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.
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