Second Republic in the DPRK

DO NOT CITE OR DISTRIBUTE WITHOUT PERMISSION The views expressed in this presentation are personal opinions of the author and do not reflect the official positions of the APCSS or the U.S. government Second Republic in the DPRK Continuity and Change under Kim Jong Il Dr. Alexandre Y. Mansourov

Outline • What has changed since Kim Il Sung’s death in July 1994? • What remains the same? • Where is Kim Jong Il likely to take his country from here in future?

Elements of Continuity: Nature of Economic System • Command and control economy, central planning (partly defunct), state ownership • Results: misallocation of resources, proliferation of inefficiencies, wastefulness, mismanagement • Isolation from world markets • Militarization of economy

Elements of Continuity: Nature of Political System It is still a totalitarian dictatorship based on one-party rule of WPK and the cult of personality of Kim Jong Il Kim’s clan still holds power

Elements of Continuity: Nature of Ideology The ideology of Juch’e (“self-reliance”) still permeates all spheres of social, economic, political, and cultural life

Kim Il Sung’s Legacy Intact In sum, there have been NO principled changes in the nature of economic and political systems, substance of ideology, or core of the ruling clan in North Korea since 1994

Elements of Change:Emergence of Three “Neo’s” The 2nd Republic can be characterized by three “Neo’s” Cultural neo-traditionalism Political neo-authoritarianism Pre-market-oriented economic neo-corporatism

Clan Rules • Succession politics is OVER. KJl is in firm command. • Any collectively organized opposition failed to emerge in the past decade. • Against the background of wide-spread famine and economic depression, yes, there is some grumbling and disquiet; but, everyone suffers. Hence, personal survival is the name of the game for all. • The message is out: if one is loyal to Kim Jong Il, one will survive this time of hardship and will be taken care of in the long run. • Ruling elite is rejuvenated. The KJI-groomed “three revolutions” generation is firmly in power.

Assault on the Party-State • KJI is elected the Secretary -General of the entire WPK, not of its Central Committee, as it used to be. Frequent purges decapitated the WPK CC, especially in such areas as agricultural policy, energy policy, foreign trade, ideology, counter-intelligence WPK's influence in decline Growing separation of Party and State

Military Rule “Songun politics” • National Defense Commission is the supreme state organ • Vertical hierarchy of the NDC-authorized representative offices subordinated directly to KJI in all economic, social, and public entities at all levels (like “groups of three revolutions” in the 1970s): • Is the military in control of the state sector of the national economy and all public institutions, like in wartime? • Paradox: how can the KPA’s influence seemingly grow under the “army-first politics” against the backdrop of the hollowing out of the NK’n military capabilities? • Potyemkin village? • Does the military represent its own corporate interests; or does it represent the selfish interests of Kim’s clan?

Military Rule

Constitutional Reform of Sept. 1998 • First Session of the 10th SPA passed a new “Kim Jong Il – era” Constitution: • Abolished the institution of the President and Vice-President • Diminished the powers and status of the Central People’s Committee • Made the NDC the supreme state body defining national security strategy, economic and political development strategies; Kim Jong Il as a de-facto supreme leader • Made the President of the Presidium of the SPA as a formal “head of state” (plus three vice-presidents and four “honorary VPs”) • Abolished the Administrative Council and instituted the Cabinet of Ministers composed mainly of economic ministries • All “power ministries” were subordinated directly to NDC • Private ownership is allowed. Party rule is curtailed.

Government Administration Reform of Sept. 1998 • Objective: to cut down government expenditures and increase government efficiency through greater centralization of functionally related government bureaucracies at the center and through delegation of responsibilities to local actors • Solution: creation of “super-ministries” and “super-commissions” • Result: decrease in central control over local governments and economic actors

Political Neo-authoritarianism:Summary Unchallenged rule by Kim Jong Il Less party More military Loosening of central control at the local level Centralization of government bureaucracy at the center

Economic Collapse • In Pyongyang, there is a policy-making consensus that • the status-quo is unacceptable • NK is facing a profound macro-economic crisis • a new structural adjustment strategy must be adopted to improve the economic situation • Strategic goal – to build a “powerful and prosperous nation” (“kangsong taeguk”)

Proliferation and expansion of FETZs (6), i.e., “growth poles” or market anclaves, – “trickle down approach”(Sinuiju, Kaesong, Rasong, Nampo, Wonsan, etc.) “Big leap forward” (2nd “Ch’ollima march,” “shock therapy” à la NK) Quasi-liberalization of prices, wages, and FOREX on 7/1/02 (“7/1 measures to improve economic mgmt”) The logic is simple: NK’s economy is at the bottom already so its radical restructuring should not have much negative impact on either public welfare or economic output anyway. Models of Structural Adjustment

Black markets

“Apparatchik (bureaucratic) capitalism” Ministries-led restructuring “Clan/cronies capitalism” Conglomerates-led restructuring Economic Actors Should property rights over the public sector be retained by the State or transferred to enterprises through securitization of assets? Is privatization of SOEs on the horizon?

