Given its structural dilemma, fundamental reform would not be easy: experts


Signs of North Korea’s apparent moves toward reform and openness have left many wondering if the reclusive state truly intends to fundamentally revamp its debilitated structure of economic governance.

Many analysts have painted a positive outlook, saying that as Swiss-educated Kim Jong-un needs to strengthen the legitimacy of his fledgling leadership, a sweeping overhaul would be inevitable.

But Kwon Young-kyong, professor at the state-run Institute for Unification Education, presented a cautious interpretation of the so-called June 28 economic measures that some media said are the partial renouncement of the centrally controlled system.

“A fundamental change would be difficult due to the structural dilemma that the North’s (dictatorial) governance entails. The environment outside of it should also be cooperative, but this is apparently difficult as long as Pyongyang’s nuclear issue remains unsettled,” she told The Korea Herald.

“But compared with its earlier measures introduced in July 2002, the new measures may be steps further in terms of the level of reform.”

The new measures reportedly give greater autonomy to state corporations, allowing them to choose their production items, prices, amounts and marketing methods.

They also allow farmers to take in 30 percent of their harvest. Under the measures, the food rationing system is scrapped for ordinary citizens. It is applicable only to public servants and workers at educational and medical institutions.

From a broader historical perspective, these fragments of change, though they have yet to be confirmed, would be accumulated within its economic system and add up to cause its revision in the end, Kwon noted.

“The North’s reform moves are like a spiral staircase. Northeless, it is going further (in the direction of reform),” she said.

“Rather than focusing on whether the North’s reform is fundamental or not, we should focus on how the reform has reproduced itself and expanded itself. The quintessential change is made through this process.”

Her claim was presented in her research paper introduced on Tuesday at an international seminar on the possibility of the communist state’s reform.

Kwon, in particular, paid attention to the “gradual, partial and belated” pattern of Pyongyang’s economic reform measures.

At a time when the capitalist world has ecome increasingly integrated with all socialist states opting to change their economic governance, the North is apparently pressed to do something to catch up with the trend.

But Pyongyang is apparently fearful of the possible threat to its regime, which can be brought by uncontrollable outside influence. Stuck in such a dilemma, the North has repeated a pattern of “reform, stop and reversal,” Kwon stressed.

She noted that even when the North took some bold reformative steps, they were carried out at a level to accept the inexorable reality of the uncontrollably expanded market that ordinary people now rely on heavily to put food on their tables as the food rationing system collapsed in the mid-1990s.

In contrast to his father Kim Jong-il who introduced his reform policy some years after officially taking office in 1998, Kim Jong-un appears to be moving to implement his own measures less than one year in office as if to highlight the urgency of economic reestablishment.

When Kim continues to adhere to the rigid dynastic ruling principles, these measures should face limits, she said. In a series of his remarks unveiled through media, Kim has clarified that he would uphold his father’s military-centered policy although he may put more emphasis on the economy.

To overcome the limits, Kwon said that Pyongyang should introduce a partial privatization of property and a commercial banking system, and bring in more foreign capital to support its reform drive.

At the same seminar, Kim Joong-ho, senior researcher at the Export-Import Bank of Korea, said that the North’s future reform efforts may be aimed at strengthening the economic foundation of the new leadership rather than enhancing the livelihood of the common people.

To encourage the North to open up to the outside world, some stressed the need for it to join the International Monetary Fund and the World Bank. Its entry into the organizations would help the North secure much-needed financial aid, which would also help address its nuclear issues, they said.

“Seoul should give a message, active rather than passive, saying that it will actively support the North should it opt to join the IMF, the World Bank and the Asia Development Bank,” said Jang Hyeong-su, financial professor at Hanyang University.

“It is likely that its entry into the IMF can be linked to the resolution of the nuclear issue, which could lead to some progress in the multilateral aid-for-denuclearization talks,” he said, referring to the stalled six-party talks involving the two Koreas, the U.S., Russia, China and Japan.

“The U.S., Japan and the EU can persuade the North to join the IMF.”

By Song Sang-ho (sshluck@heraldcorp.com)