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Sunday, June 17, 2018

Is North Korea Another Cuba?



By Roy C. Smith

Last week’s 1-day US – North Korea summit ended with a joint statement promising "mutual confidence building" to "promote the denuclearization of the Korean Peninsula." President Trump and Supreme Leader Kim Jong Un also made commitments to build a "lasting a stable peace regime on the Korean Peninsula," to work toward denuclearization and to recover POW/MIA remains from the 1950s. Though the statement was vague, expectations soared that North Korea would stand down its nuclear weapons and the US would withdraw sanctions and assist in developing North Korea’s economy. 

Evan Osnos, a China expert for The New Yorker who visited North Korea recently, suggests the unexpected change of heart by Kim Jong Un to be the result of the increasing amounts of foreign information leaking into North Korea through social and other media that show how so very badly off the country is relative to its neighbors. After 70 years of a “socialist paradise,” North Korea’s GDP per capita, stagnant for years, is only $583 -- China’s is $8,123 and South Korea’s $27,538. By this measure, North Korea is the poorest country in the world by a significant amount. Knowing this to be so, Osnos says, makes Kim’s regime vulnerable to upheaval from within, despite its harsh rule with 200,000 political prisoners. So, after seven years as chief of state, maybe Kim figures it is better to use North Korea’s newly achieved nuclear deterrent to bargain for relief from sanctions to get some economic development before it’s too late. 

The event brings to mind another momentously staged announcement, one in December 2014, when the US and Cuba agreed to normalize relations. Raul Castro replaced his brother as Supreme Leader in 2006, and he knew very well that the Cuban economy was crumbling, it had run out of credit with other socialist nations, and its main benefactor, Venezuela, was on its last legs. Something had to be done, so Raul liberalized some things -- permitting sales of personal property and real estate and freeing up local markets to small time entrepreneurs. But the only way out, Raul also seemed to know, was to restore relations with the hated US, in the hope that economic fallout would be enough to get the economy out of the no-growth slump it was in. But this was a big step and carried many risks. Raul took five years to think about it before commencing pre-announcement negotiations.

I was in Cuba a couple of weeks after the 2014 announcement and there was no doubt that the excitement it generated was considerable. All the Cubans one could see were talking about how much better things would become when the US trade “blockade” was lifted and incoming foreign investment would create a new world of enhanced economic activity.  In March of 2016, the US embassy was reopened and President Obama visited to celebrate the event.

Since then, not much else has happened on the normalization front. GDP growth shot up to 4.4% in 2015, because of a spike in tourism and increased expectations. But nothing else was reformed in the economic sector, no large-scale investments by multi-national corporations, no banking reform, and no effort to upgrade the agricultural sector so as to avoid having to import 70% of Cuba’s food. Growth rates plummeted to -0.9% in 2016, then rebounded a bit to 1.5% in 2017. Cuba’s GDP per capita is $7,600, much higher than North Korea’s but still less than China’s. Raul recently retired, though no one doubts he still runs things from his rocking chair.

Raul distrusts everything American, especially its big businesses that flourished in Cuba during the Batista regime that the Castros overthrew in 1959.  Once in power, the Castros’ forced fed the Cubans with their version of a socialist paradise, aided by 30 years of economic aid from the USSR. The Soviets played the Cuban nuclear deterrent card in 1963 – installing missiles that nearly led to a US invasion or nuclear exchange – from which they backed off.  However, without the support of the USSR, which imploded in 1991, Cuba experienced a very difficult, near-starvation, decade, only to be bailed out again by another socialist paradise, Venezuela.  Then, as Venezuela’s economy collapsed, Cuba had to look to other options to stay intact. If Raul did nothing, rising economic discontent might lead to the end of Cuban “Socialismo” after his death. If he patched things up with the US, the economy might rekindle and the regime could survive.

The Castros have long since ceased to be any kind of threat to the US, but their rule, like the North Koreans, is a testimony to the ability of an authoritarian police state to stay in power indefinitely, despite dreadful economic results. But it seems than both Raul Castro and Kim Jong Un saw handwriting on the wall – do nothing and our economies finally do crash and political change may be next. Do something with the US, and we can buy some time: sanctions may be reduced, and foreign money may be attracted to a less confrontational future.

Like the Castros, the Kims are a cautious family business unlikely to open up more than a little. Perhaps a little can go a long way if it makes local street market entrepreneurs happy. But, really big changes usually take a new guy to pull them off. Deng Xiaoping engineered China’s 180-degree turnaround strategy skillfully, but only after Mao Zedong, who launched the disastrous Red Guards to rekindle revolutionary ardor, had died and Deng had gained power.  

In Korea, post-summit meetings continue to see what might be done. Mr. Pompeo has said that he and Mr. Trump expect nuclear disarmament to be achieved by the end of the president’s first term, but sanctions will remain until it happens. Some observers who know, say disarmament is a process that will take a decade or more.  Some who know North Korea say the thirty-year effort to secure nuclear weapons and missiles was only to be able to deter threats from the US, its longstanding enemy-in-chief.  Maybe Kim will give up some stuff, as his father did in previous negotiations with the Clinton administration, but never all of it and not quickly without sanctions relief. Really big changes by North Korea seem hard to imagine.

In Cuba, a really big change didn’t happen with normalization because Raul didn’t want it to. For him, opening up Cuba’s economy to global investment entailed too big a risk of capitalism getting into the country and creating a surge of money and market forces that might overwhelm government policies, information and controls. What Raul did want was a repeal of the US trade embargo with Cuba. Mr. Obama may have been ready for this, but the Republican-controlled US Congress was not. To repeal the trade embargo will require restoration of human rights and property seized by the Castro government.  Nevertheless, some normalization is better than none. The US and the Cubans can wait for Raul, now 87, to pass on and then maybe somebody new will appear to make the really big changes Cuba needs and the US would welcome.

But Mr. Kim, in his thirties, isn’t about to pass on.  If the deal with Mr. Trump proves too risky, he probably figures he can back away as before. But, he may be in a tighter spot than he thinks.  The Americans may not be willing to trade unless they get everything they want, and Mr. Trump has promised to achieve disarmament one way or another. Both Trump and the Kim are dealing in a vast area of mutual misunderstanding and distrust, but with high expectations for political success.  Still, there is no need to rush -- North Korea’s nuclear threat to the US, never great or imminent to begin with, is “on hold.”

A Cuban type of slow-go in North Korea could be what both sides need. A few signs of good faith, lots of talks off stage, visits by diplomats, more aid and encouragement from South Korea and Japan, and who knows, maybe in time something better than the status quo ante will emerge.

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