Author: Andrei Lankov, Kookmin University and ANU

At a cursory glance, North Korean policy over the last two decades may seem profoundly irrational. The country has continued to cling to a grossly inefficient and anachronistic economic system, once patterned on the Soviet economy of Stalin’s era. Predictably, the North Korean economy folded in, leading to a disastrous famine in the mid to late 1990s (it has since recovered, but only partially).

At the same time, in its immediate region, one can see seemingly irresistible and shining examples of how very similar problems have been solved. China in the 1970s and Vietnam in the 1980s faced challenges that were remarkably similar to those that North Korea faces now. These two countries faced up to their economic challenges through reforms that implemented de facto switches to market economies while maintaining the old ‘communist’ ideological facade.

North Korea’s decision, under Kim Jong-il, not to do the same might appear irrational to outside observers. But if one examines the peculiarities of the situation in detail, from the North Korean perspective it makes a great deal of sense.

In many regards North Korea has more in common with the now-defunct East Germany than with China: it is a part of a divided country whose two parts have massively different living standards. While in divided Germany the per capita income of the West was two to three times greater than the East, in Korea the South enjoys a per capita income at least 15 times greater than the North.

If North Korea starts reforming itself in accordance with the Chinese model, information about South Korea’s affluence (thus far largely hidden from a majority of North Koreans) will unavoidably spread among ordinary citizens. North Korean propaganda presents South Korea as a country populated by the same ethnic nation, so the North Korean people’s discovery of the size of the disparity would deliver a mortal blow to the legitimacy of a reforming North Korean government. North Koreans would labour under the illusion that unification would result in instant riches. As a result, reforms hold the potential to trigger an East German-style popular revolt, rather than a Chinese-style economic success.

Kim Jong-il thought that Chinese-style reforms were prohibitively risky for the viability of the regime. But will this policy be continued by the emerging Kim Jong-un regime? It remains to be seen, of course, but there is a major difference between father and son. This difference is not Kim Jong-un’s Western education and experience but rather his youth.

The major problem that the North Korean elite faces is simple: whether it reforms or not, the North Korean system is gradually disintegrating from below. The state-controlled, centrally planned economy shrank dramatically in the 1990s and many factories remain non-functional. Rations are distributed only sporadically and most North Koreans make a living through a diverse set of technically illegal activities associated with the private economy. Most importantly for the regime, information about the outside world, and South Korea in particular, is spreading inside the country thanks to DVDs and other modern technology.

This means that in the long run the system’s days are numbered, though the system could still survive for some decades to come.

Under the rule of Kim Jong-il, it was reasonable to expect that the system would continue for another 10–20 years so long as the government did not undertake any dramatic and destabilising changes. This was more than enough time for Kim Jong-il and his entourage, who were men in their 60s and 70s. But a 20-year life expectancy for the regime is not sufficient for its new leader, who is, after all, only 31 years old.

Kim Jong-un has some valid and rational reasons to do something to which his father was deeply opposed: to attempt to change the country, reviving its economy and improving its living standards.

Any possible North Korean version of Chinese reforms is likely to be significantly different from Deng Xiaoping’s reforms in China.

The North Korean leadership has to be especially cautious and move slowly. In China, the reformers in charge have been very careful to maintain the disingenuous communist facade, even while building capitalism. Similar measures will be even more vital for North Korean reformers, who will almost certainly describe their efforts as a means by which they will perfect Juche-style socialism. Given the nearly irresistible allure of South Korean prosperity, North Korean reformers will also treat their own people with great brutality, crushing all signs of dissent.

For the outside world, the nuclear issue is, of course, of great importance. In this regard, it is clear that North Korean reformers have little incentive to surrender their nuclear weapons.

While denuclearisation might bring some investment from the outside world, it will also make the country quite vulnerable to foreign attack. More importantly, it will make the government helpless if a local revolutionary movement erupts and then gets foreign support — as was recently the case in Libya. After all, the unlucky Libyan dictator, Muammar Gaddafi, is the world’s only dictator who agreed to jettison his nuclear program in exchange for economic benefits. There is good reason to believe that the West would have been far more reluctant to support anti-Gaddafi forces in Libya had the country remained a nuclear state under a dictator renowned for his unpredictability. This harsh lesson was not missed by the North Korean leadership.

Kim Jong-un’s government faces a choice. On the one hand, it can continue to follow his father’s policy of stasis, maintaining the status quo at the cost of economic stagnation. If it does so, the regime may remain stable for another one or two decades, but in the longer run it is almost definitely doomed. On the other hand, Kim Jong-un might decide to move his country toward market capitalism while maintaining a firm grip on power. There is some chance that he would succeed in this endeavour, making North Korea another ‘developmental dictatorship’ of the type we have seen so frequently in East Asia since 1945. However, it appears more likely that attempted reforms would merely speed up the regime’s demise.

Little is known now about the direction that Kim Jong-un will ultimately take, but recently emerging signs seemingly indicate that he is inclined to take the reformist path. Given his age and the challenges he faces, this might be a rational solution, but it remains highly risky. He might succeed indeed, but there is a significant possibility that he will fail in a dramatically spectacular way.

Andrei Lankov is Professor at Kookmin University, Seoul, and Adjunct Research Fellow at the Australian National University.

This article appeared in the most recent edition of the East Asia Forum Quarterly,‘On the edge in Asia’.