By Arthur I. Cyr
Rason is not a household word, but that may change. On Monday, a major trade fair opened in this district in North Korea's far northeast, with colorful capitalism in a diverse array of products, ranging from Chinese-made bulldozers and other construction equipment and vehicles to clothing and toys on display.
Among the large numbers of visitors attracted by the event, Chinese business people were the most prominent, along with other Asians and some Europeans. The lively interchange among visitors interested in business and brokering deals contrasts with the gray background of conformity and control, typically characterizing the few remaining bastions of classic communist dictatorship left in the world.
Pyongyang has made this event a priority ― understandably, given the long-term destructiveness of communist doctrine and resulting desperation of North Korea's population. The insular, repressive and downright weird regime dominating that country must attract foreign investment to avoid collapse.
As in Cuba, an essentially feudal regime dominated by a single ruthless family is having to compromise with reality. Specifically, the totalitarian model creates neither prosperity nor domestic peace.
A large collection of communist states covering much of the globe had the collective capacity to avoid facing this fact. With market economies and representative governments increasingly the way of the world, they can't avoid reality.
Rason is among a series of special economic zones now receiving renewed attention and emphasis by Pyongyang. Special laws apply to such districts to provide local officials relative autonomy in seeking commercial agreements and exchange. Rason's location gives it a considerable advantage for doing business in China.
Jang Song-thaek, uncle of North Korean leader Kim Jong-un, visited China just before the Rason fair's opening. His trip secured commitment to receive substantial assistance to facilitate development of the special economic zones.
Yet red tape continues to entangle and frustrate foreigners seeking to develop trade and investment. Special invitations must be secured to enter the country.
Visitors are constantly and carefully monitored. They can use cellphones and the Internet, as well as basic transportation to meetings, only after securing formal official permission.
All of this provides justification for an elaborate bureaucracy employing large numbers of people, while frustrating capital formation and subtracting value from the economy. These practices must change if North Korea's economy is to become productive.
Limited efforts to open the economy are especially important given North Korea's erratic military behavior.
In March 2010, a North Korean torpedo sank the South Korean ship Cheonan, following a skirmish the previous year between naval gunboats from the two countries. An independent international commission concluded that physical evidence confirmed North Korea had sunk the vessel, but Pyongyang angrily denied the charge.
In November 2010, North Korean artillery bombarded Yeonpyeong Island, held by South Korea.
This February, Pyongyang agreed yet again to cease its on-again, off-again nuclear program. In joint announcements coordinated with the U.S. Department of State, the regime agreed to halt nuclear development and permit international inspection of facilities.
Yet in April, Pyongyang tested a missile, preceded by the usual bombastic propaganda broadcasts. The launch ended in spectacular, embarrassing failure.
This confusing behavior gives urgency to use economic leverage with North Korea, especially by South Korea, China and the United States. Washington should encourage practical Seoul-Beijing cooperation in dealing with Pyongyang and in the wider six-party talks.
Arthur I. Cyr is Clausen Distinguished Professor at Carthage College. Contact him at acyr@carthage.edu.
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