Kim Jong Il, the reformer?

Bradley Martin, author of Under the Loving Care of the Fatherly Leader, writes in the Global Post:

Now that food shortages reportedly have forced North Korea to reverse its crackdown on capitalist-style markets, more systematic reforms for its collapsed economy may not be far behind.

The markets policy reversal came May 26 in directives issued by the cabinet and the ruling Workers’ Party to subordinate organizations, according to a report by the Seoul-based newsletter North Korea Today, which gets its information from officials and ordinary citizens inside the North. “The government cannot take any immediate measures” to relieve a food shortage that is “worse than expected,” the newsletter quoted one of the directives as saying in explanation for the policy change.

The same authorities only late last year decreed a sudden currency revaluation that crippled the “anti-socialist” markets, where stallholders had been trading for individual profit, by confiscating the traders’ wealth. The new decrees bless and deregulate what’s left of the markets, which have shrunk and in some cases closed completely in the interim, in the hope that market trading will keep people from starving. And the directives instruct managers of state-run enterprises to pursue lucrative deals — especially in foreign trade — that could help feed their employees.

This could all turn out to be the big event that finally pushes the very reluctant leadership into a multi-year campaign of serious reforms of the sort that began decades ago in Vietnam and China, according to Felix Abt, a Swiss involved in North Korean joint ventures in pharmaceutical manufacturing and computer software.

“Given an industrial stock and an infrastructure beyond repair, and the impossible task of maintaining a huge army, economic reforms appear unavoidable in the very near future,” Abt, a former president of Pyongyang’s European Business Association, wrote in an email exchange.

“It looks intriguing and it reminds me of Vietnam’s history of reforms,” said Abt, who did business for years in Vietnam before going to Pyongyang and recently has moved back to Vietnam while maintaining his involvement in North Korea.

“The Vietnamese economic situation looked dire at the beginning of the 1980s,” he explained. “Nguyen Van Linh, party secretary in Ho Chi Minh City, favored moderate economic reforms. He tried too early, lost his job and left the political bureau in 1982.

“Le Duan, secretary general of the Communist Party, was categorically against any economic reforms. He died in 1986, the year of the five-year party congress which brought Nguyen Van Linh back and elected him as his successor. The new party secretary general immediately launched the Doi Moi policy — ‘reforms.’”

Abt ventured the lesson that triggering reforms “takes something big like the death of a leading politician” in Vietnam — or, in North Korea, a “ruinous” currency revaluation.

Not every foreigner who has had firsthand economic dealings with North Korea is convinced the recent events constitute that trigger. Some worry that U.S.-led sanctions could nip any flowering of capitalism in the bud.

“The problem is still U.S. Treasury’s attitude,” said one such foreigner, who asked not to be identified further. Treasury Department officials began working several years ago to take North Korea “out of the international banking system,” discouraging trade, he noted.

Some U.S.-sponsored sanctions subsequently were eased in an effort to persuade Kim Jong Il to negotiate away his nuclear weapons capability, but after those talks went nowhere — and especially after North Korea allegedly torpedoed a South Korean warship earlier this year — enthusiasm for compromise cooled. Recent reports say Washington is moving toward aggressively strangling cash flow into the country.

There is also the argument that Kim believes he cannot afford to reform the economy because it would let in information and influences that would undermine his family’s rule by letting his isolated subjects learn that the rival South Korean system works much better.

According to Abt, one answer to both concerns could be China, which “will provide all the support necessary to the DPRK party and government to enable economic reforms without regime change.” He used the abbreviation of Democratic People’s Republic of Korea, the country’s official name. “The DPRK may expect support from other quarters, for example, the European Union, too,” he said.

“I think the dilemma of the leadership — economic upsurge versus the inflow of ‘subversive’ system-destabilizing information and ideas, particularly regarding the South — can be overcome with the necessary Chinese support,” Abt said. “Though the division of Korea can only be compared with that of Germany before 1990, China’s division — capitalist Hong Kong, capitalist Taiwan — was a sort of challenge to Deng Xiaoping and successors, too, but they learnt to manage that quite well.”

Read the full the story here:
Analysis: Kim Jong Il, the reformer?
Global Post
Bradley Martin
6/24/2010

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  • NDiv

    Well, the sanctions do work. They lessen N.Koreas ability to build nuclear bombs. The goal is not to get them to adopt capitalism…

    This is something that always confounds me. People attribute these goals to sanctions they can never meet like affecting internal political liberalization or something. Thats not the point. They are not imposed to get N.Korea to become capitalist. If anything, adopting a more market based system is even worse as it will make their economy more efficient and allow them to have a more powerful military program. Economic strength also increases the regimes legitamacy, it was afterall the economic breakdown of the 90s that resulted in the beginings of real cross border exchange and trade.

  • Alex

    I’m not sure this article really argues that US-led sanctions intend to create internal economic reform – instead, the article appears to argue that US-led sanctions make it near-impossible for the DPRK to function in any globalised fashion. I would agree. I would, however, disagree with the notion that US-led sanctions are designed solely to “lessen N.Koreas ability to build nuclear bombs”.

    The reality is that the US-led sanctions restrict DPRK revenue from global trade and investment, meaning it is even harder for the country to feed its citizens (though which citizens would be fed is, obviously, a matter to question). The problem, in essense, is that Western nations either starve DPRK citizens along with the elite, or allow the elite to support itself, its citizens, and its goals. The dichotemy is clear. The US has obviously selected its preferred method – though that of Canada, Europe and North-Africa remains less-clear.

    – Alex, Seoul

  • NDiv

    Yes, the reality is that US-led sanctions restrict DPRK revenue from global trade and investment. That’s the point. I don’t know how trade or revenue relates to the ability of the North Korean government to feed it’s citizens. AFAIK They don’t even pay for any of the food they receive. The regime only uses hard currency buying loyalties of the elites and the military.

    They would still get food aid, from the US no less had Kim not kicked out the NGOs back in 2009. I suppose we could still offer them truckloads of food and hope it arrives where it’s needed, but the history of that in North Korea is pretty bad.

    I suppose Kim is really holding his own citizens hostage. If we sanction him, he will actively REFUSE food aid and starve his own citizens. So I suppose you’re right, we either let them do what they want, or Kim starves his populace. You seem to think we should pick the former option. I think we should sanction him to keep his military as weak as possible, while offering food aid to help his citizens (and making sure he doesn’t turn around and resell it).

  • Alex

    My apologies for the delayed response.

    This is actually something I find very interesting – I’m currently researching how US policy impacts on development in the DPRK. Product of said research forthcoming (… one day!)

    I would agree with many of your points. However, your argument argues itself out: “I suppose we could still offer them truckloads of food and hope it arrives where it’s needed, but the history of that in North Korea is pretty bad” and “I think we should sanction him to keep his military as weak as possible, while offering food aid to help his citizens”. As you, yourself say… the history of the DPRK makes ‘feeding the citizens and starving the military’ almost, if not completely, impossible. Let us face facts – the DPRK is a country in which -history repeats-.


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