North Korean Economy Watch

Korea Times
Andrei Lankov
11/12/2007

Kim Jong-il loves to surf the net. In 2001 he asked the U.S. Secretary of State for her e-mail address, and in 2002 he told a visiting North Korean dignitary that he spent much time going through South Korean sites. He repeated this statement during the recent summit describing himself as ”an internet expert.”

Despite his relatively advanced age, Kim Jong-il takes the IT industry seriously. He obviously believes that the IT industry might become a wunderwaffen (super weapon) which one day will save the ailing North Korean economy (Kim Jong-il has always believed in simple, one-step, technology-based fixes for problems).

Now and then, news agencies report on North Korean efforts to train software specialists, or on a technology firm established by the North Koreans, or even on Kim Jong-il’s plans to create a large industrial complex which would become the North Korean reply to the Silicon Valley.

Efforts to create a computer industry go back to the late 1970s. In those days, the U.N. Development Program helped the North build a small pilot integrated circuit plant. Its history was plagued by one misfortune after another: the plant’s building proved to be badly insulated, the electricity supply was unreliable, and the engineers who were sent overseas for training arrived too late (most of them did not speak English, anyway). However, by late 1985 the plant was operational, producing ICs, an essential component of a computer.

By the early 1990s, the North was producing some 20,000 computers a year. Not much, but enough to provide for the military and even earn some money from export (over 60 percent of them were said to be exported).

In the early 1990s the North Koreans developed their own software, including a word processor. The latter had, among others, a peculiar function: it could automatically insert the names of the Great Leader and Dear Leader through a specially designated hot key.

In the North the PC was never meant to be a personal computer. It is reserved for office or industrial use, not for home – not least because the Internet is unavailable. For a regime which (correctly) assumes that its survival depends on its ability to keep the populace ignorant about outside world, the internet presents a mortal danger. Matters are further exacerbated by the unique success of the South Korean internet. If North Koreans were allowed to surf the numerous Southern sites at will, the carefully constructed picture of the world would instantly fall apart.

Thus, the internet is outlawed – but not completely. In recent years, foreign embassies have been allowed to connect to Chinese internet providers, but they have to pay the exorbitant fee for an overseas call (currently, $2 a minute). The connection is unreliable, but if your bills are paid by your country’s taxpayers, you probably can check your email… Access to email through business centers and even Internet cafes is becoming possible as well _ as long as one is a foreigner and is willing to pay exorbitant prices.

Only the privileged few have unlimited high-speed access to the Internet. But these trusted people are numbered in the hundreds or, perhaps, count a few thousands. Access is provided for the military, intelligence, and few privileged research centers only. Rooms where the internet-connected computers are installed are considered off limits for the North Korean personnel, and only people with proper security clearance can access this source of dangerous knowledge.

Less privileged institutions have access to local networks with limited connections to the World Wide Web. Their task is to let scientists and engineers retrieve the data they need without unduly exposing them to the dangers of overseas decadence.

There have been attempts to make money through IT. None of the grand plans for selling locally developed software on the international market have come to fruition, but there are easier ways to make a buck. In 2002 the North Koreans started an on-line gambling site in cooperation with a South Korean company. It targeted South Koreans, since gambling is illegal here. Its message board attracted much popularity since it was a place where the Southerners could exchange messages with the North Korean staff. The ability to chat with the Northerners was exciting (even though the largely young participants probably did not realize to which extent their interlocutors were controlled). The combination of gambling and propaganda obviously terrified Seoul, and the site was closed down.

Another area where North Koreans are trying their luck (and obviously not without moderate success) are game development and computer animation. Indeed, even major studios are sometimes inclined to outsource their animation work to North Korea.

The Internet remains a hot potato for the North Korean leaders. They understand its importance, but they do not know what to do about its political dangers. While facing such a choice, they have always opted for political security.