THOUGHTS ON NORTH KOREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01439R000500110028-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 9, 2016
• Document Release Date: December 14, 2000
• Sequence Number: 28
• Publication Date: April 18, 1969
• Content Type: MF

Approved For Releas2001 /03/04,
M
8 APR 1969
MEMORANDUM FOR: Acting Deputy Director for Intelligence
SUBJECT Thoughts on North Korea
1. The "no military retaliation" policies following
the Pueblo and EC-121 affairs can be interpreted as North
Korean successes. However, U.S. policymakers should not
overlook the fact that North Korea's policy of belligerence
has been expensive to her, in economic terms. She is semi-
isolated both within the Free and Communist Worlds. I
submit the following in support of this conclusion:
a. Since 1961, North Korea has received no
economic credits or grants from the USSR, Eastern
Europe, or Communist China. Likewise, she has
received no medium or long-term credits from
Western nations despite vigorous attempts to do
so. The adverse effect on imports needed for
development purposes is obvious, and there has
been a significant slowdown in economic growth.
b. Kim II-song's imports from the USSR of
military equipment are probably mostly on credit.
It is not possible to determine what portion of
these imports were provided as aid deliveries and
what portion the North Koreans paid for on current
account. However, whatever the terms, there has
been an immediate diversion of domestic investment
resources to military uses (construction and
extension of airfields and naval facilities).
c. As a consequence of the military build-up,
the economic goals of the five-year plan set for
1967 were postponed to 1970, and most of these are
not going to be met. In contrast, South Korea's
economic development has blossomed forth, bene-
fitting most recently from heavy Japanese private
investment. North Korea imported less machinery
Approved For Release 2001/03/04: CIA-RDP80B01439R000500110028-7
 Approved- For Releas 2001/03/04 d . 80B01439 000500110028-7
and equipment in 1961-67 than South Korea imported
during the single year of 1967. In the post-Korean
war period of the early 1950's, it was said that the
South was left with the people and the North with
the industry. But given the trends of the 1960's, in
a few years the South will not only have most of the
people, but the lion's share of industry as well.
2. It would be unfortunate if the U.S. took any
action against North Korea which prompted the resumption
of the subsidized flow of industrial machinery and
equipment that the USSR (and to a lesser extent, Communist
China) furnished during the later 1950's to the North.
Things on the Korean peninsula have been going pretty
well. Hopefully, we can have some effect on our allies
to continue to deny credits to North Korea.
25X1A
EDWARD L. ALLEN
Director
Economic Research
Approved For Release 2001/03/04: CIA-RDP80BO1439R000500110028-7