Comrades & Capitalists
Rigidly Communist North Korea is starting to allow just a bit of economic freedom
Tong-il looks like plenty of other Asian markets: hundreds of shoppers browsing through rows of tiny stalls jammed with everything from imported computers, DVD players, and phony Rolexes to washing machines, vegetables, and dog meat. But there is something unusual about this seemingly conventional capitalist scene. It is in Pyongyang, the capital of the most tightly controlled bastion of Communist orthodoxy. The merchants wear clean blue smocks with ID badges, and they work for a state that, until recently, viewed any tender sprouts of capitalism as dangerous invaders to be pulled out by the roots.
To the surprise of many, North Korea is trying to jumpstart its torpid economy with market-oriented reforms. Even through a nearly three-year-long standoff with the United States and other countries over its drive for nuclear weapons, the Hermit Kingdom has been cautiously removing the seals that have kept out market forces--along with most other foreign influences.
The resumption last week of six-nation talks over North Korea's nuclear programs may well reflect its need for Western money and technology to make the reforms work--and stabilize the country. The North's decision to drop its 13-month boycott of the talks and accept, at least in principle, the goal of banning nuclear weapons from the Korean peninsula may say a lot about where its ruler, Kim Jong Il, wants to take his impoverished nation. "Serious economic problems" and the prospect of renewed hunger among North Korea's 23 million people, reasons a senior Bush administration official, probably led Kim back to negotiations.
Real reforms. The first week of talks in Beijing showed uncommon cordiality, and even hints of flexibility, on all sides, but what they didn't do was reveal Kim's intentions on nukes--or the broader direction he plans to take his country. But after initial skepticism, a striking array of U.S. and foreign officials and North Korea watchers have concluded that the economic reforms are for real--and cannot be reversed without triggering chaos. "The North Korean leadership is very enthusiastic about continuing with reforms," says Yang Chang-seok, deputy director-general of South Korea's Unification Ministry. By expanding trade, investment, and aid to the North, he told U.S. News , South Korea will "reduce the cost of eventual reunification."
South Korea, in fact, did something the Bush administration refused to do: It put economic incentives at the forefront of its campaign to draw the North back to the negotiating table. The South offered to step up trade and investment, send fertilizer and food, and provide electricity--the latter contingent on the North abandoning its nuclear weapons efforts. The offers, along with U.S. moves to mute anti-Kim rhetoric and assure the North that it had no intention to attack, seems to have led the North to end its boycott.
The economic reforms were launched quietly in July 2002--just before the nuclear crisis erupted. Selig Harrison of the Center for International Policy, a frequent visitor to the North, calls the process "reform by stealth." Managed by technocrats like the current prime minister, the regime decriminalized activities, like trading in unofficial markets, that spread during the economic freefall caused by the collapse of Soviet subsidies and communist bloc trade in the early 1990s. Kim apparently sees the market openings of one-party Communist China and Vietnam as relevant to his aims. He has toured a General Motors joint-venture factory and a stock market in Shanghai.
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