By Hwang Eui-gak
The Seoul-based Yonhap News Agency reported on March 18 that Pak Nam-gi, director of planning and finance of the North's ruling Workers' Party, was recently executed near Pyongyang as a scapegoat for his failed currency revaluation adopted last November drastically reducing people's assets.
The news came amid an unconfirmed report that China, a long ally of North Korea, is preparing a contingency plan for the uncertain odds of a big bang in the isolated North.
Apparently, the currency revaluation (at the rate of 100 to one for the new currency) was believed to have been aimed at forfeiting excessive money hoarded by those families who have benevolent relatives abroad. But it has turned out be a serious blunder hurting people's daily lives in the overall short-supply economy.
North Korea has attempted to introduce partial but various economic reforms and opening policies to overcome its economic hardship but only without success due to ``faulty implementation" rather than ``bad intentions."
Many North Korean technocrats do not understand both economic principles and markets. One of the major causes of the North's economic policy failures could be traced to its excessive overinvestment in its military sector, not to mention the leader's lack of understanding of human economic incentive and motive.
To make matters worse, the leadership is obsessed with the lingering worries about how its power structure will be affected once the society changes.
As long as a nation remains divided in mutual hostility, a large diversion of scarce national resources to the military is inevitable.
But a serious unbalance between the economic sector and the military sector is dangerous. The heavy military sector at the sacrifice of economic investment will slacken the economy while its fat military tends to be more provocative.
This reflects today's picture of North Korea, which often threatens its southern rival with ``a sea of fire." The risk is in fact made far worse by the virtual certainty of the North's possession of nuclear weapons coupled with its enhanced missile deployment in the vicinity of the Demilitarized Zone (DMZ).
For over more than a decade, the communist regime has not been able to provide enough food for its people, despite its repeated slogan of building a socialist paradise. Many in the North know through either ear-to-ear hearsay or increasing outside contacts about the affluent life which their southern brethrens are enjoying across the DMZ.
Officials as well as grassroots in the North know well that frequent stealing and extorting farm produce by the North's hungry soldiers is hurting the income of farmers and that rampant corruption amid widespread hunger is contributing to eroding the legitimacy of the North's leadership.
Despite the tight controls, people are continuing to eke out a meager living by selling and buying scarce and necessary goods in underground markets.
People should be able to generate food and income the state is no longer able to provide. Even bureaucrats, knowing that the state is in short supply of resources to reward their zeal, are increasingly looking for secondary market opportunities which inbreed both legal and illegal trading.
The underground economy fosters corruption, making possible many things that were unthinkable in the past, such as bribery and human trafficking. All these phenomena ring a death knell.
As is possibly the case of executed Pak Nam-gi, the North's leadership can use its reckless power by victimizing some surrogate persons on charge of policy failures, but such an illegitimate power will have to assume its ultimate responsibility, and more importantly, it will unavoidably invite its own implosion.
Indeed, with the leadership of the North Korean regime in flux, the political and economic relationship between the North and the South, and between the Korean Peninsula and the world, is uncertain. What would be the implications if the current North Korean government were to fall?
A big bang in the form of either implosion or explosion will not be the end of the story for the peninsula. Just as the DMZ lies largely in the hands of surrounding powers, so is the destiny of Korea likely dependent on its neighbors.
A unified Korea could be established if its four neighboring powers are assured of their security and interests in the region. This must be an urgent contingency task that all Koreans have to prepare for from now on.
Dr. Hwang Eui-gak, a professor emeritus of economics at Korea University, is now working at the International Center for the Study of East Asian Development (ICSEAD) in Kitakyushu, Japan. He can be reached at hwang@icsead.or.jp or eghwang40@yahoo.co.kr.