Pyongyang officials appeared to have pursued some such line of reasoning. Oh Seung-ryul, a research fellow at Seoul’s Korea Institute for National Unification, reported in 1999 that the North was consciously deemphasizing manufacturing as its key legal means of earning foreign exchange. (The turnaround was by no means complete, and apparently it had no effect on the illegal means of bringing in hard currency, such as manufacturing and smuggling heroin or printing and passing hard-to-detect counterfeit U.S. dollars, the “Super-Ks.”) More prized than manufacturing was tourism. The shift was particularly evident in the Rajin-Sonbong free economic zone. There a new casino opened, mainly targeted at people coming across the border from China. “North Korea is modifying the function of the Rajin-Sonbong area from a manufacturing base to a tourist attraction and center for transit trade,” Oh said. He added that the Pyongyang regime had banned South Koreans from visiting the zone and had begun taking down advertisements for Western businesses there.
In the Rajin-Sonbong case, the danger of ideological contamination probably was not the only factor militating for a change. (There was some question as to why it should have been a factor at all, if one credited the earlier reports that the regime had moved all the original residents out and replaced them with people considered super-loyal to Pyongyang and relatively immune to foreigners’ blandishments.) Another big factor was that outside investors had not been enthralled with the zone’s remote location. Their investments from 1991 to 1997 had totaled only a disappointing $62 million, according to South Korean government statistics.
Corruption by the previous team of officials also seemed to play a role. A 1998 report quoting Chinese sources in Beijing said North Korean authorities had arrested seven officials including the head of the Rajin-Sonbong Special Development Project, who had been investigated by central party officials on corruption charges. Allegedly they had extorted money from foreigners who hoped to do business there. The report said the project office in Yanji, just across the border in China, had been closed.4 While it was too early to predict whether tourism and gambling would do the trick for Rajin-Sonbong, advantages to the regime of relying on tourism could be seen clearly in the Mount Kumgang case. Try to earn that kind of money manufacturing textiles or assembling television sets.
But didn’t South Korean tourists pose the same sort of “contamination” threat as businessmen? Not since June 1999. That was when North Korean authorities arrested and questioned for several days a touring Seoul house-wife and mother. They accused the woman—-who said she innocently chatted to a North Korean park ranger about the lives of North Korean defectors in the South—of being a spy. Reported to have begun psychiatric treatment for the trauma she endured, she told interviewers for The Korea Herald that she believed she had been set up. Indeed there were indications that Pyongyang had been looking for a tourist who could be made an example, in order to scare future tourists into reticence. If that was the intention, it certainly worked. The tour was suspended for forty-five days. When it resumed, a columnist for Chosun Ilbo went along and later reported: “On the cruise ship, on the bus and whenever there were a small number of people gathered together, Hyundai personnel continuously asked the Kumgang mountains tourists not to say anything to the North Korean tour guides other than ‘hello’ and ‘thank you.’” The tourists complied.
As we have seen, steps toward rationalizing economic management and luring outside investment in the early 1990s had clashed with the aims of the military men whom Kim Jong-il was cultivating. Those steps had essentially come to a halt when South Korea turned its back on the North during the first nuclear crisis. The years of mourning and extreme famine that followed the death of Kim Il-sung in 1994 saw few indications of a renewed push to reform the economy. But on September 5, 1998, the Supreme People’s Assembly adopted a new constitution for the Democratic People’s Republic of Korea. Its third chapter covered the economy. Article 33, radical by past standards, read: “The State shall introduce a cost accounting system in the economic management … and utilize such economic levers as prime costs, prices and profits.” Article 37 added that the state should encourage “joint venture enterprises with corporations or individuals of foreign countries within a special economic zone.”5 The following year the country enacted an elaborate External Economic Arbitration Law.
