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By Martin J. Cool |
With the announcement in late 2013 of the execution of Jang Song-thaek, the uncle of North Korean leader Kim Jong-un, the Democratic People’s Republic of Korea (DPRK) was once again thrust into the international spotlight. Jang, believed to have been the second most powerful individual in the country before his removal and subsequent death, was seen as a key player behind the nascent economic reforms underway in the world’s most isolated nation. Those reforms, including new special economic zones jointly managed by North Korea and China, are now in question. Unfortunately for the people of North Korea, the problems in the DPRK government go far beyond the realm of economics. One of the most important contributions to North Korea’s woes has been its abysmal energy security policy. Heavily dependent on its sizable coal reserves, North Korea’s policy of “self-reliance” has stunted economic growth, destroyed its environment, and killed thousands in the devastating famine in the 1990s. Regrettably, little has changed since Kim Jong-un came to power in 2011.
This paper is a study of the energy security policy of North Korea over the past twenty years through today. Several key questions will be examined in this study: What is the current energy policy being pursued by the North Korean leadership? What are the future consequences of this policy for North Korea, the region, and the world? How can the United States and its partners engage the Kim family regime in a constructive manner?
Before addressing these questions, it must be noted that any study of North Korean energy security must address the problem of gathering accurate statistics about energy use in the country. Very little data is available aside from official statistics released by Pyongyang through its official news media, the Korean Central News Agency (KCNA). North Korean officials have traditionally been deliberately vague about the official data it releases, often using percentage increases or decreases from previous years without specifying total amounts. For example, electricity production in 1999 was listed as 45% more than the previous year. Given that 1998 was believed to be a particularly poor year for electricity production all across the country due to climatic disruptions, it is possible that 1999’s production was actually much less than say 1995 or 1996. Either way, all researchers must accept the fact that wading through the propaganda statements of the Kim family leadership is both a challenge and a constraint when studying North Korean policy-making.
Juche and Self-Reliance
North Korea’s energy policy, like its political and economic policies, is built around the juche ideology, translated as either self-determination or self-reliance. In pursuit of this ideology, North Korea seeks above all else to provide for itself in every facet of statehood in order to avoid subordination to a foreign power or foreign entity. In his book The Impossible State, renowned Korean scholar Victor Cha explains juche as consisting of four main tenets: man is the master of his fate; the master of the Korean Revolution is the people; the Revolution must continue in a self-reliant manner; and the key to the Revolution is its founder, Kim Il-sung. In many ways juche can be thought of as a form of Korean nationalism that can be traced to the birth of the current North Korean regime. This nationalism was evident despite the fact that North Korea was within the Soviet Communist sphere. As Cha writes, North Korean ideology differed from Marxism-Leninism in that it privileged “state and sovereignty” over internationalist sentiments. When the worldwide Communist movement came to an end in the early 1990s, the nationalist aspects of juche naturally lived on in the North Korean government.
Another prominent Korean scholar, Bruce Cumings, finds the word juche more difficult to translate than merely “self-reliance” or “self-determination.” It is less an idea than a “state of mind,” he writes, that puts Korea first in everything. Kim Il-sung’s prominent use of the word alongside other common terms, however, such as chajusong (self-reliance), minjok tongnip (national independence), and charip kyongje (independent economy), helped to color juche with its now familiar impression of self-sufficiency. Significantly, all of these terms are antonyms of a Korean phrase, sadaejuui, which means serving and relying on a foreign power, a concern of all Koreans that has been borne out of centuries of subordination to regional powers. In its pronouncements through the state-run KCNA, one can still observe North Korea’s fiercely independent and anti-foreign stance today.
