South Korean Saenuri Party lawmaker Yoon Sang-Hyun, citing Chinese Customs data and “studies on North Korean trade patterns” compiled by the
National Intelligence Service South Korean government,* has leaked a report alleging that in 2013, Pyongyang imported $644 million in luxury goods. Yoon says this is enough to buy “more than 3.66 million tons of corn or 1.52 million tons of rice, far more than the country’s food shortage of 340,000 tons estimated by the U.N. Food and Agriculture Organization and World Food Program for the year 2013-2014.”
Now, to be completely fair to the North Koreans here, Pyongyang told the WFP that it was going to import 300,000 tons of that amount commercially. Still, North Korea’s spending on luxury goods again raises the question of why North Korea needs food aid at all, or why anyone there has to go hungry.
According to the World Food Program’s most recent published data, North Korea was expected to have a food deficit of 507,000 metric tons for the year between November 2012 to October 2013. In the year from November 2013 to October 2014, North Korea had a better harvest, and that deficit fell to just 340,000 tons. In each of these years, the North Korean government said it would import the same amount — 300,000 metric tons — leaving international donors to cover the remaining 207,000 metric tons (2013) and 40,000 tons (2014).
In 2012, perhaps projecting from that year’s leaner harvest, the World Food Program asked donor nations for $200 million for a two-year program to feed 2.4 million pregnant women, nursing mothers, infants, and children in North Korea.** The donors, however, have stayed away in droves, and if you put all of these import statistics into one chart, it goes far to explain why***:
As the WFP explains, nearly a third of North Korean children are chronically malnourished or stunted, 20% of breastfeeding women are malnourished, “more than 82 percent of households do not have acceptable household food consumption during the lean season,” and many have “poor dietary diversity,” which means they survive on corn and other cheap carbohydrates, and maybe some vegetables.
The statistics on North Korea’s commercial food imports come from WFP/FAO assessments, here and here. Of course, those figures are what the North Koreans promised the WFP, and I don’t have to explain the value of a North Korean promise to you. The figures are for cereal imports only, and probably also exclude other, higher-end or luxury food imports. They are simply that percentage of North Korea’s unmet cereal needs that Pyongyang itself says it intends to fill.
While one should always be wary of Pyongyang’s manipulation of need assessments, plenty of reporting from inside North Korea confirms that for most people, the food situation is dire. Publicly, the WFP attributes this situation to a number of reasons, including a long series of droughts and floods that never caused anyone to starve in South Korea, and also on Pyongyang’s “scant foreign currency reserves to buy food on the international market.” It is this assertion that I intend to refute as conclusively and embarrassingly as possible, if only to prod the WFP to address it truthfully.
Yoon has made an annual event of releasing these data, as reliably as a [circle one: flood/drought] destroys North Korea’s entire corn crop, but not South Korea’s. In 2011, Yoon gave The Telegraph a year-on-year accounting of North Korea’s increasing luxury goods imports for the years 2008 to 2010, including $216 million for TVs, digital cameras, and other electronics, and $9 million in whiskey and other expensive liquor. In 2012, a report Yoon released, citing (in part) Chinese Customs data, claimed that North Korea imported $446 million in luxury goods in 2010 and $585 million in 2011:
Imports were especially pronounced for high-end cars, TVs, computers, liquor and watches. Inbound shipments of luxury cars and associated components almost doubled to 231.93 million dollars last year from 115.05 million dollars in 2009. [….] Artworks and antique imports reached 580,000 dollars last year, more than 10 times the figure of 50,000 dollars in 2009. Perfume, cosmetics and fur saw their inbound shipments double. Among items that saw sharp drops in imports were leather products and musical instruments. [Dong-A Ilbo]
Later that year, NPR reported on how the other four-fifths were getting by:
But all five North Koreans I met in China say that’s not the whole story. The markets are full of food, they agree, but most ordinary people can’t afford to buy it. State rations aren’t being distributed, and even some soldiers are going hungry. One man who gave his name as Mr. Kim described the drastic action one family he knew took.
“I saw one family, a couple with two kids, who committed suicide. Life was too hard, and they had nothing to sell in their house. They made rice porridge, and added rat poison,” he recalls. “White rice is very precious, so the kids ate a lot. They died after 30 minutes. Then the parents ate. The whole family died.” [….]
The U.N. report found that in Ryanggang province, where the situation is worst, almost half of the children are stunted from malnutrition. Even in the showcase capital, home to the elite, one in five kids is stunted.
“I saw five people who died of starvation right before I left this year,” says another interviewee, Mrs. Kim, who lives on the outskirts of Pyongyang and is not related to Mr. Kim. Talking to reporters is risky for North Koreans, so NPR is using only the surnames of the people interviewed for this story. “There was one father, who worked in the mines, but his job provided no rations. His two children died. Apart from that family, I know of one other woman and two men who starved to death.” [NPR, Louisa Lim]
In 2013, Yoon again provided data “gathered by South Korean agencies” to The Asahi Shimbun, which reported that Pyongyang imported pet dogs from Europe, sauna equipment from Germany, along with plenty of watches ($8.18 million) and expensive booze ($31.11 million). The imports totaled $323 million in 2009, $584 million in 2011, and $646 million in 2012, representing a doubling of known luxury imports in just two years. The Telegraph cited the same source and statistics in this report, noting that the Pyongyang also imported $37 million worth of electronics.
[The same year this video was taken, incidentally.]