For a time after that, change once more slowed. Pyongyang-watchers warned that signs of relaxation in the North must be read carefully. Jean-Jacques Grauhar, secretary general of the Seoul-based European Union Chamber of Commerce, previously had worked and lived in Pyongyang for several years. He told me in 2000 that North Korean leaders apparently had no objective beyond repairs to their economic system. Their goal was “not to change the system—and that shouldn’t be the objective of foreign investors,” he said. Grauhar and other experts advised non-Korean companies to team up with South Koreans and emulate their style, doing business in ways that were minimally threatening to a regime leery of change. “I’ve been pushing Club Med to do something there for years,” he said. The French company’s resorts were often built in pristine environments secluded from the surrounding reality—much like Mount Kumgang. In addition, Club Med got its profits from outsiders, not from hard-pressed locals of the host countries. The notion of Club Med’s bikinied guests playing bar games in North Korea seemed far-fetched—but then, until not long before, so had the idea of Hyundai tours of the Nine Dragons waterfall.
In his taped conversation with Chongryon’s Japanese-Korean delegates on April 25, 1998, Kim Jong-il addressed economic issues. “We are not isolationists, but we want to keep the status quo,” he said. “We don’t want hordes of tourists to come here and spread AIDS and pollute our land.”6
Kim in that conversation showed a lively interest in the details of other economies, particularly those of Japan, South Korea and the United States—all of-whose nationals he referred to as “devils.” He saved his most favorable words for the United States, specifically then-President Bill Clinton. “Clinton is doing well in the White House,” he said. “Jack Kennedy tried to make a name for himself but he was rubbed out before he had the chance. This Clinton fellow is only fifty-two, but he got elected to the White House twice. He is quite a guy.” Kim praised American-made computers. “Today,” he said, “South Korea brags about its computers on TV commercials, but the South Korean computers don’t even come close to American computers. We have to butter up the Americans and get the best they have. Our People’s Army regards the United States as its sworn enemy, but our people engaged in trade address the Americans with much respect. This is called the principle of ‘hard inside, soft outside.’ ”
Kim showed himself to be a news junkie, ever ready to call forth odd facts from his memory. However, his failure to travel widely could be seen in misconceptions and examples of naiveté. He asserted that Japan could do much more with damming rivers to produce hydroelectric power than it had done, taking advantage of its “many tall mountains with high volumes of-water.” In fact, Japanese rivers are short and not especially mighty—a big reason why the country had chosen to emphasize nuclear power. By looking through Japanese product catalogs, Kim had discovered the installment plan. “How long have they been using this method of payments?” he asked his visitors from Japan. “Even shoddy products are being sold on the installment plan. It appears that the installment plan is due to slow sales.”
His characterizations of South Korea, which at the time was suffering from a severe Asian financial crisis that had begun in 1997, were full of exaggeration and misrepresentation—perhaps simply his wishful thinking: “The real ruler of South Korea is the United States. Today South Korea is in turmoil politically and economically. Seoul officials are trying to restore economic stability but I doubt they will make it.” Of course, following that economic rough patch, they did make it. Revealing his faulty perception, Kim observed that, after having prospered “for about ten years starting in 1988,” the South Korean devils were “broke and dirt poo
r.”
In an illustration of Kim Jong-il’s peculiar sense of proportion, he related at some length his wish that Chongryon officials search in Japan and South Korea for two species of native Korean dogs that were approaching extinction in the North. We can speculate that the beasts’ scarcity had to do with the famine and the unavailability of other sources of protein. (East Asian joke: What do you call a Korean with seven dogs? Answer: A caterer.) But Kim ascribed their absence to a lamentable lack of popular devotion to the maintenance of the breeds. “We don’t want our own native dogs to die out,” he said earnestly. “We must make sure that pungsan and jindo dogs prosper and propagate. Our people are quite indifferent to the future of our dogs. That is wrong. These dogs belong to Korea and we must preserve them.”
