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A model for change

Rodion Ebbighausen / rcJanuary 11, 2013

There are signs that North Korea may be setting out on the path of economic reform. While its giant neighbor China is one obvious example to follow, experts say Vietnam is seen as a far better model by Pyongyang.

A farmer works in a rice field in Dong Anh District in Hanoi, Vietnam (Photo: ddp images/AP Photo/Chitose Suzuki)
Image: AP

The New Year speech by North Korean leader Kim Jong Un was widely viewed as surprising, appearing to indicate that a radical change in policy was being embarked upon.

His wish, it seemed, was that North Korea should set out on an economic journey.

For Werner Pfennig from the Institute for Korean Studies in Berlin, the statement was not so unexpected. Since the young leader took power, a lot has happened in North Korea and the New Year speech should be taken seriously.

The German daily Frankfurter Allgemeine newspaper recently published a report suggesting Kim's speech was about more than just empty platitudes.

Specifically, it cited German economic experts who had apparently given advice to the North Korean leadership about reforms. The country would begin to implement changes this year, the adviser told the newspaper. And, he said, Vietnam was to serve as a model for the modernization of the country.

"If North Korea really does have any kind of example, then it is Vietnam," Pfennig told DW, adding that Vietnam's influence was more important than China's for North Korea.

"Special economic zones along the lines of the Chinese model have, diplomatically speaking, had limited success in North Korea." In addition, there is great mistrust in North Korea about the brand of Communism practiced by its larger neighbor. "If a North Korean delegation travels to China, then they think that they are in the West," said Pfennig. Not so with Vietnam.

North Korean leader Kim Jong Un speaks(Photo:KRT via AP Video/AP/dapd)
Kim's speech hinted that some reforms might take placeImage: dapd

Central to all of this was the relationship between openness and control, according to Pfennig. "The belief in North Korea is that Vietnam follows an economic policy in its dealings with other countries in which Vietnam has complete control. That is what makes Vietnam so attractive."

There were also other considerations. In the 1970s, for example, Vietnam overcame the United States and succeeded in achieving national reunification between North and South. In addition, Vietnam insists "on its independence, even where China is concerned - and it had a charismatic leader." Even today, Ho Chi Minh - who died in 1969 - is still venerated in Vietnam.

Vietnam's rise

The socialist countries that were left behind after the breakup of the Eastern Bloc took various different directions. Vietnam opted for a comprehensive political and economic renewal. Instead of a centrally planned economy, a socialist economy similar to China's was conceived - one that gave the people greater leeway.

Vietnam's development was based on two major policies, Gerhard Will, Asia expert with the German Institute for International and Security Affairs, told DW. First of all, the government introduced initiatives to liberalize markets to a certain extent - first in agriculture, then in family businesses and finally in larger companies. Secondly, it opened up to world markets, which in turn attracted foreign investment.

"Vietnam's Communist leadership was much cleverer in spotting international opportunities and thought much more in economic terms than North Korea."

Vietnam subsequently achieved immense growth rates of up to ten percent and rose to become the second largest exporter of rice in the world in the 1990's.

U.S. soldiers at Long Binh base, northeast of Saigon (Photo: AP)
Vietnam is seen as a good example not least because the US military was driven out by Ho Chi MinImage: AP

In contrast, North Korea held firm on its Stalinist course after 1989 and became increasingly radicalized. It set out on a path of military armament and nuclear buildup - to pose a threat to the West. Pyongyang used its atomic weapons program to blackmail the international community. It even threatened the West with its own downfall, Will explained. "The collapse of the regime poses an even greater threat for neighboring countries than the nuclear weapons program."

If North Korea completely collapsed, China and South Korea fear they would have to accept a wave of starving refugees; there are currently 24 million people living in the isolated country.

Policy leads to famine

Its policy of isolation brought the North's economy to a virtual standstill in the 1990s. Even today, the country would not be able to produce enough food to feed its people without extra help from China and Russia - there is not enough fuel nor is there enough agricultural machinery to do the job.

The North Korean regime was responsible for catastrophic famines which caused the deaths of between 600,000 and one million people between 1994 and 1999.

Neither Will nor Pfennig are convinced North Korea would be successful in implementing either the Chinese or the Vietnamese models. The basic conditions for reforms were simply "much less adequate than in China or Vietnam," according to Will.

"It lacks the agricultural base from which the first impetus for reform came in China and Vietnam," Pfennig mentioned.

North Korea military vehicles carrying rockets participate in a mass military parade in Pyongyang's Kim Il Sung Square to celebrate 100 years since the birth of North Korea founder Kim Il Sung on Sunday, April 15, 2012. (Photo:Vincent Yu/AP/dapd)
North Korea set out on a path of increasing militarism after the collapse of the Eastern BlocImage: AP

Held back by isolation

Another difference is the extreme isolation of the country. As Will pointed out, Pyongyang simply lacked the necessary allies. Furthermore, North Korea, as opposed to China and Vietnam, did not have a large population of expats upon which it could draw. "The Chinese and Vietnamese who were living abroad were the ones who forged the links with the world market in the first stages of reform."

Currently, from Pfennig's point of view, a solution from within the Koreas could be more promising than any other model - for example special economic zone Kaesong, in the southwestern part of North Korea. Up to 50,000 North Koreans work there under South Korean management. So far, it has proved to be quite a success.