Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 3

By Yong Sueng Dong

Introduction
The situation on the Korean Peninsula evolved rapidly in 2018. The
three inter-Korean summits and the North Korea-United Statessummit were events that we could not have predicted just a few
months ago. At the center is Kim Jong Un, chairman of the State
Affairs Commission of North Korea. Kim took over the leadership ofNorth Korea at a young age. While North Korea maintains a socialist
state, in actuality we can see it being ruled by a dynasty like in feudal
times. North Korea has pursued extremely closed policies since its
foundation, which has contributed to building up its mysterious
image and increasing concerns about its military power under adictatorship, and this has served as a source of its competitiveness.
South Korea’s assessment of Kim has changed dramatically. The first
South Korean special envoy that visited Pyongyang and came into
contact with Kim for the first time stated that “Chairman Kim Jong
Un was well-versed not only in the relationship between the Northand South, but also with the details of the background and history ofinternational affairs.” While this is only natural for a leader who bears
responsibility for a country, this assessment of Kim was a clear
expression of the outside world’s perception of the young andinexperienced leader. The world, as well as some in North Korea, has
generally considered Kim an extraordinary dictator who has, since
taking power in 2012, threatened the international community with
nuclear and missile development and did not hesitate to do awaywith not only powerful men, but even relatives such as Jang Song
Thaek and Kim Jong Nam. In this way Kim’s radical conduct
significantly increased concerns about the political risks posed by
North Korea for South Korea and the rest of the world.
However, since Kim became leader, North Korea has shown many
internal changes. The international community did not take muchinterest in such changes as they were overshadowed by the nuclear
problem. Since 2018, Kim has started to show himself to the outside
world and assessments of him have changed. China has even called
him “a great young leader who will move the world”. This article willassess the stability of the North Korean regime based on the changes
that have occurred since Kim came to power.

Changes in & Assessment of North Korea
A North Korea that Accepts Risk

AuthorYong Sueng Dong

strategy of fortification to protect North Korea, Kim Jong Un isemploying an active military strategy to defend it. The sanctions
against North Korea and the strategy of increasing pressure that the
US is employing are improving the stability of the regime. Kim istrying to bring changes to North Korea through denuclearization
negotiations. The country is still a feudalistic society, but Kim istrying to change it into a modern one. But paradoxically, maintaining
a feudalistic society provides stability for the regime. There aresimilarities to the times when Western powers demanded East Asian
countries that still maintained a feudal society to open up in the 19th
century. The frequency with which Kim is providing local guidance
while displaying his anger towards unchanging North Korean
officials and organizations is increasing. In spite of economic
sanctions, he is flaunting the progress of developments such as theMirae Scientists Street, Ryomyong Avenue, and Wonsan Kalma zone.
What Kim is demanding of North Koreans is to have the resolve forchange, so that the sanctions would not be a problem.
North Koreans are scrambling to procure the financial resources
for various developments. When Kim orders development, the Party
allocates financial resources to each organization. Each organization
then distributes the allocated resources to North Koreans. Kim
checks each site through on-the-spot guidance and pushes
development forward. It should be noted that the focus of such
movements is on restoring the North Korean economy’s selfrehabilitation capacities. The economy’s dependence on the outside
world is low. It is a typical feudalistic society. The commercializationof North Korea simply means the distribution method for internal
resources is switched from a planned economy to a market
economy. It is not that the economic pie has got larger and themarket has expanded. Kim wants to enlarge the pie. Because theprocurement of internal resources has its limits, he is actively trying
to obtain external resources.
To this end, North Korea has been negotiating with the US with its
only bargaining chip, denuclearization. If the pie becomes larger,
North Korea’s dependence on the outside world increases and it will
become an opportunity for North Korean society to switch from a
feudalistic society to a modern one. The market will exceed thechange in method of distributing North Korea’s internal resources
and the nature of the economy itself will be forced to change. This
will fundamentally change the method of assessing the stability of
the North Korean regime. Kim accepts these risks.