Kim first explained North Korea’s power shortage in terms that blamed nature and let the regime and its policies off the hook. “We had ample electricity when Leader Kim Il-sung was alive,” he said. “You may wonder why it is that we are short of electric power now. The reason is simple. We had natural floods several years in a row, which was unprecedented in our history, and our coal mines got flooded. We could not dig enough coal to keep our thermal plants going. That is why we are short of electricity and our people are suffering. Our economy is suffering for lack of electric power because our coal mines are flooded.”
* * *
To outsiders hoping for major changes in North Korea, though, Kim’s somewhat mixed-up view of the capitalist world might seem less significant than his reiteration of the failings of socialism as he saw them. As his talk with the Chongryon representatives progressed, for example, he took a different tack on the causes of at least part of the power shortage. He criticized colleagues who insisted on taking juche’s self-reliant principle to extremes. “During my 1983 visit to China, Hua Guofeng and I visited the Baosan thermal power station,” he said. “It was imported from another country. China was technologically advanced enough to build its own power plants but it decided to buy the plant abroad. I asked Hua why” The Chinese leader “said that China could have built the station but the foreign plant was better.” In contrast, Kim observed, “Our people reason differently. Their idea is to buy only those parts that we cannot make and the rest we build here. This kind of attitude has led to many costly failures. … We are paying dearly for our mistakes. …
“Our socialist system is people-centered and we say that we serve the people, but the truth of the matter is that our economic system is not quite like that,” Kim told his visitors. “In a capitalist society, customers are catered to and their pockets are picked clean in every possible way” He elaborated: “The socialist system is ice-cold and indifferent to the customers. In our country, our store workers take the attitude that they don’t care if the customers buy anything or not. Instead of servicing the customers and trying to sell something, they would rather that patrons did not show up so that they won’t have to do anything. In a capitalist nation, service is everything. When our people visit Japan, they are courted everywhere with ‘Welcome, welcome, please come in.’ Japanese eateries have managers who supervise the servers, and any service boy in trouble with a patron is severely reprimanded or punished. In our country, our servers are never fired for poor service. On the contrary, the patrons are expected to pay and bow to the servers for the privilege. It should be that those who receive money should thank the givers, but alas, here in this country, it is just the opposite. Capitalism has been around over one hundred years now and it tries all sorts of things to stay alive.”
Kim spoke of some management changes that could help his system stay alive. One was to hold qualifying examinations instead of assigning people more or less at random to such demanding jobs as handling foreign trade. “In organs like Foreign Economic Cooperation, anyone who knows Kim Guk-tae can join his outfit,” he remarked (mentioning the official who had gotten reformer Kim Dal-hyon demoted and sent off to the provinces). “We need to change this and require specific knowledge of foreign trade.” He spoke favorably of sending students abroad for training. “In China, one of Deng Xiaoping’s great feats was to send two thousand or so students abroad annually to study, and upon their return they were given important jobs,” Kim said. North Korea should emulate Deng on this point. “We have people at the top who don’t have even the vaguest idea of how to get our economy moving. All they are able to think about is how much pay they are getting. Such is our sad situation and we must change it fast. Many of our workers have poor or no concepts of money. They are completely in the dark on making profits. They know about meeting production quotas, but they have no idea how to sell the products and make profits.”
Those were strong criticisms indeed. But it was not that Kim Jong-il was ready to praise the capitalist system, after having struggled against the alien Western system throughout his career. “To be honest, we like the current financial meltdown in Asia,” he told his visitors. “Some of our people in charge of our economy had harbored some illusions about emulating the capitalist economy of Asia, but now the current crisis made them realize how wise Leader Kim Il-sung’s policy of juche is. It was a rude awakening to these people.” He added, “Currently we are poor and our life is hard, but you won’t see any people on earth that is as united as we are.”