Laws on central planning, agriculture, mineral resources, etc. Laws on Stock, Joint Stock Company, Kim Jong Il’s decrees Economic Neo-Corporatism:Battle of Ministries versus Combines Battle of Laws Emergence of multi-layered and partly decentralized economy Corporatization of assets in oil refining, mining, manufacturing, textiles, food processing Delegation of administrative and managerial responsibilities from party officials to industrial/commercial managers

Economic Neo-Corporatism: Sources of Financing • Debt – advocated by government economic bureaucracy (external borrowings from IFIs, Japanese settlement, ROK’s indirect BOP support) • Ru’s bad lesson: much aid will be stolen via corruption • Equity (development of local capital markets) – advocated by industry • China’s positive lesson: good for FDI, KJI’s visit to the Shanghai Stock Exchange • Confiscatory monetary (print more money, inflation) and fiscal (raise hidden taxes) policies – advocated by MinFin

Economic Neo-Corporatism:Summary Move away from absolute State control of the economy (“statism”), but not in the direction of greater economic liberalism; rather towards greater “corporate control” in the emerging pre-market conditions NK is no longer a centrally planned economy. But, concurrent new institution-building is absent.

Cultural Neo-Traditionalism:Politics of Filial Piety and Red Flag Ideology • The politics of filial piety practiced by KJI during 3-yr mourning period facilitated the revival of “neo-Confucian” values in the NK’n society Yuhun chongch'i Fatherly Leader Respect for the Elderly Motherly Party Politics of Virtue Filial Loyalty Family-State Benevolent politics

Cultural Neo-Traditionalism: Rise of Nationalism • Communist aspects of the juch’e ideology are toned down, whereas nationalist elements are increasingly emphasized: • NK projects itself as the sole independent guardian of authentic “traditional Korean values” and depicts SK as a Westernized and Americanized “modern day puppet of global imperialism.”

Cultural Neo-Traditionalism:Revival of Religions • State-sponsored revival of religions (both Christianity and Buddhism), unthinkable ten years ago

Cultural Neo-Traditionalism: Symbolism and Cult of Personality • Renewed emphasis on symbolism (rather than rationalism) in ideological propaganda: • Introduction of the Juch’e-Era calendar (1st year – 1912) and the Sun Day – April 15 • Propaganda of the myth of Tangun as the “founder of the Korean nation” • Eternalization of Kim Il Sung as “Eternal President”: the cult of his personality is given mystical attributes

Foreign Policy Legacy of the First Republic • Kim Sr.’s legacy dominates Kim Jr’s f/p priorities. • With all Kim Il Sung’s “great accomplishments,” he left three historical tasks unfulfilled: • To settle scores, conclude peace, and normalize official relations with the United States and Japan • To reunify the Korean peninsula on the basis of the Juch’e Idea. • To repair broken ties with Russia and China • Kim Jong Il’s mission is to complete these Herculean tasks. CAN HE DELIVER? Is Kim Jong Il a Super-Kim Il Sung?

Common values and interests: traditional ties: “lips & teeth”) communist ideology M-L political system fight against US hegemony defend socialism by modernizing economy and preserving political system manage refugee flows Policy divergencies: PRC recognizes NK’s military inferiority vs SK PRC is against WMD in K. PRC is against NK’s use of force to unify NK resents PRC’s “two Korea” policy NK plays Taiwan card China is the Key Developmental model Political legitimacy Military protection As long as PRC is behind KJI, his survival is assured, and China is likely to give enough aid to NK to keep it afloat. NK’s economic dependency on PRC food, fertilizer, fuel, debt

Welcome to KEDOLAND

“KEDO Miracle” • a State within a State - status of exterritoriality, own banking and legal systems, postal and telecom services, int’l ID docs and immunities • a Western enclave inside NK(like Japanese settlements in open ports, following the opening of Korea as a result of the Kanghwa Treaty of 1876) • how far can KEDO “push the envelope”? • KEDO’s impact: new notions of what is acceptable and desirable in policy-making in NK; a new constituency of NK’n experts in int’l law, contract law, IOs, nuclear energy field; support for local economy • Is KEDO dead for now? • Common belief: SK will absorb NK before the LWR project is complete. But, what if the DPRK government remains in power indefinitely? What will happen to KEDO-land then? • Permanent SK’n anclave inside NK? KEDO-run FETZ? Open industrial park? LWR shutdown? • How much “enough” (evidence of past activity) is enough?

