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In-depth Business Intelligence
Books on North Korea
REPUBLICAN REFERENCE
Area (sq.km)
120,540
Population
22,224,195 (July 2002 est.)
Capital
Pyongyang
Currency
North Korean won (KPW)
Leader
Kim Jong-il
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Update No: 034 - (23/02/06)
Marking time
February, a bleak month in North Korea, was also a largely uneventful one.
Domestically, it saw as ever the birthday on the 16th of the DPRK's supreme
leader Kim Jong-il, who this year officially turned 64 (though he may really be
65). The usual celebrations brought no word on naming an eventual successor,
although outsiders' speculation on this persisted.
Internationally, meanwhile, a resumption of six party talks - both Koreas,
China, the US, Japan and Russia - on the nuclear issue came no closer. Pressure
from Washington on the separate issue of DPRK counterfeiting continued to rile
Pyongyang, amid some evidence that it was also hurting. But rather than force
North Korea back to the conference table, the effect may be to drive Kim Jong-il
further into the arms of his Chinese semi-protector.
Synchronized warbling; Kimjongilias bloom
Kim Jong-il's birthday on February 16, a holiday in North Korea ever since
1974 (six years before his status as successor to his father Kim Il-sung was
made public), was marked with the usual extravagance. Normal for North Korea,
both the mode and intensity of this cult seem bizarre to the rest of the world.
To take just one example of dozens, the official Korea Central News Agency (KCNA)
reported a synchronized swimming gala on the great day. Evidently singing was
synchronized as well, since besides the "graceful rhythms … and refined
teamwork", the Changgwangsang Health Complex swimming pool resounded to
such ditties as "Thunder on Jong Il Peak", "Our General Is
Best", "Ye, Bright Moon over My Country", "General and
Children", and "Let's Advance Faster for Higher Goal."
Like his late father, Kim Jong-il also has his own flower. Whereas Kimilsungia
is an orchid from Indonesia, Kimjongilia is a begonia bred by a Japanese
admirer. The latter is now the subject of an annual Kimjongilia Festival. This
year's, the tenth, saw over 23,000 potted plants sent in by more than 100
organizations: "including military organs, commissions and ministries of
the Cabinet, national institutions and servicepersons, working people from all
walks of life, school youth and children … and overseas Koreans, foreign
embassies … and friendship and social organizations in different
countries" (KCNA again).
On top of this, each province also held its own separate exhibition, with
thousands more of the blooms. Delusions of grandeur apart - Kimjongilia is
"recognized as the world's most famous flower": you heard it here
first - in a land chronically short of electricity and where child malnutrition
is widespread, the greenhouses needed to nurse these blooms through the harsh
Korean winter are an appalling waste of scarce resources. Politically too, there
is an air of competitive feudalism: woe betide anyone whose flowers fall short,
one supposes.
Succession speculation
While Kim Jong-il was lauded to the skies, with (inter alia) a national
seminar on February 8 devoted to his "immortal feats", no further
clues emerged as to what plans, if any, he has for his own succession. While no
doubt such a genius will be a hard act to follow, leaving a vacuum is also very
risky. With long and impenetrable articles on inheriting the revolution starting
to appear in the Pyongyang press, there is clearly much thinking behind the
scenes.
Meanwhile speculation in Seoul added contradictory new twists to the rumour
mill. On the one hand it is claimed that Kim Jong-chol, the dear leader's middle
son, dined with China's president Hu Jintao; and that a Party campaign to honour
him is under way. Against this is a comment of Kim Jong-il's former sushi chef
that his father regards this son as too "girly." Rather than sexism -
Kim Jong-il also has at least two daughters, who by most accounts are not in the
running by definition - this may be more literally true. On February 18 the
Korea Times reported a rumour that Kim Jong-chol has a fatal and incurable
disease: an excess of female hormones, "which makes him even bosomy."
There is of course no confirmation.
Bottom dollar: tightening the screws
In an unwelcome birthday present to Kim Jong-il, Banco Delta Asia (BDA), a
Macau-based bank accused by the US of being a conduit for DPRK counterfeiting
and money-laundering, said on February 16 that it has severed all ties with
Pyongyang. BDA thus hopes to head off implementation of the Patriot Act, which
would bar US banks from opening or maintaining correspondent accounts with it. A
formal US threat to do this last September caused a run on BDA, forcing the
Macau authorities to take it over. Two South Korean banks recently cut ties with
BDA, whose responses include hiring Ernst and Young to review its DPRK business
(it has, or had, some 50 customers there) and Deloitte and Touche to advise on
anti-money laundering measures. It has put $25 million in a suspended account
under the direction of the Monetary Authority of Macau.
While the US obviously has every right to protect its currency, two problems
arise. This is a blunt instrument, snaring innocent and guilty alike. The 50-odd
North Korean accounts suspended by BDA include that of Daedong Credit Bank (DCB):
a joint venture with UK investors (originally by the now defunct Hong Kong-based
Peregrine), which not only serves other JVs in the DPRK but is at pains to
stress its transparency and anti-laundering procedures. If the idea is to show
Kim Jong-il that crime does not pay, making life difficult for legitimate
business in Pyongyang seems an odd way to go about it.
What is Bush playing at?
