In the north market reforms extended to farmers in 2012 appear to have worked. At first it was thought that the reforms (which allow farmers to keep a third of their harvests and sell them on the open market) failed because the government still controlled access to factory made fertilizer, farm machinery and similar supplies and often did not deliver. But a semi-legal market developed for such goods and the government looked the other way (which it has learned to do if it wishes the markets to be productive). Many ideological hard liners in the government still oppose such market reforms, but growing starvation and unrest resulting from the anemic economy and the example of nearby China has forced the hard core communists to back off. Despite worsening climate and access to fertilizer and fuel farmers have managed to maintain production, and improved their own standard of living by selling a portion of their produce in the markets (the states still gets most of the crop, at a very low price.) This new development did not go unnoticed by rapacious bureaucrats who have rigged the system to force newly prosperous farmers to pay bribes to keep portions of their crops they are entitled to. All these market reforms have brought out more corrupt officials looking for a “share” of the profits. This has created a toxic atmosphere between the new (and often quite affluent) entrepreneurs and their government. Until the 1990s the average North Korean regarded his government with awe and fear. For many that attitude has shifted to disgust and mistrust. North Korean leaders fear this development while neighboring China sees opportunities.
North Korea is still seeking a high price for any sort of concession on its nuclear program. North Korea continues to hold out for a major (size unspecified but apparently more than the United States and the neighbors are willing to pay) to get the north to shut down their nuclear and long-range ballistic missile programs. This is seen as such a threat that even China is getting more nervous about and more extreme in its threats to North Korea over the matter.
Although the U.S., Japan and South Korea now have a Trilateral Information Sharing Agreement meant to better counter North Korean aggression there is still a major problem with Japanese and South Korean cooperation. Despite the threat both countries face from North Korea (and China) such cooperation has been impossible to achieve. South Korea has turned down all Japanese proposals that both nations coordinate military policy against common enemies (China and North Korea). Such cooperation is still very unpopular in South Korea because of continued anger over 40 years of brutal Japanese occupation early in the 20th century. This the Japanese consider self-destructive as it wallows in the past at the expense of dealing with current and future threats. Yet Japan continues to ignore the fact that its post-World War II policy (documented in decrypted Japanese diplomatic messages sent out right after the Japanese surrender in August 15, 1945) of claiming to be a victim in World War II and guilty only of trying to liberate all Asians from Western oppression is the obstacle. That “Japan as victim” view was never very popular with Japan’s neighbors, who saw Japan as no better (and often a lot worse) than Western imperialists. To the countries of East Asia Japan compounds these historical sins by continuing to insist that Japan is innocent of any wrongdoing. This makes it more difficult to unite to deal with threats from North Korea and China, but the Japanese show no signs of changing their attitude.
North Korea is, reluctantly and discreetly, attracting tourists interested in seeing older technologies that are no longer functioning anywhere else in the world. Elderly Russian airliners and railroad engines and other vehicles are favorites, as are sights like trucks running on coal gas. This sort of thing was popular in Nazi Germany during World War II because of oil shortages but largely disappeared after 1945. In North Korea these coal powered trucks are common for the same reason and to tech history buffs they are a rare example of living history. Thus for these tourists, especially if they are respectful, North Korea will keep the foreigners from such obsolete (in the rest of the world) equipment.
Visitors to North Korea are surprised to note how quickly North Koreans are getting cell phones. These devices were only legalized for all North Koreans in 2011 and demand for them has been spectacular. Chinese firms supply most of these phones and report that cell phone exports to North Korea in 2014 were worth $83 million, which was double 2013 sales. Chinese smart phones often sell for less than $100. The government sells the phones at a large markup, so it makes sense to import as many as it can. By the end of 2015 it is believed there will be over three million legal cell phones in North Korea (plus a 100,000 or so illegal ones from China that can be used near the Chinese to call outside North Korea.)
Details are still coming out of North Korea about a late December disaster in which several divisions of the army’s 9th Corps suffered hundreds of casualties when troops were diverted to construction projects instead of the annual cold-weather military exercises. The 9th Corps was the only unit diverted because it is permanently based in area. The troops were sent to complete construction on a ski resort and airport plus several smaller projects. Because of fuel and food shortages the troops suffered considerably from cold and hunger. Most of the time the temperature was below freezing and there was lots of snow. Some of the troops had to march 200 kilometers to the construction sites and in one construction accident over thirty troops were killed and many others injured. There were many cases of frostbite and work related injuries. All this was declared a state secret and it took weeks for details to get out to other North Koreans and then outside the country. Officially the government did publicize a few of the deaths and presented them as heroic sacrifice in the service of the country. The reality was less glorious and this sort of thing does not help with troop morale although for many NCOs and some troops there is a certain pride in surviving such situations.
