FREE ESSAY ON NORTH KOREA

NORTH KOREA

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North Korea:
Policy Determinants, Alternative Outcomes, U.S. Policy Approaches 
(Rep. 93-612 F)
Congressional Research Service,
Report for Congress 
June 24, 1993 
By Rinn-Sup Shinn, 
Analyst in Asian Affairs,
Foreign Affairs and National Defense Division*
SUMMARY
North Korea is undergoing a wrenching phase of adjustment to an uncertain post-Soviet
world. Its government is reined in by two major constraints: fear that any political or
economic reform would have the same fatal consequence for itself as it had for the former
Soviet Union and other erstwhile allies; and fear that the United States, South Korea,
and other enemies would stop at nothing to overthrow the communist regime of the North.
The United States has a major stake in the outcome of North Korea's effort to deal with
its daunting task. The challenge in the North has become compelling as Pyongyang has come
up far short of its core policy objectives: political self-preservation, undermining
South Korea--and by extension, U.S. military presence in the South; and obtaining
economic and security support from the outside world. Facing an obvious need to change,
Pyongyang is caught in a dilemma about reform. In the wake of the Soviet collapse, a
shaken Pyongyang reaffirmed its resolve to defend a) its centrally planned, autarkic
command economy; b) its monolithic, one-party system identified with the persona of Kim
Il Sung, the great leader (and now with that of his son and de facto successor Kim Jong
Il); and c) its policy of reunifying the two Koreas on Kim Il Sung's terms. The two Kims
still talk as though time is on their side, and that they can outwait U.S. withdrawal
from the South. Nonetheless, they seem to recognize that they need to end their
self-enforced isolation, to say nothing of their unaccommodating foreign policy posture.

A sense of urgency and a siege mentality are real and growing in Pyongyang. In
particular, the North's economy, which it has long defined as the real underpinning of
political stability and military preparedness, is shrinking by all objective criteria.
Still worse, there is no immediate relief in sight. At the same time, Pyongyang is
slipping further and further behind Seoul--a situation that has potentially unnerving
security implications. Seeking economic help and greater international legitimacy, North
Korea in recent years has sought to reconcile with South Korea by promising
nonaggression, reciprocal cooperation, and denuclearization of the Korean peninsula. But
the regime remains doctrinaire, self-centered, and committed to political control, and
has repeatedly undercut its soft approaches by reneging on such promises. 
The United States has also received numerous promises from Pyongyang. A number of policy
approaches may be considered by the United States: engagement aimed at inducing Pyongyang
into the community of nations; military, economic, and political pressure to underscore
U.S. concern for the stability on the Korean peninsula; and outwaiting--letting Pyongyang
chart its own transition by refraining from action that can be reasonably perceived in
Pyongyang as provocative and threatening, while avoiding any actions that would give
legitimacy or assistance to the North Korean regime. 
INTRODUCTION
North Korea (Democratic People's Republic of Korea--DPRK) is a major foreign policy
challenge to the United States because of its intractability as well as its threat to
37,000 U.S. troops in South Korea. Isolated and self-absorbed, its behavior is widely
thought to be as irrational as it is unpredictable. The communist regime in Pyongyang
regards the United States as its sworn enemy and the main obstacle to Korean
reunification. It has denounced the United States for its forcible occupation and for
allegedly turning South Korea into a forward military base from which to plot the
collapse of North Korea or to launch a nuclear attack. 
Since the division of the Korean peninsula in 1945, North Korea has defined its
self-preservation in terms of three policy priorities, or core interests: consolidating
Kim Il Sung's power base, undermining South Korea to hasten U.S. withdrawal from the
South, and securing maximal support from the former Soviet Union and China. These
priorities were designed to assure the security of the Kim regime from domestic critics
and against perceived threats from the United States and South Korea (Republic of
Korea--ROK). Externally, Pyongyang has pursued anti-U.S. and anti-South Korean policies
as interrelated and complementary approaches. Forcing the U.S. out of the South was
judged necessary to lay the groundwork for establishing a docile pro-North Korean regime
in Seoul. North Korean leaders continue to believe that the end of the U.S. military
presence will enhance their chances for overthrowing anti- communist South Korean regimes
and for unification on Pyongyang's terms. 
Pyongyang's current concerns about its own survival are cumulative and derived from three
main sources: slow economic productivity since the 1970s, South Korea's insurmountable
economic lead over North Korea in the crucial inter-Korean rivalry, and deepening
isolation since the breakup of the Soviet Union--Pyongyang's most important source of
weapons and economic assistance through 1990. Pyongyang sees no relief in the short run.
In the past, as North Korea became less secure, it sought to attribute its economic
troubles to the actions of the United States and its allies, South Korea, Japan and
others. But now, North Korean leaders seem convinced of the need to befriend these old
enemies; nonetheless, they are wary about opening to these countries on terms over which
they have little or no control. In seeking to relate itself to the rest of the world,
Pyongyang is both cautious and ambiguous, mixing conciliatory signals with contradictory
hardline messages. 
This report contains four parts.1 In the first, North Korean policy determinants are
identified and examined in terms of motives and rationale as Pyongyang itself appears to
have defined them. 
Variable factors likely to affect economic development and prosperity are also part of
the strategy for survival, for they are portrayed as the material foundation of political
stability and military effectiveness. Self-preservation has also meant an unwavering
commitment to a Stalinist command economy that, from its inception, was identified with
Kim Il Sung's philosophy of self-reliance. Since 1947, he has maintained that a
self-supporting economy was the foundation of true national freedom and political
independence. He has continued to favor an inward- looking development strategy based on
the primacy of a heavy industrial base. Suspicious of even Soviet intentions, he opposed
Moscow's attempt in the 1950s to induct North Korea into the now defunct Council for
Mutual Economic Assistance (CMEA), the Soviet-sponsored instrument for intra-communist
bloc trade and economic coordination. Although Pyongyang liked to appear self- sufficient
in its own domestic expertise and resources, in fact North Korea depended considerably on
Soviet technology and economic assistance. Through the 1980s, Soviet largess was critical
to North Korea; it supplied nearly 70% of North Korea's oil needs at friendship discount
prices and on barter. Many of North Korea's industrial facilities were built or
rehabilitated with Soviet assistance.2 
For decades, the two Kims held the notion that ideology was more important than pecuniary
incentives in motivating workers, and that North Korea had the abundance of resources and
high levels of science and technology to become an industrial power. A case in point was
their optimism in March 1974, when North Korean leaders declared that in the next several
years North Korea would catch up with and outpace the advanced countries of the world in
terms of per capita output of key industrial goods. 
