Some 20 million North Koreans now rely on the black market as the regime's rationing system deteriorates, the South Korean government believes.
Seoul has apparently decided to stick to its North Korea policy in the future, which it believes is slowly bringing about change inside the North. "We estimate that only about 4 million of the North's total population of 24 million live on government rations but most of the remaining 20 million people rely on the black market," a senior South Korean government official told the Chosun Ilbo Monday.
"North Koreans who don't get rations regularly are surviving through the booming underground economy. The regime has no choice but to leave it intact for fear of riots and complete loss of control."
The two previous administrations gave the North 500,000 tons of food and 300,000 tons of fertilizer every year, but the Lee Myung-bak administration has suspended aid because the North continued provocations. "All this has contributed to breaking down the North's rationing system and a collapse of the middle class," he added.
Kim Sung-min of defector station Free North Korea Radio said, "The government seems to believe that only about 1.4 million North Korean soldiers and some 2.6 million Pyongyang residents can depend on the government rations but regular rations have stopped for everyone else."
Based on this judgment, Seoul continues to turn down the North's demands for dialogue since the sinking of the Navy corvette Cheonan and the shelling of Yeonpyeong Island last year. The government has concluded that the North will have to change its attitude now that the rationing system has nearly broken down and the underground economy is booming as North Koreans try to scrape a living.
"Change is happening in the North and the regime is calling for talks because Seoul has implemented a consistent North Korea policy," a government official claimed.
The North has been pushing for talks since the beginning of the year but the South's response has been lukewarm, insisting that Pyongyang must apologize for sinking the Cheonan and shelling Yeonpyeong and take credible steps toward denuclearization.
In an interview in the U.S. last month, Chun Young-woo, the senior presidential secretary for foreign affairs and national security, mentioned the possibility of the North's collapse. He said the "internal energy" for change in the North is becoming stronger.
Seoul believes that the black market has been booming since the botched currency reform in late 2009. At the time, there was unprecedented resistance for North Koreans who became newly wealthy from open-air markets, and Pak Nam-gi, then director of the Workers Party's Planning and Finance Department, was reportedly executed to take the fall for the debacle.