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  Hard Currency for the Dear Leader: An Oasis of Capitalism in North Korea

Hard Currency for the Dear Leader An Oasis of Capitalism in North Korea

By Wieland Wagner

Part 2: 'The North Is Learning New Things Every Day'

Take, for example, Kim's visit to the Shenzhen special economic zone in southern China early last year. Shenzhen's claim to fame is that former Chinese leader and reformist Deng Xiaoping chose the region as his laboratory for opening up China to capitalism only three decades ago. Deng pursued his plan with great caution, partly to avoid jeopardizing the Communist Party's dominant role.

But instead of following the Chinese example, Kim returned home and promptly conducted a nuclear test, setting off worldwide outrage and contempt. This went too far, even for China.

But Kim's bout of saber-rattling is apparently over, at least for now. He plans to shut down the nuclear power plant in Yongbyon by the end of this year. He has promised this to China and the United States once before, and crews had even begun disassembling the plant. If he makes good on his promise this time, however, the United States could even be willing to establish diplomatic relations with North Korea. This would give Kim access to the World Bank and the International Monetary Fund -- and to loans that could help his regime survive longer.

New factories are already being built in the thriving Kaesong special economic zone. In addition to a number of small to mid-sized South Korean companies, the Korean subsidiary of southern German automotive supplier Prettl and two Chinese companies have already signed leases in the industrial complex, hoping to secure their place in one of the last few spots in Asia still relatively untouched by capitalism.

The "Dear Leader," as Kim likes to be called by his subjects, determines the pace of progress in North Korea, where the contemporary calendar begins with the birth of Kim Il Sung, the father of the current dictator and founder of the nation, in 1912. Since his death in 1994, Kim Il Sung has been designated as the country's eternal president. North Korean subjects are required to wear lapel pins bearing the image of the country's former "Great Leader."

Kim Myong Ok, an employee of South Korea's Woori Bank in Kaesong, also wears the pin on her uniform. She cheerfully explains the purpose of a bank in a special economic zone and the lessons she has learned from her capitalist bosses, including how to exchange money. This is a necessary skill at Kaesong, because Kim Jong Il has ordered that the official form of payment here should be the US dollar, not the South Korean won.

Kim Myong Ok adds that online payments to her bank's customers are unfortunately not an option. The Internet is banned in North Korea, and that means no online banking in Kaesong. In fact, all the companies operating in the industrial complex can only communicate with their headquarters in South Korea -- one of the world's most densely wired nations -- via phone or fax. "The North is learning new things every day through its exposure to the market economy," says Hyundai Group manager Byun Ha Jung. Nevertheless, any form of electronic data processing is still seen as a potential threat to the system here.

Instead of using computers to record the flow of goods from Kaesong across the border to South Korea, border agents tick off the products, item by item, on manual lists. It takes them an entire day to inspect a single truckload -- an impossible handicap in the age of globalization.

There are other areas where speed -- or lack thereof -- has been the North Koreans' Achilles' heel. In May, the two countries dedicated a new railroad line for transporting goods to Kaesong. But the new rails have yet to carry a single freight car, and the sparkling new train station adorned with a giant portrait of Kim Il Sung remains deserted today. There are apparently security concerns, say officials at Hyundai.

Kwon Soon Jin, a shoemaker, has worries of a different sort. Here and there, he says, something universal happens in one of the factories: romance in the workplace -- and between North and South Koreans, no less. Of course, dictator Kim strictly prohibits such sentimentality and threatens violators with serious consequences.

"Whenever we notice anything of this sort," says Kwon, "there is only one solution for those involved: the immediate transfer to other positions." In separate locations, of course.

Translated from the German by Christopher Sultan