Monday, June 06, 2005

North Korea on the Rebound

In Pyongyang, Sinuiju, Rajin and other cities across North Korea the lights still grow dark at night, but in other ways some life and color and maybe just a little taste of prosperity seem to be creeping into the daily life of this country’s nearly 23 million people.

Reports seeping out of the North, such as this recent unsigned article from the Christian Science Monitor, speak of the beginnings of consumerism in the capital and some other cities. There seem to be more shops actually stocked with things to buy. People on the street appear to be better dressed. Private cars are appearing on the roads.

Trucks constantly rumble across the narrow bridge spanning the Yalu River, linking the North Korean city of Sinuiju with its bustling sister city of Dandong in China. The trucks moving into North Korea are said to be filled with electronics goods, refrigerators and household appliances bound for Pyongyang.

In 2002 North Korea’s unchallenged leader Kim Jong Il declared, “money should be capable of measuring the worth of all commodities.” The statement didn’t have quite the ring of Deng Xiaoping’s famous phrase, “to get rich is glorious,” but presumably it had a similar effect of giving the leader’s imprimatur to making money.

The figures seem to bear out a modest revival of the North Korean economy, which was knocked for a loop a decade ago when Pyongyang’s main patron, the Soviet Union, collapsed and took with it the subsidies that had underwritten the economy. But last year China’s investments jumped from about a million dollars in 2003 to $200 million.

This development has implications for American policy makers, who, for the past decade, have quietly hoped that if they out-waited Kim Jong Il, his regime would collapse and the issue of his nuclear weapons would disappear with it. Yet, far from being on the verge of collapse, North Korea seems stronger than it has been in years.

North Korea has the feel of China in the early 1980s, when the economic liberalization and market reforms initiated by Deng Xiaoping were beginning to take hold, when people discarded their drab Mao jackets and began wearing brighter clothes, when commercial advertisements instead of political slogans appeared on the billboards.

For nearly a decade, the Chinese have counseled North Korea’s leaders to follow their example, gradually opening the economy to market forces. They urged them to copy an early Chinese innovation of establishing experimental special economic zones (SEZ), where foreign investment would be encouraged and capitalist principles applied.

North Korea’s response was to create the Rajin-Sonbong Free-Trade Zone in the far northeast corner of the country. Theoretically, this enclave of capitalism would benefit from its close proximity to China and Russia, which converge at this point. Five years after it was established the zone still lacked such basics as hotels, office buildings, telephones, fax machines an airport and paved roads.

Rajin-Sonbong never made much sense. Its location in the northeast is far from any economic center. Indeed, it is not very far north of Gilju, where reputedly the North Koreans might test an atomic bomb. It’s as if the Chinese had located their first SEZs in the desert, near the Lop Nor nuclear test site, instead of where they did locate them, across from Hong Kong and Taiwan.

As far as I know, the only enterprise in Rajin is a Hong Kong-owned casino hotel. It attracts buses filled with Chinese tourists from the northeast provinces, who probably don’t have enough money or connections to get to Macau. One gets the impression that Kim Il Sung located the zone far away from Pyongyang so not to contaminate the communist cadres with the filthy lucre.

Obviously, the right place to put a special industrial zone is where one is now, in Kaesung, just north of the Demilitarized Zone, which is beginning to bustle with Chinese and South Korean joint ventures. You don’t have to have much imagination to figure that the future economic center of a reunited Korea would be in the corridor stretching from Seoul to Pyongyang.

Of course, any progress could be set back by a repeat of the famine of the early 1990s in which a tenth of the population may have died. International food donations are said to be way down because of worldwide opposition to Pyongyang’s nuclear program. More city workers than usual are being dispatched to the countrywide to work on farms.

But if the North can get through this harvest year it may continue to prosper. When one thinks about it, how could a country surrounded by three “miracle” economies -- China, Japan and South Korea – fail to prosper? They must have had to work very hard at it.

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