North Korea Woos the Capitalists

...Of course, our economy faces some hardships due to the fact that raw materials cannot be imported easily," admits Kim...

...Nor would they let journalists accompanying the potential foreign investors wander in the streets of towns outside the capital...

...Pyongyang has now turned to other sources for oil, such as Iran, but still suffers a severe shortage...

...This port is favorable for dealing with cargoes from Europe, northeastern China and Siberia on their way to Japan, the United States and Southeast Asia," he says, viewing Chongjin as the gateway to a rich region of the world...

...Whether major companies from countries like Japan and the United States are ready to take the plunge remains a question...

...There is plenty of work here for everybody...

...These were major ports," says one who lived in nearby Rajin, where an expansion is also under way...

...Yet one can understand the regime's desire for new relationships, despite its clinging to old methods of controlling the country's 20 million people...

...They have begun to donate machinery and technology to small factories, which then export their products to Korean-owned companies in Japan...

...No time," the reporters were told...

...Following a long dinner one evening for a large group of foreign academics, business executives and journalists from three countries North Korea formerly considered its arch enemies—South Korea, Japan and the U.S...

...For that reason we want to improve our relations with capitalist countries...

...There are other topics, too, that the North Koreans prefer not to talk about...

...Many of them have relatives and friends in North Korea...

...He and his colleagues profess to see no conflict between the open hand they are reaching out to foreign entrepreneurs and their refusal to tolerate any deviation from State Socialism...

...I just can't imagine how people keep going...

...Financial desperation, though, does not mean an end to repression in the world's most rigid remaining Communist state...

...Today, everybody is short of food, especially after the long winter...

...The Daewoo conglomerate is precisely the kind of investor Pyongyang wants to attract...

...As evidence of North Korea's good intentions, Kim says his government hopes soon to become a member of the Asian Development Bank—an initial step toward securing economic support some day from the International Monetary Fund and World Bank...

...Explaining why last December North Korea formed a free trade zone in the once bustling northeast, Kim goes on: "It is for our own survival...

...The lack of commercial activity on the bridge or in the shallow, 100-yard-wide river below—once northeast China's route to the sea—dramatizes the economic deterioration troubling the regime...

...You can see the docks are all empty...

...Because workers will retain ideological purity even under foreign capitalist bosses, he pointed out, companies can be sure that they will not strike...

...Kim Dal Hyon has even tried to turn the rigid control of society in North Korea into an inducement for investment...

...There are so many ifs," says Kuwai Keisuke, who is looking at outmoded coal cranes...

...North Korea's leaders believe that if they can convince the world they are not building nuclear weapons, they can remove the final barrier to relations with capitalist nations...

...Some day everything will collapse, that's for sure...

...North Korea Woos the Capitalists BY DONALD KIRK Chongjin The advice of "Great Leader" Kim Il Sung is etched in white on a red wall at the entrance to the port complex of this industrial city on North Korea's northeastern coast...

...They have a long way to go before they can hold out the possibility of a return on investment of better than 50 per cent...

...an impassioned young member of Kim's staff said to me: "Please, let us not talk about who started the Korean War...

...His optimism seems excessive, given the enduring hostility between North Korea and the United States, which still keeps about 40,000 troops in South Korea...

...Kim Duc Choong is confident that North and South Korea will settle their differences—in particular, the controversy over North Korea opening its nuclear facilities to complete inspection by the South—and that Seoul will then lift its ban on trade and free travel across the border...

...Before last year there were six trains a day from Russia and six from Korea," said Lee Song Pil, director of the local railway station...

...Whether or not that is the case, they do appear curious about the activities of their Far Eastern neighbor...

...A smooth-talking North Korean press aide, chatting with the visiting journalists at an impressive banquet, maintained that "the Russians are jealous" of North Korea for managing to keep its socialist system intact...

...That is all history...

...Wait...

...In a few months, there will be relations between our government and yours...

...Some of the lyrics flashed in English on a screen beside the stage read: "Our Socialism is the best in the world...

...Kim Duc Choong is one of the 18 South Korean experts in the group invited by the North Koreans to stir interest in the country's commercial potential...

...We should not be concerned about economics only, but also about social development," says Kim Dal Hyon, Deputy Prime Minister for Trade, as he justifies the paradox...

...Burglaries of homes and apartments in major cities have been increasing, and some officials are rumored to be open to bribes...

...Improving the usage rate of the port is very important for the advancement of the country...

...At the same time, it is clear from their internal propaganda that they are not harboring, and will not countenance, any thought of a Russian-style perestroika, or restructuring...

...Moreover, he said, "In capitalist countries there are gangsters...

...Officials are eager to show off the port—and the "free trade zone'' recently established a short distance away, in the Tumen River area extending to the Russian frontier...

...All this was started in the 1930s by the Japanese," notes Kim Duc Choong...

...He dismisses the claims of progress made by North Korean guides...

