Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty (38 page)

Part of the quality problem was said to result from the laziness of some workers who lacked the communist attitude of “one for all, all for one,” and who were not behaving, in President Kim’s phrase, as “masters of the nation.” If a worker is not doing a good job, said a hothouse manager, “we educate him ideologically and politically so he can carry out his tasks well.” Criticism sessions might be held—“It’s something like mutual assistance so he can correct his mistakes and become a good gardener.” If a worker should work well, “we praise and honor him.” But the manager said that was “not a particularly fixed procedure.”

In that stage of development of North Korean society, officials admitted, it was necessary to employ a system of material incentives. Work teams got extra money for exceeding not only quantitative quotas but also quality standards, and they-were supposed to find their pay docked if their work fell off.
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“As we are applying the cost accounting system which was created by our Great Leader, Comrade Kim Il-sung, when we produce more we can get extra money but when we produce less we get less,” said the hothouse manager.

Another obvious way to improve the quality of goods would have been to reduce the reliance on locally developed technology—under which North Koreans had figuratively reinvented the wheel in a number of fields—and import either finished products or the plant machinery to make them. Indeed, the country’s leaders wanted to import additional selected technology from the countries most advanced in each field, which often meant from the West and Japan. The problem here was Pyongyang’s reputation for stiffing debtors.

The usual estimate by outsiders was that North Korea owed about $2 billion abroad. The Japan External Trade Organization broke that down as $300 million owed to Japanese creditors, $ 500 million to Westerners and between $1 billion and $1.2 billion to other communist countries. Periodic promises to pay at least the interest due on those debts had not been kept. North Korean checks written on third-country bank accounts had even been returned for lack of funds to cover them. Although officials now talked of repaying the debts by 1984, foreign creditors were pessimistic about getting their money even by then. They cited both the unreliability of past assurances from Pyongyang and doubts that the ambitious goals of the economic plan could be met.

Much of the debt was for plants and equipment imported during the crash program to raise the technological and output levels of the country earlier in the decade. Outsiders generally believed that Pyongyang had launched the effort with little planning or preparation, following the abortive Red Cross peace talks in 1972–1973 and the shocking glimpses of Southern advances that the talks afforded North Korean officials visiting Seoul. The move to import selected foreign technology represented a relaxation—but not abandonment—of the North Korean policy
of juche.

The plan was to pay for the overseas purchases with foreign exchange to be earned from expanded exports. When export earnings lagged and the payments slowed to a trickle, the country’s international credit rating plummeted. The buying spree came to a halt. For example, trade with Japan—-which had been North Korea’s largest noncommunist trading partner—-was reduced to largely cash transactions in a few items handled through a small company the North Koreans set up in the Portuguese colony of Macao.

When I met the director of North Korea’s Institute of Economic Research, Ryom Kwon-san, for an interview, Ryom emphasized external causes for the payments problem. First, he said, the world-wide economic crisis triggered by the Arab oil embargoes and oil price increases had caused “many” countries to decline to take delivery of North Korean products they had ordered. (He mentioned only one by name, Pakistan.) Cement, magne-site clinker—for making firebricks—and machine tools were left piled up in North Korean ports. Second, he said, lower international market prices for certain commodities, especially copper, had reduced foreign exchange earnings even when the goods were shipped.

Ryom did not mention it, but I heard much later of another external factor: North Korean officials may have connived in cheating their own country, in the beginnings of an atmosphere of official corruption that was to become quite pervasive later. Kang Myong-do, a North Korean trading company vice-president, told a South Korean magazine interviewer: “The country is in such a state, and officials are just taking money for themselves.
Moranbong watch factory was built in 1978 with Swiss factory components, but it’s crummy stuff. The person who arranged it got a kickback from the Swiss for paying a lot of money for old machinery”
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When I pressed Ryom to say whether some of the fault did not lie with North Korea itself he admitted that delays in a port-expansion program had kept shipments from going out even in cases when buyers were prepared to accept them. The country “may have” had trouble supplying goods in a timely fashion, he said, and “possibly” was a victim of its own inexperience in trade with noncommunist countries.

