North Korea

A Guide to Economic and Political Developments

Ian Jeffries

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781134290321
• Edition: 1
• Topic: History
• Subtopic: Asian History
• Index: History

There is much intense interest in North Korea at present. This partly arises from questions about Korea's nuclear capability and intentions, and about the extent to which North Korea may be viewed as 'a rogue state' or part of 'the axis of evil'. In addition, however, North Korea has recently begun experimenting with reforms along Chinese lines. The vigour with which these will be pursued, and related questions about the degree of engagement, or otherwise, with South Korea are also important issues. This book provides full details of economic and political developments in North Korea since 1989 when the communist world began to change irrevocably.

1 An overview of political and economic developments

A brief history

First North and South Vietnam (in 1975) and then West and East Germany (in 1990) were reunited. But North and South Korea are still divided and the land and sea frontiers survive as leftovers from the Cold War era despite the historic meeting in Pyongyang of Kim Jong Il and Kim Dae Jung, the leaders of the two countries, on 13–15 June 2000.

Former South Korean president Kim Dae Jung (IHT, 20 June 2000, p. 9): ‘We have reached a turning point so that we can put an end to the history of territorial division for fifty-five years . . . We have been a homogeneous nation for thousands of years. We lived as a unified nation for 1,300 years.’

A unified state from AD 668 to 1945, Korea was liberated (and divided at the 38th parallel) in 1945, having been part of the Japanese Empire from 1910 to 1945. An isolated state, it was known as the ‘Hermit Kingdom’. At the 1943 Cairo Conference the allies had envisaged an independent and unified Korea.

But the North was occupied by Soviet forces in August 1945 and the United States occupied the South. The Democratic People's Republic of Korea (DPRK) was proclaimed on 9 September 1948. In the Korean War (1950–3) China backed the North and UN forces backed the South (the Soviet Union having absented itself from the UN Security Council). North Korean troops had crossed the 38th parallel on 25 June 1950. Apart from Chinese forces, the Soviet air force also took part in the war (although this was not formally admitted by the Soviet Union at the time). The war ended in a truce rather than a peace treaty. The armistice was signed on 27 July 1953 by North Korea, China and the United States acting on behalf of the United Nations. Since July 1953 the two Koreas have been separated by the Demilitarized Zone (DMZ), which runs to the south of the 38th parallel in the West and to the North in the East. North Korea occupies 55 per cent of the total territory.

Kim Il Sung was born Kim Song Ju on 15 April 1912 and he adopted the name Kim Il Sung after a famous guerrilla who fought the Japanese. (‘Il Sung’ means ‘One Star’.) Kim Il Sung (who became known as the ‘great leader’) was prime minister (1948–72), president (1972–94) and general secretary of the Korean Workers’ Party (formed in August 1946 when the Korean Communist Party united with the New Democratic Party). Kim Il Sung was named head of the Korean Workers’ Party (Communist Party) in 1948. He died on 8 July 1994 of a heart attack at the age of eighty-two. He had groomed his son Kim Jong Il (the ‘dear leader’; born 16 February 1942) to take over when he died, thus ensuring the perpetuation of family rule (the first ‘dynastic’ succession in communist history).

The succession of Kim Jong Il was much smoother than many had envisaged.

Kim Jong Il … skilfully tightened his grip on power over the last decade despite critics who once pegged him for a sickly playboy who would not last long … When Kim Jong Il took power many outsiders doubted whether he had the charisma or cunning to hold the regime together. But the secretive leader, in his signature jumpsuit, surprised critics with his resilience, rallying the military around him. (www.iht.com, 8 July 2004)

(There seems, however, to be a struggle within the family over who is to succeed Kim Jong Il: see the entry in the chronology for 17 June 2004 and November 2004. There have even been reports of internal opposition to Kim Jong Il, but in such an isolated country it is difficult to know how seriously to take such reports. North Korea thinks there is a US plot to bring about regime change.) Kim Jong Il became general secretary of the Korean Workers’ Party on 8 October 1997. On 5 September 1998 Kim Jong Il was made chairman of the National Defence Commission. Although Kim Il Sung was made ‘eternal president’, Kim Jong Il was head of state, the post of chairman of the National Defence Commission being proclaimed the ‘highest post of the state’. Kim Jong Il rarely travels abroad, but he has certainly visited China (e.g. on 15–20 January 2001 and 18–22 April 2004) and Russia (e.g. on 26 July–18 August 2001 and on 20–23 August 2002). He did not visit South Korea as was envisaged after the 2000 meeting in North Korea with the then South Korean president Kim Dae Jung.

Kim Jong Il draws on three separate belief systems to buttress his rule: communism, Confucianism and ancient Korean shamanism. He is also said to have been born on Mount Paekdu, which is linked to Korean myth with the country's founding. In truth he was born in Russia. (The Economist, 18 December 2004, p. 109)

North Korea took care not to antagonize either China or the Soviet Union, but after the disintegration of the latter in 1991 (coupled with the collapse of communism in Eastern Europe in and after 1989) North Korea has been far more beholden to China than Russia (not least in terms of economic aid).

