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North Korea happy after China just bailed them out, say analysts

After recent meetings with China, North Korea seems to have its own version of trickle-down economics and emerging markets.

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Officially, says Mr. Flake, a long-time analyst of events and trends in North Korea, the North has reverted to the economic policies of the 1960s when Kim Jong-il’s father, the long-ruling Kim Il-sung, who died in 1994, was holding sway. A number of ministers, now in their 80s, he says, have been making “old school socialist moves,” since the failure of a plan to revalue the currency that was introduced late last year.

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Still, he says, inside Pyongyang cellphones have become a common sight since Orascom, the big Egyptian company, got the contract two years ago to introduce mobile telephone service. By now, 250,000 North Koreans are said to have cellphones.

Talk of economic change

“Recent videos show they’ve eased up considerably,” says David Straub, associate director of Korean studies at Stanford’s Shorenstein Asia-Pacific research center. “They are at least talking more about trade and investment.” Still, says Mr. Straub, a former U.S. diplomat in Seoul, “I don’t see any fundamental change in North Korea’s economic policies.”

David Kang, professor of international relations at the University of Southern California, sees the people living in provinces along the Chinese border as benefiting the most from shifting policies. “If you are caught in illegal trading, you can bribe your way out,” says Mr. Kang. “There’s an active black market.”

The cross-border trade is vital to the two Chinese provinces across the Yalu River border on the west and the Tumen River border on the east. “The Chinese are queuing up for hundreds of millions of dollars in investment,” he says.

'Rising generation' of leaders

In the bargain with China, Kang is confident that Kim Jong-il has won Chinese approval of Kim Jong-un as his heir. The evidence, he says, is that Kim Jong-il and Hu Jintao agreed on a statement referring to “the rising generation of the Workers’ Party.”

That phrase echoes similar wording that’s been appearing on billboards and in the North Korean media. With delegates to the conference of the Workers’ Party believed to have already arrived in Pyongyang, the delay in staging the event has set off endless speculation, none of it substantiated, as to the reasons.

Among other theories is that Kim Jong-il is recovering from medical setbacks suffered during his recent visit to northeastern China, that flooding has prevented delegates from getting to Pyongyang and that Kim Jong-il is fending off grumbling within the party ranks about his choice of his third son as his successor.

“The temptation is for everyone to lead to conclusions as to what’s going on,” says David Straub. “I take all these unsourced media reports very gingerly.”

From what he’s read in the North Korean media, Park senses “a great deal of disappointment that the party conference is delayed.” Still, “the conference is going to happen,” he says, citing the presence for the past two or three weeks of military units outside the city waiting to parade in celebration.

If North Korea is in a mood for celebrating, however, one aspect of life there has not changed – the draconian system in which thousands are sent to prison for political crimes and public executions are commonplace.

“There have been more public executions than before,” says Ha Tae-keung. “That’s because, before the succession, they’re afraid an antisocial situation will break out.” Most recently, he says, ”We got news of the execution of one person trading in South Korean CDs, and some woman was executed for using a Chinese cellphone.”

IN PICTURES: Cult of Personality: Inside North Korea