How the Hell does North Korea Manage to Earn Foreign Exchange?

19 04 2017

Kaesong Industrial Park - workers(Charis Chang, 2017.04.18, www.news.com.au) From the outside North Korea looks like an impoverished state cut off from the rest of the world. But during its weekend procession, the isolated regime managed to put on an impressive display of its rockets and military strength, in defiance of growing American warnings about its military capability.

While many have the impression of North Korea being a poor country that can’t feed its own people, Leonid Petrov told news.com.au that it had large stockpiles of natural resources that it used to fund its weapons research.

“North Korea is a mountainous country that has huge natural resources including deposits of high quality coal, gold, silver, uranium, iron ore and rare earth metals,” said Dr Petrov, a visiting fellow at the Australian National University College of Asia and the Pacific.

He said North Korea had exported its minerals to allies such as China and the Soviet Union for decades until the collapse of the communist bloc. Since then it had been more proactive in international trade, although the tightening of sanctions has seen its export ability curtailed recently.

Dr Petrov said China in particular had maintained trade in North Korea and was keen to keep a monopoly on its rare earth metal trade.
“So China buys everything North Korea is prepared to offer (of its rare earth metals),” he said. These metals are important because they are used the production of many 21st century products like mobile phones, computers, LCD screens and cars.

Another way that North Korea earns its money is by exporting its workers to China, Russia, the Middle East, Eastern Europe and South East Asia. In fact there were no visa requirements between North Korea and Malaysia until early this year, when tens of thousands of North Korean workers were deported following the assassination of North Korean president Kim Jong-un’s older brother Kim Jong-nam.

“Tens of thousands of North Koreans are sent overseas to work in restaurants, construction sites, as vegetable growers and builders of monuments in places like Africa,” Dr Petrov said.

“Dictatorships like big projects and North Korea can offer them labour to build big monuments, highways and airports.” Dr Petrov said the “lion’s share” of the worker’s wages went to the North Korean government.

North Korea also welcomes foreign investment. The Egyptians have invested in the country’s telecommunications network, concrete factories and construction industries, while the Chinese are keen on fishery resources, the mining industry and have developed a network of supermarkets selling Chinese-made consumerables.

Previously North Korea also benefited from co-operation with South Korea, which invested hundreds of millions into the Mt Kumgang resort where South Koreans and foreign visitors could stay and go mountain climbing. The Kaesong Industrial Park, which produced goods using South Korean know-how and North Korean labour, also gave it a financial boost until it was shut down last year following North Korea’s fourth nuclear test.

Dr Petrov said until last year China was also providing North Korea with other resources it needed such as crude oil and petroleum at “friendly prices” or possibly even for free.
It’s this type of trade that the Trump administration and the Australian government wants to block.

“They’re keen to see China stifling North Korea to death and causing the economic collapse of North Korea’s economy, which is unrealistic,” Dr Petrov said.

He said China sacrificed more than 250,000 soldiers during the Korean War to support the North Korean government. “It’s wishful thinking that China would just turn the tap off and allow the North Korean regime to implode.

“China understands that this would cause chaos in North Korea, the absorption of North Korea into South Korea and the subsequent advance of American troops to the Chinese border.

“So China is not going to allow the economic collapse of North Korea.” Dr Petrov said China was more likely to demonstrate its anger through ceasing economic co-operation temporarily, such as when it suspended the importation of coal after the assassination of Kim Jong-nam. “It bites but is not deadly,” he said.

But Dr Petrov said these types of actions were probably not going to be effective in curbing North Korea’s ambitions as it could always turn to Russia to help. “If China ceases economic co-operation, then Russia steps in and will continue doing the same,” he said.

“North Korea knows that well and plays off Russia against China, allowing Moscow and Beijing to compete for concessions on North Korea’s mining industry, fisheries and port facilities.” Russia is interested in North Korea because it sees it as a good market for Russian gas, oil and electricity. Russia believes North Korea could also potentially open the corridor for the export of energy to South Korea.

