Pyongyang may pass more market reforms soon

North Korea’s parliament meets tomorrow amid speculation that the country’s new leadership wants to push through economic reforms that analysts say carry as many risks as potential rewards.

North Korea has one of the world’s most rigidly controlled economies and is desperately poor following decades of mismanagement and isolationism, as well as recent international sanctions over its nuclear program.

North Korea watchers and media reports in South Korea have suggested the rubber-stamp parliament may approve limited reforms pushed by new leader Kim Jong-un, including incentives for workers and farmers to boost productivity.

“The new leader is ready to push for gradual economic reforms in earnest as long as such changes will not rattle the country’s political system,” Yang Moo-jin at the University of North Korean Studies told Agence France-Presse.

Since taking power after the death of his father Kim Jong-il last December, Kim Jong-un has made several public statements on the need to improve living standards.

“Reforms are always risky in a closed totalitarian country but Jong-un appears to be confident that his leadership is now stable enough to enforce a new system,” Yang said.

“I have no clear picture yet but there have been various signs that changes are being made in the North’s economic system to give factories and companies greater autonomy in management,” he said.

Newspaper reports in Seoul have said one change would see the North’s regime taking only 70 percent of the harvest from collective farms, allowing farmers to keep or sell the remainder.

Economic reform, however gradual, is a risky business in such a tightly controlled country.

Limited market reforms were introduced in 2002 to revive an economy which had begun to collapse in the 1990s as subsidized imports of fuel and food from the former Soviet Union and its European satellites dried up.

But the resulting boom in street markets and general trading activity was seen as a threat to government control and most of the reforms were rolled back three years later.

Then there was a disastrous currency “revaluation” in 2009 that resulted in an inflationary surge that wiped out people’s savings and triggered rare public protests.

Andrei Lankov, a Russian professor at Seoul’s Kookmin University, said it seemed clear that Kim Jong-un was looking to move the economy in a new direction.

“There are too many signals, coming from too many directions to deny the fact that North Korea has begun to change,” Lankov said. The obvious model, he said, would be a Chinese-style “development dictatorship” combining an authoritarian political structure with a market economy.

However, this would inevitably require an initial period of uncertainty as any market changes take root.

“A reforming North Korea will likely be very unstable and might collapse,” Lankov said.

The North convenes its rubber-stamp parliament once or twice a year.

AFP