Successful as it had proven up to that point, my Clark Kent–style change of identity had begun to threaten my mission. When we arrived at the conference hall where the official delegates were to convene I found that the scholar Martin had been classified as an official delegate. Not only that, I had been assigned a front-row seat facing the dais, my name in very large letters affixed to a placard on the table in front of me. I couldn’t bug out without being noticed. Fearing that I would end up wasting precious days vegetating in that conference room, I approached Fat Kim and Slick Kim and won their kind permission to give up my VI.P. status and join the rest of the crew of foreign reporters to look around in Pyongyang and environs.
With the notable exception of Kim Jong-su, whom I did not meet on this visit, North Korean officials had been notorious for bland, filibustering, prevaricating replies to interviewers; they would talk for hours but give little useful information. Speaking with the foreign reporters who were covering this tour, however, our chief host, Deputy Prime Minister Kim Dal-hyon, was a refreshing departure from the rule. Kim Dal-hyon frankly acknowledged that the collapse of Soviet and East European communism had hit his country hard. “Because of the rapid destruction of the world socialist market,” he lamented, “we can’t export our goods to socialist countries and import oil in exchange.”
In particular, longtime barter partner Moscow had begun demanding payment in hard currency, which was in very short supply in North Korea. Trade with the former Soviet republics had accounted for 38 percent of Pyongyang’s global trade in 1990, but dropped to less than 14 percent in 1991, according to South Korean figures.2 Not only was North Korea importing less from its old ally; its exports were down even more, since its products generally were not competitive with rival free-market products. Analysts were saying the North’s economy actually had shrunken each year since 1990 (including, by one estimate, a sickening drop of as much as 30 percent in 1992 alone).3 China reportedly had joined Russia in demanding hard-currency settlement, further fueling the alarming trend. Not surprisingly, Pyongyang appeared determined to squeeze every possible dollar or yen out of foreign visitors: A European businessman living in Pyongyang’s thirty-five-story Koryo Hotel said his daily room rate had doubled to $200 not long before our arrival.
Nickel-and-diming, however, would not solve the problem. Evidence of poverty and economic stagnation was too abundant for the authorities to hide as we rode by train and bus from Pyongyang across the central mountains to the east coast and north-ward to the Russian and Chinese borders. In previous years I had seen progress in farm mechanization in other parts of the country, but it seemed not to have occurred in this area—or, if it had occurred, to have been reversed, perhaps because of the oil shortage. Farmers plowed far less often with tractors than with oxen, which were among the few farm animals visible. Beanpoles lining the dooryard of almost every house along the route were the only visible source of protein—helping to explain a propaganda campaign that recently had pushed the slogan: “Let’s eat two meals a day instead of three.4
Little nonfarming work could be seen. At the port of Rajin, for example, we were told that the dock-workers were taking a “holiday.” In Pyongyang, large numbers of people were out and about in mid-afternoon, a marked change from the semi-deserted streets noted during most daylight hours on earlier visits. My guide explained that new working hours permitted people to start early and finish early—but reflection suggested that there were reasons other than humanitarian that kept them from the workplace. All this tended to confirm reports that up to half the factories and working population had been idled by energy and other material shortages resulting from the collapse of the international socialist barter economy.
Whether operating or not, factories looked old and inefficient—and their products showed it. Of course, there were occasional bright spots. In a downtown Pyongyang department store, a new display featured stylish jogging suits. But who in North Korea could afford 148 won, about $67 at the official rate and more than a typical worker’s monthly pay for a jogging suit? As for the choices provincial residents were offered, there was no chance to find out. The train we were living on did not stop in cities and towns overnight but instead poked around in the countryside and sat on rural sidings. Our suspicion that this was intended to keep us from exploring the provincial towns and cities became a certainty when we visited the port of Chongjin. Some journalists attempted to walk out of the port’s gate to a nearby department store, but a port guard stopped them at gunpoint.
