Night Watch

North Korea: According to a report in the Daily NK, the Kim Jong Un regime has ordered provincial authorities to submit proposals for limited opening of cities to foreign investment and technology.

Sources from the northern provinces bordering China said that the authorities in each of the North's nine provinces have received orders to prepare proposals for two cities in each province that might be attractive to foreign investors. This will create a pool of 18 cities as potential candidates to become open cities, in competition with each other.

Central officials will review the proposals, the locations and the demographics. According to the sources, the division of effort would require foreign companies to bear most of the risks, to control management and to control production issues. North Korean authorities would provide and control the personnel, including security.

Comment: The Daily NK is the only source of this information, but it has unique, reliable sub-sources. The report appears credible.

If it is accurate, it would seem to provide belated corroboration of the optimistic opinions that a Swiss-educated leader such as Kim Jong Un would relax internal restraints and open up North Korea. It also would add perspective to North Korea's decision to reopen the Kaesong industrial complex. Kaesong is one of the models for the legal and administrative documentation and other requirements for dealing with foreign investors.

Nevertheless, considering Kim's brutal purges and provocative behavior last February and March, his definition of "opening" is not likely to be congruent with that of a western scholar. This is not the bow wave of political reform. The Rason Free Trade Zone in the northeast, the Kaesong complex and the Mount Kumgang tourist center, which are the only non-Stalinist economic ventures in the North, are surrounded by tight security. Access is tightly controlled. Worker interactions with foreigners are limited and controlled by party cadre and security personnel. Open primarily means receptive to foreign money and technology.

This looks like another of Kim's brainstorms, like the construction of a winter sports and entertainment resort on the east coast, which has encountered serious problems resulting from shoddy construction. North Korea lacks the infrastructure, even in Pyongyang, to meet the power, information technology, telecommunications and transportation needs of modern businesses.


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