“Under new leader Kim Jong Eun, North Korea in recent months has shifted its rhetoric to emphasize the economy rather than the military and is introducing small-scale agricultural reforms with tantalizing elements of capitalism, according to diplomats and defector groups with informants in the North,” writes the Washington Post’s Chico Harlan:
The changes, which allow farmers to keep more of their crops and sell surpluses in the private market, are in the experimental stage and are easily reversible, analysts caution. But even skeptical North Korea watchers say that Kim’s emerging policies and style — and his frank acknowledgment of the country’s economic problems — hint at an economic opening similar to China’s in the late 1970s.
But reform is likely to remain largely economic rather than political and it is principally driven by the need to attract investment from China.
According to a study by the Bank of Korea, “manufacturing investment from China could help transform a country whose national output in real terms is estimated by the United Nations to be smaller than it was some 20 years ago,” Reuters reports:
But the report warned that the North still had a long way to go to emulate the legal reforms undertaken by China in modernizing its centrally planned economy, something that Chinese premier Wen Jiabao raised with the North’s effective second-in-command on a recent visit to Beijing.
“China indicated that for the special (economic) zones to become active, a more market-friendly regulatory system is needed,” the central bank report said.
“This is apparent in the comments by Premier Wen Jiabao at his meeting with Jang Song-thaek that North Korea must present a more favorable set of conditions to companies by incorporating market principles in supporting regulations such as in real estate and taxation.”
“It’s premature to make any judgment about what will happen, but we were in a system last year [under Kim Jong Il] where it seemed like policy had been set and it was distinctly retrogressive, with no reasonable prospect for change,” said Scott Snyder, a senior fellow for Korea studies at the Council on Foreign Relations. “Now, I think that there is an anticipatory buzz that maybe there could be something new.”
Several media outlets that employ North Korean defectors, including Washington-based Radio Free Asia, have reported that Pyongyang is rolling out agricultural policy changes that mark a significant break from the state-controlled economy.
Those measures, according to the reports, reduce the size of cooperative farm units from between 10 and 25 farmers to between four and six. The decrease is critical because it allows one or two households, not entire communities, to plan and tend to their own farms. Farmers still must hit production quotas, but they can keep 30 percent of their crops, up from less than 10 percent. They can sell the rest to the government at market prices, not state-fixed prices, and they can keep (and sell privately) anything exceeding the quota.
For observers seeking signs of reform, Kim Jong Un has been a godsend,” writes CSIS analyst Victor Cha, and suggestions that Pyongyang is due to launch a new economic policy based on China’s Market-Leninist model “only fuel speculation that junior Kim is serious about change,” he writes for Foreign Policy.
Even if Kim successfully consolidates power, he needs a new ideology,” Cha recently wrote, “in order to demand the blind obedience that characterized his father and grandfather’s rule. He appears to be downgrading, not celebrating the military, so he cannot copy his father’s “military-first” ideology.
North Koreans also recall that previous reforms proved to be short-lived. A defector from Hyesan, 43-year old Lee Chul Ho recalls the opening in 2002.
“In Pyongyang and the provinces, [people with money to invest] got involved and started reviving some moribund factories, while existing and new buildings were put to use not only for shops, stores, bars and restaurants, but also for karaoke parlors and billiard halls,” he tells Daily NK. “There were also massage parlors, hair and beauty shops and saunas,” Lee went on. “People were able to buy things more easily, so their lives became much more comfortable. The foreign currency shops and restaurants used by cadres and foreign currency earners gradually began to disappear.” Economic revitalization naturally resulted in more active trade between North Korea and China as well. North Korea expanded the right to trade with the outside world to city and county enterprises, allowing transfers of technology, equipment, materials and raw materials, as well as joint ventures themselves. Various trading companies sprang up, representing another great opportunity for those with investment capital. But on April 25th 2005 it all came tumbling down as the state closed down shops and other services, calling them “anti-socialist elements”. Buildings, facilities and other property was expropriated, and patrols organized by the Ministry of People’s Safety smashed signboards down with hammers. The people went into shock as their assets vanished overnight, and it is this type of experience that is rightly cooling expectations now. Speaking figuratively, “they eat the ones that have been fattened up”.
Information about developments within the Hermit state is emerging from a new generation of defectors. Described as “small miracle” for raising hopes for human rights in North Korea, the defectors act as a “bridge population” between the two Koreas, says Carl Gershman, president of the Washington, D.C.-based National Endowment for Democracy.