Word: kim
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Such is the parlous state of commerce in the world's last Stalinist holdout. On Oct. 2, North Korea's dictator, Kim Jong Il, held a historic meeting with South Korea's President, raising hopes that diplomatic progress in the effort to get Kim to abandon nuclear weapons, along with an easing of the country's self-imposed isolation, might ultimately lead to economic reforms. And for foreign investors lured by what Devonshire-Ellis calls the "barren romance" of the place, North Korea holds obvious, if modest, attractions: a highly literate workforce with average daily wages that are about half...
...mining and cement production, the North has only a hodgepodge of functional industries, including, weirdly enough, its animation studios, which have been used by several European companies. One of the few export industries to flourish, meanwhile, has been military hardware. Illicit trade in drugs and counterfeit products may net Kim's regime up to $1 billion a year--equivalent to one-fourth of the country's legitimate exports...
...North Korea continues to receive commercial support from neighboring countries, which hold out hope that Kim's hostile kingdom can be enlightened through greater integration with the global economy. China, North Korea's biggest trading partner, has increased its dealings with the North. Trade between the countries was up 5.4% in the first 11 months of 2006, to about $1.54 billion. Much of that commerce was one-way--Chinese food and electronics moving into North Korea--but about 150 Chinese companies are doing business there. "Once the political situation stabilizes and medium-size enterprises begin to discover North Korea...
Deals in the North do have a marked tendency to go south. For example, a Thai telecom's plan to develop a mobile-phone network faltered after Kim's regime banned cell phones in 2004. Kelvin Chia, a Singapore-based lawyer who has worked with North Korean joint ventures since 2004, says many investors were spooked by the country's October 2006 nuclear test and the international fallout. "One of my clients was looking at going ahead with a substantial investment in a mineral-processing project," Chia says. "Before he went in, he had an indication from financiers...
...deal, brokered by China, the price for North Korea's denuclearization is the U.S. taking regime change off the table and offering security guarantees and the phased normalization of economic and political relations with a regime currently on the U.S. list of nations sponsoring terrorism. Kim Jong Il's odious regime will thus survive (unless or until it collapses under its own weight) as the price for making the region considerably safer. A compromise, then, but as many diplomatic observers had long warned, the only deal possible to avoid confrontation...