By the mid-1970s, Pyongyang had concluded it was losing out to Seoul in the economic
race. Since the mid-1980s, it has begun to modify its rigid self-sufficiency policy,
emphasizing foreign trade and readiness to accept foreign investment and tourism, and, by
the late 1980s, even some economic cooperation with South Korea. Pyongyang is now faced
with the challenge of how to realign its foreign economic relations without losing its
tight grip on controls over the population. 
Along with political control and economic development, military preparedness remains
vital to North Korean survival. Since the end of the Korean War, Pyongyang has invested
heavily in a military buildup to counter has appealed to South Korean leaders for mutual
reconciliation, while covertly seeking to destabilize what it calls the military fascist
clique. But Pyongyang also has resorted to assassination, dispatching killers to Seoul in
1968 and 1974, both an attempt on President Park Chung Hee; to Rangoon, in 1983, to kill
visiting President Chun Doo Hwan; and terrorists to the Middle East, in 1987, to blow up
a South Korean airliner en route to Seoul. 
In dealing with Seoul and others, North Korea is widely seen to have behaved
unpredictably. Even as it prides itself on being unfailingly consistent and principled on
Korean nationalism or unification, Pyongyang has clearly made tactical changes in its
South Korea policy, reversing itself in a number of important instances including the
following: 
Pyongyang unilaterally suspended the historic dialogue with the South in 1973, saying it
was a waste of time, but in 1985 resumed the dialogue, concluding that circumstances now
favored engaging the South. 
In 1979, Pyongyang rejected a South Korean-U.S. proposal for a tripartite conference as a
scheme to promote a two-Koreas policy, but had a change of heart in January 1984. 
In September 1981, in bitter opposition to Seoul being chosen as host city for the 1988
Summer Olympics, North Korea reportedly voted for Nagoya, Japan, calling into question
its devotion to Korean nationalism, which Pyongyang claims should transcend its
ideological differences with South Korea; in 1986, Pyongyang turned around to propose
cohosting the Olympics with South Korea.4 
In 1991, despite its years of principled opposition to the idea of a separate United
Nations seat for North and South Korea, Pyongyang changed its mind and applied for UN
membership, vowing at the same time it would continue to struggle for a one-Korea policy.

Pyongyang announced on March 12,1993 that it would withdraw from the nuclear
nonproliferation treaty (NPT); on June 11, it reversed itself stating that North Korea
would temporarily suspend its withdrawal from the NPT--but without agreeing to special
inspections demanded by the International Atomic Energy Agency (IAEA).5 
North Korea's approach to Seoul has undergone further, more subtle shift since the early
1980s, when Pyongyang decided to place more emphasis on anti-Americanism in its
propaganda activities aimed at South Koreans. The shift helped Pyongyang capitalize on
rising anti-American sentiments among South Korean student activists in the wake of a
bloody suppression of an urban uprising in Kwangju in May 1980. In 1983, Pyongyang
stepped up an anti-U.S. consciousnes-raising propaganda, asserting that the United States
was neither protector nor partner of the South Korean people. 
In another effort to disrupt South Korea's relations with the United States, Pyongyang
launched an anti-nuclear war movement in the early 1980s. The movement had two aims:
first, to evoke fear of a nuclear holocaust that North Korea claimed was imminent due to
the U.S. nuclear presence in the South and, second, to link the initiative to the
Pyongyang-directed pan-national anti-nuclear movement for the denuclearization of the
Korean peninsula. Pyongyang hoped the anti-nuclear card would force withdrawal of U.S.
nuclear weapons and troops from the South--and eventually undermine South Korean
stability and pave the way for reunification with the South. 6 
FRATERNAL SUPPORT
The third determinant of North Korean policy was based on Pyongyang's presumption that it
would receive economic and other support from fellow communist countries. Since 1953, Kim
Il Sung has had to cope with the presence of U.S. forces in the South--the bitter and
costly legacy of his failed unification venture in invading the South in June 1950.
Rhetoric of military self-reliance notwithstanding, Kim's strategy for self-preservation
presumed that Soviets and Chinese would render strong support for his eastern outpost of
socialism. 
From its inception, North Korea has defined its friends and foes in terms of where they
stand on anti-Americanism. Thus, North Korea was allied with Mao Tse-tung's China, which
Kim Il Sung judged was more anti-American than the revisionist Soviet leadership was.
Kim's 1962 decision to build a foundation for military self-reliance apparently was a
function of his growing skepticism about the reliability of Moscow where his own national
security was concerned. Nevertheless, military support from Moscow and Beijing was the
centerpiece of Pyongyang's security environment, the crucial counterpoint to perceived
U.S. threat. 
In the years after the Soviet collapse, Pyongyang has sought periodically to improve its
sometimes cool relationship with China, now its only major source for economic and
military support. But with China seeking expanded U.S. trade and investment and having
normalized relations with Seoul in 1992, the North's security environment has grown
increasingly precarious. Pyongyang's paranoia about its national security can be gauged
in part by its shrill reactions to the annual U.S.-South Korean team spirit joint
military exercise, but more importantly by its determined efforts to develop a nuclear
weapons capability and to refuse compliance with the IAEA's demand for special
inspections. 
KEY VARIABLES AFFECTING POLICY DETERMINANTS
Few would question Pyongyang's survivability during the next two years. For the longer
term, however, North Korea's future seems to hinge on four main variables: leadership
succession, military loyalty, economic recovery, and relations with South Korea and the
major powers. 
KIM JONG Il, THE SUCCESSOR
In recent years, observers have suggested that Kim Jong Il, the chosen successor, would
not survive long after his father's death. The younger Kim, referred to as the Dear
Leader in North Korean media, is said to be impulsive, unstable, and of weak character,
and to lack his father's leadership charisma and military background. Without them,
observers say, he could be either eased out in an intraparty power play or toppled in a
military coup. So far the 51- year old Kim junior seems to be holding up without any
overt sign of opposition. He is also being built up in the North Korean media as the most
outstanding strategist in our age and ever-victorious, iron-willed, brilliant commander;
these are honorifics previously reserved for the senior Kim. 
