ANALYSIS: With its impoverished society, North Korea unable to change

December 20, 2011

By YOSHIHIRO MAKINO / Correspondent

SEOUL--North Korea had promised its impoverished population it would "open the gate to a great, prosperous and powerful nation" in 2012 to mark the centenary of the birth of Kim Il Sung, the country's founder.

To that end, North Korea ramped up its efforts to transform itself into an economic power. But those efforts have not paid off noticeably so far.

Kim Jong Il's death on Dec. 17, officially announced by Pyongyang two days later, came as muted criticism was being voiced that North Korea had bitten off more than it could chew in trying to advance the nation's economic interests. Some critics said the effort was actually impoverishing society.

There is concern that Kim's death will trigger economic and social turmoil.

In this year's "Joint New Year Editorial," equivalent to a policy statement, North Korea said improving the people's standard of living remained a key challenge for the second year in a row.

North Korea had embarked on an ambitious housing program, aiming to build new complexes for 100,000 households in Pyongyang, in time for the centenary celebrations in April 2012. It also planned to complete the Huichon power station, with an output capacity of 300,000 kilowatts, by that date.

However, sanctions imposed by the international community over the country's nuclear and missile development programs, as well as other circumstances, hampered the procurement of material and equipment.

Sources familiar with North Korea said that the construction target of 100,000 housing units was reduced to 20,000 units.

The main focus is on building 2,800 units along leafy Mansudae Street in Pyongyang, the sources said.

The construction boom has taken its toll at the Huichon power station. Sloppy construction work has seriously compromised safety there, the sources said.

Not to be outdone when South Korea hosted the Seoul Olympic Games in 1988, Pyongyang was the venue for the 13th World Festival of Youth and Students the following year.

For that occasion, North Korea spent the equivalent of $3 billion, according to some accounts, to build hotels and public facilities.

The outlay resulted in a halt of allotments of essential goods in Hamgyong and other provinces.

Against this background, some experts in South Korea believe that North Korea's centenary celebrations in April will be followed by another spate of economic hardships.

Kim Jong Un, Jong Il's third son and heir apparent, revalued the country's currency in November 2009 in a bid to wrestle control of economic affairs, but that effort ended in failure.

While the country is witnessing a growth in "general markets," based on free market principles, unauthorized markets are also expanding. The latter poses a problem as North Korean authorities are unable to collect associated taxes in the form of entrance fees.

Rationing was suspended in most parts of the country, except for Pyongyang, from the late 1990s. Because ordinary citizens are not reaping benefits from the country's supposed march toward progress, they are rapidly losing interest in the regime that is now in the hands of the third member of the Kim dynasty, sources said.

From around 2000, DVDs began to flow in from China and elsewhere. Some North Koreans have begun to dress like actors in South Korean TV dramas.

The accumulated number of deserters from North Korea to South Korea topped the 20,000 mark this year. The number of cellphone subscribers in North Korea is likely to top 1 million by the end of this year.

In the meantime, Kim Jong Un's power base rests firmly with the military and the security authorities. As of now, there have been no visible signs of protests by North Koreans, who are well versed in the violent and oppressive nature of the regime.

Kim Jong Un may take advantage of the social mood for abstinence following his father's death to downsize April's celebratory events and ward off economic hardship.

Unless Kim Jong Un's power base suddenly collapses, North Korean citizens will likely watch how the transition of power progresses, analysts said.

By YOSHIHIRO MAKINO / Correspondent
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In this image made from video, North Korean woman cries as others bow in front of a giant statue of North Korean founder Kim Il Sung in Pyongyang, North Korea on Dec. 20, 2011, a day after North Korea announced the death of leader Kim Jong Il. (AP Photo/ APTN)

In this image made from video, North Korean woman cries as others bow in front of a giant statue of North Korean founder Kim Il Sung in Pyongyang, North Korea on Dec. 20, 2011, a day after North Korea announced the death of leader Kim Jong Il. (AP Photo/ APTN)

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  • In this image made from video, North Korean woman cries as others bow in front of a giant statue of North Korean founder Kim Il Sung in Pyongyang, North Korea on Dec. 20, 2011, a day after North Korea announced the death of leader Kim Jong Il. (AP Photo/ APTN)

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