North Korea’s Economic Policy in 2010: Resolutely against the Insurmountable Tide of Market Expansion

By Park Hyeong Jung, Senior Research Fellow
Korea Institute of National Unification Online Series

The new year’s joint editorial for 2010 demonstrated the continuity of North Korea’s domestic and foreign policy since August 2009. As for the economic policy, North Korea will reinforce the measures against the market expansion which have been gradually strengthened since 2005 and culminated in the money exchange measures at the end of 2009. North Korea would confront with daunting challenges in 2010, caused by its conservative orientation, which faces against insurmountable wave of societal and economic changes in the society and the world.

Though it began in 2005, the conservative economic orientation became a component of North Korea’s new strategic posture since August 2009. After having finished offense against South Korea and the U.S. from October 2008 to July 2009, North Korea set out five policy objectives domestically and internationally: First, to be acknowledged as a nuclear weapon state; second, to negotiate Korean peninsula peace regime and to end hostile relations with the U.S.; third, to domestically construct ‘economically strong state’ through conservative policy and mobilization; fourth, to frame inter-Korean relations for exchange and cooperation while avoiding to discuss nuclear issues; and fifth, to endeavor strongly to attract foreign investment.

The content of new year’s joint editorial was dictated by these five strategic objectives. In the new year’s joint editorial, on the hidden diction of being a nuclear state, North Korea avoided hostile expressions against South Korea and the U.S. to induce and facilitate prospect for ‘friendly’ relations. As to South Korea, it took placatory expressions, such as ‘improvement of North-South Korea relations’ and ‘active promotion of inter-Korean reconciliation.’ As to the U.S., North Korea wanted to ‘finish hostile relations between the DPRK and the U.S.’and ‘to establish solid peace regime on the Korean peninsula through dialogue and negotiation.’

In truth, the joint editorial places its main emphasis not on deterring outside threat but on rearranging domestic conditions. Setting such emphasis signifies that after achieving allegedly a nuclear state in the early 2009 and thereby having favorably rebalanced power relations with the neighboring countries, the North Korean authorities have prioritized to rearrange relations between the regime and society on behalf of the former since the late 2009 and in 2010. In this, two points could be mentioned: First, North Korea would see this year as a year of relative stability in its foreign relations so they can focus more on domestic power balance between the regime and society. Second, they would like to manage the consequences of monetary reform started in November of 2009 which meant a draconian attack on the economic activities outside of the state control, and to pressure the restoration of state sector predominance in the economy.

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