How successful has North Korea been at applying its juche philosophy of self-sufficiency throughout its history as it concerns its energy policy? Although an exhaustive review of the Soviet-Korean and Sino-Korean relationships during the Cold War is beyond the reach of this paper, it will suffice to say that the DPRK received significant amounts of aid from the Soviet Union and China during that time, usually after attempts at energy self-reliance failed. Though estimates vary, as much as $4.75 billion in aid was delivered by Communist-bloc countries to North Korea between the end of World War II and 1984. Probably the most revealing time period about the degree to which North Korea depended on its Soviet and Chinese backers for its energy supply was in the early 1990s when the Soviet Union collapsed. North Korea was accustomed to importing oil at a heavily discounted rate of around 25 percent of the market price. As the Cold War came to an end, North Korea went from importing about 3.5 million tons of oil per year to less than 1.5 million tons. By 1991, petroleum imports had fallen to 45,000 tons. While crude oil just four years prior had accounted for nearly 22 percent of North Korea’s imports from the Soviet Union, by 1990 it was under 7 percent. The ripple effect on the economy, however, shows just how hollow the DPRK’s self-reliance ideology really was. The lack of oil imports reduced the amount of coal that could be produced because ammonium nitrate was not available without petroleum products. Additionally, crop production lagged due to the decline in chemical fertilizers that required those Soviet imports as well. All sectors of the North Korean economy and countryside felt the chain reaction.
Unfortunately for the people of North Korea, many of the problems afflicting the North Korean economy result from poor decisions made by the leadership in Pyongyang during the Cold War that still have effects today. In the 1970s, for example, the DPRK considered building oil-burning power plants in order to make up for its energy shortfalls. The idea was dismissed by Kim Il-sung, however, because it did not align with his philosophy of juche. As Kim Il-sung explained it, if North Korea built “oil-burning stations, we will have to import oil from other countries. This is contrary to our party’s policy of building an independent economy. Therefore, I did not accept the scientists’ suggestion and decided to build power stations that rely on the resources of our own country.” Another example occurred in the 1960s when North Korea decided it should build new electric plants powered by thermal power and coal, sources that it had in abundance. The problem, however, was the size of the power plants that were actually built. Lacking the technology to excavate enough coal to feed the plants, North Korean workers were forced to undergo Chollima movements. Chollima referred to the use of “ideological zeal” in order to make up for shortfalls in technology or manpower. Unfortunately, the movements often led to massive inefficiencies in the economy and broke the backs of the North Korean workers while failing to meet the standards set by the government. Though North Korea was able to survive the Cold War years because of its backing from fellow Communist states, the results were to be felt later in the 1990s when the subsidies slowed significantly.
1990-2013: Domestic Production and Foreign Suppliers
How has North Korea performed in meeting its energy goals since the end of the Cold War? Pyongyang depends heavily on its own massive amounts of coal reserves. According to the U.S. Energy Information Administration (EIA), in 2011 North Korea produced over 35 million tons of coal and consumed 30 million tons. In her paper “Uncovering North Korea’s Energy Security Dilemma: Past Policies, Present Choices, Future Opportunities,” Virginie Grzelczyk writes that by the middle of the last decade, North Korea started to recover from the depths of the famine and economic disaster that had occurred in the 1990s shortly after it lost aid from the Soviet Union. According to pronouncements from the North Korean media during that time, Pyongyang’s commitment to “step up the construction of large hydro-power plants” and “large power plants” showed marginal success. Although it is unclear how many hydropower plants North Korea are operational today, production from both hydro and solar probably helps to offset some of North Korea’s energy needs that cannot be met with coal. Official state news broadcasts by KCNA has also highlighted other countries’ use of alternative sources of energy, such as natural gas in Iran, geothermal in Iceland, and nuclear power, suggesting possible future developmental goals. However, North Korea’s lack of access to technologies and its extreme international isolation make these alternative energy sources difficult to exploit.
Whatever its future prospects for alternative energy use, the bottom line is that without assistance from its surrounding neighbors, North Korea cannot meet its current energy goals. Despite its coal reserves, North Korea is severely lacking in oil and must import most of what it uses from other countries. According to the EIA, North Korea produced a total of 9 barrels of oil in 2013 but consumed 14,000. North Korea has made up for this shortfall in a variety of ways. The United States has in fact provided large amounts of energy aid over the past twenty years. The Congressional Research Service reports that between 1995 and 2003, the United States provided over $400 million in heavy fuel oil through the Korean Peninsula Energy Development Organization (KEDO) as part of the Agreed Framework signed in 1994. It was halted by the Bush administration in 2002 after North Korea’s hidden uranium program was discovered and then resumed in 2007. By December of the next year, 200,000 tons of heavy fuel oil had been shipped to North Korea from the United States. The United States has ceased all deliveries of food and energy aid to North Korea since 2009.