Ryom said the country was completing expansion projects at its ports of Nampo, Haeju, Hungnam and Chongjin. To upgrade the capacity of the North Korean merchant fleet, he said, the shipyards had moved to build 20,000-ton cargo ships in addition to the old models of only 10,000 tons. He could not give a figure for total current fleet tonnage, he said, because he was not “a specialist in this field.” Ryom suggested that a visit to the Nampo port, downriver from Pyongyang near the country’s west coast, would demonstrate what was happening in port development. But I never got permission despite repeated requests. Bruce Dunning of CBS Television did go to the dry-cargo port and told me he had found dredging in progress, as well as construction to add new berths to the seven or eight in place. About ten ships were in port. A Panamanian-registered container ship was being loaded, but with old-fashioned conventional cranes; farm tractors pulling wagonloads of cargo outnumbered forklift trucks.

With improvement of transportation facilities, Ryom told me, “we think that the debt will be repaid soon.” Then North Korea could proceed in carrying out “the main line of our party—to make bigger efforts to develop foreign trade in the coming years.” For the time being, “we are mainly exporting cement, magnesite clinker and metal products,” he said. “But we are going to emphasize also exports of machine tools, manufacturing machinery. We will increase the capacity of our factories.” Already foreign demand for North Korean cement was increasing rapidly, he said, and if the seven-year plan should prove successful, the country by 1984 could be earning $1 billion a year from exports of cement, steel, chemical fertilizer and zinc.

However, some outside observers did not see much indication, up to that point, of an advancing trend in exports that would help North Korea pay off its debts. An analyst with the Japan External Trade Organization in Tokyo noted that North Korea registered a decline in such principal exports as zinc and lead from 1977 to 1978 while selling more textiles and agricultural products abroad.

North Korean officials appeared not to understand why capitalists got so upset over such matters as bounced checks. For example, Ryom, introduced to me as one of the country’s leading economists, said, “Our debt is not so much. I think there is no country that is not in debt.” Mean-while, the
impatience of some foreign creditors was approaching open contempt, with the view often expressed that North Korea could pay its bills if it really wanted to. The leading Japanese economic daily newspaper,
Nihon Keizai Shimbun,
had reported in January 1979 that cement plants and baking furnaces, imported from Japan but never paid for, had been placed in operation in North Korea and could produce export goods to earn foreign exchange. Add that to an apparently improved domestic economy, the paper said, and Japanese businessmen—-with “an increasing sense of distrust”—wondered why North Korea did not pay up.

One Western diplomat who dealt with Pyongyang was even less reservedly bitter in his comments after several years of broken promises. He suggested that North Korea could meet its economic goals and pay its debts if it got rid of the bizarre personality cult around Kim and stopped spending huge sums for festivals honoring “the Respected and Beloved Leader.”

Confronted with such criticisms, Pyongyang officials tended to go on the offensive. One approach was to blame Western lenders and news media for spotlighting the debt problem. Bai Song-chul, the official who had told me his story of being an orphan, was sitting in during my interview with Ryom. In his impatient fashion Bai interjected a typically tough message for me to pass along to the country’s debtors: “If you are quiet, you “will be paid back soon, but if you are shouting, you “will be paid back later.”

