North Korean Economy Watch

Nautilus Institute
Bryan Port
1/17/2007

North Korea’s recent nuclear test clearly demonstrates that the Korean peninsula is the crux of Asian Security. The Democratic People’s Republic of Korea (DPRK), North Korea’s official name, poses a range of challenges. Though the nuclear challenge appears to be the most extreme and urgent, developments in the DPRK could lead to violent conventional military spasms or humanitarian disaster, each with consequences as grave as those posed by DPRK weapons of mass destruction (WMD). Regardless of the challenges, Korea’s future has significant ramifications for the balance of power in East Asia and by extension on American security and prosperity. One day, DPRK leader Kim Chong-il will pass the keys to the kingdom and the nuclear launch codes to a successor. Kim’s choice and how he goes about the succession process will impact East Asia for decades and consequently requires significant consideration in US strategic planning.

Effective foreign policy requires an in depth understanding of the historical, social, and cultural context of other nations, their leaders, and their people. Though the DPRK is opaque, much is known about its history and even its people. From what we know we can develop significant insight. However, the balance of what we don’t know requires that we conduct considerable alternative analysis to define a range of possibilities to facilitate effective planning and policy development. Alternative analysis is imperative regarding the succession issue. Though it is nearly impossible to confidently predict who Kim will choose to succeed him, much less the successor’s prospects, analysts can define a range of plausible scenarios which can play a positive role in strategic planning, and leave the US a fighting chance of avoiding strategic surprise.

DPRK CONTEXT. Before analyzing scenarios for DPRK leadership succession, one must first consider the context and circumstances of the DPRK. The dearth of information available on the DPRK and its leaders can lead analysts to over emphasize a given aspect of the DPRK and through this narrow prism turn the DPRK into a caricature. We commonly see this in how the media and others portray Kim Chong-il. Analysts are also at risk of mirror imaging or applying one’s own cultural and historical frames of reference to the DPRK.

The DPRK is a deeply stratified society. An individual’s place in DPRK society is based largely on one’s family history (Songbun) and political reliability. Those with blood connections to Kim Il-sung or those who fought with Kim Il-sung against the Japanese (partisans), and their offspring, comprise the majority of the DPRK’s elites. It is rare for someone without this background to ascend to elite status in the DPRK. Some may gain a certain level of stability, power, or privilege, for example members of the military or scientists, however without the right bloodlines they will not climb to the pinnacle of power in the DPRK.

Despite its societal stratification, there is a shared societal and historical perspective that must be taken into account when thinking about North Korea or North Koreans. Understanding what the DPRK is, or understanding its leaders, requires placing oneself in the historical mindset of a North Korean. The DPRK is the most Orwellian society the world has ever known. The DPRK is not a communist nation; certainly not in the sense of Marx or the perversion of Marx that was the Soviet Union. North Korea has never known a pluralistic political system, much less democracy.

For nearly its entire history Korea has been a feudalistic society, constantly on the edge of survival at both the societal and individual level. Korea has been under constant threat of invasion. Koreans have struggled merely to subsist, with bouts of hunger or famine a common occurrence. Even in South Korea, stability, to say nothing of prosperity, is a recent development. It is only in the last 20 to 30 years that South Korea moved beyond its history.

Even for the most elderly of today’s North Koreans, the historical context is Japanese colonization, Korean War, emerging totalitarian state under Kim Il-sung, relative stability, Kim Chong-il’s accession to power, famine, and economic depression. North Koreans lack outside information and thus lack the basis for comparative thought about their society. Of course, comparative thought about politics presumes the freedom, sustenance, energy and time required to engage in political thought or activity. Only the elite in the DPRK are positioned to have the luxury of political thought, and they are the stakeholders in the current system.

Though it is difficult to understand from an American perspective, many in the DPRK, including its leaders, do genuinely fear the United States and for that matter other foreign powers including Japan and perhaps even China. This is based on Korea’s history of being subject to multiple foreign conquests and leads to the desire for self-sufficiency. Kim Il-sung very effectively manipulated this historical perspective and Kim Chong-il continues to do so.

DPRK CIRCUMSTANCES. The DPRK is in dire straights. A crumbling infrastructure, local ad hoc solutions to problems and corruption are the common denominators of government, economy, and society. Resources, privileges and even security are obtained through barter or by outright buying the services of a corrupt official. Almost everyone is corrupt from the lowest private in the Army to the senior members of the Korean Workers Party.