In addition to doling out swag to the elite, the regime has recently used some of this to stock the shelves of elite department stores in Pyongyang, which presumably means that the regime expects to make a tidy profit. I’ll say this for state capitalism — it’s a more efficient way to separate the hoarders from their loot than old-fashioned confiscation.
Had donors fully funded the WFP’s program, its one-year food cost would have been half of $137 million, or $68,500,000, just 10.6% of what North Korea spent on luxury goods in 2013. Put another way, what Pyongyang spends on luxury goods, according to the best available statistics, is 9.4 times higher than what the WFP pays to import food to feed pregnant women, nursing mothers, and children in North Korea.
And obviously, Pyongyang is also spending a lot of money on weapons on top of that.
One problem with taking these data too literally is the risk that the South Korean government is inflating them to disinform us. On the other hand, because luxury goods imports violate U.N. Security Council Sanctions, and also the national laws of the United States, the EU, and Japan (among others), many of the sellers have good reasons to conceal some of these imports. This means that there are risks of the data being overstated and understated. It may never be possible to authenticate precisely what North Korea spends on luxury goods, but it is possible to corroborate, based on other sources, that that spending is very substantial, and rising.
This report in The Chosun Ilbo, accompanied by photographs, show shops in Pyongyang selling the wares of “Chanel, Lancome, L’Oreal’s,” “expensive jewelry by Cartier and Swarovski,” and “luxury watches by Rolex and Omega, and clothes by Italian designers.” In 2011, South Korean government officials told The L.A. Times’s John Glionna that while North Korea continued to receive foreign food aid, Pyongyang’s appetite was for all things Gucci, Armani, and Rolex. It also imported $500,000 in high-grade beef, a description that can’t possibly include the Big Macs Kim Jong Un had flown in on Air Koryo. In 2013, Reuters reported that members of the North Korean elite jammed bags of luxury imports onto every flight from Beijing, right under the noses of Chinese Customs.
Is there evidence to corroborate the dramatic rise in luxury imports that Yoon’s figures suggest? There is, to a degree. In January 2012, Wall Street Journal reporter Jeremy Page examined Chinese customs data and U.N. reports, and found that “Since 2007, North Korea’s imports of cars, laptops and air conditioners have each more than quadrupled, while imports of cellphones have risen by more than 4,200%.” Page’s report was rich in interesting detail:
The U.N. data show that China has replaced Japan as the biggest exporter of cars to North Korea since Tokyo added them to the luxury list in 2006, and that in 2010 China overtook Singapore as the biggest exporter to the North of tobacco products, which many countries consider luxury items under the sanctions. [….]
“The sanctions don’t work because as long as China allows the export of luxury goods, the North Korea elite will be paid with them to support the regime,” said Jiyoung Song, an associate fellow at London-based think tank Chatham House, who has studied North Korea since 1999. [….]
Among the exports of liquor to North Korea from Hong Kong in 2010 were 839 bottles of unidentified spirits, worth an average of $159 each, and 17 bottles of “spirits obtained by distilling grape wine or grape marc” worth $145 each, according to the U.N. figures.
In 2010, North Korea also imported 14 color video screens from the Netherlands—worth an average $8,147 each—and about 50,000 bottles of wine from Chile, France, South Africa and other countries, as well as 3,559 sets of videogames from China, the U.N. data show. [….]
In 2010 alone, North Korea imported 3,191 cars, the vast majority from China—although one, valued at $59,976, placing it in the luxury category, came from Germany.
Page even produced this graphic:
This trend is also both mirrored and amplified by a very visible increase in spending on leisure and sports facilities. The ROK National Intelligence Service, estimates that North Korea spent $300 million on those facilities in recent years. It’s not clear whether Yoon’s figures include those costs, or how much of them.
Much of the luxury goods trade in China is done openly, at shops near the North Korean Embassy in Beijing that cater to an elite clientele. After China, Europe was the second-worst offender. An Austrian man was implicated for selling North Korea luxury sedans, and attempting to sell them Italian yachts. Despite Italy’s success on this occasion, North Korea directly imported jet skis from Italy, and also “imported sauna equipment from Finland and Germany.”
It’s also possible to search the U.N. Comtrade database for some corroboration. I ran a quick search, which revealed multiple exports of alcoholic beverages and electronics by China and various European countries in 2013. Perhaps in the coming months or years, I’ll try to aggregate some of these data myself to look for patterns, and to identify countries whose enforcement of the Security Council resolutions is particularly suspect.
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* Oops. Forgot the strikethrough when I posted this.
** Of the requested $200 million, just $137 million would be for food costs (page 1). The rest probably consists of salaries of shipping and support costs, some of which will be paid to Pyongyang for the costs of storage, transportation, fuel, and labor — costs whose accounting the WFP Inspector General questioned recently. (See Annex A-I).
*** Correction 17 Oct 2014: I took a second look at my math and realize that I either used the wrong figure for 2012 and 2013 or made an error in calculating cereal prices. Although I can’t find where the WFP reports a dollar cost of the cereals Pyongyang said it imported, one can arrive at a reasonable estimate by calculating the commercial price from the data in Annex A-1 (42 million divided by 115,000) and multiplying that price by 300,000. The WFP data tell us that food prices and Pyongyang’s commercial cereal imports were both relatively constant for both years (page 8). That works out to a higher figure of $110 million, about a sixth of what Yoon’s ROK government figures say Pyongyang imported in luxury goods. Note that this is consistent with the 2010 figure (the 2011 figure is probably a partial-year figure, so don’t put too much stock in it). I regret the error and have corrected the chart accordingly.