ACCESSION NUMBER:00000 FILE ID:96081203.EEA DATE:08/12/96 TITLE:12-08-96 NORTH KOREA UNDER PRESSURE TO FIND NEW FUNDING SOURCES TEXT: (Warsaw Pact demise, Japan recession squeeze regime) (490) By Amanda Blanck USIA Staff Writer Washington -- Policy analysts in the United States, Japan and South Korea have underestimated the stress North Korea is under according to Nicholas Eberstadt, a visiting scholar at the American Enterprise Institute. "At this point, the North Korean state is left with much less in the way of resources than it had before and much bigger problems," Eberstadt said during a presentation at the American Enterprise Institute August 9. Eberstadt's presentation focused on unreported aid to North Korea from ethnic Koreans living in Japan. Calculating the amount of remittances to North Korea from pro-Pyongyang groups within Japan is difficult since the money travels in unusual ways, according to Eberstadt. Estimates of the cash flows range from $600-800 million a year, a figure presented to the Japanese Diet by a Japanese official in 1994, to $50-200 million a year, the range calculated by Eberstadt looking at trade balances. Eberstadt admitted that it is impossible to say which set of numbers is correct. He gave several reasons why he felt that his estimate is the more plausible one, including North Korea's recent problems in obtaining food and fuel. If $600-800 million were being remitted annually, the government would have the resources to purchase food and fuel for its citizens, he said. Cash flows out of Japan began drying up in 1989, Eberstadt said. He attributed the decline to a number of factors including the collapse of Japan's "bubble" economy, negative revelations about life under Communist regimes elsewhere in the world, and a reduction in younger ethnic Koreans' loyalty to the Pyongyang regime. The disintegration of the Warsaw Pact at the same time further reduced sources of funds for North Korea, he said. Beginning in the 1950s, North Korea adopted a strategy of demanding and receiving funds from more powerful countries such as China and the Soviet Union, according to Eberstadt. The breakup of the Soviet Union significantly reduced this source of funds. Pyongyang now finds itself in a situation where "the government has to figure out either how to generate hard cash earnings or how to find new patrons with really deep pockets, and I suspect that the North Korean leadership is concentrating its attention on both of those possibilities right now," he said. North Korea's dealings with the United States can be viewed as a continuation of this strategy, Eberstadt said. "It's something that North Korea's leadership knows very well how to do, how so to speak to shake down big powers, and I think one can interpret what has been going on with the Agreed Framework from such a context. Washington, Seoul and Tokyo are now great powers with deep pockets. North Korea's leadership has this great skill in putting its hands into great powers' pockets," he said. NNNN .
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