DPRK

The Future

Working with under-performing organisations teaches you that events can easily spiral out of control and there can be a rapid escalation of events. In North Korea there is plenty of evidence of chronic under-performance (combined with a state of denial by senior management). Drivers of change and discontent are likely to spring from the masses realising that they don't live in a paradise after all. This will come from an awareness of what is happening in China, the growing contact at factory / enterprise and state level with South Koreans as well as from ordinary people seeing and maybe even meeting foreigners in their midst.

On the other hand neither China nor South Korea can afford the sudden collapse of the Korean Workers' Party regime and this provides a financial incentive to sustain it, irrespective of rhetoric to the contrary. A meltdown in North Korea, including for example military confrontation as a last throw of the dice by the regime, would be a recipe for disaster in the Far East with implications beyond the economies of China, South Korea and Japan.

Prospects for the people of North Korea remain grim. Food rationing has been re-introduced after tentative moves towards private food sales were abandoned (one reason being the impact on currency inflation that this created) and UN and NGO food aid organisations have been told to leave the DPRK.

Nonetheless subtle changes appear to be taking place: state enterprises are encouraged to earn foreign currency and there is evidence of branded goods in circulation (albeit Chinese copies) suggesting a degree of trade with the outside world. There would also appear to be a class of people (probably trusted party members) who are regular visitors to China including the trader I met on the train and others seen in Beijing. Similarly the recent deaths of three senior members of the regime (each of whom were well past retirement age) could provide an opportunity for new ideas to be introduced.

The extent to which the regime could manage a change process is questionable – fear of losing control, misunderstanding of market dynamics, a lack of imagination and the dominant bureaucratic mentality all conspire against radical reform in addition to the vested interest of those who want the status quo to continue. Nor would a change process be easy. An introduction of capitalism and global competition would surely destroy what little remains of industrial activity in the country and it is difficult to see the people of North Korea finding it an easy transition in psychological terms let alone economic. If the experience of integrating East Germany with the west has been difficult it doesn't compare with the challenge that would be posed by North Korea.

Catalysts for change could include internal power struggles within the regime, natural catastrophes (for example more floods and hence further food crises) or a shift in international relations (for example a revival and escalation of the ongoing nuclear dispute). Otherwise my bet is that in the short term North Korea will remain essentially cut off from rest of the world and the show will go on. However, for how long it can continue has to be questionable.