Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty (128 page)

Despite its investment, the company—and its customers—had to put up with inconveniences that could not be fixed. Because the resort had only a Spartan, 150-room hotel, Hyundai had decided to turn its tours into three-day cruises between the South Korean port of Tonghae and North Korea’s Kosong. Tourists, most of them South Koreans, slept on their ships and disembarked twice for all-day excursions. Thus each person had to pass four times through North Korea’s rigid immigration and customs. (The North Korean officials checked them with state-of-the-art security devices that Hyundai had donated.)

Pyongyang was so insistent on controlling North Koreans’ exposure to outsiders that Hyundai’s buses traveled on an exclusive road bordered on both sides by chain-link and barbed-wire fences. The North Koreans who were cleared to work as park rangers, tourists and Hyundai staff had been instructed to discuss nothing beyond innocuous subjects such as the weather—although the rule did not prevent one senior female guide from asking me earnestly to urge American investors to bring their dollars. (I had entered on a tourist visa arranged by Hyundai—thus perhaps avoiding once
again any lingering consequences of my 1989 blacklisting as a journalist. But I made no secret of the fact I was on assignment to write an article for a financial magazine.
³
)

The low-wage manufacturing model for developing an economy definitely had drawbacks. Why pack your people into sweatshops to inhale fumes from the benzene used for gluing together athletic shoes? After all, the greedy foreigners who financed and oversaw such enterprises and sold the products abroad “would grab the lion’s share of the profit. And as soon as your people started demanding higher wages and better treatment, those foreigners would close up shop and head off to Somalia or some other godforsaken place where they could hire workers even cheaper.

A top North Korean official considering the matter would have added another argument: Those foreigners, if you let them into your country to oversee their manufacturing businesses, would corrupt your hitherto carefully isolated and indoctrinated people with alien notions sure to highlight the enormous gap between the regime’s teachings and reality as known to the rest of the world. The process eventually would threaten the continued existence of the regime. And if the businesspeople coming in happened to be South Korean—as were a large percentage of outsiders entering the North to do business—the problems would boil up sooner rather than later. South Koreans, sharing a language with the North Koreans, would be harder than other outsiders to isolate.

Pyongyang officials appeared to have pursued some such line of reasoning. Oh Seung-ryul, a research fellow at Seoul’s Korea Institute for National Unification, reported in 1999 that the North was consciously deemphasizing manufacturing as its key legal means of earning foreign exchange. (The turnaround was by no means complete, and apparently it had no effect on the illegal means of bringing in hard currency, such as manufacturing and smuggling heroin or printing and passing hard-to-detect counterfeit U.S. dollars, the “Super-Ks.”) More prized than manufacturing was tourism. The shift was particularly evident in the Rajin-Sonbong free economic zone. There a new casino opened, mainly targeted at people coming across the border from China. “North Korea is modifying the function of the Rajin-Sonbong area from a manufacturing base to a tourist attraction and center for transit trade,” Oh said. He added that the Pyongyang regime had banned South Koreans from visiting the zone and had begun taking down advertisements for Western businesses there.

In the Rajin-Sonbong case, the danger of ideological contamination probably was not the only factor militating for a change. (There was some question as to why it should have been a factor at all, if one credited the earlier reports that the regime had moved all the original residents out and
replaced them with people considered super-loyal to Pyongyang and relatively immune to foreigners’ blandishments.) Another big factor was that outside investors had not been enthralled with the zone’s remote location. Their investments from 1991 to 1997 had totaled only a disappointing $62 million, according to South Korean government statistics.

Corruption by the previous team of officials also seemed to play a role. A 1998 report quoting Chinese sources in Beijing said North Korean authorities had arrested seven officials including the head of the Rajin-Sonbong Special Development Project, who had been investigated by central party officials on corruption charges. Allegedly they had extorted money from foreigners who hoped to do business there. The report said the project office in Yanji, just across the border in China, had been closed.
⁴
While it was too early to predict whether tourism and gambling would do the trick for Rajin-Sonbong, advantages to the regime of relying on tourism could be seen clearly in the Mount Kumgang case. Try to earn
that
kind of money manufacturing textiles or assembling television sets.