As heir to leadership, the junior Kim is required in time formally to assume the two
posts still held by his father-mentor: president of the state and general secretary of
the Central Committee of the ruling KVVP. That will be the easiest part of de jure
succession. A more daunting part will be whether he can inherit the senior Kim's charisma
as a family right, or inspire the same unquestioning faith that Kim Il Sung has inspired
from his followers. 
In the 1990s and beyond, the true test of succession seems to be whether and how Kim Jong
Il can help handle the problems he inherited--the decades-long, unfulfilled promises to
ease the shortages of food, clothing, and shelter. Kim Jong Il's chances of firming up
his power and carrying out some reform, observers say, will be greater while his father
remains a formidable presence. His strength rests heavily on his control of party
ideology and organization. 
MILITARY LOYALTY
From his early days as an anti-Japanese guerrilla leader in the 1930s, Kim Il Sung has
had an abiding faith in the power of the military for political survival. The Korean
People's Army (KPA)--the collective term for the North Korean armed forces-is a
contemporary expression of his faith in the military and in his capacity to endure
through adversity. The formidable war machine he built and presided over as supreme
commander has been passed on to Kim Jong Il, named supreme commander in December 1991.
The looming question is whether Kim Jong Il can inspire the same undivided institutional,
but more importantly personal, loyalty from the KPA as his father has. The question is
critical, since the KPA is the only organized group that can make or break Kim Jong Il's
succession. The KPA is more than a professional institution. It not only is the guarantor
of power, political instrument, and security blanket for the two Kims but plays economic
and foreign policy roles as well. It can be likened to a state within the state and, more
than any other institution (including possibly the party itself), is crucial to
Pyongyang's self-preservation. It may not be an exaggeration to say that, in the North
Korean perception, if the KPA cracks, so will the foundations of the DPRK. 
Probably this explains why the two Rims have taken pains to assure for themselves an
iron-fisted grip on the military.7 In the elder Kim's case, he had built an army before
he did the party; and understandably, he wants to have Kim junior gain the same firm
control over the KPA. With his blessing, the younger Kim took familiarization trips to
military bases on his own as early as 1964. From 1973 onward, when he started to involve
himself actively in the party's organizational and propaganda affairs, Kim Jong Il also
sought to place his own youthful trusties in the KPA hierarchies. Between 1975 and 1979,
he asserted himself forcefully in trying to imbue the KPA with the philosophy of
self-reliance--apparently antagonizing some of the KPA veterans who regarded his
intrusiveness as incompatible with military discipline and professionalism.8 By 1980
(when the junior Kim was formally presented to the world as second in command) and
certainly by April 1985, the KPA had supported Kim Jong Il, prompting one analyst to
suggest that it had become Kim Jong Il's private army; the following year, Kim Il Sung
let it be known that the leadership succession issue was brilliantly solved. In 1990, Kim
junior assumed the senior vice chairmanship of the National Defense Committee, became the
KPA's commander-in-chief in December 1991, a marshal of the army in April 1992, and the
chairman of the National Defense Committee in April 1993. 
Grand Marshal Kim Il Sung and Marshal Kim Jong Il are joined by defense minister Marshal
O Jin U to make up the three-member presidium of the party political bureau. This means
the fusion of power at the top, potentially blurring functional boundaries between the
KPA and the party and possibly skewing policy decisions toward military options.9 
Under Kim Jong Il, the KPA in the short run seems likely to have a preferential claim to
state resources. Some analysts say this now amounts to one-third of annual budget
outlays, or as much as a quarter of Pyongyang's gross national product. In the yearly
battles over resource allocation, the military has always prevailed, presumably because
of its primary mission. But that does not tell the whole story. The KPA's economic role
is considerable. It is called on to provide the bulk of the labor force for major state
construction projects. More importantly, arms sales controlled by the KPA have accounted
for an estimated $500 million a year in recent years, or nearly a third of Pyongyang's
annual export earnings. Lately, Pyongyang's oil crunch seems to be forcing the KPA's
attention to the Middle East, reportedly to seek oil in exchange for North Korean Scud
missiles and other military supplies. 
No less significant is the KPA's role as an instrument of foreign policy toward the Third
World. In the 1980s, Pyongyang is known to have dispatched military advisors to 33
nonaligned countries, had a military training program for 18 countries and exported or
granted weapons and other kinds of military aid to 35 countries. 10 This military
diplomacy is linked to Pyongyang's overseas propaganda, which pursues sympathy and
support from the Third World. 
As resources available for foreign arms, crude oil, and food imports continue to dwindle,
the KPA's attitudes will become pivotal to the future of the DPRK. The KPA and Kim Jong
Il will have to decide whether to channel more resources to the military at the expense
of the economy; whether to press for major inter-Korean arms cuts and balanced force
reductions; and whether to abandon the nuclear weapons program in exchange for
concessions from Washington and Seoul.11 
ECONOMIC PERFORMANCE
Kim Jong Il will have to depend on performance rather than charisma to succeed in leading
North Korea in the future, says a 1991 report by a study group of prominent American
scholars and specialists on Asian affairs. 12 The performance alludes to an economy whose
lackluster record has had Pyongyang worried since the 1970s, long before the stagnant
economy was severely shaken by the unexpected collapse of the Soviet bloc. 
In 1984, Pyongyang began approaching the West, albeit unsuccessfully, for joint ventures,
expanded trade, and advanced industrial technology. Cheap labor and some abundant
underground mineral ores aside, the North has had little to offer except promises of
riches for would-be investors. Nearly at the bottom in international credit ratings, it
has a decidedly unappealing investment climate, given its leadership unpredictability and
the secrecy of its economic data. 
Unable to sell its capital import and trade policy on its merits, Pyongyang appears to
believe it has no option but to turn grimly inward and practice rigorous austerity. A
sense of urgency was evident in Pyongyang's behind-the-scenes contacts with South Korean
trading firms beginning in 1987--until then politically unthinkable in light of the
North's public disparaging of South Korea's economic achievements. To make matters worse,
the crumbling of the Soviet bloc proved devastating for the North's economy, which had
depended on the former Soviet Union for half of its trade turnover. Ensuing economic
dislocations led to negative economic growth in the 1990-92 period, estimates ranging
from -2% in 1990 to -10% in 1992.1a In December 1991, the North announced it would set up
a special economic zone. The following year, it sent an unprecedented government economic
delegation to Seoul for first-hand observation of South Korean factories. Since then, the
government has announced more steps to make the country's economic climate more
attractive to foreign investors. 