The DPRK remains a pervasive police state with a population that lacks even the most rudimentary elements of a functioning civil society. Though corrupt, the security services are powerful. While individuals within the security services are “for hire,” when the regime is threatened the security services can mobilize quickly and effectively against individual or group opposition, real or perceived.

Still, KCI cannot take for granted the continued effectiveness or loyalty of the security services. Although Kim has multiple security services to perform checks and balances, eventually the deterioration of ideological integrity, to say nothing of ruinous state of physical infrastructure and corruption, are emboldening entrepreneurial security personnel. More mischief is possible, and emboldened individuals are more likely to seek out other like-minded individuals, at first for profit, and then perhaps for power.

At this point it appears that members of the security services are happy to simply use and abuse their positions to survive, or in the case of senior members enrich themselves. However, the security services as a whole, and their individual members, will face tough questions about their futures deriving from succession. Some may still consider a successor in ideological terms. Is the successor worthy? Pure enough? Others may consider the successor in terms of their position in the security services and the maintenance of their privileged positions in society. Is the successor capable enough? Will they be demoted or purged? How the security services react to the successor issue will be a key determinant to the successful installation of a successor, and ultimately the stability of the DPRK.

DPRK ELITES. North Korea’s elites face a paranoid, schizophrenic existence. This is not to suggest that KCI, or other DPRK elites, suffer from mental disease. Though it is not unreasonable to believe that like people everywhere, even leaders, that some North Korean leaders suffer from mental illness. Rather, elites in the DPRK have much to loose in the event of political change and corresponding to the stakes are at best anxious and likely paranoid about maintaining their positions. The only person who is secure in his position in the current regime is Kim Chong-il.

Chang Song-taek is married to Kim Chong-il’s younger sister Kim Kyong-hui. Until 2003, Chang was considered the second most powerful man in the DPRK, and held the title of first deputy director of the Organization and Guidance Department. In 2003 KCI had Chang arrested. No one is certain as to the reasons for Chang’s fall from power, but speculation exists that Chang had been too overt in his support of Kim Chong-il’s oldest son, Kim Chong-nam, in the race for succession. Even though Chang has been rehabilitated and returned to a position of power, his situation shows that no member of the DPRK elite is secure. The security apparatus is ever present and mistakes often lead to a concentration camp or death.

North Korea’s elites face incredible challenges and pressure. They must at once protect their own interests and also take actions that preserve the regime, which is the source of their relatively privileged existence. These two goals are often at odds, and may even be mutually exclusive. North Korean elites must apply the filter of Juche ideology to their actions and/or be prepared to explain or justify actions in ideological terms.

Elites in the DPRK share in common with elites everywhere a calculating nature and wish to position themselves and their allies to survive and prosper in the future. For this reason, it is imperative for elites in the DPRK to analyze the succession issue, and conduct their affairs so as to maintain favor with KCI, but also be at the vanguard of a successor’s regime.

Some elites may reach the conclusion that Kim Chong-il’s successor has little chance of consolidating power. Such a determination requires not only confidence in predicting who KCI will choose, but also mandates determining who will be powerful enough to supplant the successor. Following is the even trickier task of currying favor with KCI, the individual they believe KCI will choose to succeed him, and the individual who they believe will actually take power.

At the top of the elite and the pinnacle of the succession issue is Kim Chong-il. Almost all of the analysis of the succession issue assumes that Kim will choose a successor and that it will be one of his sons. However, Kim has surprised us in the past and will likely do so again. Before moving on to consider a range of options available to KCI in terms of choosing a successor, it would help to more specifically consider the context and circumstances of Kim Chong-il.

KIM’S CONTEXT AND CIRCUMSTANCES. Even though we are not really able to understand how KCI views the world, we can roughly understand the context and circumstances in which KCI exists. Kim presides over a failed, if not collapsed, state. While North Korea’s military remains intact, it is not the existential threat to South Korea that it once was. Kim’s security services are effective, perhaps too effective. Kim must have multiple security services, not to produce the best intelligence or efficiently secure the state, but to watch one another.

China, North Korea’s one remaining ally of any significance, supports the DPRK for negative reasons. China doesn’t want to deal with the humanitarian consequences of a complete DRPK collapse. KCI and other DPRK elites must consider that China has significant potential to play an active role in the DPRK’s succession dilemma, and has ample motive to do so. Still, China is unlikely to be overt and direct in the application of its influence, knowing that doing so could prompt a backlash. However, China can indirectly bring its influence to bear on who KCI chooses as successor by providing access to resources and senior Chinese leaders to select North Korean elites. It is also likely not lost on DPRK elites that China has the capability to more directly intervene in North Korean politics should its vital interests be threatened.

