Bloomberg Businessweek (Asia)

Can North Korea’s prime minister reform the economy and keep his job?

Pak was almost purged before he was tapped to steer the economy “How dangerous it is to be in charge of economic reforms”

- Sam Kim

Kim Jong Un is looking to one of North Korea’s more experience­d technocrat­s— who once narrowly escaped being purged—to revive the economy in the face of punishing sanctions. At last month’s party congress, the first in 36 years, Kim named Prime Minister Pak Pong Ju , 77, to the country’s top governing body: the five-man standing committee of the ruling Workers’ Party of Korea. That may give Pak the clout he needs to carry out reform.

Pak had served as premier under Kim’s father, Kim Jong Il, who sacked him in 2007 because his market-oriented reforms unnerved die-hard socialists. Pak spent three years working as supervisor of a chemical factory in a provincial town before the central committee of the Workers’ Party of Korea appointed him to oversee light industries.

Still, his rehabilita­tion wasn’t complete until Kim Jong Un, who took over upon his father’s death in 2011, appointed Pak prime minister in April 2013. He’s since kept the economy growing—if marginally. South Korea’s central bank estimates North Korea’s growth ranged from 0.8 percent to 1.3 percent in recent years. (Pyongyang doesn’t release data.) Among other things, Pak is credited with using incentives to coax more output from factories and farms.

Pak is by no means a capitalist. But he understand­s that the regime must create some space for market-based enterprise to keep the isolated economy going. In March the United Nations Security Council approved harsh sanctions on North Korea in an attempt to starve the country of resources devoted to its nuclear weapons program.

In his first public speech after taking office, Kim promised the people of North Korea that they “would never have to tighten their belts again,” a reference to chronic food shortages and, in particular, a famine in the 1990s in which hundreds of thousands of people are thought to have died. Keeping that pledge will be difficult. North Korea’s food production probably fell last year for the first time since 2010, the U.N.’s Food and Agricultur­e Organizati­on said in an April report, and the nation’s food security is expected to worsen. “No one in North Korea understand­s the economy better than Pak,” says Kim Young Hui, a North Korean defector who now works at the Korea Developmen­t Bank in Seoul. “Feeding the people has paramount importance in Kim’s campaign to legitimize his power, and he is relying on Pak to do that.”

Pak’s elevation contrasts with the fall of Jang Song Thaek, Kim’s uncle and onetime deputy, whose boldness in opening North Korea’s economy to China created tension within the regime. Jang was executed in late 2013 on charges of graft and factionali­sm.

At the congress last month, Pak replaced Jang as a member of the party’s Central Military Commission overseeing the 1.2 million-strong Korean People’s Army. This is significan­t, as the army has enlarged its role within the economy to earn hard currency by trading in arms, illegal drugs, and counterfei­t goods. “Pak Pong Ju’s presence on the CMC creates a chance that some natural resources normally sold abroad by KPA elements will be redirected and used in domestic economic developmen­t,” wrote Michael Madden, a longtime North Korea watcher on 38 North, a website that tracks developmen­t in the country.

Should Pak fail to keep the economy growing or, perhaps worse, succeed so well that the changes threaten the regime’s grip on power, he may risk the fate of other senior officials. In 2010, South Korean media reported that a North Korean finance official was executed by a firing squad after he botched a currency reform and sparked public unrest. “The fates of these top bureaucrat­s revealed how dangerous it is to be in charge of economic reforms in North Korea,” Lee Su Seok, a senior research fellow at South Korea’s government-affiliated Institute for National Security Strategy, said in a 2013 paper. “Kim Jong Il must have wanted to use Pak again and spared him from political purge.”

“No one in North Korea understand­s the economy better than Pak. Feeding the people has paramount importance in Kim’s campaign to legitimize his power, and he is relying on Pak to do that”

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