The Politics of Inter-Korean Economic Cooperation

Leonid A. Petrov, The Asia-Pacific Journal, Vol. 29-3-09, July 20, 2009.

It has been ten years since the Democratic Peoples’ Republic of Korea (DPRK or North Korea) embarked on a path of change. The first major course correction occurred in 1998 when the DPRK amended its constitution. A new cost accounting system in economic management was introduced, and a new political line of Songun (Army-First Politics) was promulgated in addition to the Juche ideology of national self-reliance. Although this adapted form of Marxism-Leninism continued to guide the country on its way to “Korean-style socialism,” the proposed changes would bring some elements of economic liberalisation and commercialisation of the economy. As part of this cautious plan, several enclaves scattered across the country were allocated by the DPRK government exclusively for inter-Korean cooperation.

Pyongyang’s readiness for cooperation was welcomed and supported by Seoul which, with the ascendance to power of a liberal group led by Kim Dae-jung in 1998, stopped waiting for North Korea’s collapse. South Korean business conglomerates volunteered to sponsor a number of joint projects in which Koreans from the North and the South could communicate, work and relax. Two inter-Korean summits took place in June 2000 and October 2007, reviving the hope for reconciliation and closer cooperation between the two parts of the divided country. The development of inter-Korean economic cooperation can be measured by the pace of growth of special economic zones’. It can be divided into two stages: 1998-2003, during which the Mt. Kumgang resort and Kaesong Industrial Park area were created and market economy activity inside North Korea intensified; and 2003-2009, when cooperation in these special economic zones continued to evolve before suddenly stalling, coinciding with the rapid curtailment of economic freedoms inside North Korea.

Despite expectations that cooperation in Mt. Kumgang and Kaesong would bring about a substantial impact on the economic policy of the DPRK, the results were hardly encouraging. Still there is no consensus as to the consequences of such cooperation on the long-term economic course of North Korea. After the 10 years of inter-Korean cooperation, most international experts continue to assess the North Korean regime as “Stalinist” and “secluded,” and its economy as “moribund.” Optimists insist to the contrary, however, that despite the return of socio-economic despair, the country is on the move and the changes have been profound. They believe that under favourable circumstances the DPRK might follow China and Vietnam in building a dynamic market-oriented economy. Pessimists too admit some positive changes of the last 10 years but dismiss the possibility of fundamental reform in North Korea. They predict inevitable economic catastrophe and regime collapse, followed by open civil conflict and violent unification…

See the full text in The Asia-Pacific Journal, Vol. 29-3-09, July 20, 2009

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Top China Advisor Worried Over Nuclear-Armed N. Korea

By Mark O’Neill, Asia Sentinel (06 July 2009)

In an alarming analysis in an official Chinese publication, a senior advisor to the Chinese government expects North Korea to launch a war on the South in the belief that it has overwhelming military superiority. Zhang Lianggui, a professor of International Strategy at the Central Communist Party School in Beijing , also writes that he regards Pyongyang ‘s nuclear program as posing a significant and unprecedented danger to China .

Zhang, who has been at the school since 1989, is a specialist on North Korea , where he studied at Kim Il-Sung University in Pyongyang from 1964-1968. His analysis, in the June 16 issue of World Affairs magazine, is one of the most critical of the North ever to appear in an official publication. It reflects Beijing ‘s rising anger with its neighbor and frustration that it can do so little to change its nuclear policy ― despite the fact that the country relies upon it for supplies of food and oil.

The first generation of Communist leaders had strong sympathy for Kim Il-Sung, who studied at secondary school in northeast China , spoke Mandarin and fought with Chinese forces against the Japanese. The current leaders have no such feeling for his son, whom they regard as a bandit. In the magazine, Zhang wrote that the world underestimates the magnitude of the risk on the Korean Peninsula . “If we look at the situation as it is, the likelihood of a military confrontation on the Korean Peninsula is very high,” he wrote. “It will start on the sea and then could spread to the 38th parallel. If a war breaks out, it is very difficult to forecast how it would develop. North Korea believes it now has nuclear weapons and has become stronger. It believes that it has overwhelming military superiority over the south and would certainly win a war,” he said.

Since the end of the Korean war in June 1953, the North has never recognized the Northern Limit Line (NLL) which the United States designated at the time as the sea boundary between the two sides and which the South accepts. On January 17, it repeated its refusal to recognize the boundary. A scene of bloody clashes between the two sides, the area contains 2,500 islands and is rich in fishing resources. There has been a gradual escalation in tension since January, when the North announced a “state of total war” with the South. It has since then tested long-range missiles and a nuclear bomb.

Zhang also said that the North’s nuclear tests pose “a risk that it [ China ] had never faced for thousands of years.” Nuclear tests by the US , Russia , China , Britain and France were carried out in deserts or remote places far from population centers. But the North’s tests are just 85 km from the Chinese border, Changbai county in Jilin province, and 180 km from Yanji, a city of 400,000 people. “The tests are close to densely populated areas of East Asia . If there were an accident, it would not only make the Korean nation homeless but also turn to nothing plans to revive the northeast of China ,” he wrote, asking why the tests were far from Pyongyang but not far from China .

