North Korea's Information Technology (IT) Strategy IT Industry, Electronic Government, the Internet

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North Korea's IT Strategy

Communication Books 396

By Ko Kyo'ng-min

396

North Korea's Information Technology (IT) Strategy IT Industry, Electronic Government, the Internet

Information Technology (IT) is an excellent medium that can shorten the time and effort required for North and South Korea to get closer. As an industry, IT is not only an "objective" where North and South Korea can work together through exchanges and cooperation, but it can also be a "means" that facilitates more efficient and effective exchanges and cooperation in other areas as well. That is because, like the Internet, IT itself can provide a "stage" for exchanges and cooperation between the two. This kind of hope can be found since the year 2000 in the willingness of the North Korean authorities to utilize IT.

By Ko Kyo'ng-min

Communication Books Communication Books

Front Cover (1 page) A Study of North Korea's IT Strategy

There are many reasons why the general public is interested in North Korea's IT strategy. I believe one of the most prominent reasons is the possibility of changing North Korea with its utilization of IT. People are cautiously expecting that, if North Korea's IT becomes generalized and entrenched in the people's lives, it will facilitate the opening of North Korea's economy as well society as a whole, which then can lead to general political change.

However, this kind of hopeful thinking about North Korea's technological aspect falls short if one looks at the examples of other socialist countries, which strongly suggest that there is only a slim chance that such change will materialize in the short term. All of the socialist countries have used IT selectively as a countermeasure against IT's subsequent impact on their societies. This kind of basic "IT strategy" probably was far stricter in the case of North Korea than in other socialist countries. The basic strategy for North Korea, thus, is selective limitation -- utilizing IT in a way that can minimize any possible threat to its socialist system of government.

This book was written systematically to analyze the current status of North Korea's "IT strategy" and provide predictions for its future. However, readers will find many instances throughout the book of the author's analytical shortcomings due to the limited availability of data the author encountered while preparing this book. I only hope that this book can find some meaning despite such shortcomings, along with my hope that it can serve as a starting point and a basis to meet the high interest of the academic world and the general public in North Korea's "IT strategy."

- From the author's introduction -

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North Korea's Information Technology (IT) Strategy IT Industry, Electronic Government, the Internet

