Winds of Change Blowing Eastwards: From Burma to North Korea

The following was written by a Choson Exchange team member. Views reflect those of the team member, and does not represent the institutional position of Choson Exchange. We have had casual conversations on the changes taking place in Burma with some North Koreans. You can’t teach an old dog new tricks. Apparently, not true in Burma. While the winds of change in the Middle East have been largely mass movements invigorated by the idealistic passions of young vanguards, Burma’s gerontocracy has surprised many by their willingness to reinvent themselves and their moribund economy. The visit by Mrs Hillary Clinton, the highest ranking US State Department official to Burma in more than 50 years, has renewed hopes that Burma will continue to carry out progressive reforms to gain acceptance in the international community. Anticipation of change is in the air.

Old men can lead change

What does this mean for North Korea? First, the assumption that change must come from the youth, unencumbered by ideology and motivated by a better Western way of life, ought to be seriously reexamined. Old men in power can open up their country, if only because of self-interest to entrench themselves and their privileges. Thein Sein, currently 66 and the President of Burma, is hardly the poster boy for change. He spent his entire career as a member of the military junta responsible for the repression of pro-democratic forces. Just today, he signed a law to allow his people to peacefully protest in Burma. And all these volte-faces are taking place while Senior General Than Shwe, a man who ruled with absolute power and an iron fist till 1992, is still alive. Perhaps the international community should seriously consider sponsoring senior North Korean leaders to Burma to understand their rationale for voluntarily ceding and sharing power. This is likely to be a more effective prep talk than any democratic lecture or visit by former US Presidents. These old gentlemen may be your unlikely agents for change.

Initiating change from the top

Second, it is a good idea to initiate change from the top of the Bastille than from the streets. While their European counterparts like Nicolae Ceausescu tend to have their doors kicked down before going down with a bang, socialist dictators in Asia seem to better understand the true meaning of power, and often voluntarily open their doors to change. If change is inevitable, existing leaders might as well start learning to control change in a non-destabilizing way. This will allow the old dogs to be seen as agents for change and claim credit for bringing the fruits of economic progress to their people. It is ultimately in their political self-interest to legitimize their rule. A social compact with their people for economic growth and a higher standard of living can only better cement their power in the short-term. This is because the energies of the masses will be channeled towards hungry stomachs and material needs, rather than any abstract democratic ideals. If democratic change eventually catches up and takes power from them, it will be at best be an uncertain and long-drawn process (i.e. just look at China). By then, they will have comfortably retired in their graves. If the old gentlemen in Burma can give up their cherished Burmese Way of Socialism, surely the North Korean leaders should take a hard look at Juche again. The old gentlemen in North Korea should be confident in the knowledge that, by initiating economic changes today, they not only benefit themselves by stabilizing their regime, but also benefit their progenies by creating a more stable and rewarding economic system.

Fast and Furious Change

Third, when change comes, it will be fast and furious. It pays to be prepared and to have a ready agenda. Ever since the Burmese military junta orchestrated a transition to civilian government earlier this year, reforms and progressive announcements have been rolled out at a rhythmic pace. Within a year, the freeing of Aung Sung Suu Kyi from house arrest, ceasefire with the Shan State Army South and the latest lifting of a blanket ban on protests constitute a nice chronological flow on the political front. Positive signs have also been signaled on the business and economic front with talks of simplifying the FX system and reforms in investment law to give foreigners more control over their businesses. Senior North Korean leaders should watch Burma closely. Even if they are not interested in pushing for reforms today, they will be wise to start thinking through the agenda and timetable for economic and political change. One does not need to tell the master practitioners of power that it is better to dictate the terms of your agenda to others than vice versa. Also, elite North Koreans have studied overseas and understand how the capitalistic system operates, so the expertise and knowledge to actualize change is already there. If their Burmese counterparts can find it in their hearts to be young again, there is no reason why the old gentlemen in North Korea can’t start a bit of experimenting and share the joy of their cognac with their fellow countrymen.

Interview on Economic Training 2.0 in North Korea (Part 2)

This picks up from a previous blogpost. I was interviewed by a Korean journal focused on inter-Korean issues. I provided my opinion on how economic policy should evolve in North Korea, and what organizations like Choson Exchange must focus on to facilitate that transition. The interview was translated into Korean. I have included parts of the English transcript below: What are your thoughts on meeting North Koreans? What is interesting about how North Koreans think?

The generation gap in people's thinking is obvious and important. A young candidate we selected for our program in Singapore impressed our ex-Foreign Minister and former Managing Director of Temasek Holdings by asking why Singapore chose to hold assets under a sovereign wealth fund rather than privatizing those assets. Such an insightful question requires the ability to think about abstract differences in systems, and also reflected the generation gap in the way North Koreans over 50 years old think, versus someone in their 20s. While the people over 50s tend to stick to more "politically correct" answers, younger people in the program are able to ask tough and insightful questions.

North Korea's living standards are low. What is necessary for them to improve their living standards?

When Singaporean policymakers emphasize the Rule of Law in developing a competitive economic system, older North Koreans rebut by claiming that they already have investment laws in place guaranteed by their constitution - forgetting that laws are only as good as its implementation. North Korea focuses too much on hard infrastructure (e.g. roads, technology, equipment) as a solution to their development problems, and too little on soft infrastructure (e.g. good governance, rule of law, and informed economic or monetary policy). This is a major obstacle to long-term economic development or even to their short-term efforts to bring in investments.

See part 1 here.

Interview on Economic Training 2.0 in North Korea (Part 1)

I was interviewed by a Korean journal focused on inter-Korean issues. I provided my opinion on how economic policy should evolve in North Korea, and what organizations like Choson Exchange must focus on to facilitate that transition. The interview was translated into Korean. I have included parts of the English transcript below: What are your current activities and what are you focused on?