It sees North Korea as part of a potential transport corridor stretching from South Korea to Europe, via Russia’s Trans-Siberian Railway. “Russia is not interested in the collapse of North Korea but the stability and co-operation with North Korea,” Dr Petrov said.

Even other countries have had a hard time enforcing sanctions against North Korea.
A United Nations expert team released a report last month that found North Korea had managed to avoid sanctions by using Chinese front companies and other foreign entities to disguise where its goods were coming from. Last year it managed to continue its export of banned minerals and also has access to international banking.

Part of the problem is how different countries interpret what is banned by the sanctions.
One example was highlighted after Austrian ski equipment was found at the luxury Masik ski resort in North Korea. Austria later said it didn’t think ski lifts were included in the European Union’s definition of luxury goods prohibited from being sold to North Korea.

An Australian brand of ski clothing was even manufactured at the Taedonggang Clothing Factory in Pyongsong from 2014, but the company said it was not aware of the problem until after production had been completed and shipped to retail customers. It took two years for the company to sever its production line.

When asked how the conflict with North Korea could be resolved, Dr Petrov said: “Stop the war, end the conflict, reconcile and co-operate”. Dr Petrov believes that North Korea had a chance for survival if it could resume co-operation with South Korea, and this could happen if South Korea changed leadership at its May 9 presidential election.

He said co-operation did happen during the 10 years of the Sunshine policy that encouraged interaction and economic assistance between the two countries from 1998 to 2008, but the US actions were very important.
He said North Korea initially froze its nuclear program according to an agreement made when Bill Clinton was president but his successor George Bush scrapped this, which forced North Korea to resume its program.

See the full article here… 





Korean Peninsula Looks More Divided than Ever

21 03 2016

Kaesong Industrial Park closing(AFP, Daily Mail, 12 February 2016) North and South Korea’s perennially volatile relations seem headed for a new and potentially dangerous low, with all official lines of communication cut off and a host of tension-raising issues on the near horizon.

The two rivals, who have remained technically at war over the past six decades, have faced and weathered numerous crises in the past, but the current situation feels particularly grim in the wake of the North’s recent nuclear test and long-range rocket launch.

Any hope of compromise or dialogue seems to have been indefinitely shelved, with a leader in Pyongyang confirming an unwavering commitment to nuclear weapons development, and a counterpart in Seoul determined to react firmly — and proactively — to any North Korean provocation.

And the standoff is taking on wider Cold War-like dimensions, with the divisions between the main parties to the North Korean nuclear issue — China and Russia on one side, the US, South Korea and Japan on the other — increasingly stark and antagonistic.

The new mood on the divided peninsula played out this week in the effective termination of the sole remaining North-South cooperation project — the Kaesong joint industrial zone lying 10 kilometres (six miles) over the border in North Korea.

– A talisman for ties –

Despite its obvious vulnerabilities, Kaesong had taken on a talismanic image by riding out pretty much every inter-Korean crisis thrown up since it opened for business in 2004.

“In a way, it’s a miracle it lasted that long,” said Leonid Petrov, an expert on North Korea at the Australian National University.

But on Wednesday, Seoul announced it was suspending all operations of the 124 South Korean companies in Kaesong, and yesterday Pyongyang responded by expelling all the firms’ managers and freezing their factories’ assets.

The North placed the complex under military control, while the South cut off all power and water supplies.

“I don’t see any way back for Kaesong now,” Petrov said. “It’s gone too far and there’s no real will in the North or South to work it out.”

Kaesong was born out of the “sunshine” reconciliation policy of the late 1990s.

One of the roles initially envisaged by Seoul was of Kaesong as a beachhead for market reforms in North Korea that would spread from the complex and expose tens of thousands to the outside world’s way of doing business.

Although that vision never materialised, some analysts still mourned its demise for closing a small but crucial open door on the world’s most heavily-militarised border.

– ‘Great leap backwards’ –

“With no Kaesong, South and North Koreans will no longer be in contact anywhere on a regular basis. That is a great leap backwards,” Aidan Foster-Carter, a Korea expert based in Britain, wrote for the NK News website.