Despite the growing importance of the market economy reforms the North Korean government still outlaws (and occasionally enforces) anti-market laws. For example it is still illegal to use foreign currencies. In part these crackdowns are a hostile reaction to the “invasion” of Chinese and American currency in markets. The Chinese currency has become the most widely used cash in much of the economy. This was a result of the ill-conceived 2009 currency reforms, which wiped out the savings of many entrepreneurs. Now these business-minded North Koreans prefer to do as much of their business as possible using Chinese and American currency. The local currency (the North Korean won) has lost most of its value (in terms of how many won it costs to buy a dollar or Chinese yuan) since 2009. Currently it takes about 1,300 Korean won to buy one Chinese yuan and 8,200 won for one dollar. Aside from the volatility and unreliability, using the won means lugging around a lot more paper currency. A lot of the crackdowns on foreign currency are mainly to make local police (and secret police) richer via a cut of the confiscated currency or bribes to ignore some merchants.
While many North Korean are benefitting from the legal (and illegal but tolerated) market reforms, many North Koreans are not. In response many poverty stricken North Koreans are, in effect, selling their children into slavery. The government is allowing orphans to be subject to slavery-like conditions, not just for their childhood but into their adult lives as well. This sort of thing is very unpopular in rural areas where the poverty is worse. Many North Korean men see themselves as serving as slave to ten years of mandatory service in the military, but then you get out. The government is increasingly forcing poor or hostile (to the government) North Koreans into slavery for life.
While threats of enslavement are seen as sufficient to keep most North Koreans under control dealing with unreliability or disloyalty in the ruling classes is another matter. The government sees foreign media (videos, TV shows and movies), especially from South Korea, as a major threat. To scare the key few percent of the population (who control the rest) away from these poisonous media influences the secret police have been identifying the more loyal members of the ruling class (especially students) and recruiting them as informants. Now informants are nothing new in North Korea but these new ones are coached on how to be new enthusiasts for the forbidden media and, more importantly, a source for such forbidden delights. Arrests have been made (meaning careers and lifestyles ruined) and that has created even more fear among the ruling class. Interestingly the members of the few hundred most senior families are exempt from punishment and most spying. Yet members of these classes also enjoy the forbidden media.
While the corruption and mismanagement are still the major economic problem in North Korea there are still natural disasters. Currently the worst of these is a drought has caused a severe electricity shortages (because so much power comes from generators at dams). This has led to a growing number of emergency measures. Since 2012 the generating capacity of these dams has gotten worse. That has reduced economic activity more each year. Thus trains (85 percent of them electrified) and factories are unable to operate, and farms producing less because irrigation pumps or farm machinery have no power. Nuclear and missile programs have priority on energy and cash for imports, but this is in short supply as well. The American led arms embargo has been increasingly effective, and fewer missiles and other weapons are being sold and delivered. Orders are down, as customers fear non-delivery, or retribution by the United States for flaunting the embargo. The hydroelectric shortages are worse in the cold weather, when reservoirs are at their lowest. The electricity shortages are worst in the northeast and are so bad this year that many trains are not running at all. It has gotten so bad that a major iron ore mine (a major source of foreign currency) is shutting down putting 10,000 miners out of work so far. Part of the problem is bad relations with China, which the North Korean government trying to force the Chinese to pay more for iron ore. China has other sources for this and is ignoring the North Korean demands. China is still pressing for North Korea to accept the world price for its iron ore and not an artificially higher one.
January 31, 2015: The South Korean Navy established a separate Submarine Command, based in the southern port city of Jinhae. South Korea has nine submarines; nine 1,200 ton boats and four 1,800 ton all of German design. Five more 1,800 ton boats are being built and will enter service before the end of the decade. North Korea has 70 subs, but only twenty are large subs. These are all elderly Romeo class boats. The Russian Romeo class was the successor to the Whiskey class boats, which were, in turn, based on the German Type XXI which first showed up in 1943, and was the first modern submarine in that it was designed to spend most of its time underwater (with just the snorkel device and periscope above water, to bring in air for the diesel engine and crew). The Type XXI was a 1,600 ton (on the surface) sub, compared to the 1,500 ton Romeos. Russia built over 500 Romeos, while China built over 80. The rest of the North Korean subs are much smaller and of more recent construction and are used mainly for delivering commandos or spies or ambushing larger ships along the coast. Only a few of the Romeos are operational and these are the only subs that can operate away from the coastal waters.
January 30, 2015: Recent Chinese visitors to North Korea report that the commander of Kim Jong Uns bodyguard was replaced. This was apparently related to placating China over the December incident where a North Korean army deserter fled to China and killed four civilians. The North Korean government is dismissing or punishing senior people in the security services who were supposed to have prevented these desertions which have been the source of many complaints from Chinese leaders. In response to this prompt reaction by the North Koreans China suddenly resumed shipping aviation fuel to North Korea, something China had halted a year ago. China apparently sold no petroleum products to North Korea in 2014, causing major economic problems there. China still provided some oil as “gifts” but not enough to keep North Korea in business as usual. Now North Korea has finally acted in an acceptable manner. China is pleased that North Korea is responding as a traditional tributary state should. Very medieval, but just the way the Chinese like it. At the moment the North Korean leadership is focused on survival. Official data shows a decline in trade between China and North Korea in 2014, the first in six years. This was the message China sent to North Korea that the North Koreans are finally responding to in an acceptable manner. Meanwhile North Korea is trying to develop closer relations with Russia. This would never replace China, because Russia is also becoming an economic dependency of China (because of sanctions and plunging oil prices) but would provide some help in the event of major problems with China. That is a false hope because at the moment China is the major and crucial ally of North Korea. There is no one else.
