Despite 'reforms,' food crisis hits N. Korea

Two-and-a-half years after North Korea introduced sweeping reforms to its economy, income differences are widening while millions live on the edge of starvation, observers say.

That grim picture emerges as the World Food Program (WFP) attempts to drum up 500,000 tons of food to help feed 6.5 million at-risk North Koreans. While the WFP does not see a repeat of the famine that killed some 2 million people in North Korea in the 1990s, it says two-thirds of the country's 23.7 million people depend on handouts that "meet only half their calorie needs."

In dire economic straits, North Korea is showing vague signs of willingness to rejoin the so-called six-party talks, as the isolated regime hopes to reap much-needed international aid in exchange for halting its nuclear program.

"Their statements have toned down a bit," says a diplomat on the South Korean foreign ministry's task force on the nuclear issue. "We hope the talks will resume in this quarter."

In 2002, Kim Jong Il introduced economic measures modeled after a resurgent China. Farmers were allowed to sell goods on private markets, factories were told to operate for real profits and lay off unnecessary workers, and the currency was devalued to bring it much closer to its real value.

But the program appears to have backfired. Grains, for example, tripled in price in 2004, with about 2 lbs. of rice costing 20 percent of the typical monthly wage, the WFP says.

"Prices have increased substantially, unemployment has increased, purchasing power has gone down, and there's less income," says Gerald Bourke, with the World Food Program in Beijing.

Analysts say the crisis could force Mr. Kim back to the bargaining table, where talks have stalled since last June. The purpose of the talks, which include representatives of North and South Korea plus the United States, China, Japan, and Russia, is to persuade North Korea to give up its nuclear program entirely. North Korea says it has built several nuclear warheads with plutonium at their core but denies having a program for building warheads from highly enriched uranium.

North Korea has made no secret of its renewed plutonium program, most recently this month during a visit to Pyongyang by a congressional delegation led by Rep. Curt Weldon (R) of Pennsylvania. Mr. Weldon says he was told by North Korea that it had made plutonium warheads at Yangbyon, 90 miles north of Pyongyang.

While his report does not go beyond earlier estimates by the Central Intelligence Agency, it appears to South Korean officials as part of Kim's strategy of playing the nuclear card to get the US's attention. The inference is that the North might again be willing to give up its plutonium program in return for a deal that includes renewed US commitment to construction of the twin nuclear reactors, first agreed to by the Clinton administration in 1994, along with lifting economic sanctions that still bar most trade between North Korea and the US.

Analysts say the North is waiting for signs of softening US policy that may be evident when President Bush gives his State of the Union address on Feb. 2. Mr. Bush is not expected to anger the North as he did in his 2002 address when he included it, along with Iran and Iraq, in an "axis of evil."

"We're willing to talk about economic assistance, energy aid, and other assistance," says the South Korean diplomat, who does not want his name used. "There's no set agenda." South Korean officials, professing full cooperation with the US, deny that Washington hard- liners are attempting to pressure the South into toughening its policy of reconciliation with the North.

"North Korea doesn't have many options," says Choi Eui Chu of the Korea Institute of National Unification. "The government doesn't produce any manufactured goods, the government doesn't have any money. They don't pay wages for labor, and they don't have raw materials."

The reforms of the past two years, Mr. Choi observes, form "kind of a patchwork," while "this coming spring there will be a serious food crisis," even though last fall's harvest was 2.37 tons, up from 2.24 million tons in 2003. The WFP attributes the gain "to favorable weather, a low incidence of crop pests and diseases, and improved irrigation in the country's cereal belt."

"Eventually North Korea will join the six-party talks," says Choi. "Time is on the side of the other five countries. The economic situation is deteriorating. North Korea has no alternative but to talk."