We were all off the mark. Since then, Kim Junior (Kim Jong Il) has taken over following his father's death. The economy has collapsed. Year after year of food shortage has left one of every three North Koreans dependent on international assistance to survive. Meanwhile, North Korea has lurched between confrontation and reconciliation.
In 1994, it went to the brink of war with the U.S. because of American concerns over a rogue nuclear weapons program. In 2000, South Korean President Kim Dae Jung journeyed to Pyongyang for a historic summit. Later that year, Secretary of State Madeleine Albright went to Pyongyang to try to work out a missile-control deal with Kim Jong Il.
"INCREDIBLE CANDOR." For a few moments, it seemed that the cold war on the troubled peninsula might finally be thawing. But Kim Jong Il hasn't reciprocated since then. Visits are canceled, provocative incidents occur. Matters certainly didn't improve when George W. Bush labeled North Korea part of the "axis of evil."
Yet, occasionally tantalizing hints of change emerge. One of the most interesting came two weeks ago when Gary Coull, Hong Kong-based chairman of Credit Lyonnais Securities Asia (CLSA), took a group of seven fund managers to check out investment possibilities in the North. Coull, who spent a year negotiating the trip, says he was impressed with what he saw.
"There was incredible candor on the part of government and businessmen we met about the need for help," says Coull. "I never saw people with so few options trying so hard.... They are candid about wanting help from the South Koreans."
THE CHINESE MODEL. Coull and his group enjoyed access to a North Korea that few outside visitors see. An economics minister told them how much he welcomed foreign investment in the mining sector. The director of a power station made a passionate speech about the need for foreign technical help. (And she'll need it -- the power station itself didn't even have the electricity to light its own building when Coull's group showed up.)
For Coull, it seemed like a throwback to China in the late 1970s, when the Middle Kingdom opened up small foreign-investment enclaves. The garment factory, battery producer, and shoe manufacturer Coull saw in North Korea two weeks ago paralleled what he witnessed back then -- low-wage, low-tech companies that had their sights set on moving upmarket and exporting their products.
"I first went to China in 1978 -- they didn't have a common understanding of business. There was no regulatory or legal framework to do business. All they had was a common language [with Hong Kong businessmen]. You need to strike deals on trust. That worked spectacularly well with Chinese and Taiwanese companies in China."
Coull's conclusion: "I think North Korea will be like China. Someone will make a fortune rebuilding North Korea. It is going to happen. South Korea will be [in] first, Japan second, and Chinese companies third."
SOCCER PRIDE. North Koreans may not be as shut off from the world as outsiders think. Coull's trip took place during the World Cup. His North Korean hosts impressed him with their intimate knowledge of football, or soccer, as we say in the U.S. North Korea's victory over Italy in 1966, which allowed it to reach the quarter-finals, is still remembered proudly.
Seoul's victory over Italy this year, which allowed it to reach the quarter-finals, was a quiet source of pride in North Korea. (Delayed video highlights of some matches were shown in North Korea this year.) "They were very, very, very knowledgeable about world football, about Ronaldo, Ronaldinho, Renaldo. It was very reminiscent of a cordial mid-1980s dinner in China. I didn't get the feeling that I was sitting around with the architects of evil."
CLSA is considering setting up an office in North Korea in hopes of putting investment deals together and aiding its business on both sides of the line that divides the two Koreas. Fledgling telecom ventures need money. Plans call for a port expansion. Power plants and factories need funding.
ONGOING TENSIONS. No less an authority than South Korean President Kim Dae Jung thought the trip noteworthy. The CLSA entourage journeyed from North to South Korea (with a brief stop in Dalian, China because of political prohibitions on direct travel), where it had a 90-minute session with the South Korean President, who, Coull says, pronounced the visit one of the most significant in some time.
I still have my doubts. I've heard this sort of talk from North Koreans before. Nearly a decade ago, I interviewed Kim Song U, a cousin of Kim Jong Il, who was in Hong Kong trying to drum up investment for a supposed free-trade zone on the Chinese-Russian border. Kim Song U made all the right noises about foreign investment, too. The zone never took off. Later, Kim was reported to have been executed.
Indeed, the day after Coull left North Korea, a battle between gunboats from the two Koreas left four South Koreans dead and 19 wounded. Another sailor is missing and presumed dead. South Korea estimates that 30 North Koreans were killed or wounded in the incident, which the South and the U.S. blame on North Korean provocation.
CANCELED VISIT. As a result, Washington announced that U.S. Assistant Secretary of State for East Asian & Pacific Affairs James Kelly will postpone his trip to Pyongyang. The Kelly visit, which was scheduled for the week of July 7, would have been the highest-ranking visit from a U.S. official since George W. Bush took office 18 months ago.
Someday, somehow, North Korea will change. The sooner it happens the better. But until then, I want to see more than just outstretched hands. Clifford, Asia regional manager for BusinessWeek, visited North Korea two years ago at the time of Albright's trip