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North Korea May Be Preparing Economic Reforms North Korea May Be Preparing Economic Changes
(35 minutes later)
SEOUL, South Korea — North Korea said on Wednesday that it will convene its Parliament later this month in an unusual session that South Korean analysts said may officially introduce the leader Kim Jong-un’s program to revitalize his country’s moribund economy. SEOUL, South Korea — North Korea said on Wednesday that it would convene its Parliament later this month in an unusual session that South Korean analysts said may officially introduce the leader Kim Jong-un’s program to revitalize his country’s moribund economy.
Since taking over the leadership after the death of his father, Kim Jong-il, in December, Mr. Kim has repeatedly stressed the need to improve the living standards of his impoverished people. He vowed in April, during his first speech, that he would ensure that his people would "never have to tighten their belt again." Since taking over the leadership after the death of his father, Kim Jong-il, in December, Mr. Kim has repeatedly stressed the need to improve the living standards of his impoverished people. He vowed in April, during his first speech, that he would ensure that his people would “never have to tighten their belt again.”
Since July, various news reports in South Korea have quoted anonymous sources within the North as saying that Mr. Kim planned to give factories and collective farms incentives aimed at boosting productivity. The state will let farmers keep 30 percent of their harvest, the reports said. Factories will choose what to produce and how to market their products, splitting profit with the state and paying their own workers. Since July, various news reports in South Korea have quoted anonymous sources within the North as saying that Mr. Kim planned to give factories and collective farms incentives aimed at bolstering productivity. The state will let farmers keep 30 percent of their harvests, the reports said. Factories will choose what to produce and how to market products, splitting profit with the state and paying their own workers.
The reforms, tested as a pilot project in selected farms and factories, will eventually spread to the rest of the country and replace the country’s dysfunctional state ration system, these reports said. The changes, tested as a pilot project in selected farms and factories, will eventually spread to the rest of the country and replace the North’s dysfunctional state ration system, these reports said.
Such changes, if confirmed, would mark the North’s latest — and perhaps its boldest — attempt to overhaul its economy, following a similar attempt that failed a decade ago. Such changes, if confirmed, would be the North’s latest — and perhaps its boldest — effort to overhaul its economy, after a similar effort that failed a decade ago.
"The coming parliamentary session will be a bellwether on where Kim Jong-un is taking his country’s economy," said Koh Yu-hwan, a North Korean expert at Dongguk University in Seoul. “The coming parliamentary session will be a bellwether on where Kim Jong-un is taking his country’s economy,” said Koh Yu-hwan, a North Korean expert at Dongguk University in Seoul.
While announcing that the North’s Supreme People’s Assembly will meet on Sept. 25, the North’s official Korean Central News Agency gave no details on its agenda. It’s rare for the rubber-stamp Parliament to meet more than once a year. It last gathered in April, when legislators elected Mr. Kim to succeed his father as chairman of the National Defense Committee, the North’s top state agency. While announcing that the North’s Supreme People’s Assembly will meet on Sept. 25, the North’s official Korean Central News Agency gave no details on its agenda. It is rare for the rubber-stamp Parliament to meet more than once a year. It last gathered in April, when legislators elected Mr. Kim to succeed his father as chairman of the National Defense Committee, the North’s top state agency.
Besides passing legislation and appointing top government officials, the North Korean legislature also announced important domestic and foreign policies, as it did in 2003, when it declared that North Korea would expand its nuclear weapons program. Last Friday, the North Korean Foreign Ministry vowed to expand its nuclear arsenal "beyond imagination." The threat came as the International Atomic Energy Agency warned that North Korea was making significant progress in building a new nuclear reactor widely seen as a pretext to enrich uranium and make weapons-grade plutonium. Besides passing legislation and appointing top government officials, the North Korean legislature also announced important domestic and foreign policies, as it did in 2003, when it declared that North Korea would expand its nuclear weapons program. Last Friday, the North Korean Foreign Ministry vowed to expand its nuclear arsenal “beyond imagination.” The threat came as the International Atomic Energy Agency warned that North Korea was making significant progress in building a new nuclear reactor widely seen as a pretext to enrich uranium and make weapons-grade plutonium.
