06 Jun 2018

Amidst the flurry of activity in the lead-up to the Trump-Kim Summit, we look deeper into North Korea’s intentions and it’s future.

Professor Vu Minh Khuong, Associate Professor, Lee Kuan Yew School of Public Policy shared with us some insights into the North Korean regime.

Six Burning Questions on North Korea

Q1. Do you agree that North Korean Leader Kim Jong Un decided to come out of seclusion and declare denuclearization because of economic assistance?

I am confident that North Korean Leader Kim Jong Un has decided to abandon his country’s nuclear ambition to focus on economic development. I don’t think this decision is motivated by any promise of economic assistance. But, it is a paradigm shift in his mindset.

Three possible factors that led to this mindset change are receptivity, tension, and opportunity. He is becoming more receptive to the idea that embracing economic reforms and global integration will lead to prosperity. This is because of the successes of countries like China and Vietnam which have a similar communist system.

In contrast, tensions caused by economic sanctions on North Korea is extremely severe. North Korea is more isolated than ever before and may fall into economic crisis if it does not decisively abandon nuclear ambitions.

Finally, North Korea sees unprecedented opportunities and enormous benefits if it changes course. Globalization, smart technologies, the economic success of South Korea, and the rise of Asia can help to make North Korea a miracle economy within a few decades. This can happen if it decides to follow the reform model adopted by China and Vietnam.

However, the paradigm shift in North Korea’s policy will not be smooth. It faces two major obstacles. Firstly, many in North Korea’s leadership still hold on to the cold-war mindset. Secondly, some groups inside and outside of North Korea do not want to see this watershed change in the status quo, due to selfish interests.

I believe that while North Korea’s course to embrace denuclearization and global integration is irreversible. It may not be easy and smooth.

Q2. How would you describe the current state of the North Korean economy? How is Kim Jong Un’s approach different from his father and grandfather?

For a communist country, making a major policy determination depends on three strategic considerations: political stability, economic success (not economic aid), and national pride.

Rapid changes taking place around the world in the past few decades have forced every nation to rethink their course of development. In particular, the outstanding success of China and Vietnam, which were impoverished just a few decades ago, has powerfully impacted the thinking of North Korea’s leadership.

By following the reform model adopted by Vietnam and China, North Korea can achieve three key objectives: political stability, national pride, and economic success.

Q3. Which course of economic reform do you think Kim Jong Un will take and why? I can think of some examples like Vietnamese reform(doi moi), China’s economic reform and openness and Singapore’s transition from developmental economy to liberal market economy?

I think Kim Jong Un should learn from all the successful development models in Asia, including that of China, Vietnam, and Singapore. In short, their lessons can be summarized in a five-element framework, which can be referred to as ASIAN: Aspiration, Strategy, Institutional building, Acquisition of knowledge, and Nurturing of human capital.

On aspiration, I believe North Korea will aim high. The country undoubtedly aspires for the level of success that South Korea has achieved.

For strategy, China and Vietnam can give North Korea a more relevant model: the reform approach should be gradual but decisive and consistent. The strategic directions include extensive adoption of market economy, robust embrace of global integration, and vigorous promotion of private sector development.

One important lesson from China and Vietnam is not to pursue massive and immediate privatization but to carry out strategic reforms, in which FDI and private sectors became the leading players of the economy, while the SOE sector adopts modern management and phase-wide privatized.

Q4. Do you think North Korea can follow the successful path of Vietnam or China? What would be a major obstacle?

Refer to response in Q3.

The major obstacle facing North Korea is its efforts to join the world in its distrust of the US and South Korea as well as its deep sense of insecurity.

I have observed Vietnam struggle to overcome this problem before. It is not easy, and sometimes painful. Any fake news and misunderstanding can cause significant trouble.

For example, someone can induce North Korea to behave unproductively by purposely releasing fake information about a US agenda to subvert Kim Jong Un after he destroys all nuclear weapons development capabilities.

It is important to note that not everyone wants to see the success of North Korea or the Trump administration in this summit. Therefore, fake news, misunderstanding, and hiccups are inevitable. In anticipation of this challenge, the US and South Korea should be well aware of this this obstacle and take strategic steps to overcome it.

Openly discussing this potential problem with Kim Jong Un and his team could be a good start. Creating a robust platform for both sides to address any emerging concerns and to create mutual understanding and trust is vital.

Respect, Reciprocity, and Reliability should be the norms in building this partnership with North Korea. In particular, If North Korea offers to do something positive, the US and South Korea should do a bit more in return. Kim Jong Un needs to build on his own confidence and enhance his people’s national pride in this early fragile stage of change.

Q5. As far as you know, has Kim Jong Un sent N. Korean government officials to benchmark Vietnam’s reform (or Singapore)?

A few students from North Korea have recently studied at the Lee Kuan Yew School of Public Policy where I teach. This means that, to a certain extent, North Korea has been proactively looking for the way to reform its economy and engage intellectually with the outside world.

Q6. When North Korea opens up, which country will be the biggest winner and why?

I think North Korea will be the biggest winner.

Opening up generates huge benefits from the synergy between the country’s potential and global development forces.

This reform will also put the country in a virtuous cycle of development in which capabilities, confidence, and collaborative commitment will be stronger over time. In my own experience with Vietnam, the transformation of the country has been amazing.

For example, in the 1980s, we were hungry and reliant on the Soviet Union’s aid for imported rice.

Just a few years after the launch of reform in 1986, we have become one of the largest exporters of not only rice but also many other products.

Before the reforms, we looked at the Soviet Union as paradise. Today Russia is lagging behind Vietnam in many development indicators.