Chang Yong-Seok, a senior researcher at the Institute for Peace and Unification Studies at Seoul National University, said one of Kaesong’s most important contributions had been to help keep inter-Korean rivalries in check.

“The Koreas both had a stake in Kaesong so they were able to restrain each other in some ways, but now that has all gone out the window,” Chang said.

The space for communication between Seoul and Pyongyang shrank further on Thursday, when the North announced it was cutting the last two remaining communication hotlines with the South.

The hotlines themselves have never been used for conversational diplomacy, but they were key to setting up meetings where such discussions could take place.

The severing of all contacts comes ahead of a period when crisis-control talks could be most needed.

– Tensions ahead –

North Korea will likely react strongly to whatever sanctions the UN Security Council eventually agrees to impose over its nuclear test and rocket launch.

Then in March, South Korean and the United States will kick off a series of annual military drills that the North views as rehearsals for invasion and which always see a spike in tensions.

Pyongyang’s claims of provocation over the exercises should be especially shrill this time, as Seoul and Washington also begin talks on deploying an advanced US missile shield in South Korea.

“South Korea and the US have said the drills will be on an even larger scale than usual which is sure to meet a big backlash from North Korea,” said Chang.

“So, with all this, I think we’re going to see tensions running at a level incomparable to previous years,” he added.





Isolated Kim Relies on Old North Korea Tensions Playbook

28 08 2015

One Korea_One enormous challenge (By Sam Kim and David Tweed, Bloomberg News, August 25, 2015) SEOUL, South Korea — North Korean leader Kim Jong Un’s military standoff against South Korea, with his threats to annihilate the government in Seoul, was not just about the loudspeakers blasting propaganda and K-pop tunes over the demilitarized zone.

Rather, the events that took tensions on the peninsula to their highest level since the aftermath of North Korea’s nuclear test in early 2013 reflected Kim’s efforts to control how ties between countries in North Asia are evolving.

The young dictator, who came to power in late 2011, is looking isolated. Kim’s nuclear ambitions and his unwillingness to take guidance from Beijing have irritated China and strained ties with Pyongyang’s traditional ally. South Korean President Park Geun-hye enjoys a rapport with President Xi Jinping and is inching toward improved ties with Japan.

Faced with a dilapidated economy and drought at home, and potentially pressured by senior officers in his military to show some mettle, Kim resorted to an old North Korean playbook — pick a fight to force concessions from South Korea on trade and aid. It’s also a warning to Park against taking North Korea lightly in her dealings with China, Japan and the United States, all of whom have urged Kim to abandon his nuclear weapons program.

“This is more than a loudspeaker issue,” said Zhang Baohui, director of the Center for Asian Pacific Studies at Lingnan University in Hong Kong. “In the end this could be Kim’s outreach strategy. Maybe they think the South hasn’t been responding enough, so provoked a crisis to get to this stage.”

The stakes are high for Kim. He has a series of upcoming anniversaries where he must prove he’s worthy of commanding North Korea’s 1.2 million troops. Economic woes facing his 24 million people are unlikely to ease soon, while North Korea’s increasingly porous border with China means ordinary people have greater access to electronics and news of life outside the reclusive country.

In the end, both leaders gave some ground after days of high-level talks among negotiators at a border village — and both can probably claim a victory. The regime in Pyongyang agreed to lift its “semi-state of war” and expressed regret over landmine blasts that maimed two South Korean soldiers, while Seoul said it’d stop the propaganda broadcasts.

Risks remain, and Kim faces the challenge of a more strident Park in the face of any further provocations.

“The question is will the dialog stick? That will be harder because there is going to be some kind of crisis that tests this in relative short order,” said John Delury, a political science professor at Yonsei University in Seoul, citing the potential for skirmishes on the maritime border or over the demarcation line.

Since Park’s government said last week it traded fire with North Korea across the demilitarized zone, her approval rating has risen. Even as the tensions roiled South Korea’s financial markets she said Monday she would not stop pressuring Kim.

