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North Koreans "Learn Capitalism" Yet Again

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Choe Yong Rim, North Korea's prime minister, toured Shanghai today "to see first-hand how the Chinese financial center has been transformed since Beijing opened up its economy to market forces," according to Voice of America news.

Choe, who left himself an out in case the whole "market forces" deal falls flat by telling China Radio International that "only under the leadership of the Communist Party of China" could Shanghai have become a commercial success, visited the Baosteel Group, the Bailian Xijiao Goods Purchasing Center and the Chinese Pavilion of the 2010 Shanghai World Expo, which Choe described as an "Economic Olympics."


Shanghai, 1990 (top), Shanghai, 2010 (bottom)
Photo credit: Gizmodo


North Korea, which is currently developing a special economic zone, Rason -- an area they hope to convince the remaining countries willing to do business with the Kim syndicate, is nothing less than a "mini-Singapore" even though it currently consists of "a single paved road" -- has often expressed its desire to "learn capitalism" then changing little.

Writes Chico Harlan of the Washington Post:

Some experts in Seoul and Washington describe the recent moves in Rason as a natural extension of political pressures. Facing U.N. sanctions and reduced inter-Korean aid from conservative South Korean President Lee Myung-bak, North Korea has grown more reliant on its traditional allies -- first China solely, then Russia as a counterbalance to China. More recently, Russia and North Korea have discussed the construction of a pipeline that would span the country, delivering gas to South Korea. Pyongyang stands to profit by charging handling fees, but Russia, analysts said, could predicate any agreement on political cooperation.


In April, delegation of 12 North Korean economic envoys spent two weeks in the United States touring companies that “represent main strands of the US economy.”

As we reported at the time, the group visited Google, Home Depot, Bloomberg, Citigroup, Qualcomm, Sempra Energy, Union Bank, and Universal Studios, as well as a mushroom farm, a seafood wholesaler, and the Port of Los Angeles, where they leaned about trade infrastructure. Sources said they also attended lectures at NYU and Stanford University, where they learned about “the market economy, consumer protection, what a CEO does, corporate strategies in the US, and an overview of the western legal system."


North Korean delegates at Stanford doing their damndest not to look at the co-eds to their right

Journalists were not permitted access to the visitors (they entered the Googleplex through a back entrance under tight security), and no mention of the trip appeared in the American media.

One of the few sources providing any details regarding the affair, South Korean newspaper JoongAng Ilbo, managed to obtain a copy of the delegation’s itinerary.

According to the report, “Six director-level officials were in the group, including the delegation’s head, Yon Il, a director at North Korea’s trade ministry. The other directors work for the trade ministry, agriculture ministry, finance ministry and industry ministry.”

Other delegates included lower level North Korean directors and managers, two advisors, and a researcher from a North Korean trade bank.

South Korean newspaper JoonAng Ilbo was rightly skeptical. Could the "DPRK 12" be sending a signal that the North “is finally getting serious about introducing more market-based economic reforms?" the paper asked. “Has the reformist message that China, its closest ally, has been hammering home for years finally gotten across? Or is the envoys’ mission just a conciliatory gesture to try to woo food aid from the U.S. amid a deepening food crisis?”

Are things different this time?

“I do think North Korea is serious this time," Marcus Noland of the Peterson Institute for International Economics tells the Washington Post's Harlan. “Why do I say that? Because we can actually see them paving the road. But the deeper issue is, what do they do with the road? Does the government want an enclave that will not affect the fundamental economy of the country? Or do they see it as a potential spur?”

North Korea scholar Andray Abrahamian tells the Post that "clearly changes are afoot in Rason," though North Korea remains "uneasy" about aspects of the project.

Of course, as this is North Korea, no one really has any way of reliably knowing the full truth about anything at all.

In a recent paper, David Straub, a former Senior Foreign Service Officer who spent 30 years focused on Northeast Asian affairs wrote, “The fact of the matter is that no one, not even in Pyongyang, really knows what is going to happen there. I believe there could be dramatic change in the regime in North Korea even as you are reading this, but I also believe it is possible that the regime could last many decades more.”

However, Dr. Siegfried Hecker, former director of Los Alamos National Laboratory (1986–97) and current co-director of Stanford’s Center for International Security and Cooperation, has made particularly optimistic statements about the possibility of North Korea's eventual opening before.

Hecker, who has been granted access to North Korea’s Yongbyon nuclear complex, told an audience about an experience he had during a visit to Pyongyang.

As Hecker entered a subway station in the capital city, he encountered a young man “wearing a backwards baseball cap with a Nike swoosh.”

“When he gets to be 21 years old, they’re gonna have a hard time keeping him down on the farm,” Hecker said. “Where there is ‘swoosh,’ there is hope.”

The question now is, will "swoosh" be available at a soon-to-come Niketown in Rason?

POSITION:  No positions in stocks mentioned.

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