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Paralysis In The North Korea
by James Dunnigan
November 21, 2012

The new leader in the north, Kim Jong Un, is still something of a mystery to outsiders. He has made changes, but to what effect is unclear. In the last few months hundreds of military and government officials have been retired and some executed or jailed. This included over 30 senior military and government officials. Those dismissed were promptly replaced by younger people. Kim Jong Un has made it clear, in public announcements, that it's time for a new generation. Many of the dismissed older officials were seemingly loyal to and supportive of Kim Jong Un, so this appears to be more a desire to shake up the leadership, than to purge opponents. Despite much talk of change, there has not been much of that up north. State controlled media portray Kim Jong Un as less dour and more approachable. He is often seen with his wife, something that rarely happened in the past. He is seen appearing to enjoy himself, which is also something new for how leaders are portrayed in the north. But Kim Jong Un still supports giving the military and security agencies priority when it comes to money and other resources. North Koreans are still being called on to make more sacrifices to make this happen.

Kim Jong Un isn't doing all this by himself, as he has a small group of advisors he relies on a lot. This includes his uncle, Jang Sung Taek, who is married to Kim Jong Ils sister. Jang has long been a powerful government official and is believed to be quite wealthy. That's because Jang has a lot to say about how North Korea earns (by legal or illegal means) foreign currency. In a country so extremely poor, the man who controls the most money has a lot of power. Jang, for example, earlier this year ordered house searches of families believed to be hoarding foreign currency (Chinese or American), rather than, as the law demands, putting it in the bank. People do not want to put their foreign currency in the bank because the government pays you less for it (in North Korean currency) than the black market money changers (who give fair market value). Jang understands how the North Korean economy really works and is trying to increase government control over the "new economy." Yang and his wife have a lot more knowledge of, and experience with, the North Korea government and economy than their nephew Kim Jong Un and, for the moment, they have his ear and trust. While the senior leadership makes a fuss and changes little, the situation continues to get worse. Food shortages grow and the threadbare economy sputters along in the face of energy shortages and growing unemployment.

For over a month now China has allowed a Chinese firm to openly discuss (in the state controlled media) a bitter dispute with North Korean bureaucrats over how a joint mining venture in North Korea was mishandled. China accuses North Korean officials of trying to extort additional cash while the North Koreans call the Chinese partner exploitative and inept. Both sides are probably right, to a certain extent, but this public debacle makes it clear that many North Korean officials do not yet know how to do business efficiently. China allows its firms to undertake joint ventures in North Korea and is not happy with the way corrupt northern officials try to cheat Chinese investors. The publicity this mining fiasco is getting is telling other Chinese firms that it’s very risky to do business in North Korea and that the Chinese government, for the moment, won’t do much about it, aside from letting the Chinese investors complain openly.

While military threats from the north grab a lot of headlines in South Korea, the major concern for southerners is the continuing lack of growth in the economy. Since the global recession began four years ago, South Korea has suffered very slow economic growth. For the last 18 months there has been no growth at all. This puts pressure on the government to cut back on military spending, despite the growing threats from the north. But most southerners know the north is in much, much worse economic shape and that the threats are more desperate bluster than a real threat. Not all South Koreans agree with that but all are concerned about the stalled economy. That is mainly the result of slower export sales and there’s not a lot anyone can do about that.

There is some economic progress in the north but this does not always benefit the people who need it most. For example, last April a new hydroelectric power plant came online, to great fanfare. But most of the power has gone to the leadership (the wealthier neighborhoods in the capital), the military, and security agencies. Most of the country still only gets a few hours of power a day.

The talk of agricultural reforms in the north apparently got stuck because many government agencies do not want to see their share of crops reduced. A government investigation found that over the years various government and military bureaucrats have increased how much of the crops they can take and that the farmers themselves are left too malnourished and weak to increase production even if they receive more resources (fuel, fertilizer). Changing this means taking food away from the military and security agencies, this is not a popular idea with most North Korean officials.

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