Currently, North Korea is accepting risk. While Kim Jong Il used a
42 Japan SPOTLIGHT • March / April 2019https://www.jef.or.jp/journal/

Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 3

The international community’s economic sanctions against North
Korea have become a means to obstruct its changes. In order tobreak through the Kim Jong Il era’s fortification strategy, theinternational community employed a carrot-and-stick strategy and it
is still clinging to this way. Many people who have visited North
Korea see improvement in the economy to the extent that theyquestion whether North Korea has really had sanctions imposed on
it. Of course, this is only after seeing some major cities such as
Pyongyang, but if the sanctions have any effect they would impact
Pyongyang as well. North Koreans are used to using the country’s
financial resources through the distribution method of the market.
North Korea overcame through the market a situation of economic
difficulties stemming from dysfunctional distribution in the past.
However, by circulating internally goods that should be exported
outside the country due to the sanctions, a situation in which there
are more goods is occurring. The sanctions are serving to maintainthe stability of the feudalistic society.
Peace on the Korean Peninsula will start from changes in North
Korea. Its menacing behavior towards the world with its nuclear
capabilities threatens peace not only on the Korean Peninsula but
also in Northeast Asia, as well as globally. This was Kim Jong Il’s
fortification strategy. As a result of economic sanctions by the rest of
the world in order to stop such menacing acts, North Korea raised its
level of threat. However, Kim Jong Un switched to an active military
strategy for defense. What he is asking for is to become a member ofthe international community, since he is prepared to stop menacing
acts even though possessing nukes. He is trying to increase theNorth Korean economy’s dependence on the outside world.
The US has a toehold on the solution. Both China and Vietnam
started to reap the benefits of reform and opening-up since
improving their respective relationships with the US. The US ispresenting denuclearization as a condition for North Korea to qualify
as a member of the international community. Since Kim Jong Un
commenced direct negotiations with the US, he has made his
intention for denuclearization clear continuously and also stated thisintention in the Pyongyang Joint Declaration at the inter-Korean
summit last September. North Korea revealed the destruction of thePunggye-ri Nuclear Test Site and pledged the closing of the
Dongchang-ri Missile Engine Test Site. It also stated that the
Yongbyon Nuclear Scientific Research Center could be dismantled.
The US has stated that North Korea must first do everything toward
complete denuclearization and has not eased up on sanctions. South
Korea and other countries such as China and Russia are of theopinion that a certain level of easing sanctions is necessary, but the
US shows no sign of backing down. This is forcing North Korea tomaintain its feudalistic society and return to Kim Jong Il’s
fortification strategy that had threatened the international
community. From such a viewpoint, we must change how we assess
the stability of the North Korean regime going forward.
This situation can be explained by Ian Bremmer’s J Curve.

CHART

Correlation of the stability & opennessof the North Korean regime in the J
Curve

③

stability

A Change of the Method of Assessing the Stability of theNorth Korean Regime Is Necessary②①

openness
Note: ★ shows the current position of North Korea.

Source: Ian Bremmer, The J Curve (2007), Seoul, Veritas

Bremmer states that in the process of reforming and openingsocialist and less-developed closed countries, Zone 2 naturally
exists. Applying this analysis to North Korea, the situation can be
explained as shown in the Chart. The era when Kim Jong Il’s
fortification strategy was employed corresponds to Zone 1. If Kim
Jong Il favored the opposite of openness in order to maintain thestability of the regime, Kim Jong Un, who employs an active military
strategy for defense, is considering the direction of Zone 3. However,in reality, as negotiations take place between the US and North
Korea, the emergence of Zone 2 is inevitable. Therefore, if North
Korea-US negotiations are to come into full swing in the future, amethod to assess the stability of the North Korean regime that will
emerge in Zone 2 will be necessary.

