Famine Makes Capitalism No Longer a 4-Letter Word

A Cabinet-ranking North Korean appealing to capitalists at the recent World Economic Forum conference to invest in his poor and famine-stricken nation is symbolic of an intensive policy struggle going on in Pyongyang. But even as Kim Jong U, who chairs his country’s Committee for Promotion of External Economic Cooperation, outlined the benefits of investing in a special economic trade zone, alarm bells were going off in Pyongyang.

North Korea’s crisis appears to be nearing a climax. The consensus among diplomats is that Washington’s failure, so far, to follow up on its constructive policies of last year might lead to catastrophe on the Korean peninsula. The defection last week of a senior North Korean official, described as an architect of the country’s strident nationalism, may also signal a turn in the internal policy debate. Meanwhile, time is running out: North Korea’s food stocks, even with severe rationing, will run out in three months, and the next harvest is due at the end of September. The future of North Korea, in particular, and East Asian stability, in general, is on the line.

The Clinton administration has refused to authorize large food shipments by U.S. corporations. Partly in response, Pyongyang has agreed to accept 200,000 barrels of nuclear waste from Taiwan in exchange for tens of millions of desperately needed dollars to buy food elsewhere. Simultaneously, it is striving to increase its metals’ exports, attract investment capital and, in another unprecedented move, sell at high discounts its $3.2-billion debt to international banks.

Earlier this month at the conference in Davos, Switzerland, Kim said that debt purchasers could use the local-currency equivalent to pay North Korean workers employed on foreign-investment projects in the 497-square-mile Najin-Sonbong Free Economic Trade Zone--just south of the Chinese border and just east of the Russian border--rather than import fresh hard currency (Dutch companies are already investing there). This amounted to still another significant “first” in North Korea’s new dealings with capitalist countries, not to mention a commitment to foreign investors of a 14% profit rate. Kim said that Pyongyang’s policies were being reoriented “so that we can develop close links with the capitalist economy.”

Kim’s high visibility in Davos, the first formal North Korean presentation at this capitalistic forum (a lower-ranking delegation attended a forum regional meeting in Hong Kong last November, quietly encouraging investment in the Najin-Sonbong Zone) had an important meaning. It suggested that “moderates” in Pyongyang may still hold the upper hand over hard-liners, who oppose all contacts with the outside world and advocate the self-sufficiency precepts of “Beloved Leader” Kim II Sung, who died in 1994. The defection of Hwang Jang Yop in Beijing, the 72-year-old chief North Korean ideologue, raises the question of whether a major reshuffling of personnel has begun in Pyongyang.

To the extent that trends can be discerned in the hermetically sealed and pathologically repressive North Korean regime, many foreign specialists think that Kim Jong Il has yet to be named general secretary of the ruling party or president of the nation, as his father was, though he is expected to receive these posts in April and July, respectively. Furthermore, he may not be fully in command of national policies. A nebulous collective leadership, including the chiefs of the powerful armed forces, may still be holding the balance of power.

Selig S. Harrison, a U.S. expert on North Korea, says that “within the regime, there is an intense policy conflict between an orthodox old guard and a younger generation of reform-minded pragmatists with greater cosmopolitan exposure,” and that “Kim John Il plays a mediating role but is generally identified with the pragmatists.”

These “pragmatists” apparently carried the day when North Korea agreed, shortly after Kim Il Sung’s death, to dismantle its weapons-grade plutonium-producing reactors in exchange for two South Korean-built reactors and economic and political concessions from the United States. Defusing Pyongyang’s nuclear-arms potential was perhaps the single, most successful diplomatic triumph of the first Clinton administration. This was followed by proposals for negotiations among North and South Korea and the United States aimed at an eventual peace treaty. Also, the administration pledged to allow U.S. corporations to export food to North Korea.

Pyongyang’s pragmatists are pursuing limited economic liberalization. Kim, who is an economist, first tested the waters when he attended the World Economic Forum in 1989, though his visit went unnoticed. Next, the Najin-Sonbong zone was established--Najin is a port on the Pacific with a potential of speeding up ocean transshipments in the region--and, thus far, more than $100 million has been invested there by Dutch, British, Danish, Nigerian and Thai companies. The collapse of the Soviet Union, once a vital economic supporter, and a series of natural disasters, including the recent floods, all accelerated these outreach efforts.

Last September, the hard-liners appeared to retaliate when a submarine carrying saboteur commandos surfaced off the South Korean coast and was captured. Again, U.S. diplomacy achieved a near-miracle by convincing the North Koreans to issue an apology for the incident (though South Korea complained that it was addressed to the world at large, not just to Seoul).

By the specter of imminent famine has overshadowed all else. Pyongyang has demanded that export licenses for 500,000 tons of food be issued to the U.S. corporations with which it has been negotiating a barter deal, in fulfillment of Washington’s commitment. The North Koreans insist that Washington honor its treaty obligation to reduce trade barriers.

Pyongyang, conceivably under pressure from hard-liners, has refused to attend scheduled New York meetings, known as “briefings,” on future peace arrangements until the food licenses are issued. The Clinton administration, under rising South Korean pressure to deny food to North Korea to hasten the regime’s fall, stands pat. Seoul has also announced that it will not provide the two nuclear reactors to North Korea if the latter accepts nuclear wastes from Taiwan.

All this has produced a dangerous stalemate. Pyongyang cannot retreat from its food-license demands and refusal to attend the diplomatic briefings without providing the hard-liners with ammunition against the pragmatists’ policies. The pragmatists are threatened with defeat if they can’t deliver the food. Put another way, 24 million people are being held hostage to Pyongyang and Washington politics.

Should the food crisis and its attendant consequences be eliminated, relations between North Korea and the rest of the world could become more flexible. This, in turn, might prepare the ground for North Korea to achieve a “soft landing” after years of virtual economic free fall. The outcome might resemble the relationship between the United States and China or Vietnam, with growing economic and cultural contacts, and, some day, a basic change in North Korea’s system. It did, after all, happen in Eastern Europe and the Soviet Union.