ADRN

The EAI hosted its 16th GlobalNet 21 Forum with Stephen Haggard (UCSD) talking about "The Political Economy of North Korea: Strategic Implications." After the presentation, the panel with Prof. Lee Geun (SNU-GSIS), Assemblyman Hong Jungwook (GNP), Lim Byeong-cheol of the Unification Ministry and Prof. Chun Chaesung (SNU) actively discussed the issues raised.

Presentation

The great famine of the mid-1990s led to the collapse of the PDS (Public Distribution System). This state failure caused a forced "marketization from below" in the country. Thus, the economic transformation was not the result of a top-down reform, but an unintended response to the state failure. However, in the post-famine era, the regime undertook a major "reform in reverse" effort: the control of the food economy, mainly by banning private trade in grain and reviving the PDS; the management of the border trade; the restrictive response of the government to the development of markets, etc. Nonetheless, North Korea has in fact become more economically open, and FDI has played an increasing role in financing North Korea’s current account deficit over time. Much of its trade is with China although it also has growing trade with the Middle East. The fact that China's share of imports and exports has expanded greatly to almost 50% implies how dependent North Korea is becoming on China. While trade across the Chinese border has been increasingly commercial in form, South Korea’s trade with North Korea has been less commercial in nature. Although the implications of these developments are not clear for now, it is certain that China has become more significant to any effective sanctions effort. North Korea’s growing ties and links with the Middle East implies that it is more open but this is limited to countries that are unlikely to exert pressure or demands on the country. Economic inducements are difficult unless highly targeted. Panel Discussion/Q&A Key findings from the active panel discussion are as follow: • North Korea’s imminent problem now is the succession issue, and it is essential for resolving the nuclear crisis. Although the pattern of the recent nuclear test with the last nuclear test is different, finding a solution may not be all that different. What is clear is that a tough tactic won’t work. We have seen from the past that North Korea can endure that. • It is important to understand the intent of North Korea so that you can apply the correct policy. Neither unconditional support nor reciprocal support will work. With the Vision 3000 model there are three main problems; 1) a mismatch of priorities; 2) the wrong process order; 3) lack of realistic targets. • The North will not change its system and will use all its resources to deal with the current crisis. The new sanctions will enhance its relations with China. • We should view the contacts with North Korea from a broader perspective. And it is important to have grand visions on how to deal with North Korea. But the most important aspect is how to get negotiations started. • Whatever North Korea's intentions are, it would not be interested in anything that could threaten its political control. So far, North Korea has not been interested in any of the benefits handed to them. • The stability of the North Korea regime may refers to less incidents of social protest. North Koreans respond to coercion by going into the market instead of social protest. Therefore, the "marketization" was a quasi-political response to the state failure.

• We may expect not a "change in regime" but a "change in the behavior of the regime." So what we are seeking is a change in behavior and character and this is what the Sunshine Policy was aiming for.

 

Moderator Young Sun Ha

Presenter Stephan Haggard

Designated Discussants

Chaesung Chun
Jungwook Hong
Geun Lee
Byeong Cheol Lim

Free Discussion Panel

Sung Kyoo Ahn
Jihwan Hwang
Heon Joo Jung
Thomas Kalinowski
Myung-koo Kang
Byung-Kook Kim
Su-Jeong Kim
Whan-yung Kim
Dongmin Lee
Seung hoon Lee
Yong Wook Lee
Seongho Sheen
Jee-ho Yoo