But didn’t South Korean tourists pose the same sort of “contamination” threat as businessmen? Not since June 1999. That was when North Korean authorities arrested and questioned for several days a touring Seoul house-wife and mother. They accused the woman—-who said she innocently chatted to a North Korean park ranger about the lives of North Korean defectors in the South—of being a spy. Reported to have begun psychiatric treatment for the trauma she endured, she told interviewers for
The Korea Herald
that she believed she had been set up. Indeed there were indications that Pyongyang had been looking for a tourist who could be made an example, in order to scare future tourists into reticence. If that was the intention, it certainly worked. The tour was suspended for forty-five days. When it resumed, a columnist for
Chosun Ilbo
went along and later reported: “On the cruise ship, on the bus and whenever there were a small number of people gathered together, Hyundai personnel continuously asked the Kumgang mountains tourists not to say anything to the North Korean tour guides other than ‘hello’ and ‘thank you.’” The tourists complied.

As we have seen, steps toward rationalizing economic management and luring outside investment in the early 1990s had clashed with the aims of the military men whom Kim Jong-il was cultivating. Those steps had essentially come to a halt when South Korea turned its back on the North during the first nuclear crisis. The years of mourning and extreme famine that followed the death of Kim Il-sung in 1994 saw few indications of a renewed push to reform the economy. But on September 5, 1998, the Supreme People’s Assembly adopted a new constitution for the Democratic People’s Republic of Korea. Its third chapter covered the economy. Article 33, radical by past
standards, read: “The State shall introduce a cost accounting system in the economic management … and utilize such economic levers as prime costs, prices and profits.” Article 37 added that the state should encourage “joint venture enterprises with corporations or individuals of foreign countries within a special economic zone.”
⁵
The following year the country enacted an elaborate External Economic Arbitration Law.

For a time after that, change once more slowed. Pyongyang-watchers warned that signs of relaxation in the North must be read carefully. Jean-Jacques Grauhar, secretary general of the Seoul-based European Union Chamber of Commerce, previously had worked and lived in Pyongyang for several years. He told me in 2000 that North Korean leaders apparently had no objective beyond repairs to their economic system. Their goal was “not to change the system—and that shouldn’t be the objective of foreign investors,” he said. Grauhar and other experts advised non-Korean companies to team up with South Koreans and emulate their style, doing business in ways that were minimally threatening to a regime leery of change. “I’ve been pushing Club Med to do something there for years,” he said. The French company’s resorts were often built in pristine environments secluded from the surrounding reality—much like Mount Kumgang. In addition, Club Med got its profits from outsiders, not from hard-pressed locals of the host countries. The notion of Club Med’s bikinied guests playing bar games in North Korea seemed far-fetched—but then, until not long before, so had the idea of Hyundai tours of the Nine Dragons waterfall.

In his taped conversation with Chongryon’s Japanese-Korean delegates on April 25, 1998, Kim Jong-il addressed economic issues. “We are not isolationists, but we want to keep the status quo,” he said. “We don’t want hordes of tourists to come here and spread AIDS and pollute our land.”
⁶

Kim in that conversation showed a lively interest in the details of other economies, particularly those of Japan, South Korea and the United States—all of-whose nationals he referred to as “devils.” He saved his most favorable words for the United States, specifically then-President Bill Clinton. “Clinton is doing well in the White House,” he said. “Jack Kennedy tried to make a name for himself but he was rubbed out before he had the chance. This Clinton fellow is only fifty-two, but he got elected to the White House twice. He is quite a guy.” Kim praised American-made computers. “Today,” he said, “South Korea brags about its computers on TV commercials, but the South Korean computers don’t even come close to American computers. We have to butter up the Americans and get the best they have. Our People’s Army regards the United States as its sworn enemy, but our people engaged in trade address the Americans with much respect. This is called the principle of ‘hard inside, soft outside.’ ”

Kim showed himself to be a news junkie, ever ready to call forth odd facts from his memory. However, his failure to travel widely could be seen in misconceptions and examples of naiveté. He asserted that Japan could do much more with damming rivers to produce hydroelectric power than it had done, taking advantage of its “many tall mountains with high volumes of-water.” In fact, Japanese rivers are short and not especially mighty—a big reason why the country had chosen to emphasize nuclear power. By looking through Japanese product catalogs, Kim had discovered the installment plan. “How long have they been using this method of payments?” he asked his visitors from Japan. “Even shoddy products are being sold on the installment plan. It appears that the installment plan is due to slow sales.”

