N. Korea: Emulating the Chinese model

It seems from the reports coming from North Korea that its enigmatic dictator Kim Jong Il has decided to implement an idea often discussed as a solution for North Korea's economic crisis, bleak isolation and disregard for values and norms established globally in the post-Cold War era.

What is meant by the idea is simply borrowing the Chinese model for initiating gradual economic reforms to ultimately abandon the hard-line socialist policies and replace them with a market economy.

Such a model has proved successful and achieved for China most of what it dreamt of, let alone that this model comes from one of North Korea's very few allies. China is actually the only country today that plays host to the North Korean leaders and provides them with political and economic support.

Reports also say that Pyongyang decided from last September to go ahead with converting the Sinuiju region on the eastern bank of the Yalu River, opposite the Chinese territories, into a special economic zone, to be a trial ground as a preliminary step before converting to a market economy and introducing the concept on a wider scale.

This is exactly what China did some 20 years ago during the rule of its reformist leader Deng Xiaoping, when the country dedicated a zone along the borders with Hong Kong for free economic activities for which special laws and mechanisms, that were not common in other parts of China, were introduced.

Unlike China, which initiated its economic reforms depending on its own capabilities and organisations and employing its diverse diplomatic relations, North Korea begins the reform while suffering international isolation and wretched economic conditions.

In addition, it is suffering from grave poverty in terms of expert personnel, scientific development and the necessary infrastructure needed for making the first step in the right direction.

Therefore, it has not been surprising to hear that the Dear Leader Kim Jong Il has given the leadership of the special economic zone to a non-North Korean citizen, namely the Chinese tycoon Yang Bin (39).

While this is a reflection of the North Korean leader's desire to benefit from the Chinese experience, it is also a reflection of the lack of any national mind capable of meeting the needs of open-door economic policy and understanding of its dimensions, as a result of some 50 years of brainwashing and anti-capitalist slogans in schools and institutions of the ruling Communist Workers Party.

It can also be said that one of the reasons for the appointment of a Chinese figure to fill this position is to encourage Chinese businessmen exclusively to invest their funds and expertise in the newly emerging economic zone.

The fears and caution that dominate Pyongyang's leaders prompted them to restrict the new policy of openness to dealing with China, at the beginning at least. This is also similar to what China did when they started their economic open-door policy. The Chinese focused at the beginning on co-operation with the Hong Kong businessmen and financiers.

Yang Bin is considered as a model of the young entrepreneur who has been able within a record period of time to create a business empire with overseas links through benefiting from his country's economic openness.

Yang was orphaned at five, graduated from the Chinese naval academy and won a scholarship to study in the Netherlands before coming back to China to involve in business. His fortune is rooted in an orchid seedling business. According to Forbes magazine, he is now the second wealthiest man in China with a personal fortune of about $900 million.

At the ceremony held in Pyongyang in September under the patronage of the second-most powerful man in the North Korean leadership, Kim Yong Nam, to hand over the special zone's authority to Yang, the latter seemed confident that Pyongyang was serious this time about adopting the Chinese model for solving North Korea's chronic ills.

According to him, the North Koreans are now determined to slowly open up the country's windows for benefiting from the positive aspects of capitalism.

In his explanation of what had been agreed upon with the Korean leadership, he said that the special economic zone in Sinuiju would not have anything to do with the laws and rules prevailing in North Korea and that it would be run by special new regulations drawn up by a 15-member council headed by himself.

He added that he planned within two years to make members of the council, whom half of them non-Koreans, be directly elected by the zone's residents. He also revealed that Pyongyang had agreed to take no revenues from the zone for 50 years. This probably shows how desperate the North Korean regime is for the venture to succeed.

However, this is not the view held by many observers who maintain that the nature of the North Korean regime is totally different from that of China, arguing that the Chinese success through a gradual economic openness is difficult to realise in North Korea.

These observers hold that there are no guarantees that Kim Jong Il's regime, which is based upon worship of the individual and moodiness, will not suddenly cancel the whole arrangements, causing great damage for foreign investors in Sinuiju.

Evidence in this context is available in abundance, the most significant of which are the reckless acts of espionage and warfare against South Korea and Japan shortly after the arrangements agreed upon at the historic Koreas' summit to normalise relations between the two countries and establish bases of co-operation and confidence between them.

In September relations between Pyongyang and Tokyo were about to enter broader scopes of co-operation following a visit by the Japanese Prime Minister Junichiro Koizumi to North Korea and the latter's formal acknowledgement and apology in public for the first time of the kidnapping and detention of 13 Japanese citizens.

However, Pyongyang blew up everything within a short time through bragging about its nuclear might and determination to continue its threats, hence ignoring the sensitive nature of this matter to Japan.

However, this is not everything when we talk about the difficulty of applying the Chinese model in North Korea. North Korea is simply a country that is short of nearly everything an economic hub needs to work such as decent roads, modern transport facilities, communications network and power plants.

Thus, there is little or no incentive for any investor to come to the country no matter what the opportunities are. This in particular, applies to Sinuiju, which is presumed to have been selected for leading the economic openness due to special specifications other than its proximity to China. Of course, the picture was not so bleak in China when it initiated its economic openness process.

In confirmation of what we have already said, let us review the conclusions of Michael Schuman, a journalist specialised in North Korean affairs, following a field visit to Sinuiju.

According to him, Sinuiju's buildings are dull, its roads are wide but dusty with only few old cars and buses, its department stores are big but without goods other than a meagre selection of basic packa