Food shortage still grips North
Korean Peninsula Energy Development Organization
(CNN) -- As North Korea threatens to bolster its nuclear arsenal, millions of its undernourished citizens are barely subsisting because of severe food shortages, according to the U.N. food agency.
The U.N. World Food Program (WFP) said recently it needs 500,000 tonnes of food, worth more than $200 million, to help feed 6.5 million hungry North Koreans this year.
Despite an expected increase in domestic cereals production to 4.24 million tonnes this year, North Korea's output will still be below its minimum requirement of 5.13 million tonnes, according to a recent U.N. assessment.
The WFP's Pyongyang-based country director, Richard Ragan, said on January 27 that millions of children, women and elderly people in North Korea were "barely subsisting because they lack both the quantity and quality of nourishment they deserve".
The WPP and the U.N.'s Food and Agriculture Organization (FAO) say a quarter of North Korea's 23.7 million people will again need outside food aid in 2005.
The U.N. agencies say North Korea's economy remains in poor condition, despite its best harvest in 10 years and some economic reforms and diversification.
They say the most critical problem for poor households is their declining purchasing power.
A joint report by the two U.N. agencies in November said an unintended consequence of reform was the problem of higher food prices.
This had been compounded by widespread cuts in wages as ailing industrial enterprises shed labor.
North Korea, ruled by reclusive leader Kim Jong Il, is already unable to feed its people and relies heavily on outside food aid distributed by the WFP.
As well, the North's decrepit economy is burdened by a lack of infrastructure, insufficient electricity and the cost of a massive military budget.
The secretive state has more than a million men and women under arms -- one of the largest standing armies in the world -- and spends heavily on its weapons program.
According to the WFP, a series of natural disasters beginning in 1995 coupled with an economic downturn over the last decade have crippled North Korea's food security and left it with deteriorating public health, unsafe water supplies and poor sanitation.
Some economic experts have been predicting for years that the North's economy will collapse, thereby plunging South Korea into the cost and turmoil of an unplanned reunification.
Estimates of the cost of that reunification range up to $250 billion in the first 10 years, extending out to $840 billion over a 40 to 50-year period.
In November 2003, John Chambers, managing director of sovereign ratings at Standard & Poor's, said the North's inevitable economic collapse could cost South Korea up to 300 percent of its annual gross domestic product.
Chambers told CNN at the time that the North's collapse was "ineluctable" and could be soon or in the medium time. Either way, it would cost the South dearly.
However, other economists say a collapse is not likely, following the reforms in mid-2002.
In February 2004, Barclays Capital Asia researcher Dominique Dwor-Frecaut noted that "the North Korean authorities seem to have a much better understanding of the issues involved in the transition from plan to market than we had expected."
One aspect of North Korea's economy that is sometimes scrutinized is its alleged reliance on narcotics, counterfeiting and the sale of weapons to raise hard currency.
Defectors from the North claim that some of the fertilizer provided by aid agencies is diverted to farms that grow opium for the drug trade.
According to the Washington-based Center for Strategic and International Studies, U.S. and South Korean military researchers estimate that North Korea exports $500 million of narcotics annually.
As well, North Korea's sale of ballistic missiles to Pakistan, Iran and Middle Eastern countries raised $580 million in 2001, researchers say.