Kim Il Sung practised a strong cult of personality (that has been carried on by Kim Jong Il). The policy of Juche(Chuche) is normally translated as ‘self-reliance’. This helped make North Korea one of the most isolated of the then communist countries. Kim Il Sung described Juche as

holding fast to the principle of solving for oneself all the problems of the revolution and construction in conformity with the actual conditions at home and mainly by one's own effort … Man, a social being that is independent and creative, is master of everything and decides everything. (quoted by Rhee 1987: 890)

‘Russia's Itar-Tass agency [is] the only foreign media organization to have a correspondent in [North Korea]’ (Guardian, 19 November 2004, p. 20).

Relations between North and South Korea

General aspects

Apart from the problem of nuclear weapons (dealt with under the section devoted to relations between North Korea and the United States), North Korea has antagonized South Korea in ways such as the following:

1 The Pueblo is the [US] navy ship that North Korea seized in 1968 in waters off the country's east coast, setting off an international crisis. One American sailor was killed and eight-two others were imprisoned for nearly a year and tortured into writing confessions’ (IHT, 20 July 2005, p. 9).

2 On 9 October 1983 the assassination, through bombing, took place of seventeen South Korean members of President Chun Doo Hwan's delegation, including three ministers, in Rangoon (Burma).

3 ‘South Korea blames the North for … the bombing of a Korean Air flight off the coast of Myanmar [Burma] with 115 passengers and crew members on board’ (IHT, 17 August 2004, p. 6). ‘The United States placed North Korea on a blacklist of states fostering terrorism in 1988 after its alleged involvement in the mid-air bombing of a Korean Air jetliner over the Indian Ocean in 1987’ (FT, 18 September 2001, p. 14). ‘Japan accused Pyongyang of kidnapping a Japanese woman so she could teach Japanese to a woman agent who was later held responsible for the 1987 bombing of a South Korean airliner’ (IHT, 22 November 1999, p. 5).

4 On 18 September 1996 a North Korean submarine was found stranded on South Korea's east coast and a manhunt ensued. On 22 June 1998 a North Korean midget submarine was caught in the trawling nets of a fishing boat in South Korean waters. On 12 July 1998 a submersible North Korean boat was found in South Korean waters. On 18 December 1998 South Korean forces destroyed a North Korean semi-submersible.

5 On 5 June 1997 there was an exchange of fire between a South Korean patrol boat and a North Korean gunboat escorting fishing boats in what South Korea claims as its waters. On 15 June 1999, in a similar incident, South Korean naval ships actually sank a North Korean gunboat on the South Korean side of the Northern Limit Line, a maritime demarcation line which North Korea has never recognized. There were also naval clashes in disputed waters on 29 June 2002 and 23 August 2003.

6 There were incidents in the Demilitarized Zone (DMZ) on 26 September 2001, 27 November 2001 and 17 July 2003.

On 18 December 1997 Kim Dae Jung was elected president of South Korea. His policy of improved relations with North Korea is called the ‘sunshine policy’, involving warmer relations between the two countries. South Korea is well aware of the enormous cost of German reunification under more favourable conditions than those facing the two Koreas. President Kim Dae Jung did not wish to see the collapse of North Korea and thus favoured gradual improvements in political and economic relations. South Korea, he believed, should help North Korea via aid, trade and investment.

The 13–15 June 2000 summit in Pyongyang proved to be dramatic, although more in terms of a perceived breakthrough in relations after years of bitter division rather than specific results. This was the first ever meeting of leaders of North and South Korea. The two leaders, Kim Jong Il and Kim Dae Jung, greeted and treated each other warmly and vast numbers of North Koreans cheered them. Contrary to general expectations, Kim Jong Il turned out to have a sense of humour and to be affable, outgoing, self-confident but respectful, relaxed and talkative. Kim Jong Il might even be described as charismatic. Kim Jong Il:

Many people, including those from Europe, say I am leading a hermit's life. I am not such a great figure to be called a recluse. The fact is that I have made many secret trips to countries like China and Indonesia. I have been here and there without people knowing.

There was no formal agenda for the talks but on 14 June the two leaders signed a joint agreement. This included the following: ‘Resolve the issues of reunification independently and through the joint efforts of the Korean people’; ‘Economic co-operation and the development of the national economy … in a balanced manner’ (South Korea would provide extra aid and encourage South Korean companies to invest more in North Korea); family reunions to be arranged, starting on 15 August (Liberation Day, celebrating liberation from Japanese occupation in 1945; the first official reunion of family members was in 1985); to promote, artistic, cultural and sporting exchanges. The two leaders also agreed to establish a military hotline. Kim Jong Il agreed to visit South Korea ‘at the earliest appropriate time’.