Secondly, as we have noted before, this new US pressure on financial crime
hands North Korea a fresh pretext to boycott the six-party nuclear talks. Not
for the first time, one has to wonder what Washington's strategy is. Unless it
was sheer coincidence that long-running probes into Pyongyang's dodgy dealings
came to fruition just as the six-party talks reached a hard-won if vague
statement of principles last September, the suspicion must be that US opponents
of engagement - vice-president Cheney is usually cited - were glad to stymie a
process which at last looked as if it might be making some progress.
This diplomatic torpedo apart, there are signs that the US pressure may be
hurting. Japan's Kyodo News claimed on February 11 that Kim Jong-il told Hu
Jintao on his visit to China in January that US sanctions could cause his regime
to collapse. That the dear leader made this hastily arranged trip, just weeks
after the two men had met in Pyongyang, suggests he is worried. Yet US advocates
of regime change should control their glee, and ask whether driving North Korea
into China's arms is a net gain. Kim Jong-il's warm welcome suggests that Hu is
prepared to support him; including, one may speculate, not only quiet pressure
to end criminal enterprise but perhaps compensation for so doing, and legitimate
alternatives. A face-saving formula for both sides on the financial issue must
be found if the six-party talks are to restart. That will not be easy, so there
may be no new talks till March or April.
Talks with Japan remain deadlocked
While six-party nuclear talks in Beijing have yet to resume the brief and
uncompleted fifth round held in November, the Chinese capital did host talks
between North Korea and Japan. Technically this was the 13th round of bilateral
talks on normalizing Japan-DPRK relations: a long and tortuous road. The first 8
rounds were held back in 1991-92, while the 12th was in 2002. Relations have
never been worse, so the wonder (and faint hope) is that they even bothered at
all. To avoid deadlock they adopted a new triple-track format, with separate
tranches for abductions (still a dealbreaker for Tokyo), diplomatic ties and
security issues.
Despite this, there was no progress. On abductions, Pyongyang stuck to its tall
tales of how 8 of the 13 young Japanese whom it admits to kidnapping died, and
insists there were no more. That did not impress Japan, especially with widening
evidence that individuals from several other countries including Thailand and
Lebanon were abducted too and are still held in North Korea. Public opinion
aside, a tough-minded Tokyo has no reason to ease its stand - whereas Pyongyang
could gain an aid package worth up to US$10 billion if diplomatic ties are ever
sealed, which seems a remote prospect. The ball is in Kim Jong-il's court.
Meanwhile Seoul sources reported on February 12 that Japan-DPRK trade fell last
year to US$190 million, its lowest since 1977. Japan was long North Korea's
second largest trade partner and main source of hard currency earnings; but
chilly relations of late have seen Tokyo tighten up, both on financial flows and
banning rusty DPRK vessels from its ports.
Mixed messages to Seoul
There were no major developments on the inter-Korean front in February. With
typically mixed messages, although Pyongyang media continued to warn (as every
year) that routine US-ROK military cooperation could jeopardize North-South
ties, the North pleased Seoul by agreeing at last to hold a third round of
high-level military talks; albeit at Panmunjom on the border, rather than the
more exotic venue of Mt. Paekdu as originally envisaged. This meeting is due on
March 2, so we shall see if North Korea is ready to move on matters like a joint
border fishing zone - agreed in principle, but no details have yet been worked
out - and cross-border railways, reconnected but not yet in use; let alone the
more substantial security issues which the South would like to discuss, such as
force level reductions.
Meanwhile Red Cross talks at the North's Mt. Kumgang resort, ongoing as of
February 22, found Pyongyang continuing brazenly to deny holding any ROK
abductees or prisoners of war (POWs), despite much evidence to the contrary.
Seoul is unlikely to press the matter, for fear of jeopardizing hard-won family
reunions (which have in fact included a handful of abductees). The contrast with
Japan is striking. There, driven by public opinion whipped up by right-wing
politicians, the kidnap issue tops the agenda; its full settlement is a sine qua
non of progress on any other front, let alone aid. In South Korea, by contrast,
abductees' families struggle to get much sympathy from either the public or the
present government.
Defending the North against Uncle Sam
Changing attitudes among South Korea's young were highlighted by a newspaper
survey of 18-23 year olds, published on February 21. Almost half (48%) said that
if the US attacked Northern nuclear facilities, Seoul should take Pyongyang's
part and demand Washington desist. 41% thought the South should stay neutral,
while 11% said it should act in concert with the US. While ambiguous phrasing
makes it unclear whether defending North Korea or opposing a military solution
was the key point, this is a striking result; consistent with earlier polls,
which have sometimes found younger South Koreans citing the US or Japan (but not
China) as greater threats to peace on the peninsula than Kim Jong-il's regime.
As this implies, the old Cold War certainties on the peninsula are no more.
Attitudes like these in Seoul must give pause to even the Bush administration's
most rabid hawks. Even if they view this as rank appeasement, they have their
work cut out to win back the hearts and minds of South Korea's rising
generations - or the future of the US-ROK alliance is bleak. A posturing
hardline new US ambassador, Alexander Vershbow, is not helping matters.
Meanwhile Kim Jong-il looks well placed to play off Beijing against Seoul, just
as his late father Kim Il-sung once milked both China and the USSR during the
Sino-Soviet dispute. Now in effect protected by all three of these immediate
neighbours - a strikingly post-Cold War troika - the dear leader has little to
fear from his foes in Washington or Tokyo. In that sense, despite no sign that
the nuclear issue will be resolved any time soon, North Korea's short-term
position at least appears surprisingly stable. But the succession is another
matter.
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