[OUTLOOK]Now we know: Pyeongyang is serious

Hiring a Dutchman worked for South Korea when coach Guus Hiddink led the red team to World Cup success. Now North Korea has hired a Dutchman to lead the Red regime into the world.

Yang Bin, the new CEO of the North's projected Sinuiju economic zone, was born Chinese but carries a Dutch passport now. He even created a "Holland Village" theme park in Shenyang, China, complete with a windmill and high-gabled Renaissance houses facing canals -- the Amsterdam of Asia.

Pyeongyang's megaphones used to call the likes of Mr. Yang a "capitalist lackey" or a "running dog of imperialism." The Dutchman is reputed to have amassed the second-greatest fortune in China, built on an empire of flowers and real estate. It was strange to see the Pyeongyang commissars fawn over him the other day as the savior of the world's last Stalinist regime.

But Mr. Yang's appointment answers one question: Yes, Pyeongyang is serious about remaking itself.

Because the regime is so secretive, it is usually difficult for outsiders to detect sustained, coherent policy in North Korea. One day, it calls for dialogue; the next, it cancels meetings on the flimsiest of pretexts. One day, its ships are opening fire in the Yellow Sea; the next, its soldiers are opening the barbed wire at the Demilitarized Zone. It often looks like a regime that can't make up its mind.

The designation of Sinuiju as a special economic zone appeared to come out of nowhere. There had been no hints, no rumors. At the U.S. Embassy's July 4 reception I asked a diplomat if anything had ever come of Kim Jong-il's reported fascination with Shanghai's economic development when he visited there in January 2001. The diplomat laughed, shrugged his shoulders and said, "Who knows?"

So now we know. Mr. Kim evidently spent the 20 months since that visit planning for last week's sudden, dramatic announcement. July's limited price reforms can now be seen as, if not the first step to a market economy, at least an attempt to adjust North Korea to the coming realities of participation in the international economy. This month's start on opening cross-border transportation links with the South falls into place as part of an overall strategy. The participation of a surprisingly large contingent of North Korean athletes in the Busan Asian Games fits, too. Forgotten now is last spring's absurd little Arirang Festival, by which the North tried to make a virtue of its refusal to participate in the World Cup fun.

So what about the Yellow Sea naval battle? What about the ridiculous demand for monetary compensation for the South's "libel" of a possibly unsafe dam? Were they tactical feints to keep us all guessing? To quote the July 4 diplomat, "Who knows?"

But the hermit regime's overall plan to come out into the world is clear. When the Sinuiju project was unveiled, it proved not to be some bureaucrat's blue-sky bluster but a stunningly detailed blueprint, with stunning concessions to the interests of international capital.

Sinuiju will be an autono-mous area that will write its own laws, administer its own affairs and have its own courts and police. Mr. Yang says he will hire a European as his justice minister, and will allow foreign residents of the special zone to run for seats on its legislative council.

These provisions are clearly designed to assure foreign investors that Sinuiju will observe the rules customary in the international business world, not those historically imposed by North Korea. Pyeongyang has learned from the failure of its earlier special economic zone in Rajin-Seonbong. There it tried to keep too much control, and investors lost interest.

Yet unless it can keep control of Sinuiju's unintended consequences, the project is a real threat to Mr. Kim's regime. It will try to shut out the capitalist enclave's contagion, encircling Sinuiju with a water barrier -- not as ugly as the Berlin Wall, but designed for the same purpose. Some 200,000 current residents will be uprooted from their homes and shipped elsewhere, to be replaced by 500,000 high-skill workers.

Sinuiju is as likely to destabilize the regime as to save it. Paradoxically, it is when things start to improve and people dare to hope that political control weakens -- see Mikhail Gorbachev's Soviet Union or the communist collapse in Eastern Europe. In South Korea, too, the more things got better under the military regime, the more the people demanded democracy. Tiananmen Square was almost another example, but China's tough guys managed to reassert control. That is presumably North Korea's intention.

Even if the problem of control can be managed, the Sinuiju project cannot succeed unless Pyeongyang manages its problem with the United States. Investors will not risk their money where the future is uncertain. And uncertainty clouds North Korea as long as it remains on George W. Bush's "axis of evil" list.

Hurling invective, Pyeong-yang's customary policy tool, will not change the situation. It must cut a deal. The U.S. price is not so steep, when you think about it: Stop selling missile technology to other rogue states; open up nuclear facilities to international inspection, and pull back your million-soldier military threat to South Korea.

Analysts have sometimes said that agreeing to these demands would strip North Korea of the only cards that the bankrupt, isolated regime has to play; so Pyeongyang's behavior, while odious, is rational. Sinuiju gives Pyeongyang a new card and an incentive to seek international cooperation. Look for it to make a serious overture to Washington -- soon.

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The writer is editor of the JoongAng Ilbo English Edition.

by Hal Piper