Wednesday, January 8, 2014

North Korea: Expect the Unexpected

I cannot emphasize enough (or beat the horse more dead) that we (the ROK/US Alliance) must focus on preparation in addition to planning:

This is why Kim’s vow to achieve economic prosperity may hasten the regime’s unraveling. One big mistake that the 3rd generation of the Kim dynasty made was promising to fix the economy. His father, Kim Jong Il never promised a rose garden, only nukes. As North Korea’s system has broken down, over the past two decades, it has by default allowed private markets to sprout up all over the country. As the system from food distribution to economic growth in the provinces broke down, a nascent merchant-class has taken shape that may now number upwards of 500,000 to a million. But more broadly, [7]a study of North Korean defectors by Seoul National University’s Institute for Peace and Unification Studies revealed [7] that more than 74% had experience selling goods in open-air markets, and derived the bulk of their income from unofficial economic activity. Even if such numbers are exaggerated, clearly large portions of North Koreans are using the markets as a coping mechanism.

But it is also possible that the Jang episode may mark the beginning of an unraveling of the Kim dynasty. The dangers of loose nukes, refugees heading North to China and South to the ROK, chaos, possible intervention by China and/or the ROK, or the US seeking to control nukes, and a precipitous reunification by default all hold the prospect of an inflection point approaching in Northeast Asia. Stay Tuned.

North Korea: Expect the Unexpected

January 8, 2014
Where is North Korea headed? When we last heard from the Boy General, Kim Jong-un, he was rationalizing the sudden and brutal execution of Pyongyang’s No.2, [3]Jang Sang Thaek [3], followed by threats to “strike mercilessly without notice [4]” in response to anti-Kim protests in Seoul.

Now Kim has offered us a glimpse of things to come. Pyongyang’s New Year’s statement, which often contain hints of coming attractions, reiterated all the vitriol about Jang’s alleged misdeeds, but contained few indications of anything except more of the same: Songun, it’s “military first” policy was praised as the way forward.

What was missing from Kim Jong-un’s New Year’s statement was any mention of the core problems leading Pyongyang down a steady, if gradual, path to oblivion. The words “nuclear weapons” and “US” were noticeably absent. Indeed, South Korean President Park Geun-Hye emphatically called Kim out on it in her first 2014 Press conference on January 6th explaining, “a nuclear North Korea is an obstacle to unification and world peace, and can never be allowed.”

The one intriguing element was a hint of possible interest in advancing North-South relations. Kim urged a move away from confrontation and said that, “Respecting and thoroughly implementing the north-south joint declarations is a basic prerequisite to promoting the inter-Korean relations and hastening the country’s reunification.”

Whether Kim is serious, or just seeking more handouts from Seoul remains to be seen. But previous North-South accords, particularly the 1990 North-South Basic Agreement contains – at least on paper – provisions to address all outstanding issues, from denuclearization to North-South reconciliation. Here again, President Park countered Kim in no uncertain terms [5]: “We must prepare for an era of unification. The primary barrier to this is North Korea’s nuclear program.” President Park put Kim to the test, calling for resuming reunions of divided families, after Pyongyang quashed an agreement to do so last year.
If the New Year’s message is any indicator, progress on the nuclear issue and the possibilities of more than marginal improvement in the North Korean economy range from slim to none.

Can’t Have Both

Unfortunately Pyongyang fails to understand the integral linkage between these two fundamental issues. At a Worker’s Party Congress last March, Kim Jong-un adopted the “byungjin” line: simultaneously pursuing nuclear and economic development. The bulk of Kim’s 10 page New Year’s message was focused on the economy, its purported achievements and what needs to be done to advance it. Yet for more than two decades, US-led global efforts to denuclearize North Korea have been based on the premise that the North must choose: it can join the global economy and prosper or it can have nukes. It can’t have both. Pyongyang has chosen self-imposed isolation reinforced by UN sanctions.
Even after several years of modest growth, the North Korean economy is now at roughly the level it was at the end of the Cold War in 1991. Even the Chinese, who account for nearly 90% of the North’s total foreign trade (a miniscule $6.8 billion) have trouble doing business with the North. Indeed, among the alleged sins of the executed Jang was selling resources too cheaply, all but mentioning China by name. Arbitrarily shutting down the Kaesong Industrial Zone operated by South Korea, the one example of opening to outside investment, sent exactly the wrong message: don’t invest here, your investment is subject to our political whims. [6]And holding an 85 year-old American tourist [6](because he fought in the Korean war) is not exactly a PR strategy for promoting tourism, which Kim’s new ski resort and dolphinariums are intended to do.

The reality is that so long as the enormous political risk factor remains, so long as military provocations can occur at any time, and no system of credible commercial arbitration exists, North Korea will have little chance to obtain any foreign investment. Pyongyang’s economic possibilities will remain very limited and it will continue to fall further behind its brethren in the South – not to mention the globalized economy. And the execution of Jang and destruction of his business networks will almost certainly chill China’s economic involvement in North Korea, a rare source of foreign investment.

Rising Expectations?

This is why Kim’s vow to achieve economic prosperity may hasten the regime’s unraveling. One big mistake that the 3rd generation of the Kim dynasty made was promising to fix the economy. His father, Kim Jong Il never promised a rose garden, only nukes. As North Korea’s system has broken down, over the past two decades, it has by default allowed private markets to sprout up all over the country. As the system from food distribution to economic growth in the provinces broke down, a nascent merchant-class has taken shape that may now number upwards of 500,000 to a million. But more broadly, [7]a study of North Korean defectors by Seoul National University’s Institute for Peace and Unification Studies revealed [7] that more than 74% had experience selling goods in open-air markets, and derived the bulk of their income from unofficial economic activity. Even if such numbers are exaggerated, clearly large portions of North Koreans are using the markets as a coping mechanism.

It can be argued that those benefiting from the current system in North Korea are unlikely to rock the boat. Nonetheless, growing portions of North Koreans are increasingly less economically dependent on the state. Historically, it is less deprivation than rising expectations that drives political change. In the case of North Korea, it is difficult to envision popular uprisings given the tight and ruthlessly enforced control Pyongyang’s terror state routinely exercises. That is precisely why the unprecedented public display of deep factionalism in the case of Uncle Jang and his associates is intriguing. One of the few certainties is that we are in truly uncharted territory. If change occurs in North Korea it is most likely to be a top-down process, with fighting amongst rival elite groups or networks.
(Continued at the link below)

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