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    Korea
     Jan 10, '14


SPEAKING FREELY
Kim purges for a new economic dawn
By Sascha Matuszak

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

The only thing North Korea watchers agree on is that nothing can be agreed upon when it comes to the motives of the Pyongyang government, particularly the temperament of its leaders, or their future course.

Leading up to the recent execution of former regent Jang Song-thaek, scholars and pundits expressed a cautious optimism for reform, specifically economic reform, centered around a collection of special economic zones. The zones stretch across North



Korea's land, and deal primarily in exploiting, processing, and shipping the country's vast mineral resources.

The promise of wealth would bring out the hermit, so went the optimistic narrative, and engagement with China - and perhaps Russia and Mongolia - would replace reliance upon China.

But after Kim Jong-eun executed his uncle for a laundry list of crimes including corruption and drug smuggling, media and academia collectively shook their heads at yet another spectacular public relations disaster for North Korea. Essays in the Council of Foreign Relations, articles in mainstream media, and analysis from enduring Korea watchers painted a multi-hued picture of instability, regression, and confusion.

But a recent study by relative newcomer, Hong Kong-based Intelligent Security Solutions, believes this is all part of the plan. ISS represents a lonely voice of optimism amidst the "hear we go again" negativity of the past month.

"The underlying message here was one of consolidation and securing the pathway to the expansion of the reform program," said Phillip Hynes, senior analyst at ISS and author of the study, presented to clients in October of this year.

"Any nonsense about hard liners striking and being behind this displays a distinct lack of comprehension of what is happening within the country, the political party, and the military apparatus over the last few years."

For ISS, North Korea is not as crazy as everyone else thinks. The country is riddled with mineral deposits - gold, iron, bauxite, graphite, you name it - but does not have the ability to process or transport the wealth of the land to market. Rail links need improvement, ports need competent management, there are no ships capable of moving all of minerals out of the country, and factories built a generation ago have been dormant and rotting for years.

"Myanmar is being sanitized right now, but from a risk management perspective, that country presents a lot more for investors to worry about than North Korea," said Hynes. "North Korea is ruled by one powerful party and the administration wants foreign investment and expertise."

"It's all just a matter of perspective: the world needs to see North Korea as a country of potential instead of a pariah."

Hynes' analysis centers around two core ideas.

The first being that the DPRK's hyper-insecurity is fed primarily by a desire for sovereign security which has been undermined by US actions, not the queer insanity of an hereditary dictatorship living in a reactionary past. US-led sanctions, decades of regime-change rhetoric, and 30,000 American troops stationed just a few hours away from Pyongyang have made it impossible for North Korea to de-couple political leadership from the military, said Hynes, or to reverse decades of economic decline,.

To anyone who has discussed North Korea, the idea that American aggression has led to a fearful, unpredictable situation in Northeast Asia is not unfamiliar. In fact, most objective scholars may find themselves nodding in agreement.

It's the second premise that makes Hynes somewhat of an outlier.

For Hynes, it is not just about Jang's corrupt financial dealings with the DPRK's SEZs and with the now-defunct and discredited Taepung Group. The sudden purge is also about a natural order of things changing, the second and third generations making the transition into the leadership slots held by the first generation, a natural process.

Kim Jong-eun had to take his pocket-lining uncle out in order to send a message - both internally and externally - that North Korea is serious about economic reform, and just as serious about party loyalty once these reforms kick off.

"There was a need for internal assurances, to make everyone understand that this is a reform-minded administration, from the top on down," said Hynes. "The party is on board, the military is on board, and Kim couldn't afford to have any loose ends during this transition."

Jang was long known to be involved in a variety of financial dealings. He was in and out of Hong Kong and China managing Taepung, a holding company shut down by the Hong Kong Monetary Authority in 2010. Jang was also considered by many to be the point man for the special economic zones modeled after China's own method of rising up out of centrally-planned poverty and into a more market determined approach to generating wealth. As such, to many observers, he was considered "China's man" in North Korea, a dedicated economic reformer, and North Korea's greatest hope for normalcy after decades of isolation, oppression, and stagnation.

"[Jang's] involvement in the SEZs was always known about, [and] given his position he is assumed to have been the power behind them," wrote Hynes in an email. "Not the case."

"[The SEZs] were at risk of being tarnished by his involvement, with the announcement of the creation of new SEZs and therefore a much bigger cookie jar to dip into, the timing of his removal is not that much of a shock."

Hynes doesn't finds himself quite alone with his theory. Although eminent DPRK watchers such as Christopher Hill do not believe that Kim Jung-un is a reformer, Hill does agree that Jang was more interested in financial dealings with China, than the actual China Model itself. As Hill himself wrote on December 20:
"If anyone can make one long for the tender mercies of Kim Jong-il's reign, it is his son, Kim Jong-eun. There is little evidence that the younger, let-them-eat-chocolate-cake Kim has the slightest interest in reform or alleviating North Koreans' suffering.

But Jang was no reformer. Rather than worrying about the country's food supply, he reportedly had broad responsibility for steering the Kim family fortune through a labyrinth of bank accounts on several continents. He was also well known for helping Kim Jong-il create North Korea's nomenklatura - the complex system of patronage, part and parcel of communism, that ensures officials' loyalty to the regime.

But Jang was no reformer. Rather than worrying about the country's food supply, he reportedly had broad responsibility for steering the Kim family fortune through a labyrinth of bank accounts on several continents. He was also well known for helping Kim Jong-il create North Korea's nomenklatura - the complex system of patronage, part and parcel of communism, that ensures officials' loyalty to the regime.
The Christian Science Monitor ran a story, in which mainland Chinese scholars discussed economic reform as an inevitable process already underway, and not an event that could be derailed by political maneuvering:
Overall, Kim's attitude toward economic reform in cooperation with China remains a mixed bag, said Fang Xiuyu, a North Korea expert at Shanghai's Fudan University.
Even as Pyongyang was announcing Jang's purging, North Korean and Chinese representatives were signing contracts on cross-border high-speed rail and highway connections, Fang pointed out.
"I don't think North Korea's economic relations with China will be affected because of this particular incident, but all we can really do for now is speculate," she said.
Another story in the Toronto Globe and Mail, in which Hynes' report is also mentioned, frames the purging of Jang as a possible housecleaning before a big event - in this case a decisive move toward economic reform.

Could a brutal, headline-grabbing execution of a high ranking official, one's own uncle, be in fact the final consolidation of political power before a big risky overture to the outside world? Hynes believes it is.

"Kim Jong-eun will make a high-profile visit to China in the next six to eight months, and economic reforms similar to what China did in 1979 will be the topic of discussion," he said. "I believe the army and the party will be supporting the civilian government in their determination to push ahead with reforms."

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing. Articles submitted for this section allow our readers to express their opinions and do not necessarily meet the same editorial standards of Asia Times Online's regular contributors.

Sascha Matuszak is a freelance writer living in China.

(Copyright 2014 Sascha Matuszak)






The unraveling of North Korea (Jan 6, '14)

 

 
 



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