Russian Card • Goal is similar: “strong and powerful” Korea and Russia, although means are different. Russia serves as a “window into the West” for NK: learn from Russian experience how to reform and survive • Pragmatism, instead of ideology, in the economic area • Personal chemistry between Kim Jong Il and Putin, intensified elite interactions • Strategic interaction: • Russia won’t join any anti-NK coalition, nor will meddle into NK’n domestic affairs • Moscow’s assurance of Kim Jong Il’s personal safety • Russian commitment to provide NK with arms up to the level of “defensive sufficiency;” • shared understanding regarding U.S. hegemony in Korea and worldwide

On-again Off-again DPRK-ROK Relations • Fear of entrapment versus fear of abandonment • Complex of inferiority (mil., ec.) vs sense of superiority (cult’l, historical) • Symbolic summit diplomacy in exchange for the balance of payments support and humanitarian assistance • Military deterrence and economic/cultural exchanges • Foment nationalistic, isolationist, traditionalist sentiment in ROK • Break up the ROK-US alliance • Propaganda of unification, but no desire to unify; the goal is to stem SK-led absorption at all costs and bid time

DPRK and the “Axis of Evil” • Engagement strategy is dead • Perry process is dead • Kelly process is on • We are back to rollback

Fighting “Evil” with “Evil”: DPRK MOFA Reply on January 31, 2002 • The prevailing situation where the U.S. openly disclosed its intention to stifle the DPRK by force of arms makes us keenly realize once again what a just stand the DPRK took when it has followed the U.S. with vigilance and what a far-sighted policy it has pursued to equip itself with powerful offensive and defensive means, tightening its belt. • Bush’s remarks clearly show what real aims the U.S. sought when it proposed to resume the talks with the DPRK recently and why the present U.S. administration ruled out even the possibility of seeking a negotiated settlement of the nuclear and missile issues created in the period of the preceding administration. • The option to “strike” impudently advocated by the U.S. is not its monopoly.

“Voice of Evil” • Korean Central Broadcasting (Feb. 4): Bush’s remarks revealed Washington’s intention to destroy the DPRK through military means by falsely connecting it with terrorism. The DPRK joined a number of anti-terror conventions last year and there is absolutely no evidence of its support for terrorism or any other “evil.” In fact, the title (“evil” better suits the U.S. itself, which is a source of true evil. • Rodong Sinmun (Feb. 5): There has been no precedent in the modern history of DPRK-U.S. relations as that which Bush openly threatened the DPRK with aggression. What merits a more serious attention is that the U.S. attempts to designate the DPRK as a target of its military operation. However, it will be a fatal blunder for the U.S. to ignite a new war on the Korean Peninsula. The DPRK is neither Afghanistan nor Yugoslavia nor Iraq. • Minju Joson (Feb. 7): Bush’s remarks in U.S. Congress clearly prove how crazy he has become in pursuing his hostile policy to stifle the DPRK. The bellicose elements consider that if tensions are defused on the Korean Peninsula, their policy of military presence in South Korea as well as their Asia-Pacific strategy will go bust. That is why they have left no stone unturned to wreck peace on the peninsula whenever a favorable atmosphere for the Korean people is created.

Japan What? • Kim’s fundamental belief: Japan’s policy t/NK is contingent on U.S. predisposition and progress in N-S dialogue • Hence, Tokyo will not make a deal unless Washington pushes for it (like with SK in 1965). Alternatively, Tokyo may rush to settle with Pyongyang on its own once it concludes that a U.S.-NK normalization or a breakthrough in the inter-Korean relations may be imminent (like Japan-PRC settlement in 1972). • In the meantime, Kim’s strategy is not to give too many concessions under duress, continue to harass the Japanese, and hold out for more compensation at better times when his own hand gets stronger and the Japanese become more flexible and eager to deal. • In sum, Kim is in no rush to normalize relations with Japan, despite his father’s will, possible financial windfall, and diplomatic advantages. Koizumi-Kim Summit on 09/17/02 failed to lead to normalization of the DPRK-Japan relations

European Offensive • Tradition of cooperation with Europe • “Dismantlement of the Cold War legacy” • Improved international reputation • Transfer of resources and technology in exchange for transparency and respect for EU humanitarian concerns • Marginal leverage vs U.S.

Bait and Frustrate NGOs • “Give me, give me, give me…” • Dark chamber of planks with glass ceiling • Limits on access and transparency • “What donor fatigue?” • “Be sincere and work harder!” • What will future hold for NGOs in NK? “Co-opt or get’em outta here!”

Foreign Policy Report Card • China – “bleeding lips and broken teeth” • Russia – mission accomplished • EU – mission accomplished • KEDO – going nowhere • United States – needs a power defroster • Japan – moribund, needs an electric shock and a new compass • ROK – on track • NGOs – under repair

Kim Jong Il’s Era Unfolding:Predictions • A gradually reforming authoritarian DPRK will have no interest in reunification. • A prosperous, democratic ROK will have declining interest in reunification. • Relations between the two, and between the DPRK and others, will improve. • Reconciliation, but no unification as long as Kim Jong-Il is at the realm in NK. • Wild Card: will Kim Jong-Il’s death cause a military coup or popular uprising and an avalanche-style unification?

Second Republic in the DPRK