North Korea’s main energy provider since the collapse of the Soviet Union has been the People’s Republic of China. World Bank consultant Nicholas Eberstadt reports that since the early 1990s, Beijing has provided nearly 90 percent of North Korea’s energy imports. According to a report recently published by the Korea Institute for National Unification (KINU), Pyongyang has continued to increase its economic dependence on China since Kim Jong-Un came to power in late 2011. Leaders in Beijing desire above all else a friendly country on its northeastern border, and this is largely what motivates China to support the North Korean regime. However, Pyongyang is aware of China’s predicament and frequently exploits this to achieve its interests. China wants to keep a buffer zone between itself and U.S. troops stationed in South Korea. North Korea provides the strategic depth necessary for the task.
Additionally, China fears the onslaught of North Korean refugees that a North Korean collapse might entail. The idea of hundreds of thousands of North Korean refugees deluging China’s northeastern region is a key inducement to Beijing’s policies towards Pyongyang. If war broke out on the peninsula, Chinese leaders know that in addition to Seoul, China would bear a significant portion of the costs.
South Korea has alternated between providing North Korea with large amounts of food and energy aid at times to providing little to none at others. Between July 2007 and March 2009, South Korea provided 50,000 metric tons of heavy fuel oil and over 95,000 metric tons of heavy fuel oil equivalent as part of the Six-Party Talks. However, when the talks broke down, then President Lee Myung-bak cut back on aid to North Korea significantly. Lee’s approach was in stark contrast to his two predecessors, Roh Moo-hyun and Kim Dae-Jung, both of whom were advocates of the Sunshine Policy, which sought reconciliation with North Korea through cooperation and aid. In 2010, Seoul’s Ministry of Unification declared the policy an abject failure that had been unable to reverse North Korea’s “perverse” policies. The Sunshine Policy cost South Korea around $4.5 billion, some of which went to joint establishments like the Kaesong Industrial Zone, but much of which was given to North Korea through food, energy, and economic aid.
North Korea also has significant energy ties with Mongolia. Information is scarce on the exact nature and amount of energy goods traded between these countries. However, recently announced deals not related to energy between North Korea and Russia and North Korea and Mongolia are indicative of a desire to strengthen energy ties. Last month, North Korea and Mongolia agreed to cooperate in the areas of industry, agriculture, and tourism. Significantly, Mongolia’s President, Tsakhia Elbegdorj, was the first head of state to visit Pyongyang since Kim Jong-Un came to power in December 2011. Additionally, a deal signed in June of this year will allow a Mongolian company, HBOil JSC, to acquire a 20 percent stake in the North Korean oil refinery called Sungri, located in the free trade zone of Rason in northeast North Korea. According to HBOil, Sungri has a refining capacity of 2 million tons per year and connects to Russia through the Russian railway system.
North Korea continues to receive periodic yet unpredictable energy supplies from Russia as well. In 2005, Russia supplied 340,000 tons of oil products to North Korea, almost one-third of its total use that year. However, these deliveries have most likely dropped in recent years given Putin’s criticism of North Korea over its nuclear weapons development. International sanctions were imposed early in 2014 after Pyongyang’s successful missile launch, but Moscow continues to pursue an economic and energy relationship with North Korea in order to open up the isolated nation. Significantly, Moscow recently signed deals involving the South Korean government with financial backing of South Korean companies. In October 2013, South Korea and Russia revived talks on a gas pipeline from Russia through North Korea into South Korea. The origins of this project date back to 2011 but it has been repeatedly delayed due to inter-Korean political tensions and South Korean concerns that North Korea could hold Seoul hostage by interrupting the smooth flow of natural gas. Separately, a deal reached in mid-November 2013 between Russia and South Korea allows South Korean companies to invest in rail and port projects in Rason, North Korea. Currently, Russia owns a 70 percent stake in the joint venture RasonKonTrans and North Korea owns the other 30 percent. The deal would permit South Korean companies to circumvent current bans on direct investments in North Korea by allowing them to purchase the Russian shares instead. South Korean companies Posco and Hyundai would probably purchase about half of Russia’s shares. The project would be a major step forward in inter-Korean cooperation as well as a boost to North Korea’s ability to transport goods out of its northeastern ports.
