[Viewpoint] Economic sovereignty on sale

The JoongAng Ilbo recently reported that North Korea has allowed China access to its East Sea fishing areas. About 250 Chinese boats have been operating in North Korean waters off Rajin and Chongjin.

News of North Korea’s provision of natural resources, such as its mines and logistical infrastructure, including ports and roads, is not new. But the North’s selling of its maritime resources to China is truly heartbreaking.

North Korea is rich in resources, and it wouldn’t be starving if its abundant resources were developed properly. But massive investments are required to build facilities, roads and railroads, as well as to supply electricity.

Yet the North does not have the capital to fund such projects. That’s why North Korea continues selling rights to its resources to China, even though China has not really asked for it.

In the past, the North’s communist leadership used to say that economic subordination meant political subordination, and that an economic colony started with the colonization of resources. Today, however, North Korea has put its economic sovereignty up for sale.

Although there is a path to attracting investments through reform and by opening up the country, the North has decided to sell development rights to its resources because it is less threatening to the regime than to allow other access. While its economy is failing, the regime’s succession plans will require higher political, economic and security costs going forward.

To come up with the funds to maintain its regime for now, the North is being forced to sell everything available. If the situation continues, it is only a matter of time before China has control over the North’s economic sovereignty.

The North Korean people should indisputably have the right to decide how to use their land and maritime resources. But the North Korean leadership is selling the people’s assets without their consent to simply extend the life span of its regime. That is an unpatriotic act of treason, and South Korea is not immune to this tragedy.

While the South is concentrating its attention on the inter-Korean conflict and internal political issues, the North’s economy has worsened so severely that it has had to sell its resources to China just for the purpose of sustaining its regime.

In the past, the South used to argue that the two Koreas must achieve economic integration and political unification. That was not only desirable because of the blood ties between the two Koreas, but because of the hope that the union of the North’s rich natural resources and the South’s technology and capital would make a unified Korea a stronger economic power.

The current situation in North Korea, however, is driving that hope away. As of now, the North’s economy is heavily dependent upon China in terms of trade, investment and aid provision.

In 1990, China comprised 25 percent of trade with the North, but that amount has now grown to about 80 percent these days. This occurred through a process in which China’s importance grew in the shrinking North Korean economy, not because a dying North Korean economy could be saved from poverty.

While China-North Korea economic relations have deepened over the past 20 years, North Korea has been listed as one of the world’s poorest countries. There are two reasons for this. China has failed to provide enough economic assistance to the North for its economy to be restored, and at the same time, it has failed to force North Korea to open up and reform.

For the past two decades, China simply provided enough assistance to maintain some stability in North Korea and create a situation in which the North was forced to provide its natural resources to China. China took advantage of North Korea’s chronic hardships and gained control over its strategic resources. That is against China’s diplomatic policy that it would never fuel a crisis, and it can also be seen as a new form of colonialism.

If the current situation continues, China will likely control North Korea’s rich natural resources even after the two Koreas’ economies are unified. South Korea may need to seek China’s permission to develop resources and build infrastructure for the integrated Korean economy.

We may even need to seek China’s permission to use the North’s rails or sail in its waters. Changing the imbalanced industrial structure of North Korea, which has become totally subordinate to China, may require an astronomical amount of capital. This is an issue that South Korea must contemplate seriously.

*Translation by the JoongAng Daily staff.
The writer is the director of the Center for International Development Cooperation at the Korea Institute for International Economic Policy.

By Cho Myung-chul