The sources of North Korean conduct: Is Pyongyang really going non-nuclear?

On 25 September 2019, a source in North Hamgyong Province, North Korea, talked with a reporter from the Daily NK—an Internet news provider based in Seoul, South Korea—on a cell phone. His calling was illegal, since North Koreans are normally prohibited from calling anyone outside the border. However, some living near the North Korea–China border have contacted the outside world with the help of Chinese cell phones. The individual informed the Daily NK about new phenomena around his area. Among them, the increase of private courier services was most conspicuous. ¹

Private business had long been banned under the North Korean socialist system but was accepted after the North Korean great famine in the 1990s. It increased afterward, and markets in the North amounted to 436 as of August 2018, according to the United States Center for Strategic and International Studies (CSIS). ² In fact, a CSIS report released in July 2017 assumed that roughly three-quarters of the North Korean population relied partly or entirely on the private market for their living. ³ The abovementioned private courier service is one example that private market activity in North Korea has been proliferating. This growth of market activity has been assisted by the increase in cell phones, presumed to be about six million and roughly equivalent to a quarter of the North Korean population. ⁴ Despite this rapid increase of markets in the North, the government is currently refraining from placing further restraints on the activity. Rather, it continues to sanction it, taking advantage of the trend. Fees for the use of market areas are collected, generating revenue for the regime.

The power of the market

The market has become an indispensable component in North Koreans’ lives. Already in 2009, one particular incident showed just how significant the market was. On 30 November of that year, the Pyongyang government carried out a currency reform, and old currency had to be exchanged for the new by a ratio of 100:1. The maximum exchange per household was 100,000 North Korean won, equivalent to some USD$100. Old currency above the maximum became worthless, and people normally handling cash in that amount were furious and went on strike. The corollary was that people dependent on the market for their daily necessities had difficulty in obtaining even rice and vegetables. However, the socialist food rationing had been severely damaged during the North Korean great famine and now applied to only public-service workers. The North Korean government could not help being embarrassed and increased the maximum to 500,000 North Korean won. The chief of the Pyongyang division of the Korean Workers’ Party (KWP) was forced to apologize to Pyongyang citizens for the unexpected currency reform. In addition, the North Korean government executed Park Nam-gi, head of the planning and finance department in the KWP, as a scapegoat. ⁵ The strike was allegedly the first public demonstration to resist the government since North Korea’s establishment in 1948. The Pyongyang government has not imposed strict controls on the market in its territory since the 2009 currency reform. ⁶

The incident, which made explicit the power of the market, took place approximately 10 months after the current North Korean leader Kim Jong Un was appointed as the successor to his father, Kim Jong Il. It seemed to influence his mindset and policy orientation afterwards.

In June 2012, Kim Jong Un introduced a new economic policy that aimed to increase incentives for farmers and factory workers. Previously, farmers had worked in groups of 10 to 25 members, but the groups had diminished to three to five members. As part of the new policy, each group had an annual goal of production, giving 70% of the production after harvest to the government and taking 30%. Each group also claimed for itself production above the goal. ⁷ This policy motivated farmers and led to the increase of grain production from 4,300,000 tons in 2008 to 4,823,000 tons in 2016. Production decreased temporarily to 4,710,000 tons in 2017 because of bad weather, but was restored to 4,900,000 tons in 2018. ⁸ According to the new economic policy, factories also would specify an annual goal of production and could distribute production above that to its workers. They had discretion to decide on monthly pay as well as the price of their goods, and they could raise investment from the business magnates, called donju, who accumulated capital in the market. Factory workers were also motivated to produce more than the annual goal in order to take some part of the surplus. ⁹

Kim Jong Un’s focus on the economy could also be seen in the Economic–Nuclear Parallel Development Policy (ENPDP), enforced in March 2013. Although it was criticized by some North Korea observers for seemingly intending to keep the North Korean nuclear programme going forever, the policy was designed, according to North Korean media, to develop the North Korean economy in tandem with the nuclear programme, concentrating on the former after completing the latter. The North estimated that it did not need to put resources toward developing conventional weapons if it had state-of-the-art nuclear warheads, diverting them, instead, to the economy. ¹⁰ In that sense, the ENPDP’s focus was the economy rather than the permanent possession of nuclear weapons.