The most jarring scene that confronted me as I sat peering out of the train window was a trainload of North Koreans passing us in the opposite direction. They were a ghastly sight. Their clothing was ragged and filthy, their faces darkened with what I presumed to be either mud or skin discolorations resulting from pellagra. There was no glass in the windows of their train. At that moment I figured I must have glimpsed accidentally what it was the authorities with their elaborate scheduling and preparations tried so hard to prevent visitors from seeing. Another surreal experience of lavish hospitality in a starving land, such as I had experienced at Kim Jong-su’s picnic in 1989, drove the image home later in the trip when we were served a magnificent feast of giant crabs on a beach in the Rajin-Sonbong area.
With almost nothing positive happening in the domestic economy, a hint of change could be seen in North Korea’s approach to the outside world. The Tumen River proposals clearly had sparked major interest in Pyongyang. China had initiated the discussions, seeking access to the Sea of Japan from landlocked Jilin Province. China’s Hunchun, about ten miles up the Tumen from its mouth, had been a bustling small port with navigation rights guaranteed by a regional treaty before Japanese troops in 1938 drove pilings into the mouth of the Tumen to cut off shipping. Conference participants traveled to Friendship Bridge, the railway crossing between North Korea and Russia just south of Chinese territory. One look was enough to convince most of them of the impracticality of China’s proposal to dredge the Tumen for ocean-going ships. The river was so silted up that dredging obviously would be constant and very expensive.
A compromise proposal aired in Pyongyang by officials of the United Nations Development Program suggested focusing development efforts on North Korea’s coastal Rajin and Sonbong ports. China could tie in by rail and road and use those as its own ports, free of customs-clearance or visa formalities. China was studying that proposal. But I heard from my East-West Center colleague Mark Valencia, a specialist in maritime matters, that “China wants the rights of navigation on the Tumen, even if it’s a rowboat. They’re thinking generations down the line.”
Besides the river port versus coastal port controversy, countries involved disagreed on whether management of specific zones should be multinational or national. China sought multinational management, and its delegates mentioned Hong Kong and Macao, neither of which it had yet taken over, as models for placing territory under the management of an entity other than the sovereign. Sovereignty was not at stake, the Chinese insisted, but only management. Those questions were to be taken up at further international meetings later that year in Beijing and Vladivostok. But North Korean officials were skeptical already about the part of the proposal that called for multinational management of the zone—-which would mean sharing power in their own territory.
Thus Pyongyang was proceeding with a parallel go-it-alone approach. On paper, North Korea had already established its first special economic zone at Rajin and Sonbong, inside the territory that would be part of a Tumen Delta multinational zone if the Chinese and others should have their way. Trying to lure investors there—regardless of how the multinational negotiations might turn out—clearly was a big part of what the government had in mind when it admitted our group of visitors. Rajin and Sonbong port officials planned to expand cargo capacity from six million to 50 million tons a year in two stages—and also planned to build a brand new port in the area with annual capacity of another 50 million tons. Unlike some nearby Russian
ports, they boasted, the North Korean ports didn’t freeze up in winter. A slick brochure complete with four-color maps projected that the population of 131,000 North Koreans living in the vicinity of the two ports would grow into a modern industrial city of a million people.
Conceivably a purely North Korean economic zone could work, if South Korean, Japanese or other foreign interests invested in factories there. But Yasuhiro Kawashima, deputy director-general of the Bureau of Port and Airport Development of Japan’s Niigata Prefecture, cautioned that proposals to expand port facilities in Rajin, Sonbong and nearby Chongjin might go nowhere unless Pyongyang persuaded neighbors to trans-ship cargoes through the North Korean ports. Lately, the trend had been the other way China had tried large-scale exports through North Korea’s Chongjin port several years before, but had backed off-when its freight cars weren’t always returned after they were unloaded. Chongjin port manager Chong Chi-ryong said the total of transit cargo handled on behalf of China and other countries was only 100,000 to 150,000 tons a year. Restoring China as a major user of the North Korean ports might require concessions to Beijing on the questions of multinationalism and access to the Sea of Japan. Future conferences would try to sort out the issue. But regardless of the outcome, said Lee-Jay Cho, East-West Center vice-president and senior researcher, it was significant that North Korea at least was talking about the various proposals.