Mr. Kim, who is believed to be 28 by South Korean officials, may retire some of the North’s aging leaders, such as Prime Minister Choe Yong-rim, 82, and Kim Yong-nam, the 87-year-old parliamentary speaker, to put his own stamp on the leadership hierarchy and promote younger technocrats to drive his economic revitalization efforts, North Korea watchers here said. Mr. Kim, who is believed to be 28 by South Korean officials, may retire some of the North’s aging leaders, like Prime Minister Choe Yong-rim, 82, and Kim Yong-nam, the 87-year-old parliamentary speaker, to put his own stamp on the leadership hierarchy and promote younger technocrats to drive his economic revitalization efforts, North Korea watchers here said.
"He will likely use the Parliament to present his economic vision," said Chang Yong-seok of the Institute for Peace and Unification Studies at Seoul National University. "We will likely see new legislation and possibly personnel reshuffle to support his economic plan." “He will likely use the Parliament to present his economic vision,” said Chang Yong-seok of the Institute for Peace and Unification Studies at Seoul National University. “We will likely see new legislation and possibly personnel reshuffle to support his economic plan.”
The South Korean news reports cited North Korean party officials who attended briefings on Mr. Kim’s economic program. They varied in details while agreeing on a rough outline.The South Korean news reports cited North Korean party officials who attended briefings on Mr. Kim’s economic program. They varied in details while agreeing on a rough outline.
"The gist is to expand incentives for factories, individuals and collective farms to boost productivity," said Yoo Ho-yeol, a North Korea expert at Korea University. “The gist is to expand incentives for factories, individuals and collective farms to boost productivity,” said Yoo Ho-yeol, a North Korea expert at Korea University.
Within collective farms, four to six workers will be allowed to work as a unit to encourage competition, said the Seoul bureau of Washington-based Radio Free Asia, as well as Web sites in Seoul, which use sources within the North to collect news. Meanwhile, Jang Song-thaek, Mr. Kim’s uncle and key policy adviser, visited China last month and won Beijing’s commitment to help North Korea build two free economic zones on its border. Within collective farms, four to six workers will be allowed to work as a unit to encourage competition, said the Seoul bureau of Radio Free Asia, based in Washington, as well as Web sites in Seoul, which use sources within the North to collect news. Meanwhile, Jang Song-thaek, Mr. Kim’s uncle and key policy adviser, visited China last month and won Beijing’s commitment to help North Korea build two free economic zones on its border.
On Tuesday, a senior government official in Seoul, speaking anonymously to a group of reporters, confirmed one element of the reported reform plans. He said the North was taking the lucrative trading rights from its powerful military and returning them to the Cabinet. In April, Mr. Kim vowed to make the Cabinet "the economic command." Analysts believe that the North’s former army chief, Vice Marshal Ri Yong-ho, who lost all his jobs in July, was fired for resisting an attempt by Mr. Kim and Mr. Jang to curtail the military’s economic rights. On Tuesday, a senior government official in Seoul, speaking anonymously to a group of reporters, confirmed one element of the reported plans. He said the North was taking the lucrative trading rights from its powerful military and returning them to the cabinet. In April, Mr. Kim vowed to make the cabinet “the economic command.” Analysts believe that the North’s former army chief, Vice Marshal Ri Yong-ho, who lost all his jobs in July, was fired for resisting an attempt by Mr. Kim and Mr. Jang to curtail the military’s economic rights.
Analysts in South Korea remained divided over whether Mr. Kim was attempting a genuine economic reform, of the kind his country’s main ally, China, has pursued, or seeking more productivity only to make up for his dwindling state coffers. The regime has found it increasingly hard to earn hard currency in recent years as United Nations sanctions tightened and outside aid dwindled. Analysts in South Korea remained divided over whether Mr. Kim was attempting a genuine economic change, of the kind his country’s main ally, China, has pursued, or seeking more productivity only to make up for his dwindling state coffers. The regime has found it increasingly hard to earn hard currency in recent years as United Nations sanctions tightened and outside aid dwindled.