By Ko Kyo'ng-min

Communication Books, Seoul, Korea, 2004

North Korea's IT Strategy IT Industry, Electronic Government, the Internet

Author Ko Kyo'ng-min Publisher Pak Yo'ng-ryul

First edition, first printing, published on 9 January 2004

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Introduction

North Korea shares the same ethnicity with our country, but it has so many different sides as well. Its ideology, governmental system, and economic level are all different. That may be the reason why the two peoples think and act differently, and also why they have different standards of living. One side sometimes ferociously criticizes and attacks its top leader, and particular groups within it do not mind threatening to start all-out anti-government movements if their interests and demands are not met. The other side is a completely different story. They can do such anti-government movements only when they do not want to live anymore, and it is very common for the people to worry about their supreme leader's pictures hanging in banners and take them down, lest they get wet in the rain. One side worries about overweight, over-nutrition, and the chronic diseases associated therewith, while on the other side, sometimes the people travel to faraway places at the risk of their lives, just to find things to eat. Not long ago, these two peoples had the same common roots and culture but, over time, they have become more and more different. This has caused so many differences between them, among not just the "upper ruling classes," but the regular people as well. The patterns of thought, action, and the basic standard of living have become all too different between the two. This "difference" between the North and the South has become more entrenched and deepened in the Age of Information. In South Korea, the Internet and optical cables are everywhere, covering the nation like a spider's web -- more than half the population uses the Internet, in one of the most widely Web-enabled countries in the world. In stark contrast, however, the people of North Korea cannot even use regular telephones easily, and they have just begun to install some basic optical cables in major cities and public facilities. North Korea may be the only country in the world that does not use the Internet. This kind of "digital divide" between North and South Korea has extended their stark differences into cyberspace as well. Since the 2000 North and South summit meeting, there has been some active economic cooperation between the two, which has facilitated some South Korean corporations' entry into North Korea, as well as similar joint ventures in third countries. There has also been an open tourism promotion for South Koreans to travel to the famous tourist attraction of Ku'mkang Mountain in North Korea, not to mention the re-connection of the North-South railway line. It all has shown that there has been some remarkable physical development to bring the two countries closer to each other. Even in the psychological aspect, it has been observed that the two peoples have shed a lot of the hostility derived from the old Cold War mentality. However, the fifty years of naked hostility against each other still will require a great deal of time and effort completely to eliminate the negative feelings and bring the two sides closer to each other. IT is one medium that can shorten the time and effort required for North and South Korea to get closer. As an industry, IT is not only a "field" where North and South Korea can work together through communication and cooperation, but it can also be a "means" that facilitates more efficient and effective communication and cooperation in other areas as well. Like the Internet, IT itself can provide a "stage" where exchanges and cooperation flourish. That hope is premised upon willingness on the part of North Korea actively to utilize IT. It is true that since 2000, the North has shown a remarkable intention to use IT. However, they have shown some sectoral differences in how it is to be utilized. Characteristically, the North is less willing to put time and energy into the areas where they think they will have more losses than actual benefits, as they calculate the pros and cons, but they maintain a relatively strong willingness to keep their initiative in areas where the opposite is true. For example, the North is still hesitant and defensive about utilizing the Internet, the global computer network. In the area of establishing an electronic governmental system, which is a utilization of IT for public service, they are actively pursuing the use of an intranet network, but have delayed any effort to connect it to the Internet. v However, the North is, in its own ways, adopting a stance of willingness to pursue the IT industrial fields where it is possible to control the socio-political impact. Considering that North- South economic cooperation in those fields is actively proceeding, one can read the North's intention actively to utilize IT for industrial purposes. It is predicted that IT will be more and more important in the future development of the North-South relationship and economic reconstruction in North Korea itself. The North currently has closed off the Internet but, once they become confident about its control and censorship both technologically and in policy, sooner or later they will open it. If that should be the case, the economic cooperation between the two countries will become far more active than now. However, even if the North opens up the Internet, South Koreans will not be able freely to meet North Koreans in cyberspace. That is because the North's opening up of the Internet from the beginning will not allow public access and usage. Overall, the North's basic approach in "IT strategy" is the gradual utilization of areas where they are confident that they can block its political influence, and minimization or even outright forfeit of areas where that is not the case. This book was written to propose a basic view that sheds some light on North Korea's "IT strategy," based on a systematic analysis by sector of the North's current IT status and its related policies. I tried to show their current utilization methods and future utilization strategy and methods within the framework of their overall national strategy in three areas: the IT industry, establishment of an electronic government system, and control and use of the Internet. There are many reasons why the general public is interested in North Korea's IT strategy. I believe one of the most prominent reasons is the possibility of changing North Korea through its use of IT. People are cautiously expecting that, if North Korea's IT becomes more routine and entrenched in people's lives, it will facilitate the opening of North Korea's economy as well society as a whole, which then may open the sluice gates to general political change. However, that kind of optimistic thinking about North Korea's technological aspect falls short if one looks at the examples of other socialist countries, which strongly suggest that there is only a slim chance that such changes will materialize in the short term. All of the socialist countries have used IT selectively as a countermeasure against IT's subsequent impact on their societies. This kind of basic "IT strategy" probably was far stricter in the case of North Korea than in other socialist countries. The basic strategy for North Korea, thus, is selective limitation which uses IT in a way that can minimize any possible threat to its socialist system of government. This book was written systematically to analyze the current status of North Korea's "IT strategy" and provide predictions for its future. However readers will find many instances throughout the book of the author's analytical shortcomings due to the limited availability of data the author encountered while preparing this book. I only hope that this book can find some meaning despite such shortcomings, along with my hope that it can serve as a starting point and a basis to meet the high interest of the academic world and the general public in North Korea's "IT strategy." Academic research and progress today are not based upon one person's creative thought. If one has built up intellectual capacity by reading others' documents and books and has accomplished some academic achievement, it no longer represents the work of just that one person. This book too, was possible only because of the prior ideas and research results accomplished by countless other scholars, public officials, and journalists. This book therefore can be said to be just a mere "compiled" collection of many efforts, ideas, and research put forth by previous researchers. Also, this book would not have seen light if it were not for the encouragement and help from my loved ones. First, my loving wife Yi U'njo'ng, my son Hyo'kchun, and our new soon-to- be born baby all have stood by me and shown me the way so that I could be always honest and diligent in writing this book. vi In addition, I would also like to express my deepest gratitude to Professor Kim Hyo'n- so'ng, director of the Electronic Government Research Center at Seoul City University, where I work, Professor Kim Hyo'k, and our fellow researchers. They became de facto co-authors of this book by providing me theoretical and technological ideas that made it possible for my thoughts to materialize into a book.

vii

I would also like to express my thanks to Yun Mi-cho'ng), the editor in chief, who gladly accepted and warmly supported my proposal to write this book.

