North Korea still calls the shots, despite diplomatic talk.
Pyongyang's plunge into international diplomacy is raising the perennial question: Is North Korea finally prepared to forgo its duplicitous, bellicose ways? The term "diplomacy" sounds so legitimate, so removed from the trademark spewing of rhetorical bombast, it would appear the anachronistic Stalinist State is welcoming civilised discourse with developed countries.
Suspicions of propitious change on the horizon instantly redoubled when the Kim Jong-il regime stunned the world with a signed, unprecedented agreement to hold inter-Korean presidential talks June 12-14. Two days after the announcement, the Federation of Korean Industries outlined five fundamentals of "Economic Co-operation between South and North Korea". South Korea's European Union Chamber of Commerce and American Chamber of Commerce are now extra eager to send delegations to the North. And there is talk that the IMF and the World Bank are now in a position to loan the impoverished Communist State nearly US$5 billion.
Despite the diplomatic offensive, which includes formal ties with Italy and upgraded relations with the Philippines, Australia, Taiwan and the EU, Pyongyang has thus far fully demonstrated only one objective: to secure money.
After meeting with EU Foreign Minister Lamberto Dini in late March, the Stalinist state rejected the notion of integrating capitalist principles in the economy. Pyongyang opened a special economic zone loosely based on the Chinese model, but excessive restrictions and meddling hampered the experiment. "North Korea is placing more weight on political issues to stress the socialist economy," says Kim Jang-han at the Centre for Information on the North Korean economy at the Korea Trade and Investment Promotion Agency. "The North is not yet ready to open its doors and improve the life of its citizens."
Never a thriving economy, North Korea nonetheless was functional when the Soviet Union was intact. The 1990 dissolution of the Soviet empire, which had provided 70% of the North's revenue, including aid, shook its economic foundation. It sank even deeper into crisis in 1994 when ill-conceived agriculture policies created a massive food shortage. Floods in 1995 and 1996 and then drought the following year left North Korea abjectly lacking in resources. A famine has killed about 3 million people. Foreign trade crawls along because of Pyongyang's dismal credit standing and economic constraints inherent in its isolationist approach to business.
While the North struggled in the absence of Russia's support over the past decade, 1999 was a banner year of aid, giving it a taste of the world's wealth. Last year, Seoul gave Pyongyang US$450 million in aid; Hyundai sent US$200 million in a tourist deal; the Red Cross gave 155,000 tonnes of aid (including fertiliser); South Korean non-governmental organisations donated aid worth US$15 million; China gave 150,000 tonnes of grain and 400,000 tonnes of a coal-like fuel called coke.
"North Korea is buffing up its image to get more aid," said Nam Sang-wook, professor of North Koreanology at Korea University. "The North will open its doors just wide enough to overcome the crisis and avoid a major loss of capital."
The level of imports and exports is so low, its paltry raw materials prevent it from taking overseas orders. Because Pyongyang harnesses its water supply to power up hydroelectric plants, droughts are a perennial problem, and the country never has enough electricity. Its old Russian-style machinery constantly breaks down.
Occasionally the Kim Jong-il regime follows through with an inter-Korean business deal. In January, Pyunghwa Motors, a business arm of the Unification Church, broke ground on a car plant in Nampo. Shortly thereafter, the South Korean shoe giant Elcanto received the green light to set up shop in the North. But the US$952 million Mount Kumgang deal it signed with Hyundai in 1998 represents the type of business arrangement North Korea hungers for.
Raking in money for allowing tourists to walk on a mountain is a one-way arrangement, all take and no give, allowing Pyongyang to hold the reins of control while snubbing compromise that would expose vulnerabilities. And while summit fever has yet to abate, the notion of North Korea co-operating politically and economically on a two-way street remains remote.