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Pyongyang Powder Keg Reignites, Sinking Hope for Korean Reconciliation
The Washington Diplomat / June 2010

By Larry Luxner

Ten years ago, this newspaper — marking half a century since the Korean War — profiled Seoul's then-ambassador in Washington, Sung Chul Yang. It was a time of great optimism on the Korean Peninsula.

With the presidents of North and South Korea cheerfully toasting each other in Pyongyang, and emotional family reunions and joint-venture border factories dominating the news, it was only fitting that our cover headline read "Melting 50 Years of Ice."

A decade later, not only has the ice not melted, but North-South relations appear to have gone into a deep freeze.

North Korea's dictator, Kim Jong Il, described by the Associated Press as "shriveled and worn" during a rare visit to China in early May, is suffering from serious health problems. Widely believed to have suffered a stroke in 2008, he's also reportedly undergoing kidney dialysis every two weeks as a result of years of heavy drinking, according to South Korean experts.

As if that's not enough, Kim also rules a country in desperate economic straits. Last year, Kim's communist regime attempted a "currency reform" that destabilized food markets, boosted domestic prices and wiped out the savings of millions of ordinary North Koreans.

The currency revaluation was so badly bungled that authorities in Pyongyang — facing widespread criticism and resistance — were forced, for the first time in the regime's history, to apologize to the public for its consequences.

And in late March, a South Korean Navy vessel, the Cheonan, sank in the Yellow Sea just south of the disputed maritime border between the two Koreas, after an explosion in the ship's stern ripped it in half. Of the 104 sailors on board, 46 were killed or remain missing. South Korean investigators have confirmed that the cause of the explosion was external — fueling speculation that the Cheonan was hit by a torpedo or floating mine.

Indeed, 60 years after the beginning of the Korean War, the two enemies remain as far apart as ever — and nobody's talking about melting the ice now.

"The word's out — even in North Korea — that they did it," said Bruce E. Bechtol Jr., a military expert with the U.S. Marine Corps Command and Staff College. "But for South Korea to respond militarily would look mean-spirited. The prudent act they'll take is through the [United Nations] Security Council, and perhaps some very stringent economic conditions. There's nothing that says South Korea has to continue maintaining the Kaesong industrial complex. That makes a lot of money for the elite, and it would be a pinprick on South Korea — but would have a major effect on the North Koreans."

What eventually happens in North Korea — considered the most closed society on Earth — has major consequences for its immediate neighbors in Asia, as well as the United States. One of only five communist countries left in the world (the others are China, Vietnam, Laos and Cuba), North Korea has the planet's worst human-rights record and is actively pursuing a nuclear weapons program.

In the face of widespread criticism, the Bush administration removed North Korea from the State Department's list of terrorist-supporting nations in an effort to lure it back to the negotiating table and renounce weapons of mass destruction. But the effort failed, and now — with mounting evidence that North Korea was behind the Cheonan attack — the White House's options are limited.

"I don't think the Obama administration wants a war in Korea on its hands. They don't want tensions to get worse, so they're discouraging South Korea from overreacting," said Selig Harrison, director of the Asia program at the Center for International Policy.

Harrison, a noted North Korea expert who's been to the hermit nation 11 times, said the United States has not adjusted to recent changes in North Korean policy.

"We used to negotiate on the basis that we expected concessions on the nuclear issue before we'd agree to normalized relations. Now they're no longer prepared to do that. They say they want normalization first," he told the Washington Diplomat. "Six-party talks would look good for the Obama administration. It would give the impression that North Korea has conceded something. But Obama's policy is Bush-like. It hasn't really changed much."

In the meantime, he warned, North Korea isn't as stable as it used to be, "because of the currency revaluation which was very poorly handled, and which affected about 30,000 people in the elite who had been permitted to have economic freedom. This is a very clumsy effort by the hardliners in North Korea to stop economic liberalization."

Kim Kwang-Jin, a former North Korean official who defected to the South several years ago, is today a visiting fellow with the Washington-based Committee for Human Rights in North Korea. A former top official at the Northeast Asia Bank and Korea National Insurance Corp. — both controlled by the regime — he's believed to be the first English-proficient defector ever to escape from North Korea.

He said the regime's attempts at currency reform had disastrous results for the vast majority of North Korea's 23.8 million inhabitants.

"The government literally confiscated all the cash from the people and changed the exchange rate from 100 old North Korean won to one new won. That means they left only 1 percent of cash in circulation. Their idea was to revive the centrally planned economy again, but it resulted in failure and hyperinflation. Prices shot up, markets closed down and the use of foreign currency was banned."

Both Kim and military expert Bechtol spoke at an Apr. 28 seminar in Washington — "Hope for the North Korean People?" — sponsored by the American Enterprise Institute for Public Policy Research. Other speakers included Peter Ackerman, founding chairman of the International Center on Nonviolent Conflict, and Robert King, the State Department's special envoy for North Korean human rights issues.

