Capitalism visits North Korea Conference: The last bastion of Stalinism is trying to sell investors on an isolated free-trade zone surrounded by barbed wire.


SONBONG, North Korea -- In the lobby of the Sonbong House of Culture is a huge oil painting of the late "Great Leader," Kim Il Sung, and his son, and current leader, Kim Jong Il. But in the alcoves, North Koreans wearing their Kim Il Sung buttons on business suits are wheeling and dealing with foreign entrepreneurs about potential joint ventures.

Capitalism has burst out in North Korea, the last and most rigid bastion of Stalinism on earth. Or at least it has burst out in this remote northeast corner of the country for this weekend, when North Korea is host to a conference aimed at luring foreign companies to invest in a free trade and economic zone it is setting up here.

North Korea, by most estimates, is in dire straits. Its economic output has shrunk by an estimated 30 percent over the last five years, partly because the collapse of the Soviet Union left it without the oil and other supplies it used to obtain at cut rates.

Factories are at a standstill for lack of fuel. And heavy flooding in the last two years, combined with an inefficient agricultural system, has caused serious food shortages.

So North Korea, with the prodding and assistance of a United Nations development agency, is trying to introduce some of the economic reforms that helped invigorate areas like southern China.

"We have guaranteed investors freedom of choice with regard to method of business management," Kim Jong U, a major economic adviser to Kim Jong Il, told the roughly 550 delegates from 26 countries who have gathered here. Foreigners will be able to do business "on the principles of the free market."

But to let in the air of foreign currency without also letting in the mosquitoes of democracy, North Korea wants to confine capitalism to the Rajin-Sonbong Free Economic and Trade Zone in the isolated northeast corner of the country, near the borders with Russia and China.

A barbed-wire fence, electrified in places, separates the 288-square-mile zone from the rest of North Korea. This despite the fact that a brochure prepared by North Korea's Committee for Promotion of External Economic Cooperation touts that the zone will become "a crossroad of human transport and traffic."

Skeptics abound, and many of the delegates to the conference are journalists and academics, more interested in getting a look at the isolated country than in doing deals.

For North Korea, the immediate purpose of the three-day conference is to show that Rajin-Sonbong, with a population of about 140,000, is ready for investors.

That is a hard sell, considering that the area has no airport, no public transportation, virtually no telephones or paved roads and so few hotels that about 150 delegates from Japan who traveled here by ship are sleeping on the boat. Some other attendees are housed three to a room in a "guest house" with only sporadic running water.

But the new Rajin Hotel opened for business Friday night, and the first international telephones went into service yesterday. The Sonbong House of Culture, where the conference is being held, has such a fresh coat of paint that it rubbed off on delegates' jackets. Buses to cart the delegates around were brought here by train from Pyongyang, the capital, and brand-new Japanese cars were brought in to use as taxis.

Color brochures tout the great plans for this district, including artists' renditions of planned industrial parks. One shows a planned conference center with several huge skyscrapers looming in the background.

Like any marketing job, the brochures can turn problems, such as North Korea's lack of electric power, into advantages. Discussing the prospects of developing the region into a tourist attraction, a site assessment document prepared by a Japanese trading company notes, "The absence of artificial illumination on the ground helps visitors interested in astronomy to enjoy viewing the heavens."

Still, the legacy of the Cold War and 50 years of Communist ideology do not die easily. South Korean businessmen, who would be the most likely people to build factories in North Korea, were barred by their government from attending the conference after North Korea refused to invite South Korean journalists and government officials.

In the hotels and on the Japanese ship, books glorifying Kim Jong Il are being sold, as well as compact disks with songs like "Our Country Without Taxes," and "The Joy of Bumper Harvest Overflows Amidst the Song of Mechanization."

The local residents, many of whom presumably will one day work at the foreign-owned factories, often politely scurry away when foreigners try to speak to them.

Pub Date: 9/15/96

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