The country, at least partly thanks to China’s prodding of Kim Jong-il, had sounded the general theme of-welcoming outside investment since 1984. But only some one hundred businesses had resulted from the joint-venture law enacted that year. Those businesses had brought in foreign funds estimated by South Korea’s Unification Board at only about $150 million5 —most of the money coming from pro-Pyongyang Korean residents of Japan. In those ventures the government permitted—but only unofficially—some capitalist-style incentives—such as “gifts” of merchandise to more productive factory workers.6 From an investor’s viewpoint, key points remained unclarified in the joint-venture and foreign exchange regulations. Outsiders’ distrust combined with internal inertia to keep real change to a minimum.
If there were reasons in 1992 to imagine that more investors might respond to the new initiatives, a most intriguing factor headed the list: North Korea had managed something of a generation shift. In a typically Korean pattern also found in South Korea, Kim Jong-il had formed his support network partly from alumni of the schools he had attended: Namsan Junior and Senior Middle School, Mangyongdae Revolutionary School and Kim Il-sung University. By 1987, the Mangyongdae school’s graduates accounted for 20 percent of the party central committee, 30 percent of the party polit-buro and 32 percent of the military commission of the central committee.7 The school “produces revolutionary warriors to carry on, generation after generation,” according to a 1982 speech by O Guk-ryol, then-chief of the armed forces general staff and a classmate of Kim Jong-il’s, who by one account had been with him as a child at the Eighty-eighth Brigade camp.8
Mangyongdae provided military training along with the regular junior-high and high-school curriculum. Graduates entered the army for three years and could become party members during that time. After their hitches, they could enroll in Kim Il-sung University or the military academy. The graduates—about 120 students per year—formed an elite. “They’re very loyal,” one high-level defector told me. “Most of the people around Kim Jong-il have graduated from Mangyongdae.” According to Kang Myong-do, son-in-law of a prime minister, applicants whose parents were still living were eligible to enroll in Mangyongdae if they were the children of officials at least at the level of party department head—higher than vice-premier. “It’s a great privilege to be admitted,” he said. Children of the elite who in the past would have gone to Namsan now went to Mangyongdaae, he said.
Besides alumni of schools he had attended, some people who had worked for Kim Jong-il in the Three Revolutions teams became prominent among his militant followers.9 Youth coming to the fore was a positive omen in the eyes of many outside analysts. “There is an ascendance of the younger, more pragmatic elite … who are of Kim Jong-il’s generation,” South Korean scholar-diplomat Han Sung-joo told reporters in Tokyo in 1992. “They are saying their country has to open up a little bit … or they will lag hopelessly behind South Korea and the polity-will collapse.”10
Kim Jong-il, who turned fifty on February 16, 1992, remained a mysterious figure who almost never met foreigners—but as day-to-day chief of the government and party he had placed protégés in a great many key economics and foreign-relations posts. Some, such as Kim Dal-hyon, the deputy prime minister who was our host, were relatives. Still they represented “a changing of the guard,” as Kim Duk-choong, former chief executive officer of South Korea’s Daewoo Corporation, said during the trip. “All are young generation— fifties and forties,” he noted. “They’re much more forthcoming than in the past.”
True, Kim Dal-hyon’s acknowledgment of serious economic difficulties had not yet become the party line; subordinates such as Kim Song-sik continued to assert that all was well and the country was experiencing little ill effect from the changes in other communist nations. And even Kim Dal-hyon insisted that his countrymen “do not have any worries about food, clothing and housing.” Significantly, though, he acknowledged bluntly that “the world is changing” and that creation of special economic zones “is for our survival,” in a world where “there are only a few countries following the socialist model.”