I was puzzled during and after my meeting with Ryom to realize that a North Korean economist seemed to know next to nothing of-what a Western economist would consider his field. I had asked that my handlers set me up with someone broad-gauged to talk about the economy. Ryom qualified, on paper. Besides directing the Institute of Economic Research, he was chairman of the economics department at People’s Economic University. But he proved a far cry from the high-powered purveyors of concepts I had spoken with in South Korea and other countries. I was dissatisfied with the bits of information I had managed to squeeze out of him in our first session of three or four hours’ duration, so I asked him to return another day for a second session. The second session lasted about as long but proved equally unsatisfactory. The problem may have been not so much Ryom himself but the fact that the regime intentionally kept its economic results murky
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Outside analysts had suggested that the North Koreans at the time of their ill-fated venture into world markets really did not understand the up-and-down dynamics of those markets, having been accustomed only to the formal barter among communist countries. I wonder if Ryom himself was hinting at this sort of ignorance when he remarked, “Our people learned the alphabet after liberation and do not know foreign languages very well.” In fact North Korea had begun to emphasize foreign language study in the
schools. But how quickly could the long-isolated country produce a sophisticated corps of world trade specialists via a rigid educational system that focused narrowly on the life, times and thought of the practically deified President Kim? Kim had directed in September 1978 that “all college students should be well versed in more than one foreign language in order to learn advanced science and technology,” and one list of North Koreans studying abroad as of February 1979 counted more than four hundred studying in such fields as languages, science, mathematics, medicine and foreign languages. However, not a single economics student was listed among them.
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Consumer goods, debt and other problems aside, Kim Il-sung’s command economy did appear to have built itself an impressive foundation. I believed I could see the magnitude of the achievement as I left the country, this time riding the train from Pyongyang to Beijing. The vistas of neat, substantial farm houses, tractors and rice-planting machines and well-scrubbed, solidly built towns gave way at the Yalu River to China’s squalid rural huts, urban slums, people and draft animals engaged in backbreaking labor.

The train was made up of green-painted passenger cars, most of them divided into compartments with two lower and two upper bunks each, plus a dining car. Clearly, the sociable place to be was the dining car, and there I sat for much of the trip, alternately peering out the window and talking politics with an assortment of passengers who at various times included Hungarians, Russians, Americans, Japanese, a Dutchman and a Scot. (By now I was not surprised that no North Koreans chatted me up.)

We began the trip by passing through Pyongyang’s rail yards, where wooden-bodied boxcars were lined up on sidings. The urban area petered out quickly and we were in the countryside. Here as earlier I saw numbers of tractors, and some rice-planting machines. In addition, though, oxen pulled wooden-wheeled carts. Houses in some places seemed a bit shabbier than those I had seen in other parts of North Korea—but as soon as I took note of those I would usually pass by other farming villages made up of clumps of the newer rural apartment houses that the state had been building. Soil quality on the North Korean side seemed to lessen as we drew closer to the city of Sinuiju and the Yalu River, which forms the border with China. In that area the predominant, dry-looking red clay resembled the poor fields surrounding my Georgia childhood home, whose nutrients had been leached out by generations of single-crop cotton planting and which could no longer support crops much more demanding than pine trees. Still, everything was neat and in order, and I saw no scenes of destitution.

Across the Yalu, the preferred exterior treatment for buildings changed from cream-colored stucco to red brick. We had a stop in the Chinese city of
Dandong. While waiting for a different locomotive to be attached, we passed through Chinese immigration in a station building whose large, framed portraits substituted China’s then-leaders for Kim Il-sung.

Then it was on through a Chinese countryside that presented a stark contrast to what I had seen in North Korea. Carts pulled by oxen and donkeys made up a great percentage of vehicular traffic outside our train windows. Even to move a huge boulder one group of workers had nothing but a donkey cart. The Chinese in 1979 had hardly any tractors. More of the houses we passed were roofed with thatch, fewer with tile, than in North Korea, and houses typically looked poorer. In villages, towns and cities the landscapes ranged from shabby to tumbledown.

Still, while what I had seen of North Korea had a settled, almost prosperous look to it, and did seem clearly ahead in such key areas of development as farm mechanization and decent housing, China had the obvious edge in one category. While one could ride for a long time on a North Korean train without seeing much in the way of human activity, China served up a constant panorama of vitality—people everywhere, on bicycles, on foot, fishing in an irrigation canal, haggling.