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DONG Yong-Sueng

North Korea Needs More than Economic Models

DONG Yong-Sueng

Aug. 22, 2008

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Experts have been arguing these days that North Korea is dropping the Chinese model for economic reforms and open-door policies and adopting the Vietnamese approach. North Korean leader Kim Jong-il had expressed keen interest in China's path before, having visited Shanghai and the Shenzhen Special Economic Zone. But at the end of 2007, Kim signaled an intention to employ the Vietnamese model, and there is growing speculation that he will visit Vietnam soon. Nong Duc Manh, secretary general of the Vietnamese Communist Party's central committee, and North Korean Prime Minister Kim Yong-il already have exchanged visits recently.

The reason why the North has interest in Vietnamese model is that it focuses on introducing economic changes without political changes. Since there is a growing possibility that the North can improve relations with the United States, Pyongyang may be attracted to how Vietnam's Doi Moi ("reconstruction") policy has flourished since the nation's rapprochement with Washington in the early 1990s.

The fundamental difference between the Chinese and Vietnamese models is starting capital. When China began economic reforms, it had considerable reserves and an army of overseas Chinese ready to invest, not to mention foreign companies who have always dreamed of tapping the huge China market. Moreover, China could open gradually, using neighboring Hong Kong, as a gateway.

In contrast, Vietnam, which had lost economic support when the Soviet Union collapsed, had no choice but to turn to international finance. Its open-door policy was subject to international scrutiny and it had to adopt an all-out approach. Still, political reform was kept out of the process.

Whether it is the Chinese model or Vietnamese model, it is gratifying that North Korea is exploring ways to end its reclusion and improve its livelihood. Both models prioritize economic growth. The North can be transformed into a new regime which doesn't ignore or use hunger of its people, but actively accepts market economy and outside capital in order to improve the livelihood of its people.

In fact, the North could use both styles. Like Vietnam it could utilize resources of international organizations and build on improved relations with the US. Like China, it could use investments from brethren outside its borders, drawing on the largesse of South Korea.

Hopefully, the North will display its willingness to attract foreign capital by establishing better investment conditions than China and Vietnam. If that happens, the North will naturally realize that the South's capital for its development would be more advantageous than other sources.

Nearly every South Korean business person who visits the North says that workers in North Korean factories want to spend more time with them but North Korean guides try to minimize contact time. Pursuing reform and opening policy (whether it is Chinese or Vietnamese) under such circumstances, where contacts are limited, may lead to failure. The North needs to recognize that the mindset and attitude toward reform and opening its doors is more important than the blueprint.

At the South Korea-US summit in early August, both sides reaffirmed their commitment to improving the human rights situation in North Korea. The South may feel uncomfortable mentioning the issue, but it can no longer ignore it. Pyongyang's reproachable policy on human rights affects every North Korean, not just North Korean refugees, defectors, and political prisoners.

In the post-Cold War environment, the concept of security has been expanded beyond military hardware to include human security. This means "the freedom from fear and want." However, that is not the case for North Korean residents. The Pyongyang regime often brainwashes its people to believe that the outside world is putting military pressure on the North to thwart the regime. As a result, the average North Korean is bound to be resistant and even hostile toward the outside world.

If the North tries to reform and open its economy, that will be an opportunity to improve human rights of its people. But, again, it will have to adjust its mindset and rhetoric. Espousing xenophobia while opening its door won't push the economy very far.

The "Sunshine Policy" of the past two administrations focused on winning over the North, but, so far, there is little evidence of any payoff. Instead of being persuaded to reform, the North took advantage of the policy to solidify its regime. A carrot-and-stick approach is now needed by South Korea and all other countries to prompt reforms in North Korea . The Pyongyang regime has models to change its economy. It has to face itself to change its mind.

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