Economy first policy

In September 2017, Pyongyang carried out the sixth nuclear test, and, in November 2017, succeeded in test launching long-range missiles that could reach the United States. On 20 April 2018, Kim Jong Un declared the end of the ENPDP and adopted the all-out Economic Building Policy (AEBP). The AEBP was meant to prioritize economic affairs among all the tasks of the KWP and the North Korean government, and to fully mobilize the human, material, and technical potential of North Korea for economic growth. ¹¹

Since then, North Korea has shown a conspicuous transformation from a military first policy (MFP) to an economy first policy (EFP). Under the MFP, the Kim Jong Il government allocated resources to the military first. Kim Jong Un reversed that policy and put people’s lives and civilian demands before military needs. The EFP has prompted several important changes in the North. First, some military resources were transferred to civilian uses. A large, military airfield located in North Hamgyong Province was converted to a vegetable farm, ¹² and a military drill field nestled by the sea in Gangwon Province gave way to a tourist complex, including hotels and restaurants, to attract domestic and foreign travellers. ¹³ Many factories that had produced munitions, rifles, and tanks are now manufacturing civilian goods, such as fans, refrigerators, farm tractors, and ski lifts. ¹⁴

The turn towards the economy took place within the military as well. Top military commanders were replaced with generals who were equipped with economic backgrounds. In May 2018, Kim Su Gil and Roh Gwang Chul, top economists in the North Korean military, rose to the first and third highest positions, respectively, in the North Korean People’s Army. Roh was replaced by Kim Jong Kwan, another top economist in the military, in January 2020. ¹⁵ Top military leaders have also been downgraded over time. Although they used to be five-star generals in the Kim Jong Il era, they are now normally four-star generals. ¹⁶ Finally, the head of North Korea now wears not a military but a civilian cap. In the MFP era, Kim Jong Il ruled North Korea as the chairman of the National Defense Commission. However, in April 2019, the North revised its constitution to stipulate that the chairman of the State Affairs Commission, Kim Jong Un, is the official head of state.

Kim’s pragmatism

Kim’s pragmatism appears to play a significant role in the current North Korean government’s emphasis on the power of the market and people. Kim Jong Un was educated in Switzerland during his adolescence. This experience seems to have equipped him with a pragmatic perspective and ability to compare the West and North Korea. This perspective is evident in records of his conversations. As an example, in August 2000, Kim said to his father’s Japanese chef, Kenji Fujimoto, “Our industry lags behind very much in comparison with other Asian countries. We can just be proud of our natural resources, such as uranium and ore. We even lack electricity, so the power often goes out even at the presidential retreats.” ¹⁷ He also said, “It is great that China improved its agriculture enough to feed 1.3 billion people and export food. We have to follow China in many aspects.” ¹⁸ Kim Jong Un has recognized, from long ago, the realities of the North’s harsh economy, comparing it to growth in neighbouring countries, and he has appreciated China’s pragmatic approach to agricultural and economic development.

This pragmatic perspective was translated into North Korean policies right after Kim took office in 2012. During his first speech in front of citizens in April 2012, he stressed that he would not let them tighten their belts again, and would not leave them in famine and agony. ¹⁹ It was a promise to strive to improve people’s lives. The ideas Kim Jong Un expressed are reminiscent of the Confucian tradition in Korea. In ancient times, the idea that a king must feed his people well was regarded as the first requirement for a king to keep his throne, and to be an exemplum virtutis. It was a pragmatic element of Confucianism. In his 2012 speech, Kim Jong Un seemed to express his will to lead like a sage king in North Korea, where the Confucian culture is still influential.

In addition to carrying out economic reform in June 2012 that increased incentives for farmers and workers, Kim Jong Un also made public his open-door policy in March 2013 by establishing 22 economic development zones throughout the North. Since Pyongyang lacked cutting-edge technology and accumulated capital, Kim’s plan was to achieve economic growth by inviting foreign capital and technology. The Five-Year Economic Development Strategy (2016–2020) includes this kind of plan.

The abovementioned policy changes in North Korea suggest that Kim Jong Un aims to emphasize pragmatic action rather than sticking to infallibilism. In his New-Year address in 2017, he confessed that he had spent the previous year in regret and self-reproach: he had heart but no ability to do well. He also expressed his firm resolution to do his best for people in 2017. ²⁰ Such confessions are in sharp contrast with a Western understanding of previous communist regimes. In his famous paper, “The sources of Soviet conduct,” published in Foreign Affairs in 1947, George Kennan criticized the Soviet regime for three founding concepts: “antagonism between capitalism and socialism;” “infallibility of the Kremlin;” and “the fact that the leadership is at liberty to put forward for tactical purposes any particular thesis which it finds useful to the cause at any particular moment and to require the faithful and unquestioning acceptance of that thesis by the members of the movement as a whole.” These concepts, Kennan said, had implications for Soviet conduct as a member of international society. ²¹ Kim’s 2017 New-Year address, in which he admitted his own imperfection and even reproached himself, indicated that at least the second concept, albeit not certainly the first and third ones, did not apply to the North Korean government.