Five Core Indicators
The core indicators that express the level of stability and change in
the North Korean regime can be identified in two areas: changes in
the internal environment and changes in the external environment.
Looking at its internal environment, the North Korean regime has
seemed to be a feudal absolute monarchy rather than a socialist
regime. Socialism has been used as a means of maintaining such a
feudal monarchy. If Kim Il Sung established the North Korean regime
and Kim Jong Il consistently protected the regime from internal andexternal threats through fortification, Kim Jong Un leans heavily
toward an active military strategy for defense (defense equipped withoffensive weapons). The traditional indicators to assess the North
Korean regime were selected during the fortification era of Kim Jong
Il and they are not suitable for the changes of the times.
That is to say that the international community considered North
Korea to be stable if it maintained its current feudal characteristics
and unstable if it switched to a modern society. However, now weshould consider it to be the opposite. Kim Jong Un is trying to bring
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Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 3

North Korea out of a feudalistic society and lead it to a modern
society. However, this has the risk of increasing instability in theregime. Even with the same assessment indicators, the standards toevaluate differ.
Changes in the internal environment are also being pushed byKim. For changes in the external environment, the core concerns arelikely to be changes in the environment accompanying the power
struggle between the US and China and it will signify North Korea
becoming a normal state within the international community.
However, there is a possibility that North Korea becoming a normal
state might conversely increase the instability of the regime.
Overall, Kim is directly taking the lead in pushing forward workthat could potentially increase instability in North Korea. It is unclear
whether Kim is aware of such an outcome. The question of whether
normal development of the North Korean regime is proportional toNorth Korea’s political stability remains unanswered. Some hold theview that if Kim’s work that harms the stability of North Korea goes
too far, there is a possibility that it will whip up a backlash within
North Korea. Nevertheless, because Kim is conducting work that
increases instability in North Korea, the method by which we assess
the regime’s stability must change.
The core indicators to assess the stability of the North Korean
regime can be summed up in the following five points.
(1) North Korea’s Relationship with the US

North Korea’s relationship with the US is the core concern ofchanges in North Korea’s external environment. This changes
according to the security of the regime that North Korea demands
and the degree of denuclearization that the US demands. Before
North Korea’s declaration as a nuclear power, the US tended tocontrol North Korea indirectly through China and South Korea.
However, it has been controlling the situation through direct dialogue
with North Korea since 2018. Since the 1990s, North Korea has been
attempting to join the international community in various directions.
In 1992 it adopted a basic agreement with South Korea, held highlevel talks with Japan on eight occasions, and attempted to normalize
relations. However, there was strong opposition, with the US
bringing up the allegation of North Korea’s nuclear development andits withdrawal from the Non-Proliferation Treaty. With the US
considering military action over this, the bilateral relationship cooled
rapidly (first nuclear crisis). However, as instability in the North
Korean regime rose with the death of Kim Il Sung, the US concluded
the Agreed Framework with North Korea in October 1994 to suspend
the proliferation of North Korea’s nuclear technology. The US was tomake arrangements for two 1-million kilowatt light water reactors by
2003 as a condition for North Korea to suspend its nuclear
development. We know that at the time, the US made this agreementwith North Korea on the premise that the regime would no longer
exist in 10 years’ time.
However, the North Korean regime continued to exist, and in 2002
the North Korean nuclear crisis was reignited (second nuclear crisis).
The Sept. 19, 2005 agreement seemingly put an end to the North
44 Japan SPOTLIGHT • March / April 2019

Korean nuclear problem, but the crisis reemerged with North Korea’s
nuclear experiments and has continued until recently. Kim Jong Un’s
North Korea declared the completion of its development of nuclear
weapons and has resumed negotiations with the US premised on
denuclearization. The US abandoned its existing method of indirect
involvement and has begun directly communicating with North
Korea. The North is demanding security guarantees for its regime
from the US. For the US, this demand means halting hostile military
actions and lifting economic sanctions. In short, it is a demand tocreate conditions for North Korea to act as a normal state within theinternational community. In return, it would go into the nuclear orderthat the US maintains. Comprehensively, this would signify that
North Korea would come under the US nuclear umbrella. If therelationship between North Korea and the US progresses to the pointof establishing diplomatic ties, it would bring about tremendous
change in the regime. North Korea’s international standing would
transform from a rogue state to a normal one. On the other hand, theNorth’s national power would virtually be reduced to the lowest level.
That is to say that the progression of North Korea-US relations will
result in making the North Korean regime less stable.
(2) North Korea’s Relationship with China

