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KPA Corruption: A Necessary Evil?

[Should NK Look to China for a Model in Tackling Corruption?]
Jonathan Corrado  |  2015-04-06 13:46

On the Corruption Perceptions Index, Transparency International gave the DPRK a score of 8/100, which means it ranks with Afghanistan and Somalia as one of the three most corrupt nations in the world. Will North Korea ever be able to uproot the systemic networks of corruption that has taken hold since the famine of the mid-1990s? Would doing so necessarily promote equality? It might be fairly contended that there is a functional (even egalitarian) element to the way that bribery in North Korea increases upward mobility for those with poor songbun and greases the wheels between private sector enterprises and the government agencies that regulate them. In fact, without the prospect of receiving bribes, public officials would have very little incentive to do their jobs. Nobody in their right mind will argue that today's bribery-laden North Korea isn't better off than it was 15 years ago. However, its hard to ignore the very real presence of a different type of corruption, that which is not only counterproductive to economic growth and political management, but also increases stratification and embitters the populace. 

Image: Jonathan Corrado

In the first segment of this series, I presented a wide angle view of patterns of corruption in Chinas Peoples Liberation Army (PLA) and the Korean Peoples Army (KPA). I explored how differences embedded in the political and financial structure account for variations in corruption. In this second segment, Ill try to shine a light on some of the detrimental net effects of corruption in North Korea in order to assess whether a crackdown can even be considered a worthwhile or necessary endeavor. To understand the essential role that bribery, graft, and kickbacks play in contemporary North Korea, I'll also go back in time to discern how they became the standard operating procedure. 

What Happens When an Entire Military Goes Under the Table? 

In May of 2014, a Pyongyang high-rise containing the families of senior Party cadres and military officers collapsed. Although the exact figure is unknown, it is believed that dozens perished. The buildings construction was accelerated as part of a speed-housing-project ahead of the 100th anniversary of Kim Il Sungs birth. It was carried out by the 7th Bureau of the Ministry of Peoples Armed Forces. In response, central authorities conducted an intensive investigation, which resulted in 7th Bureau officials passing the buck all the way up to Jang Song Thaek – who allegedly stole concrete from them – and was conveniently, by that time, already dead. Although any officer who had a hand in this scheme will likely take their secrets with them to the grave, this construction project, like most undertaken by the KPA, was most likely a hot bed of embezzlement, graft, extortion, and bribery. 

Kim Jong Eun consults with the members of the National Defense Committee on 
the construction of large scale housing in Pyongyang 2.15.2015.
 Image: Yonhap News Agency

In an interview conducted with the Daily NK, a North Korean with experience on construction projects said that, general managers command workers to bring in things like concrete all the time. When workers say they cant get the materials because they dont have the money, they respond by telling them to go and borrow supplies. Its so hard when they keep asking us to pay for things...We cant all turn to stealing. According to other inside sources, collapses that stem from shoddy military workmanship like the one above are quite common. In this context, its no wonder that the regime showed signs that theyre fretting about public perception. In an attempt to nip any antipathy toward the regime itself in the bud, a rumor began circulating that Officers from the 7th Bureau patently ignored Kim Jong Euns explicit orders to focus on safety.

In addition to becoming a tremendous burden for the rank and file, the corruption problem has also led to large-scale military inefficiency. This includes a very high desertion rate, officers needing to travel to the jangmadang to purchase fuel out of pocket, and the incidence of mass suicides among abused and starving soldiers. Lee Jin Woo, a 10-year veteran of the KPA, told the Daily NK that torpedo boats ordered to mobilize during the first West Sea battle in 1999 could not move because their fuel had been sold at the market by the officers. In light of this, it isnt hard to see how graft, corruption, and insubordination pose a problem no matter how you look at them: from the top down or the ground up.

According to a native Pyongyang citizen, the already complicated process of buying a mobile phone has recently become even more difficult because of corruption. Even if you manage to work your way through the dizzying bureaucratic maze of certifications and approvals, youre still not guaranteed a phone. Thats because the government has recently had trouble selling a device called a watt-hour meter. So they are requiring all phone subscribers to purchase the useless $32 meters, which essentially amounts to a telecommunications tax. Those who refuse to purchase the meters and submit the receipt have had their service discontinued. Viewed individually, these episodes seem like the quirky misfires of an incongruous polity. But taken together, these scenarios underline the fact that unchecked corruption inevitably causes dysfunction, waste, inefficiency, and ultimately, disaster.

 Genesis of the Under the Table Ethos 

Troops from KPA Unit 1313 Cheer on Kim Jong Eun during a respite from
winter training exercises 12.5.2014 Image: Yonhap News Agency

Kim Jong Il created an economic system that parsed the market into three tiers. He rewarded his loyal inner circle in the Chosun Workers Party with lucrative deals in mining, fisheries, and exporting as well as access to elite banking systems. The KPA was given the second tier: construction and heavy manufacturing. Ever since rations dried up during the 1990s famine, ordinary citizens have been relegated to eke out a living from the leftovers in the third tier: a sector defined by an ever changing array of strict rules and regulations designed to ensure money flows upstream to tiers one and two. 

But the cleavage between these sectors is causing economic disruption and damaging the foreign currency management system, which is important to domestic interactions because of the unstable value of the North Korean Won (KPW). The regime is so hard up for liquid that theyre requiring all households to contribute 5kg of kidney beans for export as part of a loyal foreign currency movement. Tier one or royal court banks can swoop in and undermine the profitability of other banks at any time. This makes it harder for tiers two and three to raise capital or grow their enterprise. The party also amped up its call for steel this year, forcing factory managers to grudgingly dismantle presently unused or older machinery to fulfill the steel quotas.