Other signs of Kim Jong Un’s move towards pragmatism occurred in February 2019. Kim visited Vietnam, the purpose of which was to negotiate with the United States president on the critical nuclear problem. However, he was accompanied by Oh Su Yong, vice chairman of the central committee of the KWP for economic affairs, and high-ranking officials of the KWP. The purpose of their accompanying him was to show them the scenes of reform and opening up. He supposedly intended to dilute the potential resistance of conservatives in the KWP. He may have recognized in these officials the resistance of similarly conservative officials of the Soviet and Eastern European communist parties against the wave of reform and opening up in the late 1980s. The visits by Kim and high-level party officials to the Vietnamese enterprises were broadcast by the media in North Korea, and were considered a signal to the public that there would be more opening up.

Kim Jong Un may well be thinking of his regime’s durability, since he is still young, just 36 years old. A well-known thesis of Max Weber observes that leadership derives from traditional, charismatic, or legal/rational authority. In his early days in office, Kim Jong Un tried to secure traditional authority by striving to take after his grandfather Kim Il Sung, who is still revered by most North Koreans for his independence movement during the Japanese colonial era and nation building in 1948. He also endeavoured to obtain charismatic authority by propagandizing his superiority in shooting and dealing with cannons, even in his early childhood. However, it is not certain that his traditional and charismatic authority are established in North Korean society. In these circumstances, it is no wonder that he feels keenly the necessity of winning legal/rational authority by means of economic performance. Furthermore, he saw revolutions in northern Africa in the early 2010s, mainly instigated by deep economic recession and high unemployment.

North Korea’s potential could be a credible buttress for his pragmatism. The North’s most prominent potential is cheap and high-quality labour. Only USD$75 per month was paid to a North Korean worker in the Kaesong Industrial Complex, the North–South Korean combined estate in the North, when it closed in 2016. Moreover, North Korean workers are mostly very skilled, well-educated, and highly motivated. ²² North Koreans’ illiteracy rate was 0% in 2013, according to a United Nations Development Plan report, ²³ and the ratio is likely to persist up to now because 12-years’ compulsory education is being enforced. North Korea also has vast mineral resources, such as gold, uranium, magnesite, and rare-earth elements. In addition, the North has many tourist attractions and a favourable geo-economic position between China and South Korea. These factors are apt to be conducive overall to Kim Jong Un’s pragmatism, although it has yet to bloom because of external economic sanctions.

Pyongyang’s new approach

It can be argued that the growth of the market, the increase of people’s economic demands, and Kim Jong Un’s pragmatic perspective bred the EFP. These factors arguably prompted Pyongyang’s new foreign policy orientation. The North needed to adopt a new way to materialize the new thinking and trend. In other words, Pyongyang had motives to engage in diplomacy rather than confrontation toward the United States. In terms of the nuclear issue, it turned its attitude from defiance to dialogue.

Pyongyang’s new approach to its nuclear programme is a corollary following from both new economic and social circumstances, and Kim’s pragmatism. The North is desperate to lift economic sanctions imposed by the United Nations Security Council. Without lifting of the sanctions, North Korea cannot boost international trade, attract international investment, and grow its economy. It has to reach an agreement in the nuclear talks with the United States to achieve this goal. North Korea also wants to gain assurance of national security as a basis of economic development and must also negotiate with the United States in order to accomplish this purpose. In sum, the Pyongyang regime has enough reasons to move to a different approach toward its nuclear warheads and facilities.

In reality, Pyongyang strove to foster a friendly international environment for the new approach by declaring a moratorium on the nuclear and intercontinental ballistic missile test in April 2018. About a month later, it destroyed the Punggye-ri nuclear test site, where six nuclear tests had been conducted, to demonstrate that it would concentrate on building the economy. Those actions led to the United States–North Korean summits in June 2018 and February 2019. This situation is totally different from that of the Soviet Union in the 1940s, which Kennan described as a deficient society, with weak total potential and whose conduct had, “expansive tendencies.” ²⁴

Some observers think that the United States President Trump’s administration “maximum pressure” has engendered these results. ²⁵ However, it is more plausible that North Koreans made efforts to design a strategy to make economic progress, concluded with the AEBP, and tried to show some favourable actions for the policy toward the world. Takashi Sakai, an outstanding Japanese expert on North Korea who had worked for the Public Security Intelligence Agency for 34 years and retired as the vice chief of the agency in 2012, views the North’s alteration not as submission to pressure from the United States, but as an expression of self-confidence, although he has little reason to say positive words about Pyongyang in the conservative atmosphere in Tokyo. He argues that international economic sanctions toward the North have not been effective, and its new policy orientation has come from its own decision that it was time to negotiate and produce results after it had completed developing nuclear warheads and long-range missiles. ²⁶ A new international order in northeast Asia also arguably encouraged North Korea to take a new approach. China and Russia are confronting the United States economically and politically, and have more motives to support their close ally, North Korea. The liberal South Korean government also has been ready to help North Korea strike out on a new path. These factors more likely than not contributed to Pyongyang’s transition.