South Korea is in much the same position as China in that it does not wish to deal with the humanitarian consequences of a complete DPRK collapse. However, South Korea has a significant financial stake and also a much more “personal” stake in the DPRK’s future. Collapse or violent military spasm on the part of the DPRK will be hugely costly to the South both in financial and human terms. Due to North Korea’s desperate situation, one cannot rule out that the DPRK could lash out, but truly North Korea’s only effective remaining leverage is the gun it holds to its own head (collapse) and the nuclear tipped missiles it claims to point elsewhere.

Although other countries disagree with US policy toward the DPRK, this does not mean they support the DPRK. Unfortunately for Kim, Japan, the one country that is most able to help the DPRK in the short term with cash and resources, is not inclined to do so for a variety of reasons, including the DPRK nuclear and missile threat to Japan, DPRK international criminal activity, and past DPRK abductions of Japanese citizens. About the only thing that may motivate Japan to reconsider its stance is the prospect of normalizing relations in the near-term to pay out its World War II reparations prior to a collapse of the DPRK to avoid potentially more responsibility in the event of a collapse and absorption of the North by the South.

KCI likely understands the Chinese, Japanese and South Korean perspective. Thus KCI likely appreciates not only the dire domestic straights of the DPRK, but also its grim international position.

NOT HIS FATHERS SON. Though Kim Il-sung (KIS) is not the man that DPRK propaganda portrays him to be, and though he is guilty of horrible crimes against humanity, Kim Il-sung did fight the Japanese and suffered in doing so. Through cunning and calculation, as well as brutality, KIS led the DPRK into existence. For much of the first half of its existence, the north outperformed the south. After the Korean War, life improved for many North Koreans under KIS and there was relative peace and the possibility of future prosperity. Still in spite of his power and the genuine love and respect of many in the DPRK, Kim Il-sung spent the better part of 20 years preparing to transfer power to KCI.

Kim Chong-il lacks the credibility and stature of his father. KCI never served in the military, much less fight in a war. Though he has displayed cunning and brutality, he did not overcome challenges on par with those faced by his father. Instead, whether it was completely his fault or not, since KCI assumed power in 1994, the DPRK has suffered military decline, economic failure, famine, and even in at least one case, organized resistance from the segment of society it most relies on, the military.

KCI faces significant challenges with respect not only to the succession issue, but generally with respect to running the DPRK. Conventional analysis assesses that KCI will choose a successor and that he will choose his second son Kim Chong-ch’ol. There is nothing that starkly contradicts the conventional wisdom, however, there is nothing that boldly confirms it either.

CONVENTIONAL WISDOM. There are three acknowledged sons of Kim Chong-il. In order from oldest to youngest, KCI’s sons are Kim Chong-nam, Kim Chong-Ch’ol, and Kim Chong-un. The conventional wisdom holds that KCI will opt for one of his sons to succeed him, probably Kim Chong-ch’ol (KCC).

Until embarrassing his father in 2001 by being arrested in an attempt to visit Tokyo Disneyland, KCI appeared to favor Kim Chong-nam, even though there were few outward signs that a formal succession process had begun. Kim Chong-un is not considered a serious contender, if for no other reason than his age and the presence of two older brothers.

In the past year or so Kim Chong-ch’ol (KCC) has emerged as the front-runner. Indicators include Workers Party of Korea Central Committee Secretariat Instruction No. 0101 (Reported in South Korean Weekly Chosun magazine March 2006). According to this instruction, Kim Chong-ch’ol is the party’s nerve center.

There are several reports, conflicting in detail, but consistent in stating that KCC occupied a formal government position and that he has advanced to a more senior position. Pins and portraits of KCC have appeared, and the KWP has issued instructions on their wear and display. Additionally, some of KCC’s associates accompanied KCI on trip to China to observe economic development, and KCC himself has been in Europe on official business.

Even if KCI has resolved to anoint KCC as successor, that is not a guarantee that the succession itself will go smoothly or that KCC will be able to consolidate power. Many segments of the power elite will view KCC as weak. So long as Kim Chong-il remains a force to be reckoned with, opposition to KCC as successor would be controllable. However, as Kim becomes infirm or dies, challenges to KCC will mount. This will force KCC to share power or do the bidding of factions whose support he requires, presumably the security services or military.

