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North Korea’s Kim Game for 'Let’s Make a Deal': William Pesek

March 01, 2012

The deadliest words in economics are “This time things are different.” They are even more perilous when applied to a nuclear power run by a paranoid, repressive regime. In other words, North Korea.

We have every reason to roll our eyes and scoff at Kim Jong Un’s first foray into diplomacy. In his debut, he pledges to halt nuclear tests and long-range missile launches. You can see by the muted reactions in Seoul and Tokyo that Asia is deeply skeptical, and it has every reason to be.

The 28-ish Kim Jong Un appears to be reading from the same, faded playbook of his dad, Kim Jong Il, who died in December, and grandfather Kim Il Sung, who died in 1994. Or is he? Assume that this isn’t manipulation as usual. Instead, let’s consider that events in Myanmar are influencing the young leader of a devastated nation to try a different tack.

For North Koreans, next month marks a monumentally important event: the 100th anniversary of Kim Il Sung’s birth. The founder of North Korea is a god like no other in the nation of 23 million people. Some Pyongyang watchers speculate that Kim Jong Un went under a plastic surgeon’s knife to more closely resemble the “Great Leader,” whose cult of personality always eclipsed his “Dear Leader” son.

But in reality, this April 15 is a reminder that North Korea doesn’t have much to celebrate: It is deadly poor, fast running out of friends and looking at a bleak future. South Korea, meanwhile, is prosperous, democratic and basking in the spread of its companies and cultural soft power around the world.

Sanctions’ Effect

Sanctions have been as much of a help as a hindrance to the Kim Dynasty. They were a perfect way to convince North Koreans that evil foreigners were holding them down. In his 2010 book, “The Cleanest Race,” B.R. Myers pointed out that Pyongyang doesn’t bother scrubbing “From U.S.A.” off sacks of donated rice; it’s spun as war tribute from a defeated, apologetic state.

North Korea’s new leader remains a wild card. We know little about him other than that he was educated in Bern, Switzerland, in the 1990s and has a passion for basketball great Michael Jordan. Yet as he looks round the world, he must be aware that the economic ways of his father are a dead end.

Using provocations, missile launches and nuclear tests to blackmail the world for food and oil worked until now. So did piracy, currency counterfeiting and weapons sales. In the age of GPS technology and military drones, though, such clandestine shipments are getting harder. The net has steadily tightened on North Korea’s ability to trade nuclear technology with Pakistan and Iran. All this has led to a severe cash crunch that is dangerous for the Kims.

Here, a creative step the U.S. took in 2006 is worth considering. The Kims long bought the loyalty of generals and potential rivals with luxury goods: Cadillacs, Harley-Davidsons, Rolexs, Hennessy cognac, plasma-screen televisions, iPods, fur coats, you name it. Washington even went after Kim Jong Il’s creature comforts: French wine, Italian cheese, Japanese fatty tuna and Iranian caviar. It was wise to deprive Kim of the currency he needed to maintain power.

Now that the most reliable sources of business are drying up, too, Kim Jong Un may see diplomacy as his only choice. China, long Pyongyang’s sugar daddy, has grown tired and embarrassed of the Kim Dynasty’s antics. Russia has enough to worry about as protesters turn on Vladimir Putin.

Arab Spring Fears

The Arab Spring movement, according to Pyongyang watchers, really spooked the Kims. They were close to Muammar Qaddafi when his regime crumbled, and even banned North Korean construction workers, doctors and nurses working in Libya from returning home for fear they might spread word of what happened there.

Perhaps Kim Jong Un is viewing events in Myanmar as a road map of sorts. Myanmar’s diplomatic U-turn in late 2011 is paying big dividends. A few short months after President Thein Sein opened up to the world and released some political prisoners, he won talk of loosened sanctions, a visit from U.S. Secretary of State Hillary Clinton and nibbles from companies like General Electric Co. (GE) There’s still reason to remain skeptical that Myanmar is becoming a good global citizen, but so far so good.

Kim may be watching this dynamic and preparing to follow suit, within reason. Granted, North Korea’s sincerity is even more open to doubt. Clinton and European leaders are right to call this a modest first step in the right direction, but also to urge caution.

This is very much a trust-but-verify moment. If Kim’s father were taking this step, the world would be right to dismiss it. That it’s coming from a leader who belongs to a generation more steeped in the Internet and Google Inc. than the Cold War and Morse code adds to the intrigue. This time, things may indeed be different.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

Read more opinion online from Bloomberg View.

To contact the writer of this article: William Pesek in Tokyo at wpesek@bloomberg.net.

To contact the editor responsible for this article: James Gibney at jgibney5@bloomberg.net.


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