By Kim Young-jin
It’s no secret that Kim Jong-un, North Korea’s chosen successor after the death of his father, Kim Jong-il, is inheriting an economy in shambles. South Korea and China booming at its borders provide stark contrast to its outdated central planning.
In this historical transition, the natural hope is that the young heir and his team attempt reforms following the model of China and improve the lot of the impoverished people.
But prospects remain murky and the only certainty is that any new leadership faces enormous challenges ahead.
North Korea has been outstripped by the South since it saw resources shrink in the 1970s after the collapse of communism in Europe. The late Kim, who took power in 1994, oversaw much of its fall, resisting reforms while developing a nuclear program.
Kim Jong-un is left with a planned system struggling to feed its population of 24 million. Profit sources exist with hybrid enterprises run by party or military figures with monopolies on trade and natural resources, but traditional state enterprises have long been stuck in the mud.
As part of its campaign to become a “strong and prosperous nation” by next year and keep its economy afloat, Kim Jong-il significantly boosted economic cooperation with China, including breaking ground on a pair of joint economic zones near their border ushering in Chinese investment and cooperation.
He also leaves behind a fledgling market system born of necessity during a 1990s famine that killed hundreds of thousands. After attempts to squelch the system including a disastrous currency revaluation in 2009, the regime has allowed for state-sanctioned markets and turned a blind eye to informal ones scattered around the country.
But the increased activity is concentrated on urban areas such as Pyongyang, Sinuiju and Wonsan, with the rest of the country struggling mightily, creating a wealth disparity some call unsustainable.
One highly-cited reason for hope is that Kim Jong-un studied for a time in Switzerland, exposing him to Western affluence. Some say his father may have been planning as part of the power succession more tolerance for reforms.
Some suggest the leadership could positively assess trends born from the existing changes and seek to optimize them.
“The hopeful direction is to see a shift from strength to prosperity,” said John Delury, an assistant professor of international studies at Yonsei University. “A prosperity-based system leads to a very different reaction from the international community.”
But the expert advised that given the North’s circumstances, comprehensive reform could only occur with a high level of cooperation, due particularly to the integrated nature of the region’s economies.
“I’m not saying it’s all about to happen. But a fundamental adjustment is one path it could take. It’s really something key players should be thinking about how to help facilitate.”
The other, perhaps more likely path, analysts say, is that the North will continue the plan Kim Jong-il laid out while Jong-un secures his power base. The problem, they say, is the regime’s need for absolute control to maintain survival.
“Muddling through, sadly, is the most likely path,” said Stephan Haggard, a professor of international relations at the University of California, San Diego. “The dependence of Kim Jong-un on the military and security apparatus would not seem conducive to reform.”
Under this scenario, the North is likely to continue to beef up cooperation with China, rely on international handouts and wield its nuclear weapons as diplomatic leverage.
Some suggested modest reforms were possible under Kim Jong-un in the medium-term under its push to develop its “Computer Numerical Control” in the name of the heir. The computer-aided manufacturing, they said, is code for modernization.
In the end, however, the weight of history may prove too great for Kim Jong-un to overcome.
“No country with a hyper-centralized Stalinist economy has remained efficient for longer than two or three decades,” North Korea expert Andrei Lankov wrote in Foreign Affairs. “It’s difficult to see how or why North Korea could disprove this rule.”