John Cha, author of Exit Emperor Kim Jong Il, calls North Koreas economy a chopped up, disconnected system that is not designed to facilitate economic flow and circulation. After massive inflation in 2002 and a devastating re-denomination in 2009, the KPW now trades at ~8,300 won/USD.

The economic crisis in the 1990s gutted most national agencies, forcing each department to raise funds independently. State employees were, and continue to be, paid a pittance for their labor. This necessitated the extensive and pervasive use of bribes and kickbacks to fill in the cracks between state-sanctioned projects and private enterprise. Members of the public and private worlds now exist as mutual hostages of one another, unable to live with or without their counterparts. 

Fuji TV published a video, shot by a defector who sneaked back into NK,
showing rice shipments in Danchun, South Hamkyung Province being brought
to a military storehouse. September, 2006. Image: Yonhap News Agency

The DPRK continued its Songun policy throughout the famine, meaning that while rations dried up elsewhere, there were still limited supplies available to soldiers up to the early 2000s. Film footage smuggled out of North Korea by a defector in 2006 clearly shows the military reappropriating rice aid shipments coming in from South Korea. Despite swallowing up 50-70% of these aid shipments and receiving money from the Workers Party, the sheer size of the KPA means that they nonetheless must create much of their own revenue. They do this through the production and sale of munitions, construction and infrastructure projects, operation of power plants, and ownership of heavy manufacturing companies.

Despite helming some profitable operations, the KPAs food chain does not extend in any meaningful way down to the lower ranks. The General Federation of Rear Services is tasked with providing the nations 1.19 million soldiers with 800 grams of corn/rice per day, but they often fail to give more than 500 grams (or about 500-600 kcal, ~25% of the nutritional intake required for an active adult male). Many soldiers therefore need to take monthly trips back home to fatten up. Some have been caught slipping across the border to China to steal from private homes, creating tensions with Chinese leadership.

During the famine, families were eager to send away their kids to the military to have one less mouth to feed. But these days potential recruits have begun resorting to drinking a bowl of soy sauce so that their liver appears bloated and they fail their conscription health test. Once consigned, KPA soldiers are locked in a Sisyphus-like existence, living hand to mouth while struggling to comply with impossible demands from superior officers. Rations are in short supply, requiring soldiers to beg, borrow, and steal vegetables, meat, soap, shovels, toothbrushes, wood, etc. In 2012, soldiers from the 8th army corps were ordered to procure 200 power saws, 200 shovels, and 100kg of nails. Because the KPA is unable to issue funds for the purchase of said equipment, the soldiers are urged to beg, borrow, and steal.

Despite receiving 25% of the nation's (albeit meager) GNP, not enough funds get through to feed or equip soldiers properly. According to an inside source, this is because "embezzlement and bribery are the only methods of increasing the wealth of military officials and superior officers." So even when the Ministry of Peoples Armed forces does issue supplies, the pilfering is so severe that barely anything gets through to the lower ranks. Instead, bookkeeping officers, deputy leaders, and sergeant majors siphon off goods like food, fuel, and uniforms and bring them to sell at the jangmadang. A defector from the 5th corps said that at least 10% (10-30 soldiers from each 120 person company) end up deserting due to starvation and poor treatment from officers.

As we've seen, the military underfeeds and underpays its troops, requires soldiers to pilfer food and supplies from civilians, and suffers from bribery and favoritism at all levels. This corruption leads to misery among the base of the pyramid and debilitation at the top. From the regime's perspective, this hurts both morale and fighting capacity. One of the common misconceptions is that the corruption which dominates the KPA is a deliberately designed system that directs power upwards and speeds projects through the bureaucratic ether. But we've seen that the KPA's corruption is not a system at all, but rather the aggregate of individuals motivated by necessity (and sometimes greed) to grab cash at the expense of the army's operational health.  

This context provokes some difficult questions. Would it even be possible to erode corruption without causing irreparable damage to vital social institutions? Crackdowns would likely make it even more difficult for North Koreans to eke out a living. Since everyone and their uncle has a hand in the black/grey market, there is no criteria that could possibly make a crackdown anything more than A). a scare tactic aimed at arbitrary offenders or B). a political purge aimed at shoring up power. Although it was an attempt to rein in on "renegade" merchants, the 2009 redenomination ultimately pushed North Koreans even further from the regime's grip than they were before. Aggressive, instantaneous measures that threaten the livelihood of ordinary people are counterproductive. 

In light of this, the question is not: How can North Korea crackdown on corrupt officials? but rather: Will the regime ever be able to make bribery unnecessary? They could do so by increasing the salary of state employees like military officials, which would admittedly be hard to do without going bankrupt. Furthermore, the do-anything-to-survive, rugged individualism that now dominates the minds and motivations of every North Korean is going to die hard and slow. The culture of corruption is sustained by this mentality. Only years of stability and increased faith in the government will change this. A push from the top brass towards a modern military with an efficient chain of command - such as what we saw in China - might also do a lot to begin changing the culture.      

Given our understanding of corruptions place in the KPA, the next step is to assess what sort of measures, if any, could be used to chip away at the problem. To find out, I will turn to China to engage in a thought experiment. I'll first analyze the seriousness of Xi Jinpings crackdown and then evaluate what sort of tactics could bear fruit in North Korea. Stay tuned for the final segment.   

*Views expressed in Guest Columns do not necessarily reflect those of Daily NK. 

Jonathan Corrado is an American who has spent the last three years in South Korea. He graduated from Seoul National Universitys Language Education Institute and volunteered at People for Successful Corean Unification (PSCORE) before volunteering at the DailyNK. He will begin his MA in Asian Studies at Georgetown University in the fall.

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