New Leaders Forum

A Path for North Korean Reform?

The time might be ripe for other nations to encourage Chinese-style economic reforms in North Korea. Maybe.

Many have argued that the death of Kim Jong-il could lead to Chinese-style economic reform. Yet, even if his son and successor Kim Jong-un indicated a willingness to implement such restructuring, supported by a reformist group in Pyongyang, could the regime achieve such a goal? After all, economic reform is inevitably accompanied by an inflow of information from the outside.  In order to implement economic reform effectively, then, North Korea would have to accommodate and attract foreign investment to upgrade its outdated infrastructure and modernize agricultural and industrial capacities.

And of course, foreign direct investment in the 21st century requires the wide use of information and communication technologies, meaning that although North Korea would have little choice but to accept the spread of certain means of communication such as the internet and cell phones, such change could pose a significant threat to the regime.

The reality is that the Kim family is afraid of information penetrating from the outside world because the regime’s rule rests upon the politics of fear. Kim Jong-il disseminated false information about South Korea’s economic size, quality of life and political system for decades. Pyongyang has indoctrinated North Koreans with propaganda based around the idea that South Korea is economically inferior to the North, while North Koreans are taught that South Koreans are subject to U.S. colonization. A web of lies has therefore been spun to conceal the truth about South Korea, and Pyongyang’s nervousness over the emergence of black markets across North Korea is due in large part because of the implied loss of control of information flowing from the outside.

This isn’t to say that North Korea hasn’t made small efforts at economic reform in the past. Taking a look at Chinese economic reforms, one could look to the Rason and Sinuiju special economic zones to attract foreign investment as an example. Kim Jong-il also launched a number of economic reforms aimed at introducing market mechanisms to North Korea. But such reforms generated few positives because of the inefficiency of North Korea’s Stalinist central command system. North Korea has therefore always faced the dictator’s dilemma over the decentralization of power and openness to information from outside whenever trying economic reform. Its past attempts at economic reform are very much a case of one step forward, one step back (at best).

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How can North Korea overcome its structural limitations to implement meaningful economic reform?

The Chinese experience of reform certainly suggests some lessons. Mao Zedong designated Huo Guofeng as a successor, with the “Gang of Four” forming a left wing group against reformists within the Chinese Communist Party. It was Deng Xiaoping, however, who became supreme leader through a power struggle after Mao’s death. And, after successfully purging Huo and his supporters, Deng launched comprehensive change.

North Korea is now faced with similar challenges to those Deng faced. Kim Jong-il openly designated Kim Jong-un as his successor, while Jang Song-taek and other key figures are emerging as strong supporters (or possible controllers) of Kim Jong-un.  It might not be such a stretch, then, to suggest North Korea may be seeing its own “gang” taking collective control of the country.

The question, though, is whether a North Korean “Deng” will emerge to challenge Kim Jong-un and the conservative groups in Pyongyang. Based upon the Chinese experience, a power struggle within Pyongyang to escape the dictator’s dilemma is a possible prerequisite for meaningful economic reform.

So, how can China, South Korea and the United States assist in steering Kim Jong-un, or whoever is the ultimate powerbroker, toward the path of reform?

One way could be to encourage the existing economic special zones like Rason or the Kae-sung industrial complex to expand to attract foreign capital, although it should be noted that economic reform could ultimately create an internal schism between the conservatives and reformists within Pyongyang, whether they intend it or not. And it’s also possible that a third figure, currently unknown, could become assume control through a power struggle, and establish a truly reformist regime in North Korea.

With all this in mind, policymakers in relevant countries should understand that their positive engagement with North Korea could also lead to an unexpected crisis within the leadership. But if it does, they also shouldn’t necessarily equate the collapse of the Kim regime with the collapse of the North Korean government itself, the Communist Party or with state failure.

Flexibility to respond to unfolding events will be the key, and regardless of what may happen to the Kim regime, interested parties should try to work with Kim Jong-un to encourage Chinese-style reforms. Doing so will mean being prepared to cope with an unexpected contingency in North Korea. But policymakers in the U.S., South Korea and elsewhere will be fully aware of the fact that the only predictable thing in North Korea is its unpredictability.

Sungmin Cho is a 2011 Kelly Fellow with Pacific Forum CSIS.  In 2005, Cho joined the Republic of Korea Army and served as an intelligence officer for three years, including a seven-month tour to Iraq in 2006.