NORTH Korea, off the US list of states that foment terrorism, may now try to edge its way into the world economy but analysts say a leadership that views change as a threat to its survival shows no hunger for reform. Some say Pyongyang may now see an opportunity to try to balance a growing, and probably unwelcome, dominance of its economy by China. One of the few states that can claim to have escaped the storm now tearing through world economies, North Korea has long tucked itself inside an ideological cocoon that treats self-reliance as its greatest virtue even if it has brought decades of destitution, and at times famine. The global downturn, however, could well mean that if Pyongyang, now mending fences with the outside world over its nuclear weapons ambitions, feels it is time to be less coy, it may find potential economic partners too wrapped up in their own problems to take much notice of the impoverished state. Last week Washington removed North Korea from its list of governments that sponsor terrorism, which had helped earn its place on President George W. Bush's “axis of evil”. This lifted one major deterrent to doing business with a country still under United Nations sanctions and where even the transfer of money abroad except in a suitcase can be a challenge. Significant development “This is really a significant development,” Paik Hak-soon, a North Korea analyst at the South's Sejong Institute, said of its dropping from the decades-old US list. “North Korea definitely wants to get international help. They've been trying to get aid for a long time ... but everything will move very slowly. It's an incremental process,” he added. Washington's change of heart comes as North Korea returns to dismantling a reactor that can produce material for nuclear weapons, an issue that has combined with Pyongyang's own suspicion of anything foreign to effectively seal it off from normal international commerce. That has helped push the centrally planned economy deeper into decline, with per capita income by one estimate just $400 a year, forcing it to seek food aid even in the best harvests. China and South Korea It is China and South Korea, on either side of its borders, that have become the North's chief trading partners. But Pyongyang has spurned grandiose investment plans from wealthy South Korea's President Lee Myung-bak, whom the North's state media routinely refers to as a traitor. So it is China, analysts say, which is taking the lion's share of the limited business there is in a country whose main lures are cheap labour and natural resources. So much so, Pyongyang may be hoping that a slight thaw in relations with the United States will help it balance Beijing's growing clout, some analysts said. “North Korea may be degenerating into a mere provider of natural resources to China as well as a market for Chinese commodities and eventually fall under complete control of the Chinese economy,” Korean Institute for National Unification analyst Choi Soo-young wrote in a recent paper. Choi estimated that Chinese direct investment there had jumped five-fold in two to three years to some $50 million by 2006, with the focus on minerals. “They don't like China having control of them so they also want to cut them out and trade directly with the Europeans,” said one Western businessman who recently travelled to the North. He noted that energy-hungry North Korea, which in the past year has received large fuel aid for cutting back its nuclear weapons programme, is trying to process more minerals at home. Change of focus “In the past few years, they mostly bought grains and the basic necessities for life. Now they are buying more industrial goods. This doesn't mean the economy itself has changed much, but what it does mean is that what the government chooses to focus on has changed,” the academic added, asking not to be named. “For a long time, they had the goal of obtaining nuclear weapons, and now they have them. So now they can concentrate on economic development a little more.” But with Kim Jong-il's authority depending heavily on his countrymen accepting that he rules over a paradise whose poverty is the price to pay for protecting them against relentless threat, many doubt he would dare relax his guard enough to allow open contact with the rest of the world, especially South Korea. Dongseo University professor Brian Myers, a specialist on North Korean political ideology, said Kim's priority was to maintain his legitimacy compared to the more successful South Korea, not economic development and certainly not allowing a flood of investors from Seoul. – Reuters __
