Korea: Failure Is No Longer An Option


November 13, 2018: Some customs are difficult to abandon. For North Korea this includes the habit of dragging out negotiations for a long time in order to extract more from the other side. North Korea has been doing this since the late 1940s. This is often done at the risk of having talks collapse altogether. In the past, when the North Korean economic and internal loyalty situation was not so precarious, North Korea could afford to risk failure in negotiations. Failure is no longer an option but North Koreans are going through their list of bogus demands just the same. Even the South Koreans are not falling for it this time. While many South Koreans are eager for reunification only a small minority would accept unification under North Korean terms (meaning no more democracy).

The Americans say they will negotiate as long as it takes to achieve denuclearization but only if there are no more nuclear tests. The economic sanctions will remain in force until a denuclearization deal is achieved. That means verification, something the north is very much against. North Korea is trying to get around that by persuading South Korea and/or China to press for the gradual lifting of sanctions as progress is made. The Americans are not eager to try that because in the past the North Koreans have extracted what benefits they could with that approach and then let negotiations collapse. China is willing to be flexible, but only if is good for China (like putting pressure on the Americans about some other issue, like the current trade war and accusations of rampant Internet based espionage. Meanwhile, China has been willing to see North Korea suffer from the sanctions that even China is now enforcing.

Fighting The Future

Although South Korean products continue to be officially banned in the north these items (especially clothing, fashions, electronics. software and video) from the south have become so popular, even with secret police agents and their families, that much of this forbidden South Korean stuff is tolerated as long as it is not sold openly. Some items of South Korean technology are officially accepted. For example, many North Korean officials (military, political and secret police) have been issued smartphones with voice encryption software similar to what the South Koreans have long been using. There are now nearly four million smartphone users (legal and illegal) in North Korea. While bans on foreign entertainment get the most attention from North Korean police and foreign media there are also crackdowns on local activities that are popular but banned by the government. Case in point is traditional fortune tellers as well as any religious activities. All these efforts to clamp down on forbidden activities has had one beneficial side effect; the police are hiring more informants. These people are paid in favors and or cash, often with large bonuses for particularly valuable information.

Sanctions, Scoundrels And Survival Schemes

Smuggling is still rampant, despite being more dangerous for some items going out of North Korea. Some items are relatively easy to get in, like cars and trucks. But most imports and exports are easy to spot and stop, like raw material exports from North Korea and most manufactured goods that are imported from China. It is legal to drive cars and trucks into North Korea and no time limit on how long they can stay. It is difficult to close that loophole and because North Korea is so broke, they are not going to smuggle in a lot of vehicles because fuel shortages make it difficult to operate a lot of new vehicles.

Some exports are both illegal and highly encouraged. The best example of this is malware sent to other countries, especially South Korea so that hackers can collect useful information. The latest North Korean tactic is to infect computer security software. This is very difficult but can be very profitable. And the hackers who can pull it off are highly respected and often rewarded. South Korea monitors North Korean hacking activities more carefully than most nations because South Korea is the most frequent target of North Korean hackers. South Korea reports that hacking continues to be a, if not the major, source of foreign currency (legal or illegal). The two most productive hacks lately are the use of malware to use infected PCs to mine cryptocurrency. This brings in less than a million dollars’ worth of cryptocurrency a year but it is easy money. North Korean hackers also continue to collect millions of dollars a year with various banking system hacks. One of the more recent was a raid on ATMs worldwide. The North Koreans have to use middlemen to actually go get the cash from hacked ATMs and convert the North Korean share to cryptocurrency and send it back or, it is believed, sometimes pass on the cash to a North Korean diplomat (with diplomatic immunity, in case they are caught).

Some forms of traditional (non-electronic) smuggling have been very successful, if expensive. The best example if the effort to smuggle in refined petroleum products. Sanctions limit imports to 500,000 barrels a year. Yet American tracking of North Korea tankers (often via satellite) shows that North Korea has been obtaining (at a large markup) 100,000 barrels a month via transfers at sea. Earlier this year the United States began organizing an international anti-smuggling patrol to counter North Korean smuggling at sea, particularly oil. The new joint patrol effort will include ships, satellites and aircraft from the U.S., Britain, Australia, New Zealand, Canada, Japan, South Korea and France. Part of the premium North Korea pays for this at sea transfer smuggling is the risk of being caught in the act and having one of their few tankers seized. It is usually Chinese tankers doing the transferring and China is obliged to punish the offending Chinese firm involved. Smugglers pass these additional costs onto North Korea.

Russia continues to cooperate with North Korea in evading the sanctions. One reason for that is the fact that Russia also has a corrupt and failing economy as well as international sanctions. North Korea is worse off than Russia and Russia has little to offer but the Russians do what they can. Russia continues to hire North Koreans to work in Russia and assist North Korea in smuggling coal out and oil in.

Corruption is also becoming more dangerous, not so much for the perpetrators but for the innocent victims. Case in point is the North Korean mania for building new residential or commercial buildings very fast and in spite of shortages (of materials as well as time). Residential construction is notoriously haphazard and there have been a growing number of building collapses. Government officials responsible for approving building plans and inspecting the quality of work are paid bribes to ignore unsafe conditions and it has become common for those given (by the government) apartments or houses to carefully inspect the buildings to see how expensive it will be to make the place livable or simply safe. More people are refusing the new housing because it is considered too dangerous or expensive (to repair). The growing free market housing sector is a lot smaller but the builders know that the price they get depends on quality. Bribes still have to be paid, just not as many.

