Kim Jong Un and Pompeo Discuss Economic Cooperation

This is a personal perspective of Founder and occasional volunteer at Choson Exchange, Geoffrey See, with a special Blockchain cameo.

 A picture of North Koreans reading about Secretary Pompeo's visit from our volunteer team in Pyongyang in May 2018 running a startup workshop

A picture of North Koreans reading about Secretary Pompeo's visit from our volunteer team in Pyongyang in May 2018 running a startup workshop

What does North Korea want? Secretary Pompeo talks about economic assistance after a deal is done. North Korea disputes asking for economic aid. How does economics and business intersect with this geopolitical challenge? This is our view formed from over a decade of economic and entrepreneurship training in North Korea. But first a long story of how we got here…

 US and North Korea trade barbs over economic aid

US and North Korea trade barbs over economic aid

The idea for Choson Exchange came in 2007 after I met young North Koreans interested in learning about starting a business, but had no way to access materials.

I spent 2 years seeking a way into the country to deliver training in entrepreneurship, law and economic policy legally, without success. In 2009, things changed. I spent the next two years chasing down sources in NGOs, governments and among North Koreans to understand their economic intentions.

When we started our first program in 2009/2010, it was a rocky relationship – some people in the country liked what we were doing but many were suspicious of it. The signals (often conflicting) were just emerging of top down prioritization of economic development. Some officials read the signs, others feared this change would be short-lived. This change is important because prioritizing economic development provides space for mutual cooperation on a nuclear deal. It took another 4 years of programs (until 2013) before we were able to truly gain broad acceptance for our content. This was the year North Korea scattered more than 20 Special Economic Zones across the country. That year, North Korea started tinkering with changes to agriculture policy, reminiscent of what China did in the 70s. Enterprises were given a lot more autonomy and individuals were better protected in their pursuit of profits. New enterprise and property laws were being introduced rapidly, some with which we contributed to. North Korea also sought to diversify their economic dependency, by focusing state resources on Wonsan, the furthest point from China.

 Showing North Koreans how to use the National Library in Singapore at our Mini-MBA program

Showing North Koreans how to use the National Library in Singapore at our Mini-MBA program

But changes were and still are slow. Agricultural policy changes hit roadblocks because there were economic losers. Without resources to head off opposition, changes were pursued half-heartedly. Special Economic Zones suffered from lack of infrastructure, the country’s reputation with foreign investors and a paranoid bureaucracy still trying to adjust to the changes needed to work with the outside world.

These changes are real. They were top-down, popular with the mid-level officials and buoyed by a grassroots community of entrepreneurs. But North Korea also mentioned it would never embark on “reform and opening”. While North Korea experimented, they resist the idea that ideologically they would be the same as other countries like China, Vietnam or South Korea. In implementation, this contradiction meant that North Korea would adapt ideas from abroad to its own circumstances – which include its geopolitical and security situation and its own experience of what works within the context of its history, political and social structures.

Essentially, they were “reforming” but in their own way and at their own pace. We wished North Korea would move faster. John Delury is right that North Korea needs a stable geopolitical environment before it could experiment more.

In 2011, Andray and I wrote an article in Harvard International Review arguing that the North Korea leadership was shifting its legitimacy towards economic development. They had prioritized something that was never a priority, and tying their hands publicly. In 2012, I visited Washington DC to share our thesis backed by analyses from training North Koreans and what we heard from governments in Southeast Asia that had hosted North Korean delegations. Speculating about intentions is a tricky business – I can only say I observe changes and actions, and speculated with some basis that this was a priority of Chairman Kim Jong Un. I have never met Kim Jong Un but talked to people who had done so. Many in DC laughed at us and dismissed us as “economic apologists” for North Korea. Some wise scholars and analysts probed our thesis and evidence. As the crisis intensified in 2016 and 2017, my property was physically attacked by people who hated our message that North Korea can integrate into international society, donors fled a challenging situation and if not for Blockchain technology and Bitcoin, a space I was forced to move into, I would have ended up living on the streets. Another story for another time.

That brings us to today. Secretary Pompeo is offering economic assistance and North Korea denies asking for it. Based on our experience in the country, this is my humble speculation on this exchange:

1.     North Korea’s top priority is survival and security. The leadership does not see security as something to trade away.

2.     North Korea places significant importance on economic development. This creates space for a creative deal but economic assistance is not a direct quid-pro-quo for degrading their security situation.

3.     Understanding where US fits into the North Korea economic situation is key to a deal: US investments will be dwarfed by Chinese, South Korean and possibly Japanese investments. North Korea’s economic needs are better met by other parties but its security needs are best met by American AND South Korean assurances.

4.     BUT US economic assistance matters because North Korea cares about legitimizing effect (e.g. sanctions), diversification (vis a vis China), international debt relief (e.g. World Bank/IMF), and US technology/entrepreneurship (e.g. Silicon Valley).

5.     And US should care about economic cooperation not because it is a direct quid pro quo for denuclearization, but because it stabilizes what should be an ongoing relationship and can reinforce US security assurances to North Korea

 

Geoffrey See

Founder, Choson Exchange

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