Remarks by Mr. Ri Jong-ho in the virtual event “Toward a Free and Unified Korea: Economic Challenges and Opportunities”
Ri Jong-ho: I believe that if we want to open the way for economic unification through economic cooperation with North Korea, we must first encourage North Korea to reform and open its doors. If the South and the North have different economic systems, they cannot achieve common values and goals.
Even though the Korean Peninsula is a land where the same people have lived together for thousands of years, extreme socialism and liberal democracy have been in direct conflict with each other for more than 75 years now. Among the two opposing systems, South Korea is a prosperous rich country and North Korea is the poorest country in the world. South Korea’s economic power is 50 times ahead of North Korea’s.
South Korea established itself as a well-off country by implementing liberal democracy and the market economy. On the other hand, North Korea is rich in natural resources and the people are hardworking, but it has fallen into a poor state.
It is not because the North Koreans are lazy or not smart, but because the greedy dictators of the Kim family are destroying the freedom of the people and maintaining a tyranny. North Korea is poor, but its dictator is a billionaire. The situation on the Korean Peninsula clearly shows that Korea can become a rich or poor country depending on its leader and which political and economic system they choose for the country. The Korean Peninsula is a test ground for the world that separates the touchstone of capitalism and socialism.
An inclusive economic system with freedom provides opportunities and incentives for everyone to participate in economic activities and uses their talents and abilities to get what they want. On the other hand, a planned economic system without freedom is a corrupt system in which people’s private property is taken away, labor is exploited, and wealth is concentrated on those in power.
I worked in the economic sector of the Workers’ Party’s Central Committee for more than 30 years and was a special advisor to the country’s economic development. So, I have comparative insight into the North Korean economy.
To understand North Korea properly, we need to know the nature of the Kim family and the dictatorship and why it hasn’t opened the country for 75 years. In North Korea, the means of production, land, and resources are all owned by the state, meaning it’s all owned by Kim Jong-un. It is said that Kim Jong-un is the nation and the party and represents the military and the people. He monopolizes everything in North Korea, decides everything, and all the wealth is focused on him, the absolute power. Therefore, even if the South requests cooperation from the North, it can only be executed after receiving Kim Jong-un’s policy and decision.
North Korea prohibits the most rudimentary human rights of freedom of economic activity and private property rights. It is a tyrannical system in which all freedoms, including freedom of movement and freedom of expression, have been destroyed. North Korea talks about “our people,” but internally, they define South Korea as the most dangerous enemy. Therefore, in North Korea, many high-ranking officials who were cooperating with South Korea were either executed as spies or taken to political prison camps. My friend who came to South Korea as a special envoy in December 2010, was also brutally executed as a spy.
It is dangerous to have economic cooperation with North Korea, which defines South Korea as an enemy. There can be no economic cooperation with a system in which freedom and human rights have been destroyed. North Korea does not have the Internet, can’t make international phone calls, nor able to meet with foreigners freely. Economic cooperation cannot be achieved with a country that do not guarantee freedom.
North Korea is not a country with a rule of law. Even if there is a plausible law, it’s just a scrap of paper to them. In November 2019, U.S. Supreme Court Justice Neil Gorsuch said in a lecture that North Korea has a constitution containing a great bill of rights, but it has become a useless piece of paper by a leader who monopolizes all power. Economic cooperation cannot be successful with a system in which the law does not exist. There is no law in North Korea that can protect the assets, interests, and personal security of investors.
Therefore, I believe economic cooperation is only possible when North Korea reforms and opens to unify the economic system between the two Koreas and withdraw its policy of antagonizing the South. In the past, South Korean presidents had to meet with the North Korean dictator to discuss the issue first. The international community should put pressure on North Korea to reform and open its doors.
Some are turning a blind eye to the nature of the tyranny-ridden North Korean dictatorship and presenting an emotional outlook for inter-Korean economic cooperation. They are making a hasty analysis that North Korea will soon reform and open just as China and Vietnam has done and are developing.
Kim Jong-il stressed that reform and opening its door would never be accepted in his lifetime and denounced China’s reform and open-door policy as capitalism. That is why they don’t even use the word ‘reform and open’ in North Korea.
The situation in North Korea is completely different from that of China and the former Soviet Union, as dictators of the Kim family have maintained power for three generations. There was no hereditary succession in China because Mao Zedong had lost his son during the Korean war, and it reformed and opened when Deng Xiaoping took power in 1978.
The Soviet Union also reformed and opened in 1985 when Gorbachev took over as General Secretary of the Communist Party of the Soviet Union. However, the North Korean dictator fears that opening its doors will reveal the crimes against humanity and collapse a power system wrapped up in lies and deception.
