Lying in Wait

North Korea's Modernization

The German FDP-affiliated Friedrich Naumann Foundation (FNF) is resuming its activities in North Korea, the Foundation declared in early May, when its delegation returned from a visit to the People's Republic. Seeking to gain influence on the economic development of the country, the FDP organization explicitly seeks to promote North Korea's "economic development" and is therefore aiming "at transferring knowledge of the functioning of market economy, strategies of economic modernization, city management and renewable energy."[1] For this purpose, the FNF could organize visits for German specialists to the People's Republic and invite North Korean experts to study tours in Germany. The Foundation hopes that North and South Korea will intensify exchanges and continue to develop their "friendly relations."[2] During its recent visit in Pyongyang, the FNF delegation had "numerous political meetings" including discussions with the Ministry of Land and Environment Protection to plan future cooperation.

Deterrence First

The delegation's visit was carried out in the context of the North Korean government's strategy shift, which may have far-reaching consequences, according to experts. For years, Head of State Kim Jong Un has been seeking to shift government resources away from a simultaneous reinforcement of both the economy and the military, to prioritize the country's economic development. However, due to US military pressure, his strategy could not be implemented. Jae-Jung Suh, Professor of Politics and International Affairs at the International Christian University (ICU) in Tokyo, notes that Pyongyang initially prioritized the development of nuclear deterrence capabilities with nuclear warheads and ICBMs, as a safeguard against a possible US attack.[3] In recent years, this prioritization has, to a large degree, absorbed government resources and, due to the UN sanctions, prevented, above all, also business with other countries. With the last effective nuclear and ICBM tests, this phase has successfully been completed, Suh writes.

"Pyongyang's Deng Xiaoping"

Therefore Kim can now focus North Korea's government policy on the - desperately needed - strengthening of North Korea's economy. He had already made preparations for opening the country to foreign companies, years ago, Suh explains. He not only had the Economic Development Zone Act promulgated in May 2013, which permitted the creation of a kind of "Special Economic Zones," and allowed foreign capital much more leeway than the zones that had previously been created. Already by November 2013, he had created the first eleven zones, by 2015, the next ten and in December 2017 the twenty second of these Economic Development Zones. Of course they can only reach their objective if it is possible to at least simmer down the nuclear conflict, and have the UN sanctions lifted. To boost the economic development, Kim is promoting more than just diplomacy. On his initiative, the Korean Workers Party adopted a new national strategy (April 20) that moved the country from the line of simultaneously developing nuclear weapons and the economy, to an Economy First policy. As Su reports, some experts are referring to Kim as the "Deng Xiaoping of North Korea."[4]

The Vietnamese Blueprint

This now re-opens new doors in North Korea for organizations such as the Friedrich Naumann Foundation. The foundation had been working in the country for more than 15 years. According to the FNF, it had first made overtures to the People's Republic of Korea back in 2002. In August 2004, it organized its first workshop, together with the EU's delegation in Seoul and the North Korean Ministry of Foreign Affairs, on the subject of the country's "economic modernization." In a second workshop in 2005, the topics included the State's Role in the Economy, Inducement of Foreign Investments, and Restructuring State Enterprises.[5] Over the following years, several specialists from Germany were sent for "consultations" with Pyongyang's government agencies. For example, it was reported in early 2013 that German economists and jurists were working for the North Korean government on an economic development "master plan" oriented "on the Vietnamese blueprint." For its implementation, North Korea would need "a modern investment legal framework."[6] At the time, the scenario looked also very promising for German enterprises. North Korea, it is reported has "a tremendous undeveloped potential" in important raw materials, as well as "abundantly available ... cheap labor."[7]

Doing Business

At the time, however, under the enormous pressure of the nuclear conflict, North Korea's opening was not pursued further. The Naumann Foundation could thus only continue to pursue its plans outside of the country. Last June, together with the Institute for Far Eastern Studies (IFES) at South Korea's Kyungnam University, it held already its third symposium, "Doing Business in North Korea," Speakers reported on numerous newly founded North Korean private companies, whose activities would certainly create "the necessity for a private banking sector," as was noted in a report on the event.[8] The new political situation now permits the FDP's party foundation to intensify its activities on the ground. It is also being reported that, parallel, German businesses are tentatively "lying in wait."[9] From the German business' standpoint, every form of détente "is to be seen as positive," declared the speaker of the German Chambers of Industry and Commerce (DIHK). To be sure, it is "yet ... too soon to see a positive impulse for the economy." The necessary attention is already being given. And should North Korea open up to foreign companies, then the Friedrich Naumann Foundation's active presence on the ground will certainly not harm German industry's chances.

[1] Economic Modernization. korea.fnst.org.

[2] FNF Korea visited the DPRK in May. korea.fnst.org 18.05.2018.

[3], [4] Jae-Jung Suh: Kim Jong Un's Move from Nuclearization to Denuclearization? Changes and Continuities in North Korea and the Future of Northeast Asia. In: The Asia-Pacific Journal. Volume 16, Issue 10, Number 2. 15.05.2018.

[5] See also Gesamt-Transformation.

[6], [7] Nordkorea bereitet baldige Öffnung der Wirtschaft vor. faz.net 04.01.2013. See also German Master Plans.

[8] Doing Business in North Korea: Modernization and New Consumerism. korea.fnst.org 14.06.2017. See also Erziehung zum Aufstand.

[9] Gernot Heller: Nordkorea: Deutsche Wirtschaft in Lauerstellung. dw.com 04.05.2018.