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s the six-party talks move forward in seeking the termination of North Korea’s nuclear weapon production programs and facilities, the issue of economic assistance to North Korea will assume greater importance. Will foreign aid to the North encourage economic reform, or

will it just prop up a dysfunctional economy? Economists warn that wrongly applied economic aid could actually impede the reform necessary for economic development. Currently, most international projects discussed for North Korea focus on huge, long-term, multi-billion-dollar infrastructure projects, such as light-water nuclear reactors, rebuilding the North’s entire electrical grid, transnational oil and gas pipelines and railroads, and turning fishing villages into ship-building

ports, any or all of which will take years to complete. A supplemental and faster approach to economic development would be to start from the bottom-up, adopting a people-centered approach that would look to normalized and guaranteed remittances from Koreans outside North Korea, and unfettered economic activity between North Koreans and the prosperous, enterprising ethnic Korean communities in China, Japan, Russia, the United States, and South Korea—the other five parties to the six-party talks.

—David Hawk, July 15, 2008

A

David HawkReagan-Fascell Democracy Fellow

National Endowment for Democracy

July 15, 2008

The views expressed in this presentation represent the analysis and opinions of the speaker and do not necessarily reflect those of the National Endowment for Democracy or its staff.

“It is important to underline the need to generate food security in the country, for which no foreign aid could be a substitute. This is very much linked with the need for a sustainable development process based on broad people’s participation in income and food generation, conservation and regeneration.”

—Vitit Muntarbhorn UN Special Rapporteur on Human Rights in the DPRK 15 February 2008

“The international community is invited to take the following measures:Emphasize the need for participatory and sustainable development in the country and highlight strategies for food security, while continuing to provide humanitarian aid on the basis that the aid must reach the target groups . . . coupled with effective monitoring.”

—Vitit Muntarbhorn UN Special Rapporteur on Human Rights in the

DPRK 15 February 2008

“The long history of developed countries’ aid to developing countries suggests that aid can be futile, even counterproductive, in the absence of complementary reforms. Therefore, economic assistance to the DPRK, which would be part of the package for the solution of the nuclear problem, should be aimed at assisting system transformation, not at conservation of the outdated model by uncritically satisfying North Korean requests.”

— Georgy TolorayaKorean-speaking Russian Economist and Diplomat

“Of course, the economic dimension to this puzzle is also important, and there has been precious little coordination among the six parties or international financial institutions (IFIs) to develop a shared assessment of North Korea’s economy and a complementary assistance program. The economic engagement picture is much more complicated than simply providing food, fuel oil, and related energy assistance. . . . How will the six parties manage a potential “middle period” when denuclearization is not yet complete…? There is a danger that the parties will lose control of economic levers in the negotiations, which could undermine both denuclearization and economic development objectives. The economic piece is a crucial part of overall implementation.”

—James L. Schoff, co-author of Nuclear Matters in North Korea: Building a Multilateral Response for Future Stability in Northeast Asia.

Denuclearization Japan—DPRK normalization USA—DPRK normalization Energy and economic cooperation Regional security

Referenced in the September 2005 Joint Statement (related but separate):

Four-Party Talks to convert Korean War Armistice to peace regime on the Korean Peninsula