Energy and the DPRK Economy
As discussed above in regards to the collapse of the Soviet Union in the early 1990s, the lack of energy production has had a negative impact on the North Korean economy as well. Once known for its industrial prowess shortly after World War II, North Korea has seen a degradation of its factories and industrial equipment due to poor quality electricity. According to a Nautilus Institute report that uses open source materials and visits to North Korea by the report’s authors, many factories in North Korea have been shuttered for extended periods of time or permanently shut down over the past decade due to fuel shortages. The decline in cement and steel production has led to a shift away from energy-intensive industries towards smaller and more energy-efficient activities such as trade in raw materials and small textile factories. Instead of devoting their entire day to a factory that lacks production materials to run, many North Korean workers instead spend their time selling scraps from the vacant factories on the black market in order to make enough money to buy food to feed their families. Indeed, the growth of market activity in North Korea over the past fifteen years, a closely watched phenomenon by those looking for change in North Korea, owes its success in part to energy deficiencies at the national level.
For average North Koreans, the lack of energy supply has not only had an impact on their jobs at the factory, but also their day-to-day needs. With the decrease in energy production, a concomitant rise in the use of biomass, like wood and other organic materials, has occurred since 1990. According to Nautilus, biomass has more than doubled as a fraction of the DPRK’s energy supply over the past two decades. As the public distribution system stalled throughout the 1990s and 2000s, wood burning became the alternative. Gathering sticks and scraps to burn became a common picture all across North Korea. This, in turn, led to deforestation in many parts of the country. The countryside’s vulnerability to landslides and other natural disasters increased, contributing to much of the flooding seen over the past twenty years. The vicious cycle of economic stagnation, energy deficiencies, and a lack of protection against natural disasters is evident.
The famine of the mid-1990s killed an estimated 600,000 to 3 million North Koreansand was caused in large part by the mismanagement of both the supply of energy and the economy by DPRK officials. According to some North Korean observers, the poor decisions made my North Korean leadership that caused the North Korean economy to fail will ultimately spell the eventual end of the Kim regime. Those decisions and the resulting famine led to a significant increase in market activity in the country. In an op-ed for the New York Times titled “The Market Shall Set North Korea Free,” North Korean defector Jang Jin-Sung describes the shocking discovery of the amount of propaganda produced by the leaders in Pyongyang in order to hide the truth from the average North Korean. When the state rationing system collapsed, individuals began to barter for their goods and stopped showing up to their jobs at the factories. The inability of the state to provide daily goods forced the population to depend on someone besides the Kim family, whom they had been taught to believe had provided for all of their essential needs. As the Jang writes, “the umbilical cord between the individual and the state has been severed.” Instead, the people turned to hard cash, often the U.S. dollar, which was most often used for trading in the underground market. As its economic and energy policies spiraled out of control, the North Korean leadership increased its rhetoric about American imperialist intentions and heightened fears among North Koreans that the United States might intervene. The threat of intervention was used to justified North Korea’s nuclear weapons program.
Nuclear Weapons Negotiations
North Korea’s pursuit of nuclear weapons is closely related to its failed energy security policy, which is closely related to its failed economic strategy. It is no surprise then that North Korea’s leadership announced its dual pursuit of “simultaneous economic and nuclear development,” sometimes referred to as byungjin, in March 2013. This policy prioritizes the nuclear and munitions industrial sector along with the electric power, coal, metal, and railway transport sectors. It emphasizes new ways to use science and technology and rejects denuclearization as an option, as much of the world has called on North Korea to do. Instead, North Korean leaders made it clear that they are seeking to “break out” of the economic sanctions imposed by Western countries by seeking more foreign investment through the creation of special economic zones and increased foreign tourism. This new approach could potentially put the United States and its partners in a bind. Countries will be forced to make a choice between holding fast on economic sanctions in order to bring about denuclearization and pursing economic and energy partnerships with North Korea in the hopes of building stronger ties.