In a commentary published on the Web site of Sejong Institute of South Korea, Oh Gyeong-seop, an analyst, credited Mr. Kim with "reform within the system," rather than a shift toward a market economy. His program, as reported so far, "still adheres to the state ownership of properties and bans individuals from establishing their own business enterprises," he said. In a commentary published on the Web site of Sejong Institute of South Korea, Oh Gyeong-seop, an analyst, credited Mr. Kim with “reform within the system,” rather than a shift toward a market economy. His program, as reported so far, “still adheres to the state ownership of properties and bans individuals from establishing their own business enterprises,” he said.
North Korea indeed recently said it would stick to "socialist economic principles." It even scoffed at reports of economic reform and opening in North Korea, calling them a "hallucination.” North Korea indeed recently said it would stick to “Socialist economic principles.” It even scoffed at reports of economic changes and opening in North Korea, calling them a “hallucination.”
Mr. Kim’s program won’t succeed unless the regime has a "political willingness to embrace the rapid expansion of the market," which will result from the incentives planned for the farmers and factories, Park Hyong-joong, an analyst, said in a commentary posted on the Web site of the government-run Korea Institute for National Unification in Seoul. Mr. Kim’s program will not succeed unless the regime has a “political willingness to embrace the rapid expansion of the market,” which will result from the incentives planned for the farmers and factories, Park Hyong-joong, an analyst, said in a commentary posted on the Web site of the government-run Korea Institute for National Unification in Seoul.
In 2002, North Korea experimented with similar incentives but it quickly backtracked when the markets and trading activities boomed and the regime saw them as a threat to its near-totalitarian control on the population. In 2009, North Korea again cracked own on markets. Such interferences triggered runway inflation, and occasional outbursts of protest.In 2002, North Korea experimented with similar incentives but it quickly backtracked when the markets and trading activities boomed and the regime saw them as a threat to its near-totalitarian control on the population. In 2009, North Korea again cracked own on markets. Such interferences triggered runway inflation, and occasional outbursts of protest.
New reforms could mean "opening a Pandora’s box," Mr. Park said. Changes could mean “opening a Pandora’s box,” Mr. Park said.
Pak Pong-ju, the former North Korean prime minister who was banished for pushing reforms too far in 2002, returned to the center of economic policy in 2010. He is supported by Mr. Kim’s aunt and Mr. Jang’s wife, Kim Kyong-hee, whose influence has increased under the young Mr. Kim, according to analysts and officials here. Pak Pong-ju, the former North Korean prime minister who was banished for pushing changes too far in 2002, returned to the center of economic policy in 2010. He is supported by Mr. Kim’s aunt and Mr. Jang’s wife, Kim Kyong-hee, whose influence has increased under the young Mr. Kim, according to analysts and officials here.
Meanwhile, word of a new round of economic change has created uncertainty among North Koreans, already fueling inflation. The rice price has doubled since early June, Daily NK reported last week.Meanwhile, word of a new round of economic change has created uncertainty among North Koreans, already fueling inflation. The rice price has doubled since early June, Daily NK reported last week.
"Here people think that economic measures mean rising prices," it quoted a North Korean as saying. “Here people think that economic measures mean rising prices,” it quoted a North Korean as saying.

This article has been revised to reflect the following correction:

This article has been revised to reflect the following correction:

Correction: September 5, 2012Correction: September 5, 2012

An earlier version of this article misstated the portion of yield that factories and collective farms may be permitted to keep. It is 30 percent, not 70 percent.

An earlier version of this article misstated the portion of yield that factories and collective farms may be permitted to keep. It is 30 percent, not 70 percent.