Another small example of the new, more enlightened approach: North Korean officials seemed to have realized that outsiders had little stomach for hearing-worshipful encomia to the wondrous leadership of President Kim Il-sung and his son Kim Jong-il. During our 1992 visit, unless they-were asked specifically, they mercifully refrained from spouting the interminable old lines about how the Great or Dear Leader provided this or that factory of school out of love for the people, blah blah blah.
Some of the younger officials also embodied a fascinating answer to a very real question: In a country that neither taught nor understood free-market economics, where could one find competent managers for a push to join the global economy? It turned out that some of the rising economic stars had been trained in the sciences—one of the few areas in which a North Korean could get an education with a relatively small component of ideological cant. Kim Jong-u, vice-minister of external economic affairs and chairman of the Committee for the Promotion of External Economic Cooperation, had been a nuclear scientist. Deputy Premier Kim Dal-hyon himself had been a chemist and head of North Korea’s Academy of Sciences.11
I had a glimpse of the quality of Kim Dal-hyon’s mind during a press conference. He announced at the outset that he would take all questions first, and then answer them at once. Reporters groaned, fearing that this was his trick to avoid answering any questions he considered challenging. He insisted, though, so the reporters one after another stood to ask questions, giving Kim their toughest shots. Kim acknowledged the questions as they came, but did not note them down—-which intensified our concern that we were about to be spun big time. But when all the questions were in, he gave a lengthy overall reply that actually answered all but a couple of the questions. When reporters reminded him that he had missed those, he answered them, too. The impression he gave with that performance was one of electrifying brilliance. Just listening to him raised my level of optimism about the North Korean economy by several notches.12
Alas, even the scientists-turned-economists offered no cure for North Korea’s perennial allergy to dealing in hard statistics. “The main shortcoming of socialism is that we are not accustomed to figures,” Kim Dal-hyon explained wryly as he begged off giving cost figures for April 15 celebrations so extravagant that Kim Il-sung’s eightieth birthday would do for a run-up to the Second Coming of Jesus. But at least the deputy premier showed some understanding of prospective investors’ need to know just where they stood. “Detailed laws and regulations on preferential treatment for
investors, free flow of people, visa and tax exemptions will be promulgated within this year,” Kim promised. In the future the country could open additional free-trade zones in such cities as Wonsan and Nampo, “and also create free tourism areas.” North Korea had joined the United Nations, simultaneously with South Korea in 1991, and Kim Dal-hyon hoped for help from international organizations in financing the infrastructure projects. “The major cost will be undertaken by our country, the Asian Development Bank and banks and businesses of other countries,” he said. “We’ll soon be admitted to the ADB.”
The regime knew that it still had work to do before very many outsiders would be ready to plunk down their money. “We want to revise laws, and make special new laws for the zones alone, to satisfy your demands,” Kim Dal-hyon said. “Our intention is to make a better zone than China’s Shenzhen.” (Indeed, it turned out that new regulations were enacted on October 5, 1992. They offered foreign investors tax breaks, guaranteed them property rights and allowed remittance of some profits back home. Not only joint ventures, as before, but also wholly foreign-owned ventures were now permitted. South Koreans, barred by the 1984 law, could invest in the North under the law’s new version.13 Tax rates, published February 6, 1993, were more favorable to foreign investors than China’s rates.14)
While hardly anyone in North Korea had much experience with market economics, Yoo Jang-hee, president of the Korea Institute for International Economic Policy (KIEP), a Seoul think tank, and leader of the South Korean delegation, was encouraged that such new-generation officials at least understood “their kind of economics.” Intriguing as the new approaches were, however, they did not represent a decision in favor of fundamental change. North Korean authorities remained impaled on the horns of an old dilemma: Although failure to open to investment by capitalists could doom the Pyongyang regime, so could the attitudes, knowledge and ideas that would enter the country along with such change. After all, how could a separate North Korean regime be justified once its subjects could see it had become merely an inferior imitation of the wildly successful capitalist Korea to the South?15
Under the Loving Care of the Fatherly Leader Page 70