“The broadcasts play to particular parts of her support base, particularly the Christian right and the nationalist right,” said Tessa Morris-Suzuki, a professor of Asian affairs at the Australian National University in Canberra, of the South Korean leader who passes the half-way mark of her five-year tenure on Tuesday.

On the same day Kim marks the day of “Songun,” a military-first philosophy chartered by his late father Kim Jong Il. In less than two months he’ll celebrate the 70th anniversary of the founding of the Workers’ Party as he seeks to promote himself as a shrewd politician and tough military tactician.

“This is a very important commemorative year for Kim Jong Un,” Lee Sung-yoon, a professor of Korean studies at Tufts University, said by email. “The young Kim has a compelling need to mark it with a bang, as he did in 2012 on the 100th anniversary of his grandfather’s birthday, when North Korea was miraculously to become a powerful and prosperous country.”

Kim can’t afford to look weak. Since taking power he’s conducted a series of purges to root out potential threats.

“His spate of high-level executions shows a high degree of frustration that his policies are not being implemented to his satisfaction,” Patrick Cronin, senior adviser for the Asia- Pacific Security Program at the Center for a New American Security in Washington, said in an email.

The country is suffering chronic food shortages. North Korea said earlier this year it had been in the worst drought in a hundred years and the United Nations said in June that was worsening food-security concerns in the country.

“They’re facing a poor harvest, so this could be a way to divert people’s attention to patriotism and jingoism that wouldn’t be necessary had there been plentiful crops,” said Leonid Petrov, a visiting fellow at the Australian National University in Canberra. “Kim knows he cannot offer much to his population other than superficial window dressing. He has to use the same methods his father and grandfather did.”





Koreas agree to further talks, inspect joint factory

9 07 2013

North-South-Korea-factory-talks_2013.07.08(By Steven Borowiec, The Christian Science Monitor, 8 July 2013) After 16 hours of negotiation North Korea agreed in principle to normalize operations at the inter-Korean industrial complex, which has been idle for nearly three months.

North Korea met over the weekend with South Korea on its side of Panmunjom Peace Village, taking steps to normalize operations at the jointly-maintained Kaesong Industrial park – an idled symbol of inter-Korean economic cooperation.

North Korea agreed to permit businessmen to visit the complex Wednesday to check out the facilities that have been idle since April, when North Korea blocked South Korean workers from entering the complex and then pulled out some 53,000 of its own workers. The two Koreas are planning to hold talks Wednesday about restarting business at Kaesong.

Analysts say that for North Korea, restarting operations at Kaesong could be less important than using the negotiations to extract larger forms of support from South Korea.

“The regime in North Korea wants to appear cooperative while working for something more substantial from South Korea, something like unconditional aid and investment,” says Leonid Petrov, a researcher in Korean studies at the Australian National University. “Aid, sponsorship, charity – those are the things they’re most interested in.”

In fact, says Dr. Petrov, domestic media reported that North Korea has dispatched its workers in provinces away from the complex, which indicates that perhaps it doesn’t plan to resume operations there in the near future.

More than 120 South Korean companies once operated at Kaesong, which opened in 2004 as a project to pair South Korean manufacturers with inexpensive North Korean labor. South Korean companies paid workers wages that were high by North Korean standards. In 2012, the industrial park, largely seen as an achievement in inter-Korea ties, produced $470 million worth of goods and earned North Korea about $80 million in workers’ wages, according to South Korea’s Ministry of Unification.

Before the talks, North Korea gave permission to South Korean businessmen to visit the complex, but the Park Geun-hye government in Seoul insisted that inter-Korean exchange go through the government, not through private groups or individuals.

On June 9, the Koreas held working-level talks, the first inter-Korean talks for two years. Those were meant to be preliminary discussions ahead of minister level talks that were scheduled for later that week, but the second talks were called off after Seoul and Pyongyang couldn’t agree on the rank of the delegation leaders.