January 28, 2015: North Korea has extended conscription to women, who now must serve (they could always volunteer). While men are conscripted for up to ten years, conscripted women will not be forced to stay in beyond age 23. Currently 22 percent of military personnel are female. Apparently North Korea is also considering extending the maximum time men can be conscripted to 12 years. Already many men are being pressured to “volunteer” for an extra year or two after their ten years are completed. Before the Great Famine of the 1990s (that killed as many as three million people, including many male children) men were conscripted for no more than six years (and often less). Because so many male children died during the famine, by 2000 the length of conscription service had been extended several times in order to maintain military strength at 1.1 million or so. Physical and mental standards were also reduced because many children that survived the famine were stunted physically and mentally. Since soldiers spend a lot of time farming (to feed themselves) and working in factories or construction (to pay for their housing and necessities like fuel) they are not all that well trained for combat. Moreover morale is low because they are essentially slaves from age 17 until their late 20s and are now suffering from the growing food and fuel shortages. Only those who qualify for university education escape this and they must train to become officers. People with essential skills can get out early as an incentive to be productive.
January 19, 2015: Leaked documents indicate that the United States had penetrated and clandestinely monitored North Korea’s Internet as early as 2010. This was long suspected.
January 10, 2015: While the new American film “The Interview” angered North Korea a great deal, and has not yet been released in China, millions of Chinese have seen it so far. The reaction has been overwhelmingly positive. The day after The Interview was released in the United States (on December 25th, in only 500 theaters and online) nearly half a million illegal copies were downloaded by Chinese and the reviews began to appear on Chinese web sites. Most of these illegal copies had Chinese subtitles quickly added. Most Chinese thought the film was hilarious and an instant classic. Some Chinese web sites translated the film title to “Assassinate Kim Jong Un,” which was an intentional dig at the North Koreans. A few government owned media “reviewed” The Interview and did not seem as pleased with the film as the average Chinese. One government controlled media reviewer described it as; “senseless cultural arrogance.” Interestingly the Chinese government did not order its two million Internet censors to crack down on these online messages discussing the film or try to interfere with the illegal distribution of The Interview inside China. All this no doubt angered North Korea even more because China is the only major ally North Korea has. But China has not been pleased with North Korea lately, especially North Korean development of nuclear weapons and long range ballistic missiles. The Chinese government knows the average Chinese is even less happy with North Korea and allowed this reaction to The Interview to play out in order to send a message to North Korea. This is a common way to send a message in East Asia and North Korea did not show any official displeasure at the disrespect. They got the message, even if they did not like it. North Korea is not pleased with the fact that the movie is apparently going to make money, but is much more upset at the message from China.
January 9, 2015: North Korea offered a temporary moratorium on nuclear tests if the U.S. and South Korea would halt joint military exercises. This was unacceptable because such training gives South Korean and American an edge against the more numerous North Korean troops and the North Koreans know it.
United States intelligence officials released some details of how they confirmed that North Korea was behind the recent hack of Sony Corporation networks. North Korea continues to deny any involvement.
January 8, 2015: North Korea apologized to China over a North Korean Army deserter who entered China in late December with a stolen pistol and killed people. North Korea also punished and dismissed from the military the commanders of the brigade, battalion, company and platoon of the deserter. North Korea also ordered an investigation of the state of the troops serving on the border. Such a severe reaction was necessary because the deserter killed four Chinese civilians (while robbing them) on December 27th. Within 24 hours of the murders he was hunted down and killed by Chinese security forces. There was a time, a few years ago, when China and North Korea kept incidents like this quiet. No longer, mainly because it is happening more frequently and China believes the North Koreans are losing control with desertions in their military and security services on the rise. There was no announcement of the murders in Chinese media but the diplomatic protest was news outside of China and despite Chinese Internet censorship news of the murders got into China and spread rapidly. Before the end of the year there were anti-North Korean demonstrations by some Chinese living near the North Korean border. Since at least 2008 North Korea has been trying to do something about the growing number of soldiers who are deserting and fleeing to China. There are always some troops who desert and just disappear inside North Korea. But more of these deserters are being found in China, and South Korea. Those who make it to South Korea report that the troops are now going hungry, and senior officers are stockpiling food and attempting to move their families to China. The worst desertion incidents are the ones where the deserters take firearms with them and rely on robbery to survive. This is especially bad if they do this while still wearing their North Korean military uniform. Both China and North Korea have increased their border security but the number of people, armed or not, trying to get out of North Korea increases faster and the escapees are more desperate and resourceful. China also announced the formation of a civilian militia along the North Korean border to watch the border and promptly alert border troops if anything suspicious is seen.