Some are saying that the right time to invest is now when the North Korean market is not open, even though they do not understand North Korea properly. I would like for these people to be the first to invest their money in North Korea. They should go to North Korea and experience losing all their money for them to know what a poor system North Korea has.
In 2006, a Hong Kong billionaire said that he would invest in North Korea, so I reported this to Kim Jong-il through the director of Office 39 and accepted his investment. The investor and the North Korean Defense Commission then launched a joint venture, in which Kim Jong-il personally appointed the president and me as the chairman of the board of directors.
The investor then unwittingly demanded that the regulation on appointing executives be canceled and demanded the existence of this regulation. However, once it’s been decided by the leader, that decision cannot be changed in North Korea. This investor did whatever North Korea demanded, blew $100 million, and eventually withdrew. I asked him what he would do with all the loss after investing so much. He answered that by quickly withdrawing from North Korea would actually reduce the loss, which would put the weight off his shoulders.
As far as I know, the Chinese government has been demanding that North Korea reform and open for more than 30 years and maintains the principle that it will not invest at the government level until North Korea reforms and opens. North Korea demanded that $10 billion be invested by the Chinese Commerce Ministry in 2011 with the North Korea’s Musan Iron Mine as collateral. However, the Chinese government refused, saying that investment can proceed only if companies in North Korea and China have a win-win relationship. I know this situation well because I was with the North Korean delegation in Beijing at the time.
Chinese private companies have never succeeded in investing in North Korea, and as of 2014, the bond they must withdraw from the North amounted to about $500 million. A Chinese entrepreneur I know was sorry that he couldn’t get his money back after investing $10 million in building a hotel in North Korea.
In October 2019, Kim Jong-un said it was unpleasant to see the facilities built with the investment made by Hyundai Asan into Mt. Geumgang and ordered to take down all the South Korean-made facilities out of Mt. Geumgang. Therefore, investing in North Korea will be one’s ruin.
From a North Korean perspective, President Moon Jae-in’s policy of peaceful coexistence is an anachronistic delusional policy. President Moon is proposing a policy to engage in a peaceful resolution with a North Korean dictator who dreams of armed reunification by committing crimes against humanity.
However, Kim Jong-un does not dream of coexisting peacefully with South Korea. He regards the existence of South Korea as the greatest threat, a free and prosperous rich nation. Kim Jong-un came into power and declared 2015 the year of the Unification War. He is the grandson of Kim Il-Sung, who started a fratricidal war in 1950 that claimed millions of lives and burned the Korean Peninsula. He has not given up his ambition to unify with South Korea by force in recognition of his grandfather’s legacy. He is strengthening his nuclear power to ultimately take away the South Korean territory and establish the Kim dynasty.
Therefore, the political and economic systems of the two Koreas can never peacefully exist because they are so different and on the opposite spectrum. President Moon is writing an irresponsible novel that talks about bringing peace and that unification will come one day. However, he met with Kim Jong-un three times for summit talks, but what did that accomplish? He recently made an obsequious statement of flattery in Time magazine, calling the demon, who brutally executed hundreds of high-ranking officials and killed his uncle and half-brother, honest and enthusiastic. However, Kim Yo-jong considers Moon a special “fool” and criticizes him despicably.
As world history and the 75-year history of the Korean Peninsula have shown, the two opposing system cannot peacefully coexist. I think peace on the Korean Peninsula will be achieved when institutional unification is established with liberal democracy and a market economy rather than emotional logic. Therefore, we should all actively try to change the communist dictatorship of North Korea, which is a cancerous enemy of unification of the Korean Peninsula.
Ri Jong-ho is a former senior North Korean economic official and special advisor to the Workers’ Party on economic development policy and foreign investment. His last assignment was in Dalian, China as head of the Korea Daehung Trading General Corporation, which is managed by Office 39, a clandestine organization under direct control of the ruling Kim family. Office 39 is responsible for procuring hard currency for the Kim regime, which is critical to sustain the economy and ensure the loyalty of party elites. Prior to his last posting, Ri was President of Daehung Shipping Company and Director of the Daehung General Bureau of North Korean Worker’s Party, a position equivalent to deputy secretary-level rank in the country. After that, he was Chairman of North Korea Kum-Kang Economic Development Group of the National Defense Commission, a position Ri was directly appointed to by Kim Jong-il, former leader of North Korea. Ri is a recipient of the “Hero of Labor” Award, the highest civilian honor in North Korea. Following a series of brutal purges by the current North Korean leader Kim Jong Un, he defected with his family to South Korea in late 2014. Ri currently resides in the greater Washington, DC area and consults the U.S. government and think tanks on North Korea policy.