Casting about for reasons to be optimistic, Kim imagined that North Korea could reverse its fortunes by turning into what, in his vision, sounded like a new Kuwait or Brunei. “We have untapped oil fields, and once we develop our oil fields our economy will change dramatically. Once we get the oil flowing, we won’t need to work our farms. We will sell our oil to the Japanese devils and buy their rice. Our oil will be like a nuclear weapon.”
On a more mundane level he showed a willingness to buy from successful countries their used equipment, such as tile factories and steel-rolling mills, to facilitate the manufacturing that North Korea still would need to do in addition to encouraging tourism. The problem was to avoid loss of face, a fate almost worse than death for a traditionally minded East Asian. So he asked his visitors to have Chongryon serve as intermediary in such deals. “Of course we can obtain these things through normal trades,” he said. “But how can we save our face and ask the Japanese devils for cheap used merchandise? Our trading people are reluctant to negotiate such deals, and Chongryon should step in and help us here.”
Economic backwardness had become so apparent as to tarnish the North’s image among impressionable young South Koreans. Many of them idealized Kim Il-sung as a great patriot and studied his juche philosophy, even after the successful end to South Koreans’ struggle against military-backed dictatorships at home. By the time Kim Il-sung died in 1994, though, the economic failure of the North Korean system had become too obvious for any but the most devout Southern leftist to ignore. The South Korean news media, overcoming the taboo I had encountered in the 1970s, were throwing major resources into reporting on North Korean affairs. Of course there was far more negative than positive to report. If there was a defining moment in the decline of the North’s image among idealistic South Korean leftists, perhaps it came in 1997 when no less a figure than Hwang Jang-yop defected to the South. Hwang was the North Korean senior official widely credited with having developed the juche ideology.
A 1999 scandal in Seoul illustrated the disillusionment that resulted among some South Koreans who had been beating the drums for Pyongyang. Kim Young-hwan, one of the most prominent leaders of pro-Pyongyang 1980s student radicals who called themselves Jusapa, the juche ideology faction, was reported to have confessed that he was a spy for Pyongyang. According to the National Intelligence Service (the former KCIA, in its latest renaming), Kim Young-hwan, by then a practically middle-aged thirty-six, confessed that he had joined Pyongyang’s spy service in 1989 at the behest of a North Korean agent. Kim said he was then taken to the North on a semi-submersible spy vessel and there joined the Workers’ Party, received a medal and met Kim Il-sung—-who directed him to undertake development of a pro-Pyong
yang underground and start a legal political party in the South. That he did, bringing in other veterans of the student anti-government movement.
Kim Young-hwan grew disillusioned with the North Korean system. In a 1995 magazine interview, he denounced the juche ideology. He asserted that Pyongyang had been seriously on his case from then on, scheming to assassinate him for his betrayal. He did not go to the South Korean authorities right away but, in fear for his life, fled to China. When he returned home and spilled the beans, the prosecution recommended leniency.
Such incidents did not by any means cause the South Korean left to disappear. Sympathy for the Northern brethren would remain strong. The anti-Americanism that had become pronounced in the 1980s would continue to thrive and even grow in the South. But Kim Jong-il, unlike his late father, could hardly be seen realistically as leader of or role model for a future South Korean revolution. To the extent he recognized that, it was all the more reason why he needed to do something about the economy.
Being able to point to South Korea as an implacable enemy had been, from the beginning, an essential element in the North Korean regime’s control of its people. Thus it seemed significant that in April 2000, practically on the eve of South Korea’s National Assembly elections, Pyongyang appeared to endorse blatantly the soft-line “sunshine” policy on North-South relations of South Korean President Kim Dae-jung. The endorsement came in the form of a mutual announcement of plans for a June summit in Pyongyang. The agreement for the South Korean president to meet Kim Jong-il was reached in a Beijing session, five days before an election that observers deemed too close to call. It seemed clear that both sides hoped the announcement would give Kim Dae-jung’s party the push it needed to achieve a majority in the national legislature, so that its policies could be continued.
Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty Page 94
