North Korea - Send in The Serfs

In the north the senior leadership of the military has been reshuffled for the third time since Kim Jong Un came to power 18 months ago. This time, more aggressive generals have been put into the top spots. It’s likely that the reassignments (most of those replaced are given other senior level jobs, not arrested or forced to retire) are more about getting people more loyal to the new leader into key jobs. 

Kim Jong Un is very young (about 30) to be supreme leader (at least by Korean standards) and not enthusiastically accepted by much of the ruling class and considered suspect by more conservative North Koreans in general. Kim Jong Un and other members of the Kim clan have struggled for over a year to create more loyalty for the new leader. This is difficult in the face of continuing economic problems and the growing realization by most North Koreans that they have been lied to for decades and that they do not live in the best of all possible worlds.

 

With China recently joining the international banking sanctions against North Korea, foreign aid organizations are running out of money. That’s because the North Korean government has refused to let some of them to receive money transfers via banks that are allowed to handle foreign investment (and not subject to the sanctions). In particular, North Korea refused UN aid agencies permission to use this approach, as a way to pressure the UN to do what the North Korean government wants. For example, the governments wants the UN to drop demands that foreign aid be monitored to ensure that it is not diverted to the military or sold on the open market to raise cash. The only option left to the UN is to ask foreign embassies to allow the movement of cash via diplomatic pouch (the custom of allowing embassies to ship in or out whatever they want without North Korean inspection or intervention). Embassies are reluctant to do that because, technically, it violates the rules that govern the immunity enjoyed by diplomatic pouch shipments. 

 

North Korea has ordered the increased use of slave labor in China, as a way to obtain more foreign currency (needed to buy imports). All North Korean state owned businesses (most are) have been given permission to try and make deals with Chinese businesses in which China will provide everything but the labor for enterprises in China or North Korea. The labor (most of it) will come from North Korea, which rents their people to the enterprises at low rates and shares the profits. 

North Korea has been doing this for years, mainly with China and Russia and South Korea, in the recently closed Kaesong Industrial Complex (in North Korea but financed and run by over a hundred South Korean firms). Most of these new enterprises will be set up in China, as Chinese businesses are reluctant to invest inside North Korea because too many of those firms have been plundered and cheated by the North Korean government. This practice of renting out North Korean labor is not exactly slavery but is a form of serfdom (where the citizens have some rights but their movements are strictly controlled by their overlord). The government is increasingly using economic incentives to encourage the serfs to be more productive. This trend has led to the elimination of serfdom in most of the rest of the world over the last few centuries. Russia, for example, only eliminated serfdom in the 19^th century and China a century later. 

 

For the first time North Korea has ordered school children as young as nine to “volunteer” to work on farms for the planting season. Normally only teenage students are sent, but the government has promised to increase food production and this is one of the extraordinary methods being used. Another is the use of scarce foreign currency to import more fertilizer from China. 

 

Desperate to reduce the rampant smuggling of people and goods along the Chinese border, the government is offering membership in the ruling Workers’ Party for any border guard who turns in another border guard who is taking bribes to allow this smuggling to go on. This offer includes forgiveness for past crimes (like bribe taking) by the informer. Membership in the party is a prerequisite to financial success in North Korea. Only about a quarter of the adult population are members. The top ten percent of party members do very well economically and all party members get priority over non-members when it comes to distribution of food or favors. 

 

May 23, 2013: A North Korean general sent to China to negotiate “peace” with China announced that North Korea had agreed to economic reforms, less warlike behavior, and peace talks with its neighbors (especially South Korea and Japan, along with Russia and the United States). In return China will reduce its sanctions. North Korea sent this emissary to China in response to Chinese displeasure at North Korea’s warlike behavior over the past few months. In addition to openly criticizing North Korea, which is rare, China also imposed more of the international economic sanctions on North Korea. China had refrained from this in the past and shrugged off the international criticism. But North Korean refusal to enact economic reforms (and cease being an economic burden on mentor China) and growing hostility towards South Korea and foreigners in general has made the Chinese very, very angry. North Korea has several other incentives to halt its months of warlike rhetoric. For one thing, the nuclear weapons and ballistic missile projects that caused the sanctions in the first place have been hurt by the new sanctions. This is especially true since China cracked down on illegal items, related to nuclear and missile development, moving in and out of North Korea. 

 

May 21, 2013: North Korean kidnappers released a Chinese fishing ship and its 16 man crew they had seized on May 5^th.  The boat was taken in international waters (100 kilometers from North Korea) by armed men dressed in North Korean military uniforms. The kidnappers moved the captured ship closer to North Korea and kept the crew prisoner at sea while they tried to extract a $100,000 ransom from the families of the fishermen and owner of the ship. Instead the owner eventually contacted the Chinese government, which in turn went after their North Korean counterparts. This sort of thing has happened before, the latest incident was a year ago and aggressive Chinese diplomacy got the ship released. Although the ship and crew were released, the kidnappers took five tons of diesel oil, six barrels of gasoline, and other supplies. The kidnappers had removed portable electronics but returned these before releasing the ship and crew. Apparently these were rogue coast guardsmen seeking to make a lot of money. North Korea coast guard boats often extort cash and goods from foreign (usually Chinese) fishing boats that come close to the coast. Fishing boats often will pay up just to get the armed North Koreans off their boat. But $100,000 is more than what is normally carried on a fishing boat and had to involve people ashore. Some coast guards may have successfully carried out kidnappings like this in the past and it never got reported (because of threats to hunt down and kill whoever blabbed). In any event, the North Korean government was silent on this incident.  

 

May 20, 2013: For the third day in a row North Korea fired something into its offshore waters. This time it was apparently two short range rockets. In the last three days six rockets or missiles have been fired. Normally this would not be news because any military with a large stock of rockets and missiles (like North Korea) will regularly fire some of them for testing, training, or because they are too old to keep around and must either be used or discarded (which can be expensive). But because this is belligerent North Korea, any such firings becomes newsworthy events. 

 

May 15, 2013: North Korea refused to negotiate over allowing South Korean companies to recover assets at the Kaesong Industrial Complex, which was shut down by North Korea in April. This put over 50,000 North Koreans out of work. The South Korean government provided help with the losses suffered by the South Korean companies that operated the Kaesong factories. North Korea has blamed South Korea for all this and is quietly trying to get jobs in China for some of the unemployed Kaesong workers. Most of the workers and their families brought to Kaesong to work in the South Korean factories are being sent back to the other parts of North Korea they came from. Shutting down Kaesong cost the North Korean government a lot of money, since the wages of the Kaesong workers were heavily taxed. Such workers are often housed in dormitories where they can be watched by North Korean secret police. Any workers who try to defect would be putting their family into prison, which was a death sentence for the very young and very old. North Korean workers don’t like working outside the country when they have to leave their families behind. But working in Russia and China was at least a job and you got enough to eat.