Kim Jong Il also showed flexibility on the issue of US troops on the Korean Peninsula.

President Kim Dae Jung on his return to South Korea (16 June) stated:

The danger of war on the Korean Peninsula has disappeared … The North will no longer attempt unification by force and … we will not do anything to harm the North … The dialogue [on security issues] was very fruitful … We did talk about nuclear weapons and missiles … I told him [Kim Jong Il] that the missile and nuclear problems do not help regional and world peace as well as inter-Korean co-operation.

President Kim Dae Jung (IHT, 20 June 2000, p. 9):

We were able to reach agreement on a … ‘loose form of confederation’ on the Korean Peninsula in the future – a concept that requires maintaining two governments for the two sides as they are now and creating a conference of ministers and an assembly with which the two sides can jointly solve problems step by step. We also talked about nuclear and missile issues and the issue of United States forces stationed in the South … We have reached a turning point so that we can put an end to the history of territorial division for fifty-five years … We have been a homogeneous nation for thousands of years. We lived as a unified nation for 1,300 years … I have returned with the conviction that, sooner or later, we will become reconciled with each other, co-operate and finally become unified … Let us coexist and proceed on the path toward unification … None of this means that everything went smoothly in our talks … There should not be the slightest wavering in the resolve on the part of the Republic of Korea to maintain national security and sovereignty. But we must ultimately go on the path toward unification by solving one thing at a time … The North will no longer attempt unification by force and, at the same time, we will not do any harm to the North. In short, the most important outcome of the summit is that there is no longer going to be any war.

Kim Dae Jung (17 July 2000):

Full unification is very difficult to foresee at this point. It could take as long as twenty to thirty years. My point is that it is not important when it occurs but rather how we work together towards that goal by eliminating the danger of war, living together peacefully and extending economic cooperation. (FT, 17 July 2000, p. 18)

Kim Dae Jung (18 July 2000): ‘Peaceful co-existence and exchanges may go on for twenty or thirty years. We must not make haste. But in the process we will be working towards ultimate unification’ (IHT, 20 July 2000, p. 4).

North and South Korea halted propaganda attacks against each other, e.g. switching off the giant loudspeakers along the heavily fortified border that vilified each other and urged soldiers to defect.

(In 2003 the South Korean company Hyundai was found guilty of secretly and illegally transferring funds to North Korea shortly before the 2000 summit. ‘Hyundai was at the time negotiating a $350 million contract to exclusively develop businesses in the North. Kim's government persuaded the group to increase its payment by $100 million, funded by secret loans from the state-run Korea Development Bank … Kim Dae Jung: “We wanted to provide $100 million of support. But there was no legal way to do it … This was a great investment in the future … As president I authorized it and I have no regrets”’: FT, 19 June 2004, p. 12; FT, Magazine, 19 June 2004, pp. 14–15. Kim Dae Jung himself was not prosecuted.)

In late June 2000 Chung Ju Yung (the founder of Hyundai, South Korea's largest chaebol or conglomerate) and one of his sons visited North Korea. The visit resulted in plans to increase investment in the North, including the establishment of a North Korean ‘Silicon Valley’ in the Mount Kumgang region a few miles north of the Demilitarized Zone dividing the two Koreas. Hyundai has been developing the Mount Kumgang region as a tourist destination. (On 10 August 2000 the Hyundai Group announced that it had signed an agreement with North Korea to build an industrial park in Kaesong. The agreement also provided for South Korean tourists to visit Kaesong: IHT, 11 August 2000, p. 11. ‘North Korea … signed an agreement with [Hyundai] … to develop a permanent meeting place for separated families at Kaesong, North Korea’: IHT, 16 August 2000, p. 5.)

‘The foreign ministers of North and South Korea met for the first time Wednesday [26 July]’ (IHT, 27 July 2000, p. 5).

Negotiators from North and South Korea met for talks in Seoul. On 31 July 2000 they announced an agreement, including the following:

1 To reopen liaison offices at Panmunjom on 15 August, the date observed by both North and South Korea as a national holiday celebrating the end of Japanese rule in 1945. (The offices were first opened in 1992 in accordance with the ‘basic agreement’ between the two countries in that year. They were closed in 1996.)

2 To ‘rehabilitate’ the rail link that was destroyed in the Korean War. The railway passes through Panmunjom. (A road link was announced later. Work began on the South Korean side on 18 September 2000.)

3 To open South Korea to visits by Koreans living in Japan who hold North Korean passports.

4 To continue ‘ministerial talks in accordance with ...

Table of contents

• Front Cover
• North Korea
• Title Page
• Copyright
• Contents
• Acknowledgements
• Introduction
• 1 An overview of political and economic developments
• 2 Historical, political and demographic aspects
• 3 The economy
• Appendix 1 The Soviet (Stalinist) economic system
• Appendix 2 General issues in the transition from command to market economies
• Postscript
• Bibliography
• Index