Knowing that KCC may or will not be able to go it alone, KCI may opt to install KCC as ruler of the DPRK, but only as a front man for others who will actually wield power. There may be liberal elements of the power elite who favor Chinese like reform. Should they support KCC, they might be able to begin reviving the DPRK, particularly if they are willing to take steps to gain legitimacy in the international community. On the other hand, factions of the DPRK elite pessimistic about their status in a reformed DPRK, concerned that KCC is too weak to control factions hostile to them, or critical as to KCC’s ability to control the country as could seek to overthrow KCC or force him to keep the DPRK on its present course.

There are other mo[r]e Machiavellian possibilities. KCI may be using KCC to flush out dissent, in effect using KCC as a lightening rod. Due to Kim’s advancing age, questionable health, and the poor condition of the DPRK, many elites are likely questioning their future prospects in terms of not only prosperity, but also basic stability and even survival. At some point, for example if KCI should become infirm or seriously ill, the concerns of the DPRK elite could reach a tipping point. It would be prudent to flush out the most disaffected among the North Korean elite now, rather than later. To this end KCC could serve as a useful target and distraction.

ALTERNATIVE ANALYSIS. KCI in his switch from Kim Chong-nam to Kim Chong-ch’ol demonstrated that he is flexible with respect to his choice of successor and has not taken any irreversible steps in designating KCC as successor. However, this will be the 2nd succession in the DPRK and thus there is little ground to talk about patterns or precedent. Conventional wisdom has often not held when analyzing the DPRK, making alternative analysis imperative.

It is important to remember that Kim Il-sung (KIS) spent 20 years preparing for KCI to assume power, and still upon Kim Il-sung’s sudden death in 1994 it took several more years for KCI to consolidate power. Between KCI’s health and the challenges faced by the DPRK it is not at all certain that KCI has 20 years to lay the foundation for one of his sons to assume power, assuming that this is what KCI actually intends and that it is possible to accomplish another hereditary transfer of power.

If not Kim Chong-Ch’ol then who? What other options are there for KCI? Is the choice entirely Kim Chong-il’s to make? KCI lacks the stature of Kim Il-sung and the DPRK faces significant challenges. Even Kim Il-sung faced resistance in installing his son as ruler. KCI will face challenges greater than those faced by his father, and from a weaker position in terms of his credentials, the current situation in the DPRK, and his very legitimacy.

North Korean society is still rooted in Confucian values, even though those values are distorted by North Korea’s ideology (Juche). Thus other Kim family members warrant consideration, including Kim Chong-il’s daughter Kim Sol-song, his half brother Kim P’yong-il, and Chang Song-t’aek or Chang’s children.

Kim Sol-song is Kim Chong-il’s daughter by Kim Yong-suk (Kim Chong-il’s official wife and the only one recognized by Kim Il-sung). There are reports that she currently handles important aspects of her father’s life, including his personal security. Even if not succeeding KCI she could act in a powerful supporting role, even key decision making role, to Kim Chong-ch’ol, or other successor.

Kim P’yong-il is KCI’s half brother. By some accounts, Kim P’yong-il is everything that KCI is not. P’yong-il was an active duty military officer that had genuine respect from many in the military. It is not entirely clear how KCI edged him out as successor, but it is conceivable that Kim Il-sung favored KCI, viewing P’yong-il as a threat. It is also likely that P’yong-il is not ruthless enough to rule the DPRK. Since 1988 P’yong-il has served in a series of ambassadorships, primarily in Europe.

Bearing in mind the North Koreans mindset, P’yong-il would make a good transitional figure. He carries the Kim name, and perhaps continuity with Kim Il-sung’s interrupted dreams for the DPRK. While he would certainly face opposition from segments of the elite, P’yong-il has a huge advantage in that he would likely garner the support of the military. There is a good chance based on his personal background that P’yong-il would change the course of the country. Of course KCI won’t choose P’yong-il, but in the event that Kim fails to entrench a successor, waits too long, or simply does not choose, P’yong-il becomes viable for segments of the elite concerned about their future status.

Chang Song-t’aek is married to Kim Chong-il’s sister Kim Kyong-hui and has powerful family ties to the military. Though recently purged and rehabilitated, Chang has been and is now again a powerful player in the DPRK. Even if he is unlikely to succeed KCI, Chang can still influence the succession issue. KCI might have purged Chang due to Chang’s view on the succession issue, but a rehabilitated Chang will likely not have changed his mind on the subject, but now knows to be more careful.

Chang’s children carry as much of Kim Il-sung’s blood as the children of KCI. There are not presently any signs that Chang’s children are under consideration, at least as far as KCI is concerned. However, they are out there and should KCI loose control over the process, or should other alternative scenarios play out, Chang’s children are viable alternates, particularly as a figure head for a king maker.

