[Seri column]The North faces difficult opening

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[Seri column]The North faces difficult opening

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The Pyongyang regime is resistant to reform and opening. An exhortation above a factory gate in Rajin- Sonbong, North Korea, still emphasizes the importance of socialist ideology. [JoongAng Ilbo]


On Oct. 11 the United States formally removed North Korea from its list of state sponsors of terrorism, ending a long diplomatic tug-of-war over how to reward Pyongyang’s cooperation in dismantling its nuclear capabilities.

In conjunction with the removal, North Korea no longer falls under the U.S. Trading with the Enemy Act. That opens up possible economic exchanges between North Korea and the U.S. as well as the two Koreas.

For example, rules will be eased for double-purpose items and strategic goods entering the North.

Thus far, equipment and raw materials needed at Kaesong Industrial Complex and other South-North cooperation projects have been limited to labor-intensive usage such as simple assembly.

With the ban lifted, exchanges involving capital and technology-intensive areas may be considered. Still, it is too early to make rosy predictions.

The Pyongyang regime seems to believe that it will have no difficulty gaining a seat at international institutions, and massive investment involving high-tech equipment will come to the regime.

What Pyongyang fails to realize is that the U.S. terrorism delisting opens international doors but at a price: it will now be held up to global standards in deals and to qualify, the North must first enact reforms and open up its economy.

In short, the “arduous march” to improve external economic relations has just begun for the North.

To become a member of international bodies, North Korea cannot avoid reform issues because entry entails disclosure of policies and statistics, and changes in line with global standards.

To attract foreign capital, the North will have to compete with the international community, breaking with its exclusive attitude over foreign capital, and this means actively opening doors.

However, the regime is still strongly resistant to reform and opening.

It even asked not to use those two words in the inter-Korean summit on Oct. 4, 2007.

The previous South Korean administrations went so far as to refrain from using the words.

Not surprisingly, the regime unequivocally denounced the Lee administration’s “Vision 3000: Denuclearization and Openness” goal for the Korean Peninsula.

From now on, the North will stand at a crossroad where it has to make numerous choices. Companies that do business with the North will no longer take into account the extraordinary nature of North Korea.

For example, they will not take it for granted that it is difficult to visit the country or that they should be careful in mentioning the regime. That is because they will demand that North Korea behave according to global standards.

There should be no obstacles in visiting the North, and visitors should be able to go practically anywhere in the country. It should not choose what to show, but allow investors to go wherever they want to. They should be allowed to open a letter of credit for authorization for payments.

North Korean banks should restore their credit rating in the international financial market.

Communication networks should be established for business partners to be able to contact each other anytime.

In fact, the North is almost the only country where people have difficulty freely making phone calls.

The North should also guarantee verifying the reliability of statistics and field visits needed for business decisions.

Pyongyang should no longer be difficult to visit.

The North should allow long-time stays or management activities in the North for business purposes. It should roll up its sleeves to accommodate foreign investment from all over the world, competing against other countries for capital.

To this end, the North absolutely needs to consider utilizing its southern counterpart.

One of the main reasons that China succeeded in economic reforms was capital from overseas Chinese entrepreneurs, including those from Hong Kong. Moreover, the Chinese government offered bigger benefits to overseas Chinese capital than to other foreign capital entering China.

The North should give preferred treatment to capital from the South.

By showing the world that business can be successful even in North Korea, it can produce the effect of real economic development.

The North is aiming to become an economic powerhouse by 2012.

To become a true member of the international community, it should demonstrate higher competitiveness than other nations.

The moment the North gives up its own exceptional nature itself, it will see tangible effects from its removal from the U.S. terrorism blacklist.


*The writer is a research fellow in the Global Studies Department at Samsung Economic Research Institute. For more SERI reports, please visit www.seriworld.org.


by Dong Yong-Sueng

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