Currently, we focus on training next-generation North Korean policymakers (under 40) in economics, business and law. Based on internal discussions and feedback from programs, we decided that we need to 'upgrade' to a training 2.0 model. General exposure to economic, business or legal theories are not helpful. Instead, we pursue a "consulting" relationship, where we work with NK partners to understand the economic problems they need to solve, and work with foreign experts to provide concrete solutions that can be communicated to our partners during our programs.

Can you introduce the primary activities of your organization?

It is an exciting time for us in North Korea, as there are a lot of new economic institutions or departments being set up that we think is worth working with, although progress is slow because of a lack of funding. In general, we work with North Koreans to identify specific economic or business challenges, and develop an agenda defining what they need to learn based on the issues. Based on this agenda, we provide workshops (e.g. fiscal strategy and taxation) in North Korea where 1 workshop leader is assigned to at most 8 North Koreans to facilitate discussions. We have also brought North Koreans to consult policymakers in Singapore, as North Koreans are very interested in Singapore's economic development.

Our longer-term strategy is to move to the training 2.0 model which I mentioned above. We identified two key problems with capacity building programs which we think is feasible to tackle:

First, the gap between training and implementation of knowledge must be made smaller. Instead of general discussions of economics or business, we now require NK institutions to prepare a specific agenda where they identify policies they think is feasible to review within a five year time frame. We can then focus training programs on these areas if we think the change will be positive for NK's economic development.

Second, there is also a lack of cross-institution communication in North Korea. As a result, institutions lack a common understanding of problems and a common economic strategy. What we need is to provide opportunities for these institutions to develop that common vision. An idea we are keen to explore was raised by a young North Korean who attended our program in Singapore. He suggested that North Korea create an economic strategy think tank.

(To be continued...)

Presentation at Philips Exeter Academy

Managing Director Geoffrey will be making presentations in Boston in early November at Exeter and Harvard University in the Boston area. These will be off-the-record sessions. The Strange World of Pyongyang: Helping North Koreans Learn About Economics & Business and Learning How North Koreans Think Phillips Exeter Academy Assembly Talk 10.15am November 1, 2011

This will be a general introduction to what it is like doing fieldwork in North Korea and an attempt to dispel the common media trope of North Koreans as brainwashed unthinking automatons.

-------------------------------------------------- Assembly Speaker Gives Glimpse Inside North Korea

Some excerpts from coverage of the talk in Lion's Eye at Philips Exeter Academy:

"I want to focus on understanding how we look at North Korea. The main issue with North Korea is that it is a very poorly understood country. We still don't really know a lot about the country despite much having been written in the media."

With that opening, Geoffrey See – founder and managing director of Choson Exchange, a nonprofit focused on economics, business and legal training of young North Korean government officials – began his assembly talk. By drawing on his own experiences from multiple visits to Pyongyang over the last year, See was able to give PEA students a glimpse behind North Korea's shrouding curtain...

To close his talk, See left his audience with several questions: "If you believe North Korea is run by a single dictator and the country is not changing, is it possible to reach a negotiated solution to the nuclear crisis? On the other hand, if you believe North Korea is changing, that it is a more complex country, does that give you more options on how to effect positive change in the country?" See added by way of ending, "How we understand North Korea affects what kind of foreign policy solutions we put forth in trying to tackle issues such as human rights, economic development or the nuclear issue."

Op-Ed: Economic Performance and Legitimacy in North Korea

Directors Andray and myself have shared our thoughts on North Korea's transition to a somewhat more economic performance-focused source of legitimacy at the Harvard International Review:

...Through our affiliates and our own interaction with investment-seeking arms of the North Korean government, we have noticed that intra-elite competition for investments, with multiple channels backed by different individuals at the highest levels of the North Korean government, has significantly increased in the last two years.

This leads us to speculate that with a leadership transition underway, such competition marks a shift towards increasing reliance on economic performance as a primary source of legitimacy for the North Korean government. This shift is significant as economic development has taken a back seat for the last two decades. If economic growth is to play a greater role in providing legitimacy for North Korea’s government, it will have a lasting impact on their foreign relations...

Chronicle: Why North Koreans Deserve Opportunities to Study Abroad

The Chronicle of Higher Education recently published an op-ed on why we think North Koreans deserve opportunities to study overseas.

In the early 1980s, Theodore Schultz, a Chicago economist and Nobel laureate, visited a China that was just opening up. Impressed by his translator during the trip, he offered the young man an opportunity to attend the University of Chicago's doctoral program in economics. Thirty years later, the young man, Justin Lin, who helped built one of the top economics department in China at Peking University, became the first chief economist of the World Bank from Asia. Without that scholarship, things might have turned out very differently for Justin Lin, Peking University, and the World Bank.

Today, we have North Korea, an isolated country with young people equally curious about business, finance, and economics, and in a system similar to China's in the 70s or 80s. On my first trip to Pyongyang, in 2007, a student from Kim Il Sung University, North Korea's leading university, told me that she wanted to join a trading company to prove that women can be great business leaders. She asked if I could bring economics or business textbooks for her the next time I visited the country. Her example shows there is a hunger for knowledge in the isolated country. And with international-education opportunities, some of these people could become globally integrated and enlightened leaders.

North Korea: Australia’s capacity to act where others cannot

Choson Exchange recently prepared a program for North Korean students to learn business, finance and economics overseas through university courses and internships. They consulted a range of North Koreans on how it should structure such a program and ‘the Australia National University’ often came back as the model to follow. Up until 2006, ANU hosted North Korean trainees studying economics under programs supported by international and Australian aid agencies. The Australian exchange program was clearly well-regarded by outward-looking North Koreans. [Read More]