Kim, who handled accounts worth hundreds of millions of dollars for the North Korean regime, defected in 2003 via Singapore with his wife and son. He explained that North Korea actually has two economies, a "people's economy run by the Cabinet and planned by the National Planning Commission, and another economy created by Kim Jong-il, under his control, focused on foreign trade and raising slush funds for himself."

He says this so-called "royal economy" handles more than 200 times as much foreign currency as does the people's economy. That's why, he asserts, "U.S. sanctions targeting North Korea would be very effective. It would directly hurt Kim Jong-il's regime, rather than the North Korean people, as long as financial sanctions and international efforts are focused on stopping insurance scams, counterfeiting and the sale of weapons of mass destruction and military technology."

Yet he added that widespread famine and starvation — which claimed three million lives in the mid-1990s — are unlikely to return to North Korea.

"The reason is that the people have already gone through 15 years of surviving and relying on private transactions and trading," he said. "In the 1990s, a lot of people died because they couldn't adjust themselves to the market and were not bold enough to jump into private transactions."

Bechtol said North Korea made about $2 billion in weapons sales last year to Hezbollah and Iran's Army of the Guardians of the Islamic Revolution (IRGC), both of which have been designated terrorist groups by the State Department. "That money goes to the military and the elite. It does not go down to the average North Korean working person," he said. "It is disturbing that North Korea has not been put back on the list of nations supporting terrorism."

Added Kim: "All this hard-currency income is directed to Kim Jong-il himself. He collects all this money personally. Even though there's starvation and suffering, they never care for their own people. The more they have in their hands, the more they put into the military and Kim Jong-il's lavish way of life."

Bechtol said he's seen two interesting developments in the last 18 months when it comes to suppressing news out of North Korea.

"Pamphlets are now being sent by cylinder-like balloons over the DMZ. The balloons cross the border, pop and pamphlets fall out. These pamphlets describe things such as Kim Jong-il's health and the state of the economy, things for the North Korean audience that they may not already know. North Korea's reaction to this in the past 18 months has been to crack down severely on those who get caught even reading these pamphlets. The punishment is immediate 're-education' or going to a prison camp. If you are a one-man dictatorship, information is one of the most important things you have to control," said Bechtol.

"Another thing that's changed radically is cellphones. The North Koreans have their own network, built by the Egyptians, but they've reportedly acquired a great deal of monitoring gear, so Big Brother is always listening," he said.

"However, there have been a lot of cellphones connected to Chinese networks that have been getting the word out to the South, to reporters and NGOs. These cellphones have exploded in proliferation in the last 18 months, and is causing the government real problems. In fact, the first news about the disastrous currency reform came from a cellphone call from North Korea to a reporter in China — before the South Koreans even heard about it."

After the presentations at AEI, a 12-minute video prepared by the International Center on Nonviolent Conflict was shown to participants. It examined civil resistance movements in such places as Chile, South Africa, Ukraine and Serbia, and made the interesting point that civil resistance is more than twice as likely to succeed as attempts at violent insurrection.

"The varieties of civil resistance are almost infinite, but their purposes are the same: to cause disruption and undermine the legitimacy of the authoritarian sources of power," said Ackerman. "Disruption leads to the discovery that more people are in dissent than one would think — but these people are latent double-speakers because they feel that by raising their head, they'll be chopped off."

Yet the idea that some kind of civil uprising could take root in North Korea is seen by many observers as farfetched. Likewise, even if Kim Jong-il were to give up power or die, there's no guarantee the system would collapse. In 2008, Cuba's absolute ruler, Fidel Castro, turned the presidency over to his younger brother Raϊl after 49 years in power — and Cuba's communist dictatorship remains as entrenched as ever.

CIP's Harrison told The Diplomat that predictions of North Korea's demise in the event of Kim's death are way off base.

"The general impression that Kim Jong-il is an all-powerful dictator is incorrect," said the scholar and former Washington Post reporter, who began traveling to Pyongyang in 1972. His most recent visit was in January 2009. "The death of his father, Kim il-Sung, led to a basic change in the setup there, in which you don't have one-man rule anymore, but instead a National Defense Commission. They need him as a link to the father's memory, and he needs them, because he's not charismatic like his father."

Harrison added: "I don't think that his death — which by the way doesn't seem to be imminent at all — would change much. The armed forces would still be in charge, though maybe one of his sons might be a ceremonial figure."

It's understood that the leader's third son, Kim Jong-un, has already been chosen to carry on the dynasty. Paul B. Stares, a senior fellow at the Council on Foreign Relations and author of a recent report entitled "Preparing for Sudden Change in North Korea," predicts the transfer of power in Pyongyang will be "more or less seamless" and discounts the probability of either a power struggle or a failed succession that leads to North Korea's demise.

"While we should not rule out other scenarios, there is growing evidence that a managed succession is underway in Pyongyang," said Stares. "The succession process could still play out over many years, however, with much depending on the health of Kim Jong-il. There also is no guarantee that the chosen successor will actually become the supreme leader or last for very long." - END -

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