...It was at the start of 1991 that its two big trading partners and Korean War allies, the Soviet Union and China, both began demanding payment in hard Western currency rather than in the soft currencies of the Communist Donald Kirk, a longtime contributor, is a veteran observer of Asian affairs...

...An example is the show My Happy Country with the Great Leader, playing in Pyongyang...

...The country's leaders refuse to relax their political hold, even while groping for Western funds to bail out their faltering economy...

...In these circumstances, it is not surprising to hear the authorities assure visitors that they are arranging to have their nuclear facilities inspected by the International Atomic Energy Agency as soon as possible...

...Discard it and we'll die...

...North Korea began awakening to economic if not political reality more than a year ago...

...New terminals should be built to anchor more ships," begins one admonition...

...Defend it and we'll win...

...And he makes it clear the United States is a prime objective...

...In 1984 North Korea passed a joint venture law, but it has brought in little foreign capital beyond that of Korean businessmen living in Japan...

...Business is business...

...Every time they say, 'this is our plant,' it was built by the Russians...

...countries...

...The bleakness of this port—and of two smaller ones to the north—confirms the magnitude of the problems confronting the government, its rhetoric notwithstanding...

...North Korean trade officials are attempting to do just that...

...Indeed, North Korea's dependence on foreign technology is a subject officials don't like to discuss...

...Actually, the Japanese built the steel plant 60 years ago, and the Russians expanded it...

...So do others...

...This—combined with floods in domestic coal mines—has forced many factories either to close or sharply curtail their output...

...There is not much going on," observes Kim Duc Choong, an economics professor in capitalist South Korea and brother of Kim Woo Choong, founder and chairman of the mighty Daewoo industrial group...

...Gesturing toward the smokestacks of a steel mill on the other side of the port, he says: "When you have that kind of big steel complex, you should have stacks of steel...

...The port manager, Chung Chi Young, speaks enthusiastically about completing the plan "within five years" at a cost of $96 million...

...When a North Korean train carrying the foreign group subsequently stopped in the middle of the single-track steel-girder bridge linking the Korean peninsula with the ex-Soviet Union, Russian officials on the opposite shore of the Tumen River could be seen watching the proceeding through binoculars...

...We should make favorable conditions.' He takes pains to stress the North's eagerness to overcome the hostility that has kept the Korean peninsula divided?and, naturally, to gain access to the riches of the South's conglomerates...

...In contrast to the South Koreans, the Japanese visitors appear skeptical about the immediate prospects here...

...Even the rails look rusty...

...We have to satisfy your demands...

...Now there is one, sometimes two...

...But survival will require more than lyrics designed to head off the sort of changes that have swept through most of the rest of the Communist world...

...They are expanding the port to triple its current capacity, hoping it will resume its historic role as a major route for shipping goods from China and Russia...

...But there have been reports of near-starvation as families find it difficult to secure already meager ration allotments...

...We do not want to have punks, thieves and pimps in the free trade zone...

...As a result North Korea experienced its most dismal year economically since the end of the Korean War in 1953...

...His words echoed those of his brother, who was here earlier this year and agreed to build several light industry plants once South Korea permits investment in the North...

...To Chung, who has been working at the facility for 30 years, the advantages are obvious...

...We do not have evils like alcohol, drugs and so on...

...We hope the South Koreans will be the first to invest...

...The Korean won, officially pegged at about two to a dollar, has zoomed on the black market to as high as 100 to one—although the State has kept a tight lid on prices outside of "dollar shops," accessible only to foreigners...

...Under their gaze a North Korean told everyone gathered around him on the span about the precipitous decline in trade after Moscow cut off ruble payments for its products...

...Japanese capitalists will never invest money unless the proper return is guaranteed.'' Some of the older Japanese on the tour, having been born and raised in North Korea during the era of Japanese colonialism prior to the end of World War II, think the economic clock was turned backward during the past 47 years...

...A Russian journalist, comparing life here today with what it was like when he first came to North Korea as an exchange student, underscored the urgency of the situation: "Twenty years ago, you could buy eggs and fish...

...Still, for the first time North Korean officials are showing awareness of the importance of creating an accommodating business atmosphere if they are going to earn the foreign exchange the country requires for vital imports...

...Publicly and privately, they talk about the warm reception awaiting anyone who wants to invest...

...Our intention is to develop co-production," he says...

...Traveling by train up the coast to the Russian frontier, one sees many signs of previous industrial greatness...

...Smokestack industries—iron and steel, non-ferrous metals, concrete—stand mostly as idle relics of the Japanese era...

...Eighty-year-old Kim Il Sung has prepared the way for succession by his son, Kim Jong Il, who turned 50 in Feb-ruary...

...They offered no explanations of the electrified fences along the beaches, or of the soldiers guarding factories and coal piles...

...Anybody in the South would like to come," he says...

...We hope that as many foreign companies as possible will invest in the free trade zone," says Kim Dal Hyon...

...A division of soldiers guarded this port, it was so important...

...Most of this will be covered by domestic investment," he claims, "but if other countries are willing to help, they are welcome...

...It is merely a matter of time...