As the government continues to cut back on free food and fuel for government officials and military officers all of these once affluent people have to depend more on bribes to maintain their lifestyle. Thus a change of job or even a promotion is evaluated on opportunities for demanding bribes. The growing bribery culture is making mandatory (for up to ten years) military service even more unpopular. Some officers are getting rich, like those with the power to declare a young man exempt (usually for phony health reasons) from service or get conscripts assigned to more comfortable jobs or get them discharged sooner. Since the military has little money for new equipment or using existing stuff there is not a lot for soldiers to do except work on the farms most units maintain in or next to their bases or to be rented out by their commanders to work for a factory or other commercial enterprise.

The growing corruption in the North Korean government and military bureaucracy is known to the senior leadership and recognized as a potentially fatal (to the Kim dynasty) problem. Efforts to curb this corruption have proved to be of limited effectiveness. In response to that, the government is advising the bureaucrats pay attention to the complaints of their subordinates and seek to do something to prevent growing hostility towards the government. The corruption makes life more expensive, and miserable, for most North Koreans and more of them are being open about their displeasure. That trend does not end well for communist dictatorships. The memories of the 1989-91 communist collapse in Eastern Europe and Russia still linger, in China as well as North Korea.

All this corruption has a growing number of corrosive side effects. A good, but not much noticed one, is the shrinking number of farmers. Farmers are increasingly abandoning farm work for more lucrative non-farm jobs. Many are technically still employed by a state-owned farm but manage to be away when they are needed most (like harvests). A growing number of farmers are leaving farming entirely because of the constant demands for more food, even when the crop yields have been poor. Then there are the annual “mobilizations” of farm families to go into mountains and gather berries, nuts and mushrooms. Quotas for each day of the mobilization are set and families that do not meet the quotas are less likely to get farming supplies (seed, fertilizer, fuel for farm equipment and so on) for the next planting season. The problem is that the state provided supplies have been increasingly erratic and at times unavailable. The state is also supposed to repair damage from natural disasters (like floods) but often does not or does so in a shoddy manner. Farms near a military base have an additional problem with soldiers stealing crops during harvest and anything else they can find at other times. Commanders of those troops often will not punish their thieving subordinates because the commanders get a share of the loot. When farmers go hungry because of floods or crop failure the state often does not come through with emergency food supplies. Rural health care, never as good as what is available in cities, has gotten worse. Many of the rural health workers have illegally abandoned their jobs and gone freelance in urban areas. This poor morale among farmers is a major cause of the worsening food situation inside North Korea.

North Koreans continue to try to leave the country permanently and illegally. This is despite the huge increase (up to five times more) for bribes and broker fees since Kim Jong Un came to power in 2012. The sanctions have had a devastating impact on areas where much of the employment was to produce items, like raw materials, for export. Many mines have been shut down and the government no longer can afford to provide much, or any, help for the unemployed. Those who have saved enough to pay the bribes and people smugglers try to get out or send one family out to earn money in China or (if they can pay the addition smuggler fees) South Korea.

November 12, 2018: American researchers, using commercial satellite photos, declared they had found 13 undeclared bases where ballistic missile launch sites could be hidden. While this caused a stir in American media it was revealing in other ways because South Korean, and often Japanese media, regularly report stuff like this, including the presence of the sites the American researchers had just become aware of. Most South Korea mass media have English language websites where North Korea related articles are posted translated and posted. Many Western researchers and journalists are still unaware of this excellent source of what is happening in North Korea.

November 10, 2018: Both Koreas have completed disarming 22 DMZ guard posts (11 on each side). The guard post structures will now be destroyed. This is largely a symbolic gesture because North Korea has at least 160 of these guard posts are their side of the 248 kilometers long DMZ while South Korea has only 60 (larger and sturdier) posts. Both nations have also removed thousands of mines and other explosives from the DMZ.

November 5, 2018: The U.S. and South Korea resumed joint military training when marines from both countries held one of the joint exercises they normally conduct over a dozen during each year. The U.S. and South Korea agreed to halt the joint training in June when it seemed North Korea was ready to negotiate. But because North Korea has slowed the pace of negotiations down, the joint training is resuming.

October 31, 2018: North Korea has been shutting down coastal artillery batteries on their west coast, starting with the ones within range of South Korea islands off the west coast. This is part of the series of goodwill gestures each of the Koreas would take as part of the denuclearization process. The coastal artillery batteries are an anachronism as they are towed tube artillery kept in fortified shelters that allow them for at targets offshore. But not very far offshore and not very accurately. North Korea also agreed to halt live fire exercises of the batteries near the South Korean border. Those batteries actually fired on a South Korean occupied island in 2010 and almost triggered another war. It’s unclear if North Korea will follow through on shutting down the dozens of coastal artillery batteries. The North Koreans halted the dismantling of a ballistic missile test site. Work began on that but then stopped in August and has not resumed.

October 29, 2018: South Korea complained to China that another Chinese military aircraft (apparently a Y-9 recon aircraft) had violated South Koreas’ ADIZ (Air Defense Identification Zone) and remained in the ADIZ for two hours before leaving. South Korea sent warplanes aloft to confront the intruder. This is the sixth such intrusion this year. In 2013 China announced a new ADIZ that overlapped South Korean, Philippine and Japanese airspace. China demanded that any foreign military or commercial aircraft request permission before flying into this zone. South Korea and Japan protested while the United States quickly flew some B-52s into the disputed zone without asking for Chinese permission. China protested and the United States ignored them just as China ignores South Korean protests.

October 20, 2018: With cold weather comes more electricity shortages and the government has noted the growing use of Chinese electric bicycles and the large quantities of electricity these consume because of recharging. So the bikes are being banned in areas with acute electricity shortages.




Help Keep Us From Drying Up

We need your help! Our subscription base has slowly been dwindling.

Each month we count on your contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage.
Subscribe   Contribute   Close