The relationship between North Korea and China has traditionallybeen equal. Nevertheless, China is the North’s most important
supporter. The relationship began to show signs of misalignment
with the establishment of diplomatic ties between China and South
Korea in the early 1990s. In a situation in which the US and Japan
had no diplomatic ties with North Korea, its most trusted supporter
China suddenly established diplomatic ties with South Korea without
prior consultation with the North. At the time, because the results ofthe economic reform and opening-up of the Chinese market had yet
to be seen, there hadn’t been a much economic exchange, but they
had maintained a close political relationship. The economic
relationship between China and North Korea started to become very
close around 2010. Japan started to strengthen sanctions against
North Korea in 2006 due to the abduction problem and South Korea
cut all ties with the North with the May 24 measures of 2010. It wasaround this time that China’s economy expanded dramatically andNorth Korea naturally started to depend on China.
Currently, North Korea’s relationship with China accounts for over
90% of its external economic relations. It is an absolute relationshipof dependency. This means that if North Korea remains content
under the protection of China, there is no particular problem inmaintaining the regime’s stability. In order to maintain the North’s
feudalistic system, it is actually more beneficial to maintain its
dependency on China. However, if the international community’s
sanctions against the North were to be eased and its external
relationships become diversified, the North Korea-China relationshipwould be less close. This will possibly result in increased changes
and instability in North Korean society. On the surface, if therelationship between the North and China were to deteriorate, it ispossible that the outcome would be the same – the assessment that

Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 3

instability in the regime would heighten – but in actuality it would not
deteriorate, but rather its dependence on China would decrease.
North Korea would be able to employ a survival strategy ofequidistant diplomacy with the US and China. China would continue
to provide the proverbial carrot to North Korea to maintain its
influence, and the US would likely present a different carrot to theNorth to distance it from China. North Korea is trying to takeadvantage of such a conciliatory game. The less close its relationshipwith China gets, the more the regime’s stability will decline.
(3) Kim Jong Un’s LeadershipNorth Korea has a socialist constitution. The system of thisconstitution means that North Korea takes the form of a republic.
However, it is actually in the form of a monarchical state. It is a
feudalistic monarchy in which the king has absolute authority. Kim’s
authority surpasses the constitution. In such a system, challenges tothe absolute authority cannot be accepted. Kim Jong Il was seen as
the favorite to succeed Kim Il Sung in the 1960s. After more than 10
years in a power struggle with his stepmother Kim Song Ae’s faction,
he was officially named successor in 1980. In the end, it can be said
that he fought for the position of successor with his stepbrother Kim
Pyong Il. Kim Jong Un also fought for power until the mid-2000s
with his stepbrother Kim Jong Nam. However, due to the sudden
death of Kim Jong Il, he took power without being able to end thepower struggle himself. It ended up creating a situation in which
kingmaker Jang Song Thaek aimed to become regent. Kim Jong Un
brutally disposed of Jang Song Thaek who challenged the absoluteauthority, and is maintaining a regime of terror worse than that of
Kim Jong Il.
The change in Kim Jong Un’s leadership is the most importantbarometer of change in North Korean society. Within thecharacteristic of a feudalistic monarchy (hereditary monarchy) led by
Kim, we must focus on the process of divine right (the power of theking) being separated from political power (republican form) throughthe process of modernization. The reason for this is because thechanges in North Korea being advanced by Kim, in other words
processes to be a normal state, can only trigger separation of theking’s power and political power. The emergence of political power
based on a constitution is the basis of political modernization. It is
unclear whether Kim is aware of this. Nevertheless, we must assess
the stability of the regime from the perspective that it is inversely
proportional to the weakening of Kim’s power.
(4) Movement of North Korea’s Military