In the first few months of this year, North Korea was exceptionally hostile with its rhetoric, making violent threats against Seoul and Washington. Analysts say the more conciliatory approach seen in this weekend’s agreement to allow visits is part of a typical pattern of behavior where Pyongyang alternates threats with moves toward rapprochement.

“North Korea usually comes out swinging in the first half of the year, then in the second half launches a kind of peace offensive,” says Sung-yoon Lee, assistant professor of Korean studies at the Fletcher School of Law and Diplomacy, Tufts University. “It was preordained that North Korea would want to talk about restarting the [Kaesong] complex now.”

Coming into this weekend’s negotiations, South Korea said it would seek a written guarantee from North Korea that Pyongyang would never again unilaterally shut down the complex. Analysts see this as a potential stumbling block in Wednesday’s scheduled talks; North Korea may object to making any promises about what it will do regarding facilities that are in its territory.





North Korea closing Kaesong complex after worker recall

8 04 2013

North Korean workers at the South-owned Shinwon clothes company in Kaesong industrial park(by Tania Branigan, The Guardian, 8 April 2013) North Korea has said it will recall more than 50,000 workers from the industrial park it runs with the South and consider shutting it permanently, spelling an end to inter-Korean co-operation. Pyongyang has engaged in weeks of angry rhetoric in response to a UN security council resolution expanding sanctions following its third nuclear test and to ongoing joint exercises by South Korean and US forces.

But analysts noted that while the latest move by Pyongyang was substantive, it was also a non-military one made amid concerns that the North might be planning another missile or nuclear test. The Kaesong industrial complex has been a much-needed source of income for the impoverished North and a cheap source of workers for labour-intensive South Korean firms.

The statement from a senior party Workers’ party official, carried by the KCNA state news agency, warned that operations would be suspended while the future of Kaesong was reviewed. “The zone is now in the grip of a serious crisis,” Kim Yang Gon said. “It is a tragedy that the industrial zone, which should serve purposes of national reconciliation, unity, peace and reunification, has been reduced to a theatre of confrontation between compatriots and war against the North.”

He did not mention the 475 South Korean managers still at Kaesong. The North has prevented personnel and supplies from entering from the South since last week. According to Associated Press, about a dozen of more than 120 South Korean companies at Kaesong have halted production owing to lack of supplies.

“The temporary suspension is likely to become the final sigh of the sunshine policy as we knew it,” said Leonid Petrov, an expert on the North at Australian National University. “It’s understandable that as they proclaimed war it would be inconsistent with the desire to produce sneakers and LCDs at the same time … North Korea is sending a strong message to prove that money means nothing for the regime and its nuclear missile programmes are not for sale and not negotiable.”

Seoul’s policy of free-flowing aid and engagement was ended by South Korea’s previous president, Lee Myung-bak, who took office in 2008. Petrov argued future attempts at co-operation would have to start from scratch, adding: “It is unlikely it will happen under Park Geun-hye given the conservative origins of her party. “Many people blamed the sunshine policy for being ineffective, but that’s not correct: it was too successful for its time. It achieved a lot but was too dangerous for the North and too expensive for the South.”

James Hoare, the former British chargé d’affaires in Pyongyang, said: “It may be that among the military there are those who never liked [Kaesong] and saw it as a Trojan horse. It may be they’ve decided they won’t carry on with it, but they could still row backwards. It is not militarily threatening. It’s a gesture which to me looks foolish from the North Korean point of view, but it isn’t firing rockets or doing a nuclear test.” He pointed out that attempts at engagement with the North had often stumbled, from the early 1970s onwards. But he added: “It’s very unfortunate for the workers, who will lose their wages and other perks.”

Stephan Haggard of the Washington-bade Peterson Institute, an expert on North Korean economics, wrote last year: “For North Korea, [Kaesong] is a cash cow that even hardliners have been loath to push the way of the Mount Kumgang project. Since 2004, total wage payments for North Korean workers in the KIC has totalled $245.7m, rising from $380,000 in 2004 … to $45.93m in the first half of 2012. For Pyongyang, even hardliners can see that this is a no-brainer.”