December, 2003 Pondering, Never Allow Yourself to Get Tired of Learning Ko Kyo'ng-min

viii Table of Contents

Introduction ...... v

Chapter 1. North Korea's IT Strategy to Build a Powerful and Flourishing Nation...... 1 1. IT and the Changes in North Korea...... 1 2. IT, the Governmental System, and North Korea's National Competitiveness ...... 3 3. Analytical Structure of North Korea's IT Strategy: IT Industry, Electronic Government, and the Internet...... 7

Chapter 2. North Korea's National Strategy and S&T-Centered Policy under Kim Jong Il...... 10 1. The Launch of Kim Jong Il's Government and the New National Strategy ...... 11 2. National Strategy in the Era of Kim Jong Il: Building a "Powerful and Flourishing Socialist State" ...... 17 3. The Process of Change in North Korea's Economic Development Strategy...... 24 4. Economic Development Strategy in the Era of Kim Jong Il: The S&T-Centered Policy ...... 30

Chapter 3. The Current State of North Korea's IT Policy and Infrastructure ...... 40 1. Development of IT Management System and the IT Industry: Theoretical and Comparative Bases...... 41 2. North Korea's IT Policy...... 51 3. The Current State of North Korea's IT Infrastructure ...... 60 4. Reasons for the Backwardness of North Korea's Infrastructure...... 119

Chapter 4. The North Korean Economy's "Single Leap" and the IT Industry's Growth Strategy ...... 83 1. IT as a Strategic Industry and the "Single Leap" Strategy: Theoretical Considerations ..85 2. North Korea's "Single Leap" Theory and Trends in Research on the IT Industry's Growth Strategy...... 91 3. Policy Goals of the IT Industry Growth Strategy at Each Stage...... 97 4. Conditions for Successful Implementation of the Strategy for IT Industry Growth ...... 118

Chapter 5. The Current State and Evaluation of North Korea's Implementation of Electronic Government ...... 140 1. "North Korean-style" Electronic Government ...... 142 2. Information Systems, the Internet, and Electronic Government in North Korea ...... 147 3. Internet-based Electronic Government Websites ...... 156 4. Intranet-based Electronic Government "Website Kwangmyo'ng"...... 176 5. Possibilities and Limitations in Implementing Electronic Government...... 187 6. Evaluation and Prediction for Implementing Electronic Government ...... 195

ix Chapter 6. Control of the Internet in Socialist Countries and North Korea's Internet Strategy...... 199 1. The Internet Dilemma and Control of the Internet...... 200 2. Examples of Internet Control in Socialist Countries and Their Typology...... 207 3. Models of Internet Control Strategies in Socialist Countries...... 215 4. North Korea's Internet Strategy...... 219 5. Prospects of North Korea's Opening of the Internet and Its Political Influence....225

Reference Materials...... 229 About the Author...... 248

Chapter 1

North Korea's IT Strategy to Build a Powerful and Flourishing Nation

1. IT and the Changes in North Korea

North Korea has changed in many ways since 2000. There was the shooting exchange with the South on the issue of crossing the border in the sea, and the controversies over long- range missiles and nuclear development, but its attitudes have changed dramatically over the years. Displaced families from the South and the North meet in large numbers full of emotion, and it is no longer surprising to see combined North and South sports teams enter the stadium as one in global sports competitions. The North has also agreed to have an industrial complex built in the city of Kaeso'ng as a solid symbol of economic cooperation with the South. Additionally, it has also become possible to have academic exchanges, which formerly were limited to foreign cities, right in the North's forbidden capital city of Pyongyang, not to mention South Koreans now visiting the city as tourists, following the opening of the Ku'mgang Mountains to tourism. The day seems not far off when the railroad and highways connecting North and South will be opened, making it possible freely to travel through Central Asia to Europe by train. So there is no denying now that there has been a tremendous change for the better in relations between the South and the North. In those changes and progress, the South's changes in posture and the role that it used to play were important, but the North's own changes provided the driving force for the fundamental changes in the relationship between the two. No one ever believed that one day North Korea would be starting to open up its locked doors this easily and this soon. They are now showing their own "inner courtyard" to people who have been curious as to what it looked like, and they are even asking for help after showing their "kitchen," in its spider web- covered deteriorating condition. So why is North Korea displaying a completely different attitude? North Korea has been basically closed up for the better part of the last fifty years. Its government injected its own brand of world view forcefully to its citizens, completely cut off from the outside world, and living in a world of its own. What is their intent in showing their "true self," far different from their past behavior? One can still think of the old 1970's anti-communist posters hanging in school classrooms, reminding one how the North was "a wolf wearing a sheep's mask," when hearing the news stories that it has been involved in nuclear development and is capable of manufacturing nuclear weapons. One can also think that the reason why the North is so adamant on developing nuclear weapons is because they are so fearful of being surrounded by America and South Korea, now that its old strategic partner the Soviet Union has fallen, as well as the Eastern Bloc countries, not to mention the changes that have occurred in China. So one can even feel a certain sympathy with their turning to nuclear development as a means of survival, believing it is their only way out of this trouble. Despite the North's nuclear issues, the word "change" is at the core of its national progression since the year 2000. However the level of change may seem and be understood differently by different people. One can still downgrade the North's apparent change as nothing more than a desperate act in a desperate time filled with economic deterioration and political