North Korea’s military is currently completely under the yoke of
Kim and the Workers Party. It is believed that there was a coup d’étatin North Korea by the new military guards led by Jang Song Thaek inthe summer of 2008 when Kim Jong Il suffered a stroke. They were
gradually purged before the execution of Jang Song Thaek and withthe purge the military reverted to being the military of Kim and theParty. It was Choe Ryong-Hae who orchestrated this. During themilitary-first politics of Kim Jong Il, the North Korean military had

numerous vested rights, but Kim Jong Un diverted the military’s
vested rights to the living of the people. It is not too much to say that
the North Korean military currently only has the rights necessary tomaintain it. Because the market to sell military goods is cut off
internationally, simply put, the military has become extremely poor.
Up to now, the military had enjoyed privileges to be able to maintaina separate economic power called the second economic category.
Since Kim came to power, the military has lost most of its privileges
and its dissatisfaction is growing. Furthermore, Kim is attempting tocurtail the enlarged military. Recently, due to a military agreement
between South Korea and North Korea, the military’s position isfurther declining.
Such movements have the possibility of aggravating the military’s
concern about Kim’s political power and the possibility to attempt achange in political power (a coup d’état) cannot be ruled out. This isdue to the military no longer being able to maintain itself on a statelevel distribution of resources alone and being forced to explore an
independent means of survival. There is a possibility that theeconomic activities of the military will expand along with changes inthe external environment. This will lead to the military expanding its
independent power, increasing the relative possibility of
independence of political power. Additionally, in the process oftransitioning to a republican form through a constitution, not only isthere a possibility of the military’s political neutrality or
independence emerging, it could also be an opportunity for the
military’s traditional force to enhance itself. Therefore, theindependence of the military will be inversely proportional to thestability of the North Korean regime.
(5) Trends in North Koreans’ Lives

Public sentiment is divine will. Of the core indicators that affect thestability of North Korea, the trends in North Koreans’ lives should
always be included. North Korea maintains a planned socialist
economy, but this virtually fell apart during the famine of the 1990s.
North Koreans were used to daily necessities being provided at low
prices and usage expenses, residence expenses, and education
expenses of social overhead capital. They simply had to provide
labor. However, at the same time as the planned economic systemfailed, North Koreans were forced to resolve their living problems on
their own. Their solution was the market. In the early stages, themarket expanded as a barter system. Gradually, currency became
involved and in order to maintain the stability of the value of thecurrency, it was replaced by foreign currency (US dollar, Chinese
yuan, etc.). The biggest interest of North Koreans was how to earnmore. As long as they had money, they wouldn’t have a problem
finding food and they could even use electricity. They could become
the proprietor of a company and they could place their children ingood schools. They could even make opportunities to go abroad.
The North Korean authorities have repeatedly gone back and forthfrom allowing the spread of the market to a limited extent tosuppressing it. However, since Kim came to power, the market has
been officially recognized. Each company earns its own money andJapan SPOTLIGHT • March / April 201945

Perspectives on Global Risks: the 2nd JEF Global Risk Symposium 3

laborers who work for each company are responsible for their own
living. Cooperative farms have also been given back the right todispose of the goods they produce themselves. Cooperative farms
existed only in name and since 1979 farmers had been pushed to
become laborers, receiving monthly cost-of-living allowances in
effect. Naturally, the decline in productivity of cooperative farms
could not be avoided and farmers concentrated on cultivating
vegetable gardens and terraced fields in which they could produce
the goods that belonged to them. As the situation worsened during
the North Korean famine, the dramatic decline in the productivity offarms was inevitable. Now, cooperative ownership is permitted in
effect. Farmers are devoting themselves to cooperative farms. This isbecause they are allowed to take home the fruits of their labor. The
goods produced by companies and on farms are traded in themarket. Sole proprietorships are also increasing.
However, because the current situation is mainlycommercialization utilizing national resources, its expansion islimited. North Korea shifted from a planned economy to a market
economy, but the living of North Koreans remains poor. This isbecause the economy is not growing with the inflow of new funding.
It is simply a reconstruction of part of the hardware broken in thepast and changed to a form of distributing it in the market. The workthat Kim is pushing to change North Korea from inside will provide
opportunities for the economy to grow through the inflow of new
foreign resources. A change will occur in the negative accumulation
method, which will bring about change in North Korean society. A
substantial modernization process will be realized in the lives ofNorth Koreans. With the expansion of mobile phone usage,
enhancement of a commercial system, expansion of business sizes,
and the birth of an affluent demographic, among other things, North
Korea is bound to form a new social network which will, in turn, be
the driving force to change society. If the lives of North Koreans
improve, the stability of the regime will weaken.

