Forgive North Korea’s Food Debt

By Michael Bielawski

Under normal circumstances when someone doesn’t pay back a loan, that person should be allowed to default on the debt and face the appropriate consequences. Such is not the case with the latest political drama between the ROK and DPRK governments.

In September 2000 the two Koreas signed the “Agreement on Provision of Food Loans”, just three months after the first ever inter-Korean summit. Now the Export-Import Bank of Korea has sent a message to the North’s Chosun Bank to make its first payment on the $720 million worth of rice (2.4 million tons) and corn (200,000 tons) shipped during the ROK’s two previous administrations. The plan was for the North to pay the money over 20 years at an annual one-percent interest rate. The first payment of almost six million was due June 7, after which they had 30 days to avoid default.

The ROK government shouldn’t hold their breath waiting. The DPRK has publicly stated that the food was its reward for allowing family reunions and for its participation in the 2000 June conference.

But the truth is the ROK shouldn’t even be asking for its money in the first place. That’s because if this money were to be paid back (a long shot at best), the financial burden would certainly be put upon North Korean citizens, and not the DPRK government.

Officially, demanding payment on a loan is not an economic sanction. But for all intents and purposes, in this case, that is essentially what demanding this money amounts to. This $720 million would be coming from a scrap budget under a dictatorship that has notoriously demonstrated its disdain for its own citizens through its brutal police state, prison camps, and austerity.

The fact of the matter is the corrupt officials of the DPRK are going to look at each other in some smoke-filled room in one of their infamous pleasure palaces and say, “How can we squeeze our citizens harder? Maybe we can cut their electricity earlier each night? Maybe we can expand the forced labor camps?” In other words, there won’t be any talk of cuts to the government payroll or military spending, only talk of how to further exploit the citizens.

Ask almost any economist or geopolitical analyst and they will tell you that economic sanctions never work. It’s just a rule of economics. If you put strain on a government, it’s going to hit the citizens the hardest every time. And what’s more, the government of the punished nation will use that increased economic burden to fuel anger toward the nations imposing the sanctions.

Historically, sanctions can be even more devastating than actual war. For example: Dennis Halliday, a former UN official, quit the UN after he realized that the 1990s UN-imposed sanctions on Iraq killed between 1 and 1.5 million Iraqis, even more than the eventual Iraq-US war. This is why economic sanctions are often considered an act of war or worse: because they hit civilians.

Actually the Lee Myung-bak administration already has official economic sanctions on the DPRK; it initiated some sanctions after the DPRK allegedly sunk the ROK’s Cheonan warship, an incident still disputed in the international community.

“The sanctions have hit the North Korean agriculture and caused fears of a worsening of the food situation,” Karin [Janz, of German NGO Welthungerhilfe in North Korea] has said, while explaining the country’s agriculture is heavily dependent on imported farm machines and chemical fertilizers.

“Most of these materials came from South Korea, which has now slammed the doors,” reports Saibal Dasgupta for the Times of India.

“People believe the country is in a bad condition because of outside forces,” says Janz. Considering the notorious isolation and propaganda of the DPRK, this is likely true.

And the US has imposed sanctions on North Korea since the beginning of the Korean War. Christine Ahn and Haeyoung Kim for AntiWar.com report, “In the six decades following the start of the Korean War on June 25, 1950, the United States has built a complex system of restrictions on trade, finance, and investment related to North Korea. President Truman imposed a complete embargo on all exports to North Korea just three days after the war’s outbreak, and sanctions have since been a mainstay of U.S. foreign policy toward the country.”

In any case, South Korea needs to stop demanding this $720 million, because first of all it’s not going to happen, and more importantly it is bad public relations. The bottom line is this food has already been shipped; it’s over and done with. And it probably saved lives. Let’s leave it at that and move on, or else lives are going to be lost.

The views expressed in this article are those of the author.