The Korean rapprochement took many observers by surprise, including the U.S. government. Kim Jong Il had, after all, been portrayed as a dangerous recluse, the fanatical leader of one of the world's last Stalinist states. Despite his new openness and even popularity, however, Kim Jong Il rules over a country in desperate straits. The economy is nearing a complete breakdown. Visitors report seeing virtually no cars or people on the roads, even around the capital city, Pyongyang.
Refugees continue to cross the border into China in unknown, but significant, numbers.
Reconstructing the economy is another matter. Several South Korean companies have begun operations in the North, with small to negative returns to date. The ROK itself is struggling to recover from years of crisis and recession, with nothing approaching the capacity of West Germany, for instance, to absorb the economy of its Eastern partner in 1990. Taking these challenges into account, Kim Dae-Jung's plans for Korean reunification aim towards gradual integration, rather than quick unification on the German model. The tougher economic and military issues, where the two Koreas are still far apart, will be discussed later.