How to deal with the great Asian mystery: North Korea's durability-It leaves top military men and foreign ministry officials in Washington, Seoul and even Beijing scratching their heads: how does North Korea keep going?

How to deal with the great Asian mystery: North Korea's durability

It leaves top military men and foreign ministry officials in Washington, Seoul and even Beijing scratching their heads: how does North Korea keep going?

This question acquires a new urgency, with Pyongyang's byungjin policy -- developing nuclear weapons and its economy simultaneously -- raising the possibility of a more durable North Korea with greater missile and nuclear capabilities.

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     South Koren President Park Geun-hye pressed Chinese President Xi Jinping to support Korean reunification during her recent trip to Beijing. For decades, the South Korean dream has been a "soft landing" and a peaceful, calibrated process of reunification. But what if the reality is neither a soft nor hard landing, but instead, no landing?

     History is littered with wrong predictions about Pyongyang's end. When the Soviet Union collapsed in 1991 and Pyongyang lost its Soviet subsidies, many predicted its demise. Then, in 1994 when Kim Il Sung died, there were widespread predictions of collapse. I recall some in the Clinton administration quietly hinting to me in private that one reason its 1994 Agreed Framework with North Korea was a good idea was that they expected North Korea to collapse before the U.S. had to implement the nuclear deal. Then again, when Kim Jong Il died in 2011, another wave of predictions speculated that the 20-something Kim Jong Un would fail and the regime would collapse.

     There is a logic behind predictions of demise. Since the end of the Cold War, North Korea's economic system has steadily broken down. Since the great famine in 1995, there have been continual food shortages facing by some estimates up to one-third of North Korea's 23 million people. The breakdown of Pyongyang's food distribution system led the government to allow private markets and some private plots.

Reform in North Korea?

There has been a bottom-up second economy taking shape. In recent years, markets have sprung up all over North Korea with a growing array of goods tolerated by the regime as a coping mechanism. A growing merchant strata has sprung up, occasionally harassed, but tolerated, and exists largely outside the government -- lubricated by payoffs to corrupt bureaucrats and military officials. North Korea's borders have become more porous, with trade and refugees to China and thumbdrives and CDs with South Korean movies and TV opening a wedge of information flowing in despite Pyongyang's tight controls.

     Though Pyongyang is loathe to use the word "reform," over the past three years new policies liberalizing both agriculture and industrial practices have begun to be implemented. North Korean agriculture shifted to a household responsibility system. Farmers were allowed to create small five-six member production teams, work plots of land, and sell 30% or more of its produce privately. This policy bears a resemblance to the initial 1978 Chinese decollectivization agricultural reforms.

     In industry, last year, measures were adopted giving factory and mine managers more responsibility and latitude in purchasing equipment, raw materials, and deciding where to sell it, and presumably after meeting quotas, sell some amount for profit. How far these moves away from central state planning has been implemented is not clear. It will take some time to see how they play out.

     At the same time, Pyongyang has created at least 17 Special Economic Zones -- tourist zones, export processing zones, industrial development and technology zones -- hoping to lure foreign investment. To date, there have been few takers. Pyongyang has never repaid a foreign debt, has no known arbitration system, is limited by international sanctions, and in short, is a place where political risk far outweighs prospective benefits for most potential investors.

     Another factor that could bolster such fledgling reforms is the possible role of China, Pyongyang's largest trading partner, accounting for 70% of its trade and its chief supplier of fuel and food. Though China-North Korean ties have been chilly and distant since President Xi Jinping took office, there are signs that this is changing. Bejing sent Liu Yunshan, the fifth-ranking member of the Standing Committee of the Chinese Politburo to Kim's 70th anniversary celebration of the Korean Workers Party bearing a letter from Xi.

     Liu was prominently featured on the review stand during the military parade and met with Kim over a four-day visit. Xi's letter congratulated Kim and praised him for achieving "positive progress in developing the economy ... ." Beijing has been trying to persuade Pyongyang to adopt Chinese-type reforms for years. China already has some investments in North Korean coal and mineral mines, and may be tempted to increase its economic involvement in North Korea.

Though China rejected Pyongyang joining the Asian Infrastructure Investment Bank, it has invited North Korea to be part of its "One Road, One Belt" development scheme. Beijing is eyeing Rason, a free trade zone on the Sea of Japan where the borders of China, North Korea and Russia intersect whose development could open up an export route for adjacent landlocked Chinese cities.

     In any case, all these efforts -- not to mention newly built ski resorts and dolphinariums -- appear signs of the intent of byungjin. Unlike his father, Kim Jung Un is promising to improve people's well-being.

     No one expects North Korea to become the next Asian Tiger. But these policies may allow an economy only now reaching 1991 levels, to grow by 1-2% year. That may be enough to stabilize internal situation as Pyongyang continues its quest for more and better missiles and nuclear weapons.

     Of course, some argue that the growing privatization of the economy and a fledgling North Korean middle class having unmet rising expectations will lead to a collapse of the regime. But it is just as possible that those benefiting from the economic changes may be invested in the regime and fear change.

     It must be emphasized that all these changes in North Korea are tentative. The North Korean media and officialdom are largely silent about them, perhaps taking a wait-and-see stance to reverse them if the new economic policies prove politically troublesome. In China, Deng Xiaoping gave reforms a ringing endorsement saying "to get rich is glorious." Kim Jung Un not publicly praised his new economic policies. In fact, he is yet to even utter the word "reform."

     No one expects the masses to revolt anytime soon. Pyongyang still runs a terror state with some 200,000 in labor camps, and those caught trying to flee the country are frequently executed. But the current situation may be viewed by the regime as discomforting and fragile, with its efforts to seal off the country from reality increasingly fraying at the edges.

Policy challenges

If these new policies bolster the regime in Pyongyang -- the prospect of no landing -- it poses dilemmas that make the North Korea problem still more vexing than the current conundrum. Would Pyongyang attaining an operational ICBM able to reach the U.S., and/or building a nuclear arsenal of 50-60 weapons alter the deterrence equation? Would Seoul and Tokyo retain confidence in the U.S. security umbrella? If such capabilities are qualitatively more threatening, should the focus shift from denuclearization to arms control to try and bind the problem? And finally, if North Korea adopts a full-fledged reform agenda, should the U.S. and its allies engage it in the hope that such openings lead to political change?

     For now, these questions remain hypothetical, but the next U.S. president may well have to grapple with them.

Robert A. Manning is a senior fellow of the Brent Scowcroft Center on International Security at the Atlantic Council. He served as a senior counselor to the U.S. undersecretary of state for global affairs from 2001 to 2004 and as a member of the U.S. Department of State Policy Planning Staff from 2004 to 2008, and on the National Intelligence Council Strategic Futures Group from 2008 to 2012