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.This artillery is thought to be capable of firing several thousand shells perhour towards South Korea.Even with improvements in intelligence, weaponstechnology and missile accuracy, not to mention the Bush administration sdeclared willingness to use nuclear weapons, any strike is seen as a riskyand potentially disastrous operation both militarily and politically.Engagement, however, carries its own risks.Wendy Sherman, an adviserto Madeleine Albright and a special adviser to Clinton on North Korea,described the dilemma well:I have no illusions about Kim & he is a leader who has left his people with nofreedom, no choices, no food, no future.People are executed.There are laborcamps.But the decision we have to make is whether to try to deal with himto open the country so that the people of North Korea do have freedom, dohave choices, do have food.Do I think it would be preferable to not deal withhim? Yes, but the consequences are horrible, so you have to deal with him.8The North Korean leadership is increasingly divorced from reality.Lackof knowledge filtering up to the leadership leads at best to mistakes, and atworst to outright stupidity.Flunkeyism (sadaejuui) is identified as the oppositeof Juche and is theoretically objected to.However, the reality of the situa-tion in Pyongyang is that by the late 1970s Kim Il-sung was surrounded by apolitburo of largely aged, poorly educated, ex-guerrilla generals who showedblind obedience rather than offering advice and alternatives.Kim Jong-il mayhave seen many of the older generation pass away, he has cultivated an elitethat has little interest in letting him know the reality.Kim Jong-il is not thecrazy and irrational dictator much of the tabloid press seeks to portray himas; nor is he necessarily the the hawk of hawks ,9 yet he may not have a trulyrounded grasp of the situation.As one journalist noted, The real issue isn twhether Kim is crazy enough to amass a nuclear arsenal but whether he iscrazy enough to dispossess himself of his one bargaining chip. 10Time is running out for North Korea.Another crop failure could occurat any time, aid is dwindling, allies are virtually non-existent.Pyongyanglacks the assets that China had when it began its reform process.China had280 North Koreano shortages and was not obliged to rely on foreign aid.It had a wealth ofdomestic entrepreneurial traditions and resources, as well as the invaluable bamboo network of overseas Chinese capital, know-how and contacts.TheDPRK s economic reforms of 2002 did not show us how socialism with NorthKorean characteristics would look; they simply showed how a governmenthad panicked in the face of a collapsing economy.Which economics textbooks Kim Jong-il and his planners read we cannever know, but it is plausible to suggest that the Chinese economist ChenYun numbers among them.Chen was an advocate of Soviet-style planningin China in the 1970s, but in the early 1980s moved towards a more modifiedversion of the USSR s blueprint what Chen called a birdcage economy,where the bird is the economy, the cage is the central plan and the size ofthe cage is the market:One cannot hold a bird tightly in one s hand without killing it.It must beallowed to fly, but only within its cage.Without its cage, it would fly away andbecome lost.Of course, the cage must be of appropriate dimensions.& Thatis to say, one may readjust the size of the cage & but regulation of economicactivity by the market must not entail abandonment of the orientation providedby the plan.11This notion seems to be where the economic planners and ideologues ofPyongyang have been heading, with cages like Sinuiju, Rajin-Sonbong, andadjustments to the state pricing mechanism and other limited economicreforms.Chen, like his latter-day colleagues in Pyongyang, retained hisfaith in the plan and in the subordination of agriculture to industry.He, likePyongyang, believed that central allocation was preferable to the market asit allowed for control and the eradication of market inefficiencies as wellas supplying full employment.Chen s arguments for a slightly modifiedSoviet system in China didn t win out.Deng Xiaoping, Hu Yaobang andZhao Ziyang were looking not to Moscow but to Hungary and Yugoslavia,which seemed to offer less rigid forms of socialist economics.Deng, Hu andZhao also made a simple comparison and asked, who fared better economi-cally? Was it market-driven South Korea, or plan-driven North Korea? Wasit market-driven West Germany or plan-driven East Germany? Eventuallythey looked at economies such as Singapore, Taiwan, South Korea and, ofcourse, the Asian economic giant, Japan.It is clear that Kim Jong-il knows he needs to do something about hisshredded economy.Yet he is not ready to admit, as Deng did in 1984, that a little capitalism isn t necessarily harmful.He is not ready because mean-ingful steps towards the market require decentralisation and the granting ofgreater personal freedom.As Philip Bowring has observed, the North wantsThe World s Most Dangerous Tripwire 281change without regime change. 12 While the command economy remainsdominant, the overall trend, despite possible blips, will be downwards.Theofficial New Year Message from Pyongyang in 2003 stated that the DPRKflag is adorned with great victories and no defeats.This may be the casemilitarily.The real defeat, though, for the party-state in North Korea, hasbeen the economy.POSTSCRIPTDecline, Deadlock and HopeThe Great Game of Show and TellThe propaganda chiefs in Pyongyang have consistently and repeatedlyargued that sanctions against North Korea are tantamount to a declarationof war.They would for an effective, truly all-encompassing sanctionspackage supported wholeheartedly by South Korea, China and Russia as wellas the USA and the EU is the one thing that could mean the final deathof the regime.The DPRK leadership s endgame of regime survival wouldhave failed.However, the world needs to be absolutely clear that the humanmisery and death, the scale of the resultant humanitarian catastrophe, wouldbe colossal.Most importantly, sanctions would politically isolate any caucuspushing for economic reform that exists in Pyongyang and slam the doorfirmly shut on change and room for meaningful change and economicreform does still exist.The North remains in a parlous state economically its 2006 nationalbudget was just US$2.9 billion, with an estimated 16 per cent of the totalbeing spent on the country s military (a growth in official military spendingof 3.5 per cent over 2005).Of course, officially the North Koreans haveclaimed that their economy continues to grow 1.8 per cent in 2003, 2.2per cent in 2004 and 3.5 per cent in 2005 officially though if changes inconsumer prices are taken into account (and notwithstanding the suspectnature of any economic statistics released by Pyongyang), the economy hascontinued to contract.While overall the North Korean economy has continued to shrink itshould be noted that between the failed economic reforms of 2002 andPostscript 283today North Korea has managed to boost light industrial production andsuccessfully launch the Kaesong Industrial Zone the most substantial andtangible product of the Sunshine Policy begun under President Kim Dae-jung.When the first edition of this book was published Kaesong was justgetting started and it was too early to tell what its future would be
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