Lankov on North Korea's Empty "Breakthroughs"

NKZone's Andrei Lankov had another article on North Korea in last week's Korea Times headlined Breakthroughs End in Naught.

Once every few years the world media discovers that a new historical breakthrough has just taken place in North Korea. These lofty epithets are normally used to describe a new turn in the seemingly endless (and rather fruitless) negotiations between Pyongyang and Seoul or, alternatively, to inform readers that Pyongyang has finally decided to reform its economy.

Being a sort of Pyongyang-watcher for 20 years, I have grown very skeptical about these recurring statements. Indeed, we have witnessed a number of such "breakthroughs" -- all of which ended in naught.

In the mid-1980s, Western journalists loved to speculate that North Korea was on the eve of dramatic changes; and so one of the first bouts of media hype about the forthcoming "opening" of the North Korean economy occurred in 1984.

The reason for these hopes was a Joint Venture Law passed by the North Korean parliament in September of that year....

However, it soon became evident that no serious investor was showing interest in North Korea. Ethnic Koreans from Japan, active supporters of Chongryo, opened almost all the joint ventures. And even these people whose pro-Pyongyang sympathies could be taken for granted did not rush to the North with serious money.

Indeed, journalists who hailed the Joint Venture Law in 1984 tended to forget that North Korea had already acquired an unfavorable reputation in the international capital market. In the early 1970s North Korean companies and banks solicited credits from Western banks. In a few years their debt to the West reached some $1.3 billion. In those days, Communist countries were believed to be good borrowers -- irrespective of what the Communist leaders thought about the greedy capitalists, they understood the importance of good credit ratings.

To the great disappointment of Western bankers, North Korea proved to be an exception to this rule. Pyongyang did not care much about repaying debts to the USSR and China -- and did not see any reason why Westerners should be treated differently. Thus, in the late 1970s, Pyongyang became the first Communist country to default on its loans. Of course, its credit rating was ruined, but the North Korean bosses hardly grasped the importance of this fact.

In the 1980s, however, they learned about the importance of credit ratings the hard way. The Western businesses simply refused to deal with a partner they believed to be unreliable.

During the 1980s, Romania's Ceausescu and North Korea's Kim Il-sung had a mutual admiration society, both being determined to achieve national autarky (called Juche in North Korea). But Ceausescu seems to have learned a valuable lesson from the misfortunes of North Korea, and later Poland. He bled Romanians dry in order to repay his foreign loans. In fact, Thomas P. M. Barnett (author of The Pentagon's New Map) writing in the Christian Science Monitor on 28 December 1989 (a few days after the Ceausescus had been executed) thinks this was Why Ceausescu Fell: His Silent War Against the Romanian People Backfired.

This silent war dates back to 1982, when Ceausescu implemented severe austerity policies designed to retire the nation's foreign debt by 1990. Why so quickly? The Romanian dictator had witnessed Warsaw's near default on its large foreign debt. Poland's subsequent economic collapse convinced Ceausescu that his regime had to avoid this scenario at all costs.

This was the era when pig's feet were labeled patrioti in Romanian because they were the only part of the pig that stayed in country.