Future negotiations, whether bilateral or through the Six-Party Talks, must address the trade-offs between energy and economic assistance and denuclearization. Absent energy aid, North Korea cannot meet its goal of energy independence. In order to revitalize its failing economy, Pyongyang must solve its energy deficit problems. Only then will North Korea to develop legitimate exports and move away from weapons smuggling and other illicit activities. Leaders in Pyongyang know that North Korea must develop other sources of revenue and hard currency in order to continue to operate its patronage style of rule and stay in power. Understanding this aspect of North Korea’s goals can help Western diplomats understand the West’s leverage.
Like past efforts to compel North Korean denuclearization, future talks will most likely include energy assistance as a potential carrot. In past negotiations, a short-term assistance measure such as heavy fuel oil was used in exchange for North Korea halting its nuclear weapons program. According to a Congressional Research Service report, prior to the breakdown of the Six Party Talks in 2009, the DPRK had received a total of 500,000 metric tons of heavy fuel oil and equipment from all involved parties. Additionally, 245,110 metric tons of fuel equivalent assistance had been delivered. Other assistance measures from the United States included the costs of dismantling North Korea’s nuclear reactor, payments to the International Atomic Energy Agency (IAEA) for inspections, and food aid. Heavy fuel oil has both positives and negatives as an inducement during negotiations for North Korea’s denuclearization. On the positive side, heavy fuel oil is difficult to use for military purposes, which is a key goal for both the United States and South Korea.PPHowever, heavy fuel oil is relatively expensive and does not fit well with North Korea’s current energy infrastructure. Additionally, from the U.S. and South Korean perspective, its supply does not allow for interaction between outsiders and DPRK technicians; rather, deliveries go directly from Western donors to DPRK officials, who can then control its distribution and prevent donations from being used for North Korean propaganda.
Another short-term energy option would be diesel generators and diesel to burn, which can then be used in schools and hospitals, for agricultural purposes, and to help facilitate mineral resource development. Long-term energy assistance could include the repair and expansion of some of North Korea’s hydroelectric plants, wind power plants, and improvements in energy efficiency throughout its economy. As North Korea develops its northeast region, infrastructure and economic development could be a key point of cooperation. If a gas pipeline could be developed that crosses North Korea from Russia to South Korea, the DPRK could act as a transit point in the exchange of energy for capital between Moscow and Seoul. This set up would provide Russia and South Korea with diversification for its buying and selling of natural gas while giving North Korea an important source of revenue.
This paper evaluates the energy security policy of North Korea based on its juche ideology of self-reliance. Despite its attempts to remain energy independent, North Korea has for most of its modern history depended on outside help in order to acquire enough energy to run its economy. Though North Korea was heavily industrialized before and shortly after World War II, the Kim family regime has overseen a steadily faltering economy based off of flawed choices on how to use the energy sources available domestically as well as how to import its remaining energy needs. The cost has been high. When its lifeline to the Soviet Union was severed after the collapse of communism, the North Korean government was unable to provide its citizenry with the requisite food and materials to survive the devastating droughts and floods in the 1990s. Forced to survive on their own, many began frequenting the black markets. Activity in these underground markets may be shaking the foundation from which the Kim family derives its legitimacy. Only time will tell if new economic and energy policies will bring stability and progress to the country, or whether instability will take hold in an unpredictable nuclear state in a strategically sensitive part of the world.
Martin J. Cool is an MA candidate at Georgetown University’s Security Studies Program. He is an active-duty officer in the United State Air Force and has a BS degree in Global Security and Intelligence Studies from Embry-Riddle Aeronautical University.