Future prospects for North Korea's economic development are not encouraging, as Pyongyang
seems opposed to internal reforms. For a command regime used to doing things its own way,
economic reform could be very painful and possibly frightening, particularly given
Pyongyang's stormy past relations with the world's major economic powers. Since North
Korea's centrally planned, autarkic command economy has been an integral part of Kim Il
Sung's vaunted infallible leadership, structural reform appears unlikely for now.
Incrementally adjusting the system could unravel the DPRK, as happened to the socialist
regimes of eastern Europe and the former Soviet Union. For the Kim Il Sung regime, as one
analyst put it, the lessons of history are unequivocal: to 'reform' is to die. 14 
Soon the two Kims and their economic planners are bound to confront sobering questions:
whether a cautious, controlled economic opening would help answer their prayer, or
whether the opening should be substantial, analogous to the Chinese model, in order to
bring in sufficient amounts of technology, capital, essential imports of machinery and
oil and other needed goods, and to generate the exports to pay for much of those imports.
15 These questions clearly have implications for Pyongyang's political, military, and
nuclear policies. Major shortcomings seen in Pyongyang's economic future will likely
remain unresolved unless the two Kims come to realize that their future lies in trade and
at least some interdependence with neighbors and the rest of the world. 
SOUTH KOREA AND THE MAJOR POWERS
Reconciliation with Seoul remains a central question for Pyongyang, but will be
difficult, given the North's long history of ideological disdain for its archrival. Kim
Il Sung's own dogma leaves no room for a separatist South Korea, and demands that in any
case the South must be liberated first from U.S. occupation before it can join the North
in a unified confederation. Not surprisingly, North Korea has tried to bend South Korea's
agenda for inter-Korean reconciliation to suit its own. 16 Substantively, it can not
bring itself to accommodate the much larger South Korea, condemning its agenda for
peaceful coexistence as one tantamount to criminal treason, anti-unification, and
unforgivable subservience to foreign interests. 
In recent years, however, the North Korean regime has come a long way in recognizing that
there is an established, robust regime in Seoul it has to reckon with. This is not
surprising, given the regime's awareness of South Korea's relative power and its
heightened concern about being absorbed by South Korea. Some believe that the more
Pyongyang feels threatened, the greater the likelihood that it will appeal to Seoul for a
negotiated unity. Pyongyang may even begin to court its former enemy South Korea for its
own self-preservation. 17 If so, Pyongyang will obviously have to rethink its policy
aimed at independence and democratization of South Korea. 18 
It is possible that Pyongyang may try to have it both ways: substantive linkage with
South Korea while maintaining its assertion that South Korea must change its ways first
if the two Koreas are to reconcile their differences. In any case, even as it publicly
derides South Korea's bankrupt economy, North Korea now seems to have no qualm about
asking for its investments and economic assistance. This was evident in its
behind-the-scenes contacts in 1992-93 with South Korean business firms represented in
Beijing, soliciting their participation in Pyongyang's new 7-Year plan slated to begin in
1994. North Korea might get some needed help for three reasons: 
South Korean firms are eager to bring an end to their own sluggish business by cashing in
on the North's cheap labor; 
A perception in Seoul that South Korea should invest in the North to counter a possible
Japanese economic dominance developing in the North; 19 
And growing perceptions in Seoul and elsewhere that aiding the North now can be a less
costly alternative to its collapse that, analysts fear, would impact severely on South
Korea's own economic and political stability. 
Where the two Koreas are concerned, the United States, Japan, China, and Russia all have
one interest in common: a stable and nuclear-free Korean peninsula. Pyongyang's relations
with each of these countries will be crucial to its overall future direction. 
The future of Pyongyang's relationship with Washington depends on the outcome of several
unresolved issues. The most pressing now concerns Pyongyang's nuclear weapons program,
the existence of which it denies while refusing to establish the veracity of its own
claim by allowing IAEA inspections. Pyongyang argues that the nuclear issue can be
resolved only through direct meetings between the DPRK and the United States. The U.S.
position is that Pyongyang must comply with the IAEA special inspection because of the
obligations it assumed under the nuclear nonproliferation treaty (NPT). 
A second issue involves the U.S. military presence in the South. The communist North
wants U.S. troops out of the South, its argument being that the cold war is over and that
the U.S. military presence is the primary source of threat to the North. However, given
the triangular nature of ties among Washington, Seoul, and Pyongyang, the North's policy
toward Washington is bound to affect its policy toward Seoul. This means that unless
Pyongyang's resolve to coexist with Seoul becomes credible, its demand for U.S.
withdrawal could be misconstrued in Seoul as a continuing attempt to undermine South
Korea. In the short run, it can be argued that the U.S. presence can be in Pyongyang's
own interest as the presence could become a potentially stabilizing force as the two
Koreas strive for mutual reconciliation. 
Russia incurred the wrath of Pyongyang in September 1990 by normalizing its relationship
with South Korea. Relations have remained tense since then, despite North Korean-Russian
bilateral talks in January 1993 aimed at improving the relationship and despite their
interim accord that the 1961 mutual defense treaty would remain in place, until 1995, at
least.20 According to Moscow, two major problems are yet to be resolved: Pyongyang's
failure to pay off a part of its debt to Moscow (totalling 3.3 billion of hard currency
ruble, at the 1990 exchange rate): and North Korea's insistence that Russia should stay
out of Pyongyang's dispute with the IAEA over the safeguards inspection issue. 21 
Pyongyang has remained silent about China's establishment of diplomatic relations with
South Korea in 1992. With its increasingly weakened economic and security ties to Russia,
North Korea can ill afford to antagonize China, Pyongyang's last and perhaps only source
of outside support. Despite recent unconfirmed reports of border clashes, an intense
effort has been under way to cultivate China's good will and economic and military
support. So far, China has sought to accommodate Kim Il Sung as far as possible within
the framework of its broader domestic and foreign policy agenda. In late 1991, China
reportedly promised an increase in military aid. 22 In addition, to help the North
weather its crisis of oil and foreign exchange shortages, Beijing reconsidered its
decision to require that goods be paid for in hard currency. The decision was to go into
effect in 1993. China also retains considerable leverage over Pyongyang's foreign affairs
and has played a key role in bringing Washington and Pyongyang together for direct talks
over the nuclear inspection and NPT issues. 
