Can North Korea follow Vietnam to economic success?

It’s dynamic, open to the outside world and becoming richer fast – while being run by a single-party communist government. Vietnam’s economy is being held up by the United States as an example for North Korea to follow if it gives up its nuclear weapons.

But not everyone agrees that North Korean leader Kim Jong Un could achieve what Vietnam has without giving up his tight grip on power.

This week, the Vietnamese capital of Hanoi will host the second summit between Kim and US President Donald Trump.

When US Secretary of State Mike Pompeo visited Vietnam in July, he addressed North Korea directly while speaking about his host country’s economic revival.

“The miracle could be your miracle,” he said.

Out of the ashes

Vietnam has emerged transformed from the ravages of two decades of war that ended in 1975, helped by an economic liberalisation programme that began a decade later.

Today, its biggest cities, Ho Chi Minh and Hanoi, teem with mopeds, supermarkets, bars and restaurants. The rapidly growing economy is powered by open markets and a vibrant manufacturing sector. Only China exports more mobile phones, and Vietnam has more of the devices in use than it has people.

By contrast, North Korea suffers from food shortages exacerbated by natural disasters and international sanctions over its nuclear programme. The financial penalties have isolated it from the West and cut it off from most global trade.

The Vietnam war devastated its economy [File: AP Photo]

The World Food Programme says 10.3 million North Koreans were undernourished in 2017. And US news network NBC earlier this month reported that it had obtained a memo written by North Korea’s ambassador to the United Nations calling for urgent food assistance.

Under Kim, who came to power after his father’s death in late 2011, North Korea has taken baby steps towards economic reform by allowing people to trade basic goods such as farm produce. Last year, Kim said the country would shift its focus to economic development rather than nuclear proliferation because it had met its weapons goals.

Perils of progress

Analysts who study North Korea said a new middle class was emerging in major cities such as the capital, Pyongyang. These North Koreans have access to cars, smartphones and other consumer goods, most of them imported from their country’s main ally and neighbour, China.

But North Korea is becoming more unequal, as a result.

“A society that for a long time was economically largely homogeneous … is getting more diversified,” Ruediger Frank, a professor of East Asian economy and society at the University of Vienna, wrote last year.

He said Kim’s reforms were creating a thirst among North Koreans for more of the things their neighbours in wealthy South Korea, China and beyond have. Satisfying these new expectations may be crucial for the long-term survival of Kim’s hold to power, possibly leading him to accelerate his economic transformation plan.

“In the end, if the [North Korean] system is not reformed there will be either a violent collapse or a peaceful revolution,” Frank wrote in the US-based Stimson Center’s 38 North website.

North Korean leader Kim Jong Un has started to liberalise the economy [KCNA via Reuters]

And the Vietnam model may be a tempting one for Kim to try to emulate.

Frank said China and Vietnam managed to remain socialist states while “learning how to play the capitalist game”.

When North Korean Foreign Minister Ri Yong Ho visited Vietnam last November, his host, Deputy Prime Minister Pham Binh Minh, said Hanoi was “ready to share” its development experience with Pyongyang.

“For me, the Vietnam model is the best way to coax North Korea out of its failed economic model and the best vision to motivate it to undertake denuclearisation,” Michael O’Hanlon, a senior fellow and director of research in foreign policy at the Brookings Institution in Washington, DC, told Al Jazeera.

He said that when Vietnam embarked on its path to economic recovery, beginning in 1986 with reforms to free up private enterprise and develop export-oriented manufacturing industries – its so-called Doi Moi agenda – it was facing similar challenges to North Korea’s today, including United Nations sanctions.

The sanctions were only lifted in 1989 after Vietnam ended its occupation of Cambodia, finally allowing it to trade freely with the outside world.

“I don’t know if North Korea’s challenges are all that different, except that North Korea is even more centrally run, and even more paranoid about political and social control,” O’Hanlon said.

Nuclear trump card

But other analysts said achieving the same balance between political control and economic success might be harder for North Korea.

“[Vietnam] is not such a straightforward model [to follow] because the two countries are quite different,” Huong Le Thu, a senior analyst at the Australian Strategic Policy Institute, told Al Jazeera.

“Vietnam’s reintegration with the world was a result of it complying with the post-Cold War order, not defying it,” Le Thu wrote in a paper last year. “Although Vietnam’s communists remained in charge, the country became a supporter of international law and norms. North Korea’s intentions remain unclear. Nuclear weapons remain its strongest bargaining chip.”

Analysts say North Korea’s nuclear weapons programme is its strongest suit in negotiations with the US [File: Reuters]

Vietnam did not have the nuclear card to play when it decided to exit Cambodia and open up its economy. Nor did it have a powerful regional backer in the form of China, as North Korea does, leaving it little choice but to turn to the West after the collapse of the Soviet Union some three decades ago.

Vietnam’s legislative structure is another reason why Kim may have second thoughts about pursuing its lead. Decision-making in Vietnam is split between the Communist Party head, president, prime minister and National Assembly chairperson. The effect has been to weaken the role of government in everyday life, creating space for private enterprises to flourish.

Analysts said it was hard to see Kim devolving some of his powers to other branches of government. Since taking over the leadership after his father’s death in 2012, Kim has purged numerous senior officials, including his uncle, Jang Song Thaek, who was executed the following year. In 2018, he reshuffled the Korean People’s Army High Command to install his loyalists.

China could be another possible example for North Korea to follow. Vietnam modelled Doi Moi on China’s economic renaissance of the late 1970s. Under Deng Xiao Ping, China began to liberalise while retaining one-party control, and even its nuclear energy and weapons programmes.

But China’s enormous population gives it an advantage that neither Vietnam nor North Korea has. At 1.4 billion people, China has a large internal supply of cheap labour and market of domestic consumers.

Vietnam, with around 95 million people, has had to pursue a slightly different path, mainly by courting foreign investors and trading partners to a greater degree than China has. In 2017, the volume of its trade was more than double the size of its economy, according to World Bank figures. By comparison, China’s trade-to-Gross Domestic Product ratio was 38 percent that year.

North Korea has just 25 million people, and would also need to have very liberal foreign trade and investment policies if it was to succeed in opening up its economy, according to analysts.

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