Opinion | North Korea at a crossroads: what will Kim give for an economic miracle?

To achieve this, Kim must overcome three challenges: First, he must make an unyielding commitment to achieve economic development by modernising the economic system, and to enhance the economic well-being of the entire population.

Second, he must revise the ruling Juche ideology in a paradigm shift, implementing market-oriented reforms and opening up the country so it can integrate with the global economy.

Third, the necessary market reforms and economic opening cannot be allowed to derail the regime, as Kim seeks to preserve its integrity at all costs.

People mark the New Year by paying their respects before a mosaic depicting late North Korean leaders Kim Il-sung and Kim Jong-il in Pyongyang on January 1. Photo: AFP

To transform North Korea into a vibrant and dynamic economy, Kim must be able to work with the five stakeholder states of China, South Korea, the United States, Japan and Russia to devise a package deal. The package should ensure a genuinely better chance of survival for North Korea without weapons of mass destruction.

To ensure a genuine chance, the terms of the deal should more than compensate for the five attributes of nuclear weapons, which will be affected by denuclearisation.

The first attribute is, nuclear weapons are a credible deterrent against a US military invasion, real or imagined.

Second, the nuclear arsenal constitutes a cost-effective way to maintain military parity with South Korea, whose economy is 60 times bigger.

Third, nuclear weapons are one of the two pillars of the byungjin policy, which calls for the simultaneous development of military power and the economy.

Fourth, as the signature achievement of the Kim family, the arsenal helps provide legitimacy to the regime.

Fifth, nuclear weapons are a means to execute North Korea’s belligerent foreign policy to maintain internal solidarity.

04:26

North Korea to keep ‘raising the stakes’ with more ICBM tests expected

North Korea to keep ‘raising the stakes’ with more ICBM tests expected

To compensate for the loss of these benefits, any package deal that includes forgoing the nuclear arsenal must entail two outcomes: the lifting of sanctions and threats, and the provision of security guarantees.

More specifically, all sanctions imposed on North Korea, either unilateral or endorsed by the United Nations Security Council, must be lifted, and political pressure and military threats must end.

At the same time, the following security guarantees must be provided: a peace treaty between North and South Korea; normalisation of diplomatic relations with and full recognition of North Korea by the US and Japan; and a reconfirmation of treaties with China and Russia.

While these conditions are necessary, they are not sufficient to ensure a genuine chance of North Korea’s survival as a non-nuclear weapon state. To assure the preservation of North Korea’s integrity by compensating for the loss of byungjin and legitimacy, North Korea has to achieve rapid, sustained economic development.

This requires the following three conditions to be fulfilled. First, Kim must implement market-oriented economic reforms and transform the economy into market socialism. The means of production, in the hands of the state, have to be transferred to private enterprises, state enterprises and joint ownership.

In addition, the political system should be transformed from totalitarianism to authoritarianism, maintaining the exclusive power of the communist party as a leading and guiding organisation, but allowing free economic activities. Political reform must precede economic reform.

19:39

North Korea’s ‘Return to Paradise’ nightmare

North Korea’s ‘Return to Paradise’ nightmare

Second, to integrate into the world economy and attract foreign investments, Kim must change its belligerent foreign policy to an amicable one. This, as former Soviet foreign minister Eduard Shevardnadze pointed out, involves abandoning its class-struggle ideology.

Third, opening up the economy should not lead to the disintegration of North Korea. To contain detrimental spillover effects resulting from opening up, Kim needs a well-conceived strategic economic plan with the financial resources to carry it out. The plan should entail special economic zones, which will develop as a market sector secluded from the rest of the economy, thus shielding the system from any adverse effects.

Sustained economic development has to proceed with the modernisation of infrastructure: railways, roads, seaports, airports, electric power and lines of communication. Moreover, the plan should incorporate market-oriented institution-building – the introduction of a central bank, commercial banks, a viable educational system and a bureau of statistics – and the development of human resources.

How a China-brokered peace deal on the Korean peninsula would benefit all

Finally, Kim must be able to establish a solid foundation for economic modernisation with an average of 10 per cent annual economic growth over the next 10 years. The attainment of a 10 per cent annual growth rate, which was achieved in places such as Taiwan, Singapore, South Korea and China during their economic peak, would provide renewed legitimacy to the Kim regime, prevent disintegration and a mass exodus.

The terms of the agreement should last a minimum of 10 years to give Kim time to lay the foundation for economic modernisation, so North Korea can achieve autonomous economic development without external financial assistance after that period.

Kim has a rare opportunity to not only lift the masses from poverty to prosperity, but also become a driving force for Northeast Asia’s economic prosperity, with the establishment of a permanent peace and stability.

Dr Chan Young Bang is the founder and president of KIMEP University, principal investigator at North Korea Strategic Research Centre, and a former economic adviser to the first president of Kazakhstan, Nursultan Nazarbayev

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