Curb Your Enthusiasm: On Change in North Korea

Over at Destination Pyongyang, Chris Green offers some useful cautions to those who have allowed themselves to become unduly aroused at the prospect of reform in North Korea based on “evidence” that is either superficial, questionable, irrelevant, or some combination of these things.  Green questions “hyperbolic” reports that North Korea will abandon its central rationing system — a system that is more responsible for North Korea’s famine and hunger than any other single factor — because that would mean ceding a key means of controlling its subjects.  He also cites evidence that North Korea is, while denying any intention of reforming, also showing some leg to hopeful observers abroad to attract foreign aid.

It’s Stephan Haggard, however, who does the best job of putting all of this into perspective in a few short paragraphs, when he says:

Let’s calibrate expectations. First, to our knowledge there is no document that actually spells out—in print—the reform measures that are getting so much Western attention. Everything we are speculating about is based on reporting from a small handful of second-hand Korean sources. This is significant not only because the reform rumors may simply be false, but because the leadership has not committed publicly to the measures that are getting so much attention.

Second, however, this is understandable because no leader of North Korea is going to stand up and embrace market-oriented polices and protection of private property rights per se. Any reform (or “improvements” [??]) must be embedded in an ideological justification that ties it to the existing regime and its historical antecedents in the Great and Dear Leaders. The document “Let Us Effect Kim Jong Il’s Patriotism and Step Up the Building of a Prosperous Country”—released to the public on July 26—is not available in English yet, although the KCNA devoted no fewer than four separate stories to it on August 3. But it is laden with efforts to tie vaguely-worded economic objectives to patriotism and Kim Jong Un’s family lineage; this is the sort of ideological engineering we would expect.

Third, it is also important to recognize that no reform in such a system is going to overthrow the state-socialist system or be big-bang in form. Given the nervousness and ambivalence of the leadership toward the market—some of it well-founded–policy changes are going to be piecemeal, experimental and modest. Moreover, their objective is going to be strengthen—not weaken—the state socialist system. “Reform” could even make things worse; think the 2009 currency conversion.

Finally, there has been a lot of loose talk suggesting that “reform” implies some sort of political change. To the contrary, economic reforms or improvements are designed to consolidate power and forestall political change, not lead it. One need look no farther than the DPRK’s northern neighbor to understand that dynamic.

My point here isn’t that North Korea’s rulers will always resist all changes to the system.  They probably know better than anyone that current trends aren’t sustainable forever, no matter how many checks China writes.  Commentators like to mock predictions of regime collapse in North Korea, but in fact, North Korea has been in a state of steady economic, political, physical, and social disintegration since 1993, and while domestic terror can delay the inevitable, it can’t prevent it.  Only North Koreans know for certain, but I suspect that outside Pyongyang, the people are deeply discontented, and all that still glues the regime’s rule together is the lack of any alternative, which still can’t quite arise because of the people’s isolation, fear, and exhaustion, and probably some residual awe and nationalism.  An internal challenge — which at this point, would have to come from within the military — could inflame North Korea and morph in a Syrian-style civil war as quickly as clandestine communications allow the news to spread.  Ironically, the only thing that could really gird it among the disillusioned masses now is the threat of some external force.  That’s about all the regime’s propaganda really has left.

My point is, however, that any changes in North Korea in the short term will be modest and cosmetic, designed to preserve the regime’s control and its essentially repressive and threatening character.  The junta will seek to eliminate marginal inefficiencies, wrest control of currency-earning enterprises from disfavored factions, and attract external aid through cryptic inducements and diplomatic scams.  North Korea’s rulers — whose record of “reform” is largely one of retrograde incompetence — will not direct significant economic reforms until they find themselves under far more immediate and severe economic and political duress than they’re feeling today.  For now, there is only sketchy evidence to suggest that this is the case, and only in isolated places beyond Pyongyang’s well-guarded gates.  North Korea still seems to be getting plenty of support from China, and I doubt that North Korea would be threatening to tie a toe tag on the 2005 Joint Statement (long a dead letter in any event) if it didn’t have some confidence about its short-term survival.

Of course, there’s always the possibility of a mutiny or a coup by some disgruntled general, but it’s impossible to assess the likelihood of such a development.  That possibility has lurked, unconsummated, for a long time now.

In the medium term, however, the sort of distress that would force significant economic (and then, political) change is starting to look more and more likely.  Why?  For the same reasons that toppled Communist regimes from Kabul to Berlin in the five-year period starting in 1989, and transformed almost every other nominally Communist regime that still stood at the end of that period — the loss of great-power sponsorship.  Almost alone, North Korea barely survived that period by finding itself a new sugar daddy.  But within the next two years, and probably much sooner, China will begin to feel the full economic and political impact of the bursting of its real estate bubble.  Next will come a threat to its banks, many of them laden with bad state-directed debts.  Already, we’re seeing the first small signs of capital flight.  Today, China’s behavior resembles the manic cycle of like a 19 year-old meth addict whose high has just peaked.  China’s crash will be a very bad thing for the U.S. economy, too, of course, and it will be a time of extreme geopolitical danger.

The bright side to that dark cloud is that China will be seeking a lot of economic indulgences — on trade, exchange rates, intellectual property, market accessibility, and interest rates — from its most important trading partner, which will put us in a relatively stronger position to ask for other things in return. If we’re foresighted enough, the end of China’s sponsorship of North Korea will be one of those demands.  Even if we’re not, China might independently decide that North Korea is an expense it can’t afford.  That will force North Korea to make significant concessions to its neighbors, to its own people, to a new economic reality, and to us.  But once that juggernaut starts rolling downhill, there will be no controlling its speed or direction.

Update:  I also recommend this guest post by Gene Choi at Witness to Transformation.  Again, the change at all levels of society comes from the bottom up, not from the top down.