One possibility is that the North believes it must threaten a clearly valuable asset to send the message that it is serious in its stance. Another possibility mooted by experts is that it could hope to expropriate the factories and hand them over to members of the elite, bolstering domestic support for the regime.





Kim Jong-Un’s search for shortcuts to North Korean prosperity

16 02 2013

KJU New Year speech 2013(By Leonid Petrov, Asian Currents, Feb. 2013) The New Year speech by North Korea’s new leader signals there will be little change…

When the North Korean leader Kim Jong-Il breathed his last in December 2011, his youngest son Kim Jong-Un was catapulted to the country’s leadership. That permitted him to meet the people and play the role of populist and reformer.

Kim Jong-Un looked and behaved like his grandfather, Kim Il-Sung, the founder of the Democratic People’s Republic of Korea, who ruled for 46 years. His succession looked like a perfectly planned and well-orchestrated scenario, and no observers doubted the similarity was part of the transition plan.

On the first day of 2013, Kim Jong-Un addressed the nation from the state TV, just like his grandfather used to until his demise in 1994. Kim Jong-Il, on the other hand, avoided making public speeches and never gave a TV address during his 17-year-rule, publishing his New Year’s messages as joint editorials in North Korea’s three major newspapers. Obviously, the youthful new ruler was trying to appeal to North Koreans’ fondest memories of his grandfather, and to signal that his leadership style would be more in line with that of Kim Il-Sung.

The speech was an acknowledgement of the poor state of the country’s economy. Kim promised that 2013 would be ‘a year of great creations and changes in which a radical turnabout will be effected in the building of a thriving socialist country’. The speech was full of rhetoric calling on his countrymen to make tireless efforts to ‘rid themselves of the old way of thinking and attitude and make ceaseless innovations in all work’. Kim urged boosting the economy and the military’s capability by making the science and technology sector world class, and argued that ‘the industrial revolution in the new century is, in essence, a scientific and technological revolution’, and ‘breaking through the cutting edge is a shortcut to the building of an economic giant’.

Like his grandfather, who tried to instantly turn the war-torn North Korea into a communist paradise, Kim Jong-Un also looks for shortcuts. The problem with his plan is that he suggested nothing new, but encouraged his countrymen to stick to the old values and principles formulated by his late grandfather and father. Kim claimed that ‘road of chuch’e [national self-reliance] is the only path for the Party and people to invariably follow’.

Despite North Korea’s history of defeats, failures, famines and disappointments, Kim Jong-Un persisted in lauding ‘the great achievements the president made while leading the Fatherland Liberation War to brilliant victory’ and praised ‘the strength of his outstanding strategy and tactics and wise leadership’. He also urged the people to ‘carry out the cause of reunifying the country’, describing reunification as the greatest national task that ‘brooks no further delay’.

The theme of turning North Korea into an economic giant was the most recurring in the speech. The ostensible purpose of his plan was to make the people of Korea well off with nothing to envy in the world. For this, the people should wage an ‘all-out struggle this year to effect a turnaround in building an economic giant and improving the people’s standard of living’. By calling on all sectors and units of the national economy to boost production, Kim Jong-Un again simply repeated the style and rhetoric of his father and grandfather.

Instead of offering a meaningful formula for economic development, Kim simply recommended improved economic guidance and management: ‘Party organisations should embrace all the people, take warm care of them and lead them forward to ensure that they share the same destiny with the Party to the end’. That meant North Koreans should carry on ‘the tradition of single-hearted unity’ wherein ’the Party believes in the people and the latter absolutely trust and follow the former’. In other words, Kim had no other prescription than adhering to the old son’gun [military-first] politics of his father and the centrally-planned economic system of his grandfather.

The single-hearted unity of the Army and the people around the Party was the ‘strongest weapon and a powerful propellant for the building of a thriving socialist country’. Kim Jong-Un looked confident when he claimed that the military might of a country represents its national strength.