BEYOND FAMILY. There are other forces beside Confucianism at work in the DPRK, thus requiring consideration of other succession scenarios including king maker/power sharing, alternate successors, and even that Kim may have no intention of choosing a successor.

Realizing that any one individual is not likely to be powerful enough to rule, KCI may intend to set up a kingmaker(s) to support his successor. KCI may even prefer that his successor require behind the scenes support. If his chosen successor will be too weak to supplant him, KCI can be confident that he can continue to exercise power out front or behind the scenes until his death. Further, KCI could co-opt some of the most effective challengers to his successor and reward them for present good deeds, helping to ensure loyalty.

It is conventional wisdom that KCI desires to anoint one of his sons, or at least a relative, as the next leader of the DPRK. What if he doesn’t? There are scenarios where it is not beneficial to KCI to see one of his blood relatives assume power.

KCI is almost certainly aware that his sons might not be competent enough or ruthless enough to run the DPRK. Even if KCI is still alive and active, he may be unable to stave off his opponents once a successor is appointed or operating. This could have dire consequences for KCI.

History weighs heavily on the minds of dictators, and the fate of other dictators, such as Romanian leader Ceausescu or Cambodia’s Pol Pot likely weigh on Kim’s mind. KCI could seek a successor with the requisite competence to ensure that he doesn’t meet a similar fate. This may lead Kim to choose someone other than his sons. Such a choice, though not comporting well with Confucian values, might ultimately serve KCI well.

Moving further along the spectrum of alternative analysis, what if the most prudent move for KCI is to not name a successor at all. The mere act of naming a successor creates a focal point for opposition. Ironically, at the same time, naming a successor could also set of[f] infighting to curry favor with the chosen successor at Kim’s expense drawing from Kim’s power base. Those patient and shrewd enough could hold fast making a power play at a point in time where KCI is weakening, but the successor is not strong enough to consolidate power.

Alternative power bases might not matter if the successor is not competent enough to consolidate power. The weakened state of the DPRK and Kim’s lack of legitimacy compared to his father could lead Kim to plan to die in office or abdicate at some point to avoid empowering and facing potential adversaries while still in office; something which could lead to his own demise.

One final possibility deserves consideration. KCI could die suddenly as did his father. For the US and the DPRK’s neighbors, the key concerns remain the same and center on DPRK WMD and the possibility of extreme instability that could result in outward military spasms or complete collapse.

Under a sudden death scenario, whatever steps had been made toward anointing a successor may not matter. Opponents to KCI’s choice may likewise be neutralized. It could all boil down to which of the key players learns of KCI’s death first, and whether or not they can control the news, acting quickly to capitalize on their first mover’s advantage. A particularly ruthless individual could quickly act against the key players most threatening to them, changing the whole power dynamic, regardless of whether they are ultimately successful in assuming power. It is difficult to analyze what KCI might do in terms of a deliberate succession process. It is close to impossible to analyze how a sudden death scenario would play out.

The recent nuclear tests serve to highlight the importance of the succession issue to the US and the DPRK’s neighbors. While external reasoning may have lead KCI to test a nuclear device, it is more likely that internal considerations are driving decisions not only on WMD development, but also on the issue of leadership succession in the DPRK. It is even possible that KCI conducted the nuclear test to shore up his legitimacy by doing something his father never managed to accomplish. Possibly due to concerns over succession or just internal dynamics, KCI may also have conducted the tests to strengthen his domestic powerbase and position with the military.

No matter what KCI decides in terms of succession, the consequences could include a twenty something year old leader with nuclear weapons or a collapsed state ultimately resulting in a re-unified nuclear Korea. Regardless of how the succession issue plays out, Korea will continue to be integral to US and East Asian security and prosperity.

Aidan Foster-Carter
Nautilus Institute
1/16/2007

Everyone is famous for 15 minutes, at least according to the late American pop artist and cultural icon Andy Warhol.

For Paek Nam Sun, that was literally true. North Korea’s foreign minister since 1998, who has just died, hit the headlines just once in all his 77 years - and then only on the inside pages, mainly of the regional press in Asia.

Coffee with evil in Brunei

That was in August 2002, when for a quarter of an hour Paek sipped coffee with his rather better known US opposite number at the time, Colin Powell. The place was Brunei; the occasion, the ASEAN Regional Forum (ARF).

Senior American and North Korean leaders rarely meet at the best of times, which this was not. Earlier that year, President George W Bush had famously labeled Kim Jong Il’s regime, along with Iran and Iraq, as part of an “axis of evil”. So for his Secretary of State to dally thus with the enemy, even briefly, raised eyebrows in some quarters.