North Korea stands to receive several billion dollars from Japan as part of Tokyo's
pre-World War II compensations (For injuries to Korea during Japan's occupation from 1910
to 1945). That would have been the case if its talks for diplomatic normalization, begun
in 1991, had been completed. The talks were stymied by discords, notably the nuclear
safeguards inspection issue. In time, there seems to be no question about Japan becoming
perhaps the most important contributor to the development or resurrection of Pyongyang's
economy. That prospect remains a concern of South Korean economic planners and
policymakers. 23 
POSSIBLE OUTCOMES
Four outcome scenarios seem likely in the 1990s: status quo, reform, hardline, and
collapse. Although these scenarios are analytically discrete, they could overlap to a
degree. 
THE STATUS QUO
Suppose that North Korea believes effective internal control is crucial both to ensuring
self-preservation and to facilitating reform. If so, the Kim Jong Il regime seems certain
to continue rigorous political control to enforce discipline and obedience--and try to
keep the North Korean society insulated from foreign ideas and cultures. Economically,
however, the regime would continue to search for low-risk ways to increase productivity
and improve the standard of living. That will require a reshuffling of priorities, with
more resources being allocated to economic development and away from military
expenditures. 
Yet, as long as Kim Jong Il feels insecure in the near term, his dependence on the
military will continue undiminished. The KPA is bound to retain dominant influence over
the North's domestic, inter-Korean, and foreign policy issue areas. And Pyongyang is
likely to continue to view the military as its only leverage with Washington and Seoul.
The dilemma for Kim Jong Il will be how to balance these two conflicting priorities. 
The status quo would have other consequences. Under the cloud of international suspicions
about its nuclear intentions, Pyongyang will likely remain isolated and feel its security
threatened, and may have trouble appearing credible in making any overtures to Seoul,
Washington, and Tokyo. 24 Nor will the status quo solve Pyongyang's endemic shortages of
daily necessities. 
REFORM
This scenario assumes a moderation in Pyongyang's current pattern of economic,
inter-Korean, and foreign policy approaches, since Pyongyang's trustworthiness as a
partner for foreign investment and trade will be pivotal to reform. Probably the most
plausible scenario of this type is a gradual, modest reform. In the near term, a major
structural reform would appear ruled out in order to protect the myth of Kim Il Sung's
brilliant leadership. There are two qualifications. A substantive reform (along with
wrenching pains of uncertain transition) will come as a last resort if the political
elite led by Kim Il Sung and Kim Jong Il become convinced that their collective survival
depends on major changes. Another scenario for a comprehensive change postulates a
possible coup by a counter elite made up of reformist generals and technocrats. 
Near-term reform can be essentially an extension of the current effort to increase output
of consumer goods, promote tourism, provide some monetary incentives to workers and
farmers, and attract South Korean and Western investment and technology. Although these
steps fall short of what outsiders might call real reforms, their success is crucial if
more comprehensive reform is to occur. In any case, the future of the regime's reforms,
real or otherwise, could be gauged by the following, selective indicators: 
A tangible shift in resource allocation in favor of nonmilitary and light industrial
sectors; 
Economic transparency through release of comprehensive, verifiable data; 
Significantly increased investment in science and technology, coupled with willingness to
dispatch North Korean students, scientists, and technicians to advanced countries most
actively interested in North Korea's economic productivity; 
Relaxation of restrictions on in-country business-related travels by foreign
businesspersons and technicians including South Koreans; 
A substantial boost in manufacturing of labor-intensive, higher-grade consumer goods for
exports to South Korea and Southeast Asian countries to earn hard currency; and 
Rescheduling of foreign debt payments. 
Reform can be measured also by Pyongyang's good faith involvement in inter-Korean
confidence building in both the political and military sectors. Heading the list will be
new efforts to resolve the impasse over inspections of North Korea's nuclear facilities.
Other steps include initiation of a regular, controlled inter-Korean family reunions;
inter-Korean mail exchanges; a joint development of tourist facilities at Mount Kumgang
just north of the DMZ on the east coast, or at Mount Paektu on the North Korean-Chinese
border; and a reconnection of severed railroad lines. Moderation could be also largely
symbolic such as the possible disbanding of the Pyongyang-sponsored anti-South Korean
political underground--the Korean National and Democratic Front. 
A moderate scenario would also have implications for North Korea's foreign policy. In
dealing with the United States, North Korea could drop its fixation with anti-imperialism
in favor of a more pragmatic and flexible approach. The North might initiate a formal
proposal to exchange semi-diplomatic liaison offices, embark on a good faith attempt to
return the remains of American MIAs, and/or be willing to participate in a possible
Northeast Asian regional security dialogue. With Japan, Pyongyang could press for an
early normalization of relations with Japan, even before the resolution of old pending
issues. Of course, change in relations with both Washington and Tokyo will be contingent
on increased efforts to resolve differences over North Korea's nuclear program. 
HARDLINE
A hardline scenario presumes that North Korea will forgo its fledgling reform program and
intensify its coercive domestic and foreign policy efforts. For decades, North Korea's
domestic and foreign policy has tended to feature more hardline than moderate approaches.
Its combative mind-set has not allowed much room for sustained soft approaches, which
Pyongyang views as compromising and defeatist. Inured to decades of confrontation with
South Korean and U.S. troops, Kim Il Sung and Kim Jong Il could find the notion of
compromise or peaceful coexistence with Washington and Seoul unsettling and repulsive.
But they might find it necessary to temper--but not abandon--their old hardline stance
that sometimes worked to their advantage in dealing with Washington and Seoul. 
Benchmarks for a hardline scenario would include: 
Open defiance of international pressure regarding inspection of Pyongyang's nuclear
weapons program; 
Intensified ideological exhortations and loyalty checks on the populace; 
A greater emphasis on an all-people or state ownership of the means of production rather
than collective ownership; 
A primacy of Marxist and nationalist ideological motivation over pecuniary incentives in
production drives; 
Preferential allocation of resources for heavy industry (for arms manufacturing) and the
KPA; 
Warlike threats against Seoul and Washington; 
An uncompromising attitude toward South Korea, including increased united popular front
tactics against the South Korean government; and 
Dispatching saboteurs, guerrillas, and terrorists to the South; increasing
anti-government, anti-U.S. propaganda and disinformation in South Korea; and provoking
incidents along the DMZ. 