1 isolation, still dominated by dictatorship. Its theory is that the North Korean society's core structure is still the same and has never really undergone a fundamental change at all. However, it is important to keep in mind that a change by a solid, stable system can only progress in a gradual way. In view of the stability of the Kim Jong Il system, North Korea's change can only occur in stages, one step at a time, to alleviate any shock that it may bring, and therefore, change can only start from its apparent outer skin. These apparent and gradual changes occurring in the outer skin have been clearly observed in numerous areas since 2000. With these confirmed changes that everyone agrees on, the question arises as to why today's North Korea (the Kim Jong Il system) is showing a different stance than the old North Korea (the Kim Il Sung system). It has already been almost 10 years since the death of Kim Il Sung. It also has been five years since his son Kim Jong Il succeeded to power. During this period, the country has experienced many upheavals. They probably have gone through many tough times thinking about how to set boundaries between the old dead supreme leader and the new leader's power. They also probably have put a lot of effort into stabilizing this transitional time for the transfer of power. It's also possible to think that they have tried many ways to keep their economy from going further and further down the drain. Their foremost objective during the period probably was how they could put the general public under control in these troubled times, utilizing all kinds of ways such as persuasion and even threats. North Korea had its darkest time politically and economically during the period after the death of Kim Il Sung. I believe that the "change" in North Korea's past years was a reflection of how they tried to cope with the crises. The crises in North Korea after the mid-1990's started to show a bit of stabilization as the new leader took center stage and a new system started to show a consolidated foundation under him. However, it was never easy to solve all of the political and economical problems that had been accumulating historically. There was no strong sponsor that guaranteed the government, nor did its economic conditions get any better. The people still starved horribly and the vicious cycle of extreme poverty continued. The root cause of the crisis was not "solved," but a mere bandage "patch" was temporarily utilized. The new Kim Jong Il government needed solutions that could overcome this temporarily patched crisis permanently, as well as strengthen their power basis to rebuild the economy and propose a new national vision and strategy. Before they could design a new power basis, the North Korean government proclaimed a "harsh march" to alleviate the shock coming from changes, and strengthened its ideological armament, calling for a "military first before politics" slogan, ultimately turning to an accelerated national militarization. Based on this traditional method of strengthening the power basis, the Kim Jong Il system called for building a "powerful and flourishing socialist state" as its new national strategy. As an important framework for this new national strategy and political power basis, it called for North Korea to become an "economic power." This is, as one might suspect, nothing new since all countries aim to become economically powerful. However, the difference here was that in the years 2001 and 2002, North Korea proposed many policies that showed that they were not calling for becoming an economically powerful nation just to manage the crises during this time or as a temporary solution, but were serious about implementing such economic development policies as their new national strategy. Starting with Kim Jong Il himself, as the chairman of the Military Committee, the government and the press started to promote the importance of IT. They also have taken serious reform policies such as wide and deep changes in the economic management system and implementation of a new special economic district proposal. Of course the reality is that the external circumstances are so unclear that no one can have confidence about what up to this time appears to be a new economic strategy. However it would 2 be a mistake to judge that the changes occurring in North Korea are only temporary solutions to their problems or imitations of other countries' policies. That is evidenced by their continuing efforts, amidst all the uncertainties of their international situation, which is related to North Korea's military-security issues, to pursue new policies for reform and openness, based on a firm will to rebuild the nation economically, nor are they dropping the reins of their exchanges and cooperation with the South. North Korea still remains the world's most oppressive and isolated regime. Other existing socialist countries, although not loosening their hold on political controls, at least are showing tendencies gradually to relax their level of control of economic aspects. China is at the forefront of that trend, followed by Vietnam, which is closely "benchmarking" its neighbor. Cuba, too, after the United States eased its sanctions against it, is loosening up its economic isolation and beginning to seek outside cooperation and communication to kick start its economy. Even Myanmar, known as second only to North Korea in terms of political oppression and isolation, is trying to seek more economic revitalization and implementing new policies. These are all taking place because the socialist countries are thinking that their future will be dependent on their being part of the new globalized economy. They probably considered very well the economic benefits and political losses to result from taking such initiatives before they embarked on these new policies of reform and openness. They also probably have thought that self-sufficiency or relying on one's own strength cannot be a way to maintain their system of government anymore. In this aspect, North Korea is no different from any of the countries above. That is why the changes taking place in North Korea bear some significance, even if their new economic tendency is packaged and sold in the grand names of reform and openness. The one element that gives higher meaning to North Korea's economic change is "IT." In other socialist countries as well, IT is the premise in their proclamation of reform and openness. In other words, whether on a political or economic level, implementing, and utilizing IT domestically is one of their central goals in reform and opening. To them, IT is considered to be the driving power behind the kind of change they seek. They know full well that the positive ripple effects of IT do not stop in the economic field, but have the potential to extend into political and social areas as well. That is precisely what North Korea is thinking, too. North Korea's positive steps toward utilizing more IT provide clear evidence that their intent in taking such steps is not just a window-dressing policy, but more importantly, it implies that they are willing to take further steps for systematic, fundamental change. However, so far, North Korea is still in the process of preparing and establishing such policy and strategy. They must clearly recognize the destructive potential that IT has with respect to its inherent political and social impact. Without a solid control system in place to limit such potential power, they know that fully committing to IT utilization under current conditions would be a naïve adventure like a moth flying right into a flame.

