The collapse of U.S.-North Korea summit on Thursday over disagreements on nuclear disarmament and economic sanctions is likely to put talk of a North Korean opening to the world on hold – and that is just fine for privileged elites in Pyongyang who would lose out if their country pursued major economic reforms like host Vietnam has carried out.
U.S. President Donald Trump and North Korea’s Kim Jong Un, abruptly ended their second summit meeting in Hanoi on Thursday when negotiations failed to make any headway on nuclear disarmament, a peace declaration or reducing sanctions on the North.
The failed summit will send Trump and Kim home empty-handed and raise concerns about renewed tensions if the two countries can’t reconcile their competing demands.
For elites in North Korea, however, there may be relief at the outcome.
Failure to move ahead in relations with the United States also puts off their reckoning with a more open economy and more competition implied by the choice of Vietnam as summit host and expressed by Trump, who praised Vietnam’s development and suggested Pyongyang could follow in Hanoi’s footsteps.
Vietnam, like North Korea, remains a one-party communist state despite undergoing economic reforms after normalizing with the United States in 1995. Now, the U.S. is a major trading partner with Vietnam, with the Southeast Asian country earning tens of billions in exports to the U.S. each year.
North Korean economic advisors traveled to Vietnam with Kim, and made several side trips to study the Vietnamese economic model, according to the Associated Press.
The rich are profiting
Back not everyone in North Korea is enthusiastic about a new economic model.
“They are well aware that Vietnam chose to reform and open up to Western countries like the U.S. a long time ago,” said a source from North Korea’s North Pyongan province on Tuesday, Feb. 26 to RFA’s Korean Service.
The source noted that Vietnam became a world-class rice and coffee exporter because of the reforms, but was still able to remain socialist.
“[A lot of these rich people] dominate the national sales market with the foreign cash they earn in the Sinuiju area [which had been one of North Korea’s exclusive open trade zones],” said the source, speaking before the Hanoi summit broke down.
“They forecast that [on the heels of the summit with the United States] there will be a huge increase in foreign investment if North Korea adopts the Vietnamese economic reform model, with money even coming in from the U.S. and South Korea,” the source added.
The source said North Korean elites are worried about not being able to compete with foreign investors.
“The rich have been under the protection of the state and made profits by investing in state-run factories. They have also dominated the high-interest loan sector,” the source said.
The source said that in a market economy, these elites would not have the same protections and would have much less cash than their foreign competitors.
Another source from North Pyongan’s Ryongchon county said, “The rich have been making steady profits under the name of state-run companies. But they have acquired information from senior government officials that North Korea is researching ways to adopt Chinese and Vietnamese economic reform models.”
This news has made them anxious about any potential political changes, according to the source.
“Most of the rich are secretly listening to South Korean programs every day and they hear news that Kim Jong Un would be able to develop North Korea into a great economic power if nuclear negotiations with the U.S. president go well,” said the source.
“[They] forecast that if economic reforms begin, there will be an initial chaos, and the rich will no longer be able to make profits with their secretive methods. [They fear] being victims of economic reform,” the source said.
Potential purge targets
The source also noted that in the past the rich and their relatives are often purged whenever there is public unrest from dramatic political changes.
A third source, a resident in Ryongchon county, said, “Rich people are afraid of a war because they make easy money and live well.”
“But if there is a change in the system, the state will execute [them] first,” the source said.
The source said that many of the rich people in the area are quite active in the smuggling business.
“[They] are repairing their ships to get ready for the spring smuggling season, but they are also getting ready for defection, just in case.”
Reported by Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.