His speech avoided direct criticism of the United States and its allies. Nor did he mention nuclear weapons, but indicated that if aggressors dared launch a pre-emptive attack against the DPRK, ‘the People’s Army should mercilessly annihilate them and win victory in the war for the country’s reunification’. Boosting defence industry was another priority that could contribute to implementing the Party’s military strategy, and Kim urged developing more ‘sophisticated military hardware of our own style’.

His invitation to ‘spur the building of a civilised socialist nation to usher in a new era of cultural efflorescence in the 21st century’ was in sharp contrast to his recommendations to ‘conduct Party work in the same way as it was done on the battleline in the 1970s, and put a focus of the work on thoroughly applying Kim Jong Il’s patriotism in all activities’. In cultural construction as well, all sectors were advised ‘to implement to the letter the ideas, lines and policies set forth by the general’. In this context, it remains debatable how North Korea can develop education, public health, literature and the arts, physical culture, public morals and all other branches to the level ‘appropriate to an advanced civilised nation’.

In order to effect a radical change in this year’s campaign to build a thriving socialist country, ‘officials should make a fundamental turnabout in their ideological viewpoint, work style and attitude’. But will the Party bureaucrats voluntarily uphold the slogan ‘Everything for the people and everything by relying on them!’ set for them by their youthful and idealistic leader? No safeguards are suggested by Kim Jong-Un, who only asked them to ‘work to the best of their abilities with a high sense of responsibility, eagerness and an enterprising approach’. His conclusion is built on the premise that the nation can achieve prosperity only if ‘firmly rallied behind the Party under the banner of ‘Kimilsungism–Kimjongilism’.

The New Year speech tells much about Kim Jong-Un, the succession process, and the future of North Korea. It becomes clear that Kim’s ultimate goal is to avoid any change, because it threatens the very existence of the North Korean state. If anything like what happened to the Soviet Union when Gorbachev started perestroika happens in North Korea, the leadership would not be able to control the situation. And as North Korea’s elites are equally reluctant to consider any idea of change, the mood to maintain stability and continue as Kim Il-Sung and Kim Jong-Il did over the past half a century prevails.

The recent leadership succession is definitely a case of like father, like son. Kim Jong-Un is the legitimate successor and perfect choice to continue the Kim dynasty; he is of ‘revolutionary blood’ and widely recognised as such. He is eulogised and worshiped as the Generalissimo by the Korean People’s Army and as the Dear Leader by the Korean Workers’ Party. Common people link their expectations of socio-economic improvement to him, and he is a token of stability for the Kim family. Everyone in North Korea seems to have great hopes for him. If everything goes according to his father’s plan, Kim Jong-Un will be in power for a long time.

The North Korean leadership genuinely wants to modernise the country’s economy, but hates the idea of changes in social and political life. Like his father and grandfather, Kim Jong-Un constantly searches for shortcuts to boost the dysfunctional economy without having to build new social and political institutions. Achieving technological breakthrough without systemic reform is a preferred way forward. As a result of this half-hearted policy, ordinary North Koreans will probably eat and dress better; they might even own PCs and mobile phones, but they will continue to live in the same paranoid state of fear and dependency on the Great Leader’s decisions.

Beijing would love to see Pyongyang follow its example by introducing market-oriented reforms, but North Korea simply cannot come to terms with granting its population the many freedoms necessary to make such a reform successful. This is simply impossible in the conditions of an ongoing Korean War, in which North Korean society is continuously fed lies by the regime and denied contacts and interaction with the rest of the world, particularly with South Korea. Given the circumstances of the ongoing inter-Korean conflict, the sustainable development of the North Korean economy is impossible. The country is locked in a security dilemma and reluctant to open up.

If Kim Jong-Un did decide to initiate reform he would first need to persuade his family and other elite groups to forfeit their significant privileges, because reform of any type would inevitably and quickly lead to the collapse of the political regime. Not surprisingly, the very word ‘reform’ remains a taboo in Kim Jong-Un’s North Korea.