2. IT, the Governmental System, and North Korea's National Competitiveness

1) IT and the Characteristics of a Regime

IT is the creator of and guide to the information society. IT was at the core of the transition from an industrial society to an information society. To know how the information society was created and has been developing, one only has to backtrack IT's history of growth and development. However the reason why IT played a driving role in the transition from an industrial society to an information society was because societies proactively accepted and 3 developed IT. Not only was IT used as a tool to generate profit, but it was designed as a friendly mechanism acceptable to the general public, thus making it possible to become an established infrastructure in societies. In other words, there were these important aspects that IT possessed such as technological justification and economic efficiency, but it was ultimately chosen for economical, political, and societal interests, so it became "industrialized" (or, "commercialized"), "socialized," and finally "popularized." The "popularization" of IT is a byproduct of the combination of IT's own inherent dynamics and political, social selection. Nowadays, we cannot even imagine a world without IT. IT has become the foundation technology of information societies and not just corporations, but governments are using it so proactively. IT is the growth engine that drives economic development and a central tool that increases operational efficiency and organizational innovation in governments and corporations. Ultimately, these benefits of IT greatly increase the quality of life for individuals. It has now become a required fixture in an overall society's growth as it operates each element in society efficiently and beneficially. IT can have different impacts on society depending on what purpose and intent it is used for. Even if IT is used with neutral intent, when it becomes "industrialized" and "socialized," there may be some unexpected results. For example, IT can be operated to reduce the number of workers required while producing more results, but this can result in worsened poverty because work availability is reduced for certain members of the overall population. Also, IT can bring good benefits to mankind when it is used with good intentions, but when it is abused with evil intentions, it can make the whole world shiver in fear. Additionally, how a state chooses to use IT, as in whether to utilize it as a mainly political tool or economic tool, can result in different impacts on society. If a state uses it as a tool to establish societal surveillance and as a control mechanism, IT will only lead to promoting societal distrust and decreased quality of life. However, if a state uses it as a tool to strengthen its national competitiveness and activate the economy, IT will bring economic growth and increase the quality of life for individuals. Particularly, if IT is associated with the problems of a system (regime), its societal impact will differ greatly. It means that IT utilization at the national level generally reflects the nation's ideology and governmental characteristics. Democratic societies are more interested in economic growth and quality of life than societal surveillance and the need for control so, in those societies, IT has more of a chance to be utilized as an economic tool. However in contrast, non-democratic regimes have far more probability of using IT as both a political and an economic tool. Among non-democratic regimes too, differences in how IT is used for political and economic purposes can be shown, depending on their national policy priorities. These non-democratic regimes can have different ways in how they order their priorities, whether giving more emphasis to economic development and improving the quality of life or giving emphasis to guaranteeing national security externally and maintaining domestically its own regime. Thus, the value of using IT will differ, depending on such policy priorities and whether it is used mainly as a political or an economic tool. Therefore, it can be concluded that the impact IT will have on a society at the national level will be decided by how a state chooses to use it for its strategic purposes. With this perspective in mind, it is possible now to categorize, according to regime characteristics, the purposes and methods of using IT, as well as the latter's overall societal impact. Utilizing IT makes non-democratic regimes, especially socialist countries, react more sensitively than when using any other technology, for IT has dual benefits. On the one hand, IT can potentially change the power relationship between the state and its people, working as a medium that speeds up political change within the regime. On the other hand, IT can work to 4 enliven the economy by improving productivity and bringing about economic growth, which makes it a key tool for optimizing the regime's economic performance. Thus the utilization of IT in most socialist countries can be called an issue of political and strategic choice, considering IT's political influence and economic effectiveness.