We know now, as suspected at the time, that Powell was keen to engage North Korea. But vice-president Dick Cheney was dead against, and Cheney had Bush’s ear.

Any hopes of renewed dialogue were dashed later in 2002. Accused by Washington of a second, covert nuclear programme, North Korea restarted its first one precipitating a crisis that continues, climaxing (so far) in its testing a nuclear device on October 9.

Paek low in the pecking order

With the nuclear crisis ongoing, we might have expected to see more of Paek Nam Sun. But they do things differently in North Korea.

A senior diplomat (and sometime ambassador to Poland) who had also been active in early contacts with South Korea since the 1970s, as foreign minister the genial Paek was a largely ceremonial figure: trundled out for occasions like the ARF. As such he was in Kuala Lumpur last July, where he reportedly also had medical treatment.

Serious negotiations, on the other hand, were and are the province of Paek’s nominal deputies: two above all. The better known is deputy foreign minister Kim Kye Gwan, who heads Pyongyang’s delegation to the on-off six party nuclear talks. A skilled and confident negotiator, Kim even gave an unscripted if brief press conference after the latest round of talks, held in Beijing last month, ended inconclusively.

But the real heavy hitter is first vice foreign minister Kang Sok Ju. He it was who negotiated the October 1994 US-DPRK Agreed Framework (AF); defusing an earlier North Korean nuclear crisis (plus ca change), back in the Bill Clinton era, which in mid-1994 had come perilously close to unleashing a second Korean War. If the six-party process ever gets anywhere, which is doubtful, Kang will be wheeled on again. For now, the more junior Kim Kye Gwan does the honours.

Puzzling pseudonymy

So Paek Nam Sun’s passing will hardly send a tremor through North Korea’s foreign policy. But it does shed light on the curious way they order matters in Pyongyang.

For one thing, what was his real name? The man who first showed up in the 1970s for Red Cross talks with South Korea was known as Paek Nam Jun. But after he became foreign minister, the J mysteriously morphed into an S.

Peculiar, but not unique. Ri Jong Hyok, Pyongyang’s current point man for ties with Seoul, was Ri Dong Hyok in the 1980s when he headed North Korea’s quasi-embassy in Paris. There are several other such cases. It’s hardly a disguise, so what gives?

(En passant, the French connection is intriguing. Nominally the last EU state to resist full recognition of the DPRK, in practice France has hosted a North Korean legation since the 1970s. And both Kang Sok Ju and Kim Kye Gwan majored in French: the traditional language of international diplomacy.)

Dying off

Another oddity: North Korean elites hardly ever retire. Like Paek, they mostly die in post, often at an advanced age. Communist regimes tend to gerontocracy: think China, at least until recently. But North Korea has taken this, like most things, to extremes.

Since Kim Jong Il succeeded his father Kim Il Sung as leader in 1994, the nominally ruling communist party, the Worker’s Party of Korea (WPK), seems to be frozen - at least at the top. No new appointments to the Politburo have been announced in over a decade. Instead its ranks have been thinned by the remorseless march of mortality.

Latest to go was Kye Ung Tae, who as KWP secretary for national security wielded far more power than Paek Nam Sun. Kye died of lung cancer on November 23, aged 81. That leaves just six full Politburo members. One anti-Japanese guerilla veteran and honorary vice president Pak Song Chol passed 93 last September. Three others are over 80. Titular head of state Kim Yong Nam turns 79 on February 4, just before the “dear leader” Kim Jong Il a mere lad by comparison reaches his 65th birthday.

That would be retiring age in most normal countries. But Kim Jong Il has yet to name a successor, among several competing sons and other contenders. His health is said to be not of the best although such rumors have proved premature in the past.

A nuclear North Korea is indeed a worry, but it is not the only one. The world, and even Pyongyang, will take the death of Paek Nam Sun (who?) in its stride. But Kim Jong Il could go just as suddenly. In that case all bets for North Korea would be off.

Yonhap
11/23/2006

North Korea’s top energy policy is to develop wind energy in a three-stage project planned out to 2020, the country’s officials said in an Asian conference earlier this month.

They claimed they have turned to building hydraulic power stations after the construction of a light-water reactor promised by the international community was suspended.

North Korea is a participant in the Asian Energy Security Workshop sponsored by the San Francisco-based Nautilus Institute and Tsinghua University in China. This year’s meeting was in Beijing on Nov. 5-7, and papers from the conference were recently posted last week on the Nautilus Web site.

South Korea, Russia, China, Japan and Mongolia were also participants.