Pyongyang’s preference for dialogue is not likely to alter in the near future, since it is buttressed by manifest domestic policy and the supreme leader’s thought. Therefore, unlike Kennan’s ”long-term, patient but firm and vigilant containment” recommendation for the Soviet Union, the United States needs to maintain a responsive approach toward North Korea. The United States’ efforts to engage North Korea need to continue, since they will probably pay off, in that the North has stronger internal incentives to negotiate than at any other time.

Some doubt Kim’s authenticity for dialogue. They also doubt whether he will give up the nuclear programme in return for compensation from the United States. They note that even North Korea’s constitution stipulates that it is a nuclear power, and Pyongyang has long developed nuclear warheads at great expense. However, ironically, an amendment to the constitution is not so hard if the supreme leader is determined, since the Pyongyang regime is authoritarian. Now it is necessary to seek a deal with Pyongyang rather than to act on doubt and distrust. As Robert Jervis stresses, the problems of perception and misperception are significant to policy-makers who deal with hostile counterparts. ²⁷ In Washington–Pyongyang relations, these problems are especially important, and the consequences of misperception may well be profound because they have distrusted each other, and have had a hostile relationship for 70 years. The importance of correct perception of such changes in the North and their implications, from which a right strategy toward Pyongyang can stem, cannot be emphasized enough.

Where is give and take?

I do not insist that Kim Jong Un’s authenticity for dialogue should not change at all. It can be weak at any time. It will last only when Kim believes that dialogue will bear good fruit, which, from Kim’s perspective, are guarantees of national/regime security, a declaration of the end of the Korean war, a peace treaty, and the establishment of United States–North Korean diplomatic relations and lifting economic sanctions. As long as he thinks he can obtain these goals, he will not leave the negotiation table. So it is needless to talk about his authenticity. It is more important to strive to make him believe he can sell his nuclear programme at a proper price in the nuclear talks.

Since the first United States–North Korean summit in June 2018, Washington and Pyongyang have negotiated over what and how they will give and take. The United States wants to dismantle all the weapons of mass destruction before lifting economic sanctions and guaranteeing the North’s security, whereas North Korea prefers step-by-step denuclearization and consequent compensation at each step. During the United States–North Korean summit in February 2019, Pyongyang proposed to destroy the Yongbyon nuclear complex, allegedly accounting for some 70% of the North Korean nuclear programme, in return for cancelling the sanctions by the United Nations Security Council resolutions from 2016 to 2017 that obstruct the civilian economy and people’s lives. This gradual approach was rejected by the United States. Although both parties have made efforts to strike a deal since then, they are not likely to do so very soon.

The North Koreans believe that only the step-by-step way can solve the problem, given that distrust between Washington and Pyongyang has deepened. By negotiating and implementing small agreements between them, they can dilute the distrust and go forward toward more comprehensive agreements. When they saw Libyan leader Colonel Qaddafi killed by the rebels supported by the North Atlantic Treaty Organization, they were arguably frightened and determined not to abandon the nuclear programme without security assurance. That is why guaranteeing national/regime security is just as critical as lifting economic sanctions for Pyongyang. Kim reemphasized that he would not back down easily in deals with the United States, by declaring economic development and military build-up as main goals for 2020 at the plenary session of the Central Committee of the KWP in December 2019. ²⁸

In recent times, the United States seems to have become a bit more flexible and has taken a step back from the position of denuclearization first and compensation later. Furthermore, if North Korea agrees to accept the final, fully verified denuclearization in the final stage, the United States appears ready to accept the step-by-step implementation of denuclearization. American negotiators allegedly proposed a phased approach to North Korea’s denuclearization in the working-level talks in Stockholm in October 2019. ²⁹ Nevertheless, it is still very hard for them to agree on what to give and take in each step; it is a time-consuming game requiring patience from both parties. Under this condition, it needs to be remembered that Pyongyang still has strong domestic demands to continue nuclear negotiation; hence, doubting the North’s denuclearization sincerity is fruitless, and even its probable provocations can be actions to urge the United States toward talks. Moreover, the North is suffering from commodity shortages since it tightened its border (especially with China) due to the worldwide spread of COVID-19 in late 2019 and 2020. Now North Korea not only wants help to reinforce preventive measures against the COVID-19 pandemic, but also is desperate for lifting economic sanctions to invigorate its economy when the new virus fades out. President Trump’s March 2020 letter to Kim Jong Un offering help to fight COVID-19 showed their warm personal relations. However, it is more important to translate their personal relations into practical negotiations.