“The danger for China is extremely grave. We have not paid sufficient attention to this risk. If we cannot bring about a denuclearization of the Korean Peninsula , mankind will pay a heavy price, especially the countries bordering Korea ,” he wrote. Pyongyang , he said, has never liked the six-party talks that have been trying, with Beijing ‘s help, to get the North to relinquish its nuclear program because it regards the matter as essentially a bilateral issue to be settled with the United States alone. He does not believe North Korea will return to the stalled talks. ” North Korea has turned from being a non-nuclear state into a nuclear one. In addition, it has at least 800,000 tonnes of heavy fuel [under terms of an earlier shut down of the country’s main nuclear reactor]. The six-party talks have fulfilled their historical mission”…

Zhang said that Kim Jong-Il is racing to fulfill the mission given to him by his father before he hands over power to his successor, expected to be his youngest son Kim Jong-woon, 25. This includes making North Korea a nuclear state, a symbol of a powerful country: developing missiles capable of delivering these nuclear weapons, re-negotiating the NLL and obtaining possession of the five major islands in the western sea and their rich fishing grounds, using nuclear weapons to create a new international environment and achieve reunification. Zhang’s assessment of Pyongyang reflects Beijing ‘s anger against North Korea and inability to influence policy there.

“Negotiating with North Korea is like negotiating with the mafia which is blackmailing you,” said Wang Wen, a veteran Chinese journalist. ” Beijing continues to supply the North with food, oil, consumer goods and other items it needs. The North does not pay. It [ China ] could cut off the supply, which would lead to a collapse of the regime. That would mean a unified Korea dominated by the United States . Pyongyang knows this and continues to blackmail China , like the mafia.”

[…] ” Beijing understands very well the mind-set of Kim Jong-Il,” said Wang. “It is the same as that of Mao Zedong when he built China ‘s nuclear bomb in the 1960s, when his people were starving. The Soviet Union did not help and the US wanted to bomb the site, but it built the bomb anyway. North Korea today is more isolated than China was then, so it needs the bomb even more.”

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North Korea moves to restrict economy

By Barbara Demick, Los Angeles Times (July 5, 2009)

Reporting from Yanji, China — In the markets of Kilju, a city of 100,000 near North Korea’s eastern seacoast, the ruling Korean Workers’ Party has ordered the removal of Chinese-made cookies, candies and pharmaceuticals. Even soybeans, many articles of clothing and shoes are now forbidden.

It is all part of a great leap backward taking place in the secretive autocracy. North Koreans interviewed in China in recent weeks say that the regime of Kim Jong Il has made a concerted effort to roll back reforms that had over the last decade liberalized the most strictly controlled economy in the world.

“They’re telling us that we don’t need markets and that socialism provides everything we need,” said an unemployed factory worker in her 50s, who gave her name as Lee Myong Hee. (North Koreans outside their country often give fake names because speaking to foreigners can be considered treason under North Korean law.)

Lee sneaked across the border last month into China, hoping she could make some money for her family. Thin and nervous, her body sculpted by a diet of two bowls of porridge each day, she said the party’s unbending ideology has squeezed the life out of the city’s economy. “If they don’t give us food and clothing and we’re not allowed to buy things, how can we survive?” Lee said, tears rolling down hollowed cheeks.

The Korean Workers’ Party has banned the sale and swapping of apartments, practices that were widespread for more than a decade. The open-air markets where people do most of their buying and selling are now open only from 2 p.m. to 6 p.m. The only people permitted to sell at the markets are women older than 50; everybody else is required to spend their days at their official jobs at government-run businesses.

So many Chinese goods are now taboo that markets stock only about 35% of the merchandise previously available, some say. “They want to promote our own products made in North Korea, but since everything is ‘made in China,’ there is nothing to buy,” said Kim Young Chul, a civilian working for the North Korean military who had come to China to sell wild ginseng on behalf of his employer.

The economic restrictions reflect the rising power of the hard-liners within the staunchly communist regime and go hand in hand with the belligerent mood that led to North Korea’s May 25 nuclear test. Those jostling for power in the scramble created by the failing health of 68-year-old North Korean leader Kim Jong Il are raising the banner of juche, the term coined by his father, Kim Il Sung, the country’s founder, for an ideology emphasizing self-sufficiency.

North Korea has in effect scuttled dialogue with the United States, South Korea and Japan, shut down South Korean business interests within its borders and evicted many humanitarian aid operations. “The North Koreans want to close off their country so they will not be hurt by sanctions. They think everybody is out to ruin their country and they are getting rid of anything that could be a threat,” said Cho Myong-chol, a former economics professor at Pyongyang’s Kim Il Sung University who defected to South Korea in 1994…

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