2) National Competitiveness and IT

The 21st century's foremost issue is global competitiveness. In the 21st century, no individual or country will have a bright future unless it meets global standards. The 21st century, where only qualified individuals or states survive, may become a "winner-takes-all society." It can also become a 20/80 society where only 20% of its people can live like real humans. All of this has led to almost all countries striving to secure top spots in the arenas of unlimited international competition, taking national competitiveness as a top priority for sustained survival and prosperity.1 National competitiveness is the key word that decides a nation's future in this Age of Information in the 21st century. National competitiveness can be recognized differently according to different nations and the periods they are in. There can be also wide differences in the elements that define national competitiveness, and those elements are also complex and widely varied. For example, elements that make up a nation's competitiveness such as the stage of economic development, the existence and categories of natural resources, and the political and economic environment can differ from other nations. Also, when compared to the past industrial society period, the elements that define the national competitiveness level in today's information age cannot be the same. However in spite of all these differences, economic prosperity still remains the most important element in most nations choosing to strengthen their national competitiveness, and it is agreed that among the economic elements, technological innovation is the driving force of national competitiveness. IT emerged as the central engine of economic growth in the 1990's, and it has now become the core basis of economic vitality for mature and global capitalism. Countries use IT as a growth engine to drive improved productivity and economic development. They are also concentrating on securing national competitiveness through the strategic development of IT, such as promoting IT resources and training professional personnel in IT fields. The ripple effects of these policies have resulted not only in commercial interests such as vitalization of electronic trading through the Internet and generating additional value through various information contents, but more renewed interest in public service information transformation through the establishment of an information highway or re-servicing of the information related infrastructure and electronic government as well. As we enter the 2000's however, the world IT industry, which all along had led the so- called "new economy" or "digital economy," has experienced a bit of a downturn. Nevertheless, the IT industry is still expected to lead and play the role of growth engine for the world economy in the long run, and the recent downturn is considered to be only a temporary trend. According to an assessment by the OECD, IT has contributed positively to the world economy by generating investments and improving productivity as its leader, and despite the economic downturn after the second half of 2001, it still is expected to show strong growth among OECD member nations (OECD, 2003). Almost all agree that the current situation with the downturn in IT industry is only temporary and actually a transition point for more vigorous future long-term growth, especially

1 See the work by Yun Sang-o (2000, pp. 47-71) for the effects information transformation based on IT has on national competitiveness. 5 considering IT's growth potential that would facilitate increased productivity and a higher level of development in other industries as well. It is also expected that -- among the next generation growth industries IT, BT, NT, ET, and CT -- IT will be the basic foundation technology among the five T industries, and continue its leadership role for more technological innovation (The Korean Ministry of Information and Communication, 2003, page 5). In today's world, IT has expanded not only to the economic fields, but to overall general society,, including the political, administrative, and social areas. Governments all over the world are putting much effort into establishing electronic government service systems, the better to provide administrative services to people as they consider the efficiency the systems can offer. The Internet also has become so popularized nowadays, creating numerous organized cyber communities that reflect the various interests of people who are leading societal change as they expand their political and social influence. So IT is being utilized as a tool for "innovation" that actualizes electronic government, electronic democracy, and cyber communities. At the center of strengthening the national competitiveness that governments in the world are promoting through "growth" and "innovation" is none other than IT. The vast and complex potential that IT has as a tool for strengthening national competitiveness stimulates national interest and nurturing. Therefore, regardless of regime, national power