COLLAPSE
North Korea's problems mount to bring about its disintegration--even without external
stimuli. Some analysts judge that it is not whether, but when North Korea will crumble,
if Pyongyang's isolation deepens and its economy continues its slump--especially if
prosperity mounts among its Asian neighbors. 
Several collapse possibilities can be constructed. First, collapse could occur in the
event of a massive popular uprising precipitated bifworsening living conditions and
internal repression. Some point to unconffrmed reports of 150,000 to 200,000 prisoners of
conscience, in 12 North Korean concentration camps, as evidence of sufficiently
widespread dissent to cause a massive uprising. But other analysts discount such a
possibility, given Pyongyang's rigid internal control. 
A coup could be initiated bifmembers of the Kim Il Sung clan opposed to Kim Jong Il; or
there could be a coup bifthe military, with or without support from reformist technocrats
and party functionaries. An intra-family coup would be likely to succeed only with
backing bifthe KPA and internal security agencies. A KPA coup, initiated bifjunior- to
mid-level officers, could rally around Kim P,yong Il, half-brother to Kim Jong Il.
Observers say that these officers will be concerned not so much about overhauling the
North Korean system as about improving its economic performance. 
A collapse in the next several years could result if the North's economic performance
continues to slide, particularly if food and energy shortages worsen. If Pyongyang's
ambiguity on its nuclear program continues, resulting economic sanctions could hasten
this crisis. 
U.S. POLICY APPROACHES
Current U.S. policy is designed to firmly deter North Korea's military adventurism, while
exploring contacts with Pyongyang to reach a negotiated settlement of the impasse over
its refusal to allow nuclear inspections. Some U.S. officials believe that current U.S.
policy toward the North ought to facilitate an end to Pyongyang's isolation and help
promote a stable unification acceptable to both sides of the DMZ. But there remains
substantial U.S. and South Korean suspicion about North Korea's motives in the current
situation. 
To underscore its concern for peace and stability on the Korean Peninsula, the United
States maintains 37,000 troops in the South, an unresolved legacy of the Korean War.
Although the United States has never formally recognized the DPRK, many analysts argue
that an isolated and brooding North Korea may increase the risks of instability for the
Korean Peninsula. It is not in U.S. interests to promote the rapid collapse of North
Korea, according to a finding in a recent Washington roundtable, as the shock of a
precipitous disintegration could severely affect South Korea's fragile democracy.26
Differences exist over how to draw Pyongyang out of isolation, but that U.S. policy
approaches can take the form of engagement, pressure, and outwaiting. 
ENGAGEMENT
A policy of engagement would presumably help to sound out Pyongyang's intentions,
encourage its transparency and openness, and promote understanding for mutual
confidence-building.26 This would be difficult, given Pyongyang's ingrained, exclusivist
attitude toward foreigners and Americans, residual antipathy toward North Korea's
invasion of the South and subsequent military adventurism. 
U.S. diplomats since 1988 have maintained low-level contacts with North Korean
counterparts in Beijing to discuss possibilities for improving U.S.-DPRK relations.
Through these contacts, Washington has stressed such policy interests as progress in a
North-South Korean dialogue, including the need for Pyongyang's compliance with nuclear
inspections; an end to acts of terrorism; cooperation in returning remains of American
soldiers missing in action during the Korean War; respect for human rights; and a
cessation of incendiary and misleading rhetoric against the United States. 
In January 1992, Washington had its first high-level meeting with North Korea to urge
Pyongyang to allow its suspected nuclear-related facilities at Yongbyon to be inspected
by the IAEA. The same concern was again the focus of high-level talks in June 1993.27 At
the end of four rounds of talks on June 11, North Korea said that it would temporarily
suspend its decision to withdraw from the NPT,28 but it still refused to agree to
international inspections of its nuclear-related facilities. 29 For its part, the United
States side gave assurances against the threat and use of force, including nuclear
weapons; and pledged to respect Pyongyang's sovereignty as well as its internal affairs.

In time, engagement might improve U.S.-North Korean relations. One way would be by
promoting more nongovernmental educational, cultural, sports, and business contacts.
Other steps could include: easing the U.S. trade embargo against the North;90 conditional
suspension of the Team Spirit exercise; upgrading the existing inter-governmental channel
of dialogue; and resumption of the gradual U.S. troop withdrawal from the South. While
pursuing these steps on the basis of reciprocity, the United States would presumably
remain committed to South Korea's security and, equally important, receive concrete
assurances from Pyongyang to renounce its policy of undermining South Korea. 
PRESSURE
A second U.S. policy option would be to increase pressure on Pyongyang. North Korea is
steeped in a garrison-state mentality that it is surrounded by unfriendly powers. This
mind-set seems to have worsened since the end of the Soviet empire in 1991, as evidenced
in Pyongyang's growing sensitivity to what it regards as intensified U.S. attempts to
topple the Kim Il Sung regime. And, in fact, many analysts suggest that the North would
be highly vulnerable to foreign pressure, particularly economic. 31 
In these circumstances, the United States could choose to underscore, with various forms
of pressure, its own concerns about Pyongyang's policies and actions. Such pressure,
which would be applied as appropriate to different circumstances, could include the
suspension of dialogue with Pyongyang; strong support for international economic
sanctions; resumption of the Team Spirit exercise; stepped up aerial surveillance on
North Korea's forward military deployments along the Korean DMZ; denial of visas to North
Koreans wishing to visit the United States; strict enforcement of the Trading with the
Enemy Act; a tougher stance against Pyongyang's missiles sales; demand for improved human
rights situations in the North; and a collective regional security stand against
Pyongyang. Sale of advanced weapons to South Korea could be another form of sending a
message to Pyongyang. 
Advocates of greater pressure believe it may deter North Korean adventurism and give the
rigid Pyongyang regime tangible negative incentives to be more cooperative with the
outside world. Opponents argue that it could not only stiffen Pyongyang's already
truculent behavior, but could lead Pyongyang to renew its efforts to destabilize South
Korea through terrorism, subversion, and infiltration. In this view, a beleaguered North
Korea would not be receptive to economic reform and political openness. 