 Choe Sang-Hun, “North Korea Says Leader’s Uncle Was Executed as a Traitor,” The New York Times, December 12, 2013, accessed on December 14, 2013, http://www.nytimes.com/2013/12/13/world/asia/north-korea-says-uncle-of-executed.html?_r=0.
 This date range was selected for several reasons: it marks the transition from state founder Kim il-Sung to his son Kim Jong-il; it is after the fall of the Soviet Union, a key supporter of the North Korean regime; and it is during this time that most of North Korea’s poor decisions began to have a negative effect on its economy.
 Virginie Grzelczyk, “Uncovering North Korea’s energy Security Dilemma: Past Policies, Present Choices, Future Opportunities”, Central European Journal of International and Security Studies Vol 6, Issue 1 (2012): 138, accessed on December 12, 2013 from http://www.isn.ethz.ch/Digital-Library/Publications/Detail/?lng=en&id=141530 .
 Victor D. Cha, The Impossible State: North Korea, Past and Future (New York: Ecco., 2012), 37-38.
 Bruce Cumings, “Corporate state in North Korea,” in State and Society in Contemporary Korea, ed. Hagen Koo, (Ithaca: Cornell University Press, 1993), 214.
 Cha, The Impossible State, 28.
 Ibid., 123.
 Ibid., 114.
 Ibid., 113-114.
 “Overview data for Korea, North,” U.S. Energy Information Administration, last updated May 30, 2013, accessed on December 12, 2013, http://www.eia.gov/countries/country-data.cfm?fips=KN.
 Grzelczyk, “Uncovering North Korea’s energy Security Dilemma.”
 “Overview data for Korea, North”, U.S. Energy Information Administration.
 Mark E. Manyin and Mary Beth Nikitin, “Foreign Assistance to North Korea,” Congressional Research Service, June 11, 2013, accessed December 10, 2013, http://www.fas.org/sgp/crs/row/R40095.pdf.
 Jayshree Bajoria and Beina Xu, “The China-North Korea Relationship,” Council on Foreign Relations, February 21, 2013, accessed December 12, 2013, http://www.cfr.org/china/china-north-korea-relationship/p11097.
 Manyin and Nikitin, “Foreign Assistance to North Korea.”
 Andrew Salmon, “South Korea: Policy of engagement with North is a failure”, CNN.com, November 19, 2010, accessed December 11, 2013, http://www.cnn.com/2010/WORLD/asiapcf/11/19/south.korea.sunshine.policy/.
 Sam Kim, “North Korea-Mongolia Sign Deals Before Leaders Meet in Pyongyang,” Bloomberg News Online, October 29, 2013, accessed on December 10, 2013, http://www.bloomberg.com/news/2013-10-29/north-korea-mongolia-sign-deals-before-leaders-meet-in-pyongyang.html.
 Peter Hayes, David von Hippel, and Scott Bruce, “The DPRK Energy Sector: Current Status and Future Engagement Options,” NAPSNet Special Reports, August 16, 2011, accessed on December 5, 2013, http://nautilus.org/napsnet/napsnet-special-reports/the-dprk-energy-sector-current-status-and-future-engagement-options/.
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 Hayes, von Hippel, and Bruce, “The DPRK Energy Sector.”
 Manyin and Nikitin, “Foreign Assistance to North Korea.”
 Jang Jin-Sung, “The Market Shall Set North Korea Free,” The New York Times, April 26, 2013, accessed on December 12, 2013, http://www.nytimes.com/2013/04/27/opinion/global/The-Market-Shall-Set-North-Korea-Free.html.
 Scott Snyder, “The Motivations Behind North Korea’s Pursuit of Simultaneous Economic and Nuclear Development,” The Council on Foreign Relations, November 20, 2013, accessed on December 5, 2013, http://blogs.cfr.org/asia/2013/11/20/the-motivations-behind-north-koreas-pursuit-of-simultaneous-economic-and-nuclear-development/.
 Hayes, von Hippel, and Bruce, “The DPRK Energy Sector.”
 Manyin and Nikitin, “Foreign Assistance to North Korea.”
 Hayes, von Hippel, and Bruce, “The DPRK Energy Sector.”
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