His characterizations of South Korea, which at the time was suffering from a severe Asian financial crisis that had begun in 1997, were full of exaggeration and misrepresentation—perhaps simply his wishful thinking: “The real ruler of South Korea is the United States. Today South Korea is in turmoil politically and economically. Seoul officials are trying to restore economic stability but I doubt they will make it.” Of course, following that economic rough patch, they did make it. Revealing his faulty perception, Kim observed that, after having prospered “for about ten years starting in 1988,” the South Korean devils were “broke and dirt poor.”

In an illustration of Kim Jong-il’s peculiar sense of proportion, he related at some length his wish that Chongryon officials search in Japan and South Korea for two species of native Korean dogs that were approaching extinction in the North. We can speculate that the beasts’ scarcity had to do with the famine and the unavailability of other sources of protein. (East Asian joke: What do you call a Korean with seven dogs? Answer: A caterer.) But Kim ascribed their absence to a lamentable lack of popular devotion to the maintenance of the breeds. “We don’t want our own native dogs to die out,” he said earnestly. “We must make sure that
pungsan
and
jindo
dogs prosper and propagate. Our people are quite indifferent to the future of our dogs. That is wrong. These dogs belong to Korea and we must preserve them.”

Kim first explained North Korea’s power shortage in terms that blamed nature and let the regime and its policies off the hook. “We had ample electricity when Leader Kim Il-sung was alive,” he said. “You may wonder why it is that we are short of electric power now. The reason is simple. We had natural floods several years in a row, which was unprecedented in our history, and our coal mines got flooded. We could not dig enough coal to keep our thermal plants going. That is why we are short of electricity and our people are suffering. Our economy is suffering for lack of electric power because our coal mines are flooded.”

* * *

To outsiders hoping for major changes in North Korea, though, Kim’s somewhat mixed-up view of the capitalist world might seem less significant than his reiteration of the failings of socialism as he saw them. As his talk with the Chongryon representatives progressed, for example, he took a different tack on the causes of at least part of the power shortage. He criticized colleagues who insisted on
taking juche’s
self-reliant principle to extremes. “During my 1983 visit to China, Hua Guofeng and I visited the Baosan thermal power station,” he said. “It was imported from another country. China was technologically advanced enough to build its own power plants but it decided to buy the plant abroad. I asked Hua why” The Chinese leader “said that China could have built the station but the foreign plant was better.” In contrast, Kim observed, “Our people reason differently. Their idea is to buy only those parts that we cannot make and the rest we build here. This kind of attitude has led to many costly failures. … We are paying dearly for our mistakes. …

“Our socialist system is people-centered and we say that we serve the people, but the truth of the matter is that our economic system is not quite like that,” Kim told his visitors. “In a capitalist society, customers are catered to and their pockets are picked clean in every possible way” He elaborated: “The socialist system is ice-cold and indifferent to the customers. In our country, our store workers take the attitude that they don’t care if the customers buy anything or not. Instead of servicing the customers and trying to sell something, they would rather that patrons did not show up so that they won’t have to do anything. In a capitalist nation, service is everything. When our people visit Japan, they are courted everywhere with ‘Welcome, welcome, please come in.’ Japanese eateries have managers who supervise the servers, and any service boy in trouble with a patron is severely reprimanded or punished. In our country, our servers are never fired for poor service. On the contrary, the patrons are expected to pay and bow to the servers for the privilege. It should be that those who receive money should thank the givers, but alas, here in this country, it is just the opposite. Capitalism has been around over one hundred years now and it tries all sorts of things to stay alive.”