OUTWAITING
A third U.S. policy approach, outwaiting, is designed to deal with Pyongyang's penchant
for mixing soft and hardline approaches--and its calculated ambiguity in policy toward
Washington and Seoul. It would be an eclectic counterpoint to Pyongyang's opportunistic
stance designed to catch Washington and Seoul off guard, extract concessions from them,
and outwait U.S. troop withdrawal from the South. 
Outwaiting employs aspects of both engagement and pressure. Neither embracive nor
hostile, it would refrain from actions that Pyongyang could perceive as provocative or
threatening, while avoiding actions that would give support or legitimacy to the Kim Il
Sung/Kim Jong Il regime. 
Crucial to outwaiting are an informed awareness of North Korea's past tactics in dealing
with Seoul and, just as important, a U.S. policy continuity. In addition, the United
States will need to consult and coordinate with Seoul and Tokyo on their respective
policies toward Pyongyang so as not to allow the North to play one party off another. One
potential drawback to the outwaiting is that without concerted international pressure,
North Korea could well end up producing a nuclear weapon. In response, some argue that,
left alone to chart its own self-reliant transition, North Korea may find that its
self-preservation could be better served by collaboration than by what might be called
nuclear isolation. 
--------------------------------------------------------------------------------
1 For comprehensive background information on North Korea, consult the Selected
Bibliography at the end of this report. 
2 In a retrospective commentary on Soviet-North Korean economic relations, Soviet
economist N. Bahanova reports that Soviet aid was responsible for construction of more
than 70 facilities producing over one-fourth of the North Korean gross industrial output
but that North Korea lost out to South Korea in economic competition. He blames both
Moscow and Pyongyang for North Korea's problems partly on the administrative-edict system
of economic management...developed on Korean soil at Moscow's bidding, on Soviet
lines...Its innate defects still bind [Pyongyang's] productive forces hand and foot.
Moscow Pravda, August 6, 1990, in FBIS Daily Report/Soviet Union, August 10, 1990, p.10.

4 Hahm Pyong Choon, National Division and the Olympics, Choson Ilbo [Seoul], October
25,1981; and Kulloja [Pyongyang], July 1986, pp.74-77. 
5 For what the temporary suspension means, see Engagement below. The March 12
announcement was foreshadowed by Pyongyang's argument at a February 1990 meeting of the
Vienna-based International Atomic Energy Agency (IAEA), hinting at a possible North
Korean withdrawal from the NPT rather than accepting safeguards inspection. Andrew Mack,
North Korea: The Nuclear Card, Far Eastern Economic Review, May 31, 1990, p.24; and Lee
Chang Choon, The Half-Century of South Korean Diplomacy Revisited. Seoul: Nanam, 1993, p.
179. [in Korean]. 
6 It is unclear whether the anti-nuclear card included a North Korea's intention to make
its own bomb and, if it did, when the North began its program in earnest. An unconfirmed
report suggests that Kim Il Sung's nuclear ambitions can be traced back to the 1950s. A
Japanese specialist maintains, without offering evidence, that in 1959, Kim Il Sung wrote
to Mao Tse-tung proposing a joint nuclear development; Mao is said to have declined. Kim
tried again in 1964, when China succeeded in its nuclear development program--this time
Kim asked if China could share its data on nuclear bomb development and uranium samples
with North Korea. China turned him down, with a reminder that North Korea would be
covered under a Chinese nuclear umbrella, according to Katsuichi Tsukamoto, Kim Jong Il's
Recklessness, Shokun [Tokyo], May 1993, p.l88. 
7 Such control includes freedom from any Soviet or Chinese meddling. A Japanese
specialist maintains (citing an unidentified, Tokyo-based East European source in
September 1984) that the Soviet Union proposed (in the spring of 1984) a 5-point package
of military cooperation to Pyongyang. The five points were: (1) a training in modern
warfare for North Korean officers in the Soviet Union; (2) stationing in the North of a
Soviet military advisory group; (3) the standardization of Soviet-North Korean 'tactics'
and 'weapons'; (4) Soviet naval access to Wonsan; (5) and $200 million worth of Soviet
economic aid, conditioned on Pyongyang's acceptance of the above. North Korea is reported
to have accepted (1), rejected (2), said depends on future developments to (3) and
refused Wonsan (offering instead Najin). See Akira Kuni, n,Change,in North Korea:
Direction in Post-1984 Developments, Kaigai Jijo [Tokyo], No.6, 1989, pp.29-30. [In
Japanese] 
8 For an in-depth analysis of Kim Jong Il's political entanglements relating to the KPA,
see Masayuki Suzuki, North Korea: Vying for Socialism and Tradition. Tokyo: Tokyo
University Press, 1992, pp.111-117. [In Japanese] 
9 Paul Ensor, Pyongyang's Military: A State of Perpetual Alert, Far Eastern Economic
Review, February 2,1984, p.26. 
10 Kim Kyong-joon, The Role of the Military in North Korea's Foreign Relations, Vantage
Point [Seoul], April 1933, pp.10-11, 
11 For an in-depth discussion on Pyongyang's nuclear program, see Congressional Research
Service. North Korea's Nuclear Weapons Program. By Larry A. Niksch. CRS Issue Brief
IB91141. Continually Updated. 
12 The Asia Society, The Current Situation on the Korean Peninsula. New York: The Asia
Society, 1991, p.7. 
13 According to reports compiled by East European and Russian diplomats in Pyongyang, the
North's GNP may have shrunk 30% in 1992. Tokyo Kyodo wire service, March 31, 1993. 
14 Nicholas Eberstadt, Can the Two Koreas be One? Foreign Affairs. Winter 1992/93, p.154.

15 The Asia Society, op.cit., p.6. 
16 Significantly, both Pyongyang and Seoul agree that relations between them are
intra-Korean rather than inter-state but they do not agree on what that definition means.
Whereas South Korea tends to view the definition as meaning a special relationship marked
by peaceful coexistence analogous to the two Germanys prior to unification, North Korea
tends to see the relationship more in a moralist than legalistic term. On Kim Il Sung's
expansive concept of internal affairs and its implications for Seoul, and possibly
Washington as well, see Rinn-Sup Shinn, North Korea: Squaring Reality with Orthodoxy,
pages 114-115 in Donald N. Clark (ed.), Korea Briefing, 1991. Boulder: Westview Press
(Published in Cooperation with The Asia Society), 1991, pp.114-115. 