Conclusion
The stability of the North Korean regime is rooted in the continued
maintenance of a feudalistic monarchy. If the feudalistic absolutemonarchy collapses or changes, during that process the regime will
become unstable. Kim is advancing the reform and opening of North
Korea through his own absolute power. He is taking action thatconflicts with the stability of the regime. From such a viewpoint, theinternational community’s blockade of North Korea is actuallypreserving the stability of the North as it is a factor that suppresses
Kim’s efforts for reform and openness.
Opening a way for change begins with North Korea-US relations.
Improvement in the relationship with the US will provide theenvironment for North Korea to transform from a special state to anormal state. Unlike past US administrations, the administration of
President Donald Trump is prepared to offer such an environment. If
it could not speed up such an offer due to the midterm elections, theTrump administration can concentrate on and accelerate dealings
46 Japan SPOTLIGHT • March / April 2019with North Korea now. If bilateral relations remain at the same level,
the North Korean regime will be unable to change and it will maintainits stability. Because its dependence on China will increase, its
stability will also improve. Kim’s leadership forces change without
being able to provide new things so it will reach its limit, but since
there is no driving force to change the political regime it will remain
stable. The military will also be forced to remain the military of the
Head of State and the Party. The commercialization of North Koreans
will likely expand, but since a substantive expansion cannot be
expected the market will not have the power to bring about evenmore change or instability. Therefore, if North Korea-US relations
remain at the same level, the regime’s stability will increase.
On the other hand, should bilateral relations develop, North Korea
will become a normal state, and at the same time its international
standing will fall. That means it will actually weaken the stability ofNorth Korea. There is a possibility that after North Korea’s weakening
continues until it enters into a stage of full-blown economic
development, it will gradually strengthen its national power. This
would be the so-called J Curve effect. Its dependence on China will
decrease and the stability of the regime will also weaken. Kim’s
leadership will strengthen in the early stages, but it will likely
gradually decline. If his leadership strengthens, North Korea will bestable, but if his leadership weakens, it will become unstable. Thereis a possibility that the independence of the military will gradually
increase. The military is negative about the regime’s stability. North
Koreans’ lives will improve and this will also affect the regime as adestabilizer. Such a process will repeat itself over the next few years
and assessments of the North Korean regime will also change
repeatedly. At present, the regime is stable. This is because it has yet
to ride the waves of change.
Kim wants to negotiate with the US using denuclearization asleverage to create a new North Korea. He is pushing forward changes
in spite of the fact that they will make the regime less stable.
Therefore, we must aid Kim. Currently, he is the only person who canchange North Korea and it is not an exaggeration to say that if hecannot do it, there is no other way. The surrounding countries canhelp him to escape from isolation. It is not even necessary tooverestimate him. However, doubting and restraining the only
alternative could hinder progress. Kim is appealing to us to believe in
him now. To hastily pressure North Korea now to come forward withboth hands in the air will only aggravate the situation. The higher the
hurdle the international community sets that Kim cannot accept, thelower the possibility for a resolution. Kim is young and patient. If we
do not act now, it will only serve to allow North Korea to improve its
nuclear weapons and raise the level of threat against the international
community. There is also the possibility that South Korean President
Moon Jae In will fret about the situation and leave it up to the next
administration.
Dr. Yong Sueng Dong is CEO of Oriental Link Inc. He was previously a seniorresearcher of Samsung Economic Research Institute (1989~2015) and amember of the Council of Policy Advisors to the President of the Republic ofKorea (2009~2012).