North Korea's capitalist manifesto

A predictable master of surprise, North Korea stunned the world Monday by agreeing to give up its nuclear weapons program. But to seal the deal by pinning down the difficult details, it's necessary to ask what's really motivating the hermit nation.

North Korea won't make it easy for itself in fulfilling this pact. Within 24 hours after the "consensus statement" was inked by North Korea and five other governments (US, China, Japan, Russia, South Korea), the North - contrary to the agreement - proclaimed it would abandon its nuclear program only after it's been given a new light-water reactor for producing electricity. That could mean it would be able to keep producing nuclear weapons for years. The North will also probably resist on-the-ground verification of its nuclear program - and the few bombs presumably already produced; the regime of Kim Jong Il hardly lets foreigners run around freely.

The US and China, as erstwhile partners in trying to denuke North Korea, must keep reminding Mr. Kim why he needs - and probably wants - to live up to this agreement, and quickly: His Stalinist command economy, which has been closed to the world for half a century, faces collapse and possibly another famine like the one in the mid-1990s, when some 2 million people died.

Kim, who titles himself Dear Leader, appears to know his own political survival is on the line. In 2001, he was invited to China and saw how that communist regime has been able to stay in power while allowing a market economy to thrive. The next year he freed up prices and wages, and loosened many government controls over businesses and individuals.

Local farmers markets have since sprung up, and small service shops are appearing in cities. Last year, a new dictionary was issued, and for the first time it contained the phrase "market economy" (which is a communist way of saying capitalism).

But the reforms were done badly. The nation now has spiraling inflation. Its economy has contracted for the past three years. Great gaps in wealth are appearing, even as North Korea's economy remains a fraction of the size of South Korea's. The 70 percent of the population that still relies on government food has seen their rations greatly reduced.

Last spring, the reform-minded prime minister, Pak Pong-ju, visited China and was spirited to Shanghai, where he saw the missing element for North Korea's economy: foreign investment and an influx of hard currency. He went back and told bureaucracy to learn about foreign markets and trade. The universities began to teach market basics, such as supply and demand.

But to improve its shaky experiment in capitalism, North Korea needs to stop scaring away potential foreign investors with its nuclear belligerence and abandon its long-held ideology of juche, or self-reliance. Both steps are risky for a dictator who has blinded his people to the world around them.

The Bush administration has probably bought into China's strategy of dangling economic benefits before Kim to get him to denuclearize. Withholding those benefits will be necessary if further talks falter.

Once bitten, though, the capitalist apple may be too tempting for Dear Leader.

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