17 A new policy twist in Pyongyang's approach to Seoul is its appeal that North and South
Korea take a joint nationalist stand against Washington-- appeal that has become apparent
since mid-1990. For an elaboration, see Kang Sok Ju, North and South Must Cooperate with
One another in the International Arena to Defend the Common Interests of the Nation,
Kulloja, December 1990, pp.81-85. 
18 Independence (chajuhwa) and democratization (minjuhwa) are Pyongyang's code-words for
national liberation and pro-North Korean political restructuring, respectively. Depending
on the context, minJuhwa can also mean communization. 
19 FBIS Daily Report/East Asia, February 10, 1993, p.21. 
20 According to a senior Russian official visiting Seoul in May 1993, Moscow seems
determined to regain its former influence over North Korea by supplying crude oil and
weapons to Pyongyang. The official's public comment could be seen also an attempt to
nudge South Korea toward greater economic contributions to Russia. See FBIS Daily
Report/East Asia, May 28, 1993, p.19. 
21 Moscow ITAR-TASS, February 5, 1993, as carried in FBIS Daily Report/SOV, February 8,
1993, p.11. 
22 As noted by Kongdan Oh, North Korea in the 1990s: Implications for Future of the
U.S.-South Korea Security Alliance. A RAND Note. Santa Monica: RAND, 1992, p.20. This
source, citing South Korean reports, refers to military aid in four areas: an increase in
outright aid from $300 to $600 million; an increase in military sales from $0.6 to $1
billion; training of 5,000 North Korean military specialists in China; and a promise to
sell Beijing's most modern missiles to Pyongyang. 
23 National Unification Board Urges More DPRK Trade To Counter Japan, Seoul YONHAP in
English, February 10, 1993, as carried in FBIS Daily Report/East Asia, February 10, 1993,
p.21. 
24 A senior Japanese government official is quoted as saying that Pyongyang's decision to
stay in the NPT without allowing international acceptance would be totally useless. Asahi
Shimbun, June 13, 1993. In Seoul, President Kim Young Sam said, June 12, 1993, that he
would not accept Pyongyang's recent proposal for a summit conference unless the nuclear
inspection issue is resolved. The Korea Herald, June 13,1993, p.2. In the last several
years, given Seoul's eagerness to cash in on a summit with Kim Il Sung, Pyongyang dangled
a summit card before South Korean eyes. On this apparently divisive issue, some analysts
claim that Seoul's decision to sign the December 1991 agreement on reconciliation,
nonaggression, and exchange and cooperation with Pyongyang--even before the resolution of
the nuclear issue-- was prompted in part by the wishful thinking of the Blue House
(Seoul's equivalent of the White House) that the signing would lead to a summit. See
Divided Perceptions Over Policy Toward North Korea, Chung'ang Ilbo, October 29, 1990. For
a view that President-elect Kim Young Sam should not be tempted by a possible Pyongyang
call for a summit in 1993, The Korea Herald [Seoul], December 19, 1992. 
25 See The Summit Council for World Peace. American Foreign Policy and the Future of the
Two Koreas: Proceedings of a Summit Council Roundtable. December 17,1992, Washington, D.
C. pp. 16-17; also American Foreign Policy, the Future of the Two Koreas, and World
Peace, II. Proceedings of a Summit Council Roundtable, March 29, 1993, pp.18-20. For an
argument that Pyongyang's unravelling would be staggeringly costly in economic,
political, and human terms, see John Merrill, Prospects for Korean Unification, a paper
given at a Conference on Unification in Korea, The American University, February 18,
1993. However, not all analysts are alarmed at the prospect of a collapse of regime in
the North, seeing analogies in eastern Europe and central Asia. 
26 For an opinion in favor of this approach, see Gus Constantine, Open Channels to
Pyongyang, Expert Tells U.S., The Washington Times, January 10, 1992, A7; also Doug
Bandow, Its Time to End the Korean Cold War, the Christian Science Monitor, October
14,1992, p.19. 
27 For discussion of the possible impact of U.S.-North Korean negotiations on Japan and
South Korea, see Divided Korea: Report of the Second Asia Society Study Mission. New
York: The Asia Society, 1993, p.33. 
28 Pyongyang. KCNA. June 12, 1993. The ambiguous wording, suspension, preserves
Pyongyang's option to bail out on the NPT whenever it chooses. So far at least,
Pyongyang's actions seemed to have staved off much-feared UN sanctions. The North may
regard the June 12 joint statement between the two sides as a major political victory;
that is because Washington's pledge to respect the DPRK's sovereignty and internal
affairs may undercut the U.S. insistence that Pyongyang discontinue its human rights
violations. For a South Korean perspective that North Korea registered a diplomatic
Victory having gained the upperhand over the United States in the June negotiations, see
North Korea's ,Suspension,: Back to Square One and Piles of Unresolved Tasks, Chung,ang
Ilbo [Seoul], June 14, 1993; also Seoul, YONHAP, June 11, 1993. 
29 R. Jeffrey Smith, N. Korea Won,t Quit Nuclear Ban Treaty, The Washington Post. June
12, 1993, A1; and Douglas Jehl, North Korea Says It Won,t Pull Out of Arms Pact Now, New
York Times, June 12, 1993. 
30 Currently, exporting goods to the North for humanitarian use is exempt from the
embargo; in 1991, an American firm obtained a permit to export $1.2 billion worth of
wheat to North Korea. The unused license was renewed for two more years in February 1993.
(In-person interview with a U.S. State Department official, May 18, 1993). 
31 For a summarized South Korean government study to that effect, see FBIS Daily
Report/East Asia, May 7, 1993, p.19. A Japanese source suggest that economic sanctions
would deny Pyongyang an estimated equivalent of $500 million to nearly $900 million per
year from pro-Pyongyang Korean resident groups in Japan; these sums would be equal to 33
to 60% of North Korea's annual government budget. For this estimate, see Katsumi Sato,
Kim Jong Il's 'Devil's Choice,, Bungei Shunju [Tokyo], May 1993, pp.205-207; Japan's
connection seems significant also because 80% of $200 million total foreign investment in
the North are accounted for by the pro-Pyongyang Korean groups in Japan. Chung'ang Ilbo,
May 28,1993. For a report that Japan is playing 
Bibliography
a double game on the Korean Peninsula, see Edward Neilan, Funds for North Korea, The
Korea Herald, May 8,1993, p.6.