The paper submitted by the North Korean delegation said building up the wind energy sector is “considered a top priority for policymakers, technicians and managers” in Pyongyang.

North Korea would first construct a prototype wind farm with a 10-megawatt capacity by the year 2010, then build three main wind farms with a capacity of 100 megawatts by 2015, the paper said.

In the third stage ending in 2020, onshore and offshore wind farms would be built throughout the country, it said.

North Korea has already received outside assistance for its wind energy projects, including from Denmark, which provided wind turbines that were installed along the country’s west coast in 1986. The Nautilus Institute funded the installation of a standalone wind energy system in 1998.

The paper cited fund shortages and technological barriers in pursuing the policy, but said “these problems will be gradually solved through the correct policy of the DPRK” and cooperation with the international community.

Ri Yong-ho, an official at the Pyongyang International Information Center of New Technology and Economy, said his country turned to hydraulic power stations after work on the light-water reactor was suspended.

Under the 1994 Geneva Agreed Framework, the North was to receive two reactors financed by the international community in exchange for freezing its nuclear activities. The agreement fell through after Pyongyang was accused of hiding a secret nuclear weapons program.

“To cope with this situation, the DPRK began to increase government investment in the construction of hydraulic power stations,” Ri said in his presentation.

“Our future direction for securing energy is the technological upgrading of existing thermal power plants to increase energy conversion efficiency, further construction of hydraulic power stations to raise its proportion, and taking positive measures to develop and use renewable energy, including wind power,” he said.

But no new plants are being built for the time being, Ri said.

The official said Pyongyang was also trying organic matter energy, particularly methane gas.

“For this purpose, professional research institutions for producing methane gas were organized and set to work to continuously renew and develop the technology of gasification and introduce it to productive sites,” he said.

Nautilus Institute
Nathaniel Aden
August 2006

Paper here: Nautilus-Aden.pdf
web link here

Abstract:  China is North Korea’s largest international trading partner. Since 1995, energy and fuels have dominated bilateral trade between allies.  North Korea is a net importer of Chinese crude oil and oil products; however, it became a net exporter of electricity and coal to China in 2003.  Whereas North Korean coal and electricity exports are sold at sub-market “friendship prices,” Chinese coal and oil products have been sold to North Korea at premium prices.  Over the past ten years, North Korea’s imports have become increasingly energy-intensive, while exports have become more labor-intensive.  Chinese customs data suggest that Beijing is taking a pragmatic, market-oriented approach to trade with its reclusive neighbor, while the increasingly asymmetrical energy embodiment of bilateral trade may reflect dilapidation of North Korea’s non-military industries.

Bullet Points:
1.  In 2005, bilateral trade with the PRC accounted for 39% of North Korean international trade by value.

2. North Korean trade data are compiled by partner-country Customs Bureaus, the United Nations, and the Internaitonal Monetary fund (IMF).  China and South Korea provide the best “mirror” statistics.  Customs data do not include aid shipments, official development assistance, direct government transfers, foreign direct investment, services, remittances, barter trade, smuggling, illicit trade, trade in military equipment.

3.  The DPRK has spent an increasing amount of money on diminishing quantities of energy imports, particularly Chinese crude.  The decline of energy import volumes in the face of increasing overall imports and trade may reflect demand sensitivity to increased international market prices and/or North Korea’s lack of hard currency with which to purchase imported energy and fuels.

4. The DPRK has significant, ongoing refining capabilities.

5. Between 1985 and 2002, the DPRK domestic coal production has declined from 37.5 million tons to 21.9 million tons.  Nonetheless, North Korea increased its export quantity to 2% of total domestic production since 2002. 

6.  Starting in May 2005, North Korea has been an uninterrupted monthly electricity exporter.  Hydropower may account for much of the DPRKs surplus electric power.

7.  Energy prices reflect the pragmatic, market-oriented character of China’s economic relationship with North Korea.  North Korea may be providing China coal at subsidized prices, below those of China’s other trading partners.

8.  North Korea coal export prices show an awareness of market prices starting in 2002.

9.  The DPRK has consistently paid premium prices for Chinese oil product exports over the last ten years.

10. Aside from politically-determined prices, several conditions could explain this: 1.  Real factors (transport costs, demand, goegraphy) 2. Pyongyang’s insulation from market realities 3.  No DPRK leverage.

11. In 2005, North Korea imported $2omillion worht of trucks, $2 million worth of cars, $1 million of tractors.  The transport sector has not grown significantly since 1995.

12.  Shift of DPRK trade towards energy-intensive imports and labor-intensive exports suggests deterioration of non-military industry.

Nautilus Institute
Andrei Lankov
12/1/2005

The recent news out of North Korea leaves no room for doubt. After a decade of grudgingly allowing small-scale free markets, Kim Jong Il’s regime is seeking to reimpose total control. Ironically this turning back of the clock is being aided by the “no strings attached” aid policies of two countries, China and South Korea, which claim to be trying to encourage reforms.

From early October, all trade in grain has been forbidden in the small private markets that mushroomed across North Korea when the state-run food distribution system largely collapsed during the famine of the 1990s. North Koreans are now expected to rely on a revived public distribution system for supplies of grain. Special teams of officials have fanned out to check farming households for any “excessive” supplies of grain they might try to sell in the private markets, and ensure they are left only with their officially allowed ration of 700 grams a day.

Internal travel controls are also being tightened. During the famine, authorities turned a blind eye to violations of the regime’s tough restrictions on freedom of movement, as starving North Koreans crisscrossed the country in search of food. Now these are being enforced once again, with North Koreans required to obtain a travel permit from police before they can travel elsewhere in the country.

Pyongyang’s moves in this direction should not come as a surprise. Allowing even a minimal degree of private enterprise reduces the regime’s absolute control over its citizens — especially if they are no longer dependent on the state for their food — and provides firsthand evidence of the existence of a more successful economic system. The Kim regime has seen how economic reform preceded the collapse of Communist regimes across Eastern Europe. It’s no coincidence that one of the questions most commonly heard in private conversations with members of the Pyongyang elite these days is about the fate of Communist cadres in the former East Germany. To avoid reforms is the surest survival strategy for Pyongyang’s ruling elite.

Throughout the past decade, the regime had no choice but to tolerate some degree of private economic activity, because of the collapse of its state-distribution system. But now that the North Korean economy has bottomed out and the famine appears to be over, largely due to generous aid shipments from the outside world, the Kim regime is in a position to get rid of changes that it never wanted in the first place. In addition to trying to curb the activities of private markets, it’s ordered most of the representatives of the international aid agencies that it reluctantly allowed into the country during the famine to leave by the end of the year.

The Kim regime can afford to act in this way because it knows that food aid from its two key patrons, South Korea and China, will keep flowing come what may. These now exceed shipments from elsewhere in the world. According to a recent report to the U.S. Congress, North Korea received 350,000 tons of food aid from South Korea and China in 2004 — compared with 325,000 tons from the World Food Program. Seoul also provides the North with much needed fertilizer, while China takes care of most of its energy needs.

China and, especially, South Korea claim to be supplying aid as part of a strategy of encouraging North Korea to embrace economic reform. That’s the ostensible aim of Seoul’s “sunshine policy” of one-sided concessions to the North, while Chinese leaders have shown visiting North Korean leaders around Shanghai and Shenzhen in an effort to encourage it to follow the same path. But, far from encouraging reform, North Korea’s recent actions show that it can take advantage of such unconditional aid to move in the opposition direction.

While Western countries insist on their aid being monitored by international relief agencies to try to prevent its diversion to the military, South Korea and China take a much more forgiving stance. Beijing wants stability on its borders, and would not be happy to see another nominally Communist regime collapsing. South Korea also wants to avoid the collapse of the Kim regime, since it would then have to foot the bill for an expensive and socially ruinous German-style unification. This means that both governments are ready to ship aid without asking too many awkward questions or demanding that it be closely monitored. Although ostensibly encouraging economic reform in North Korea, in reality both China and South Korea share the same short-term goal of preserving the status quo. They tacitly understand that means the regime must be able to continue to rely on its police and elite army units, and so needs to keep them well fed. That means turning a blind eye to the diversion of aid to the military, police and other members of the Pyongyang elite, even at the expense of the long-suffering North Korean people.

In the long run, this creates a paradox. Unless Seoul and Beijing are willing to foot the ever growing bills from Pyongyang indefinitely, they need to promote reforms there. However the North Korean regime has shown it has no interest in implementing reforms except when it is the only way to survive.

That creates an uneasy dilemma, which is shared by other foreign aid donors to North Korea. Stopping all aid could lead to renewed famine, especially in those areas of the country closed to foreigners. But excessive and unconditional aid is likely to halt all reforms, since the Pyongyang government would simply reverse to its old policies, using foreign aid to pay for the system’s inherent inefficiencies (and perhaps for a bit of luxury for Kim and his cronies). And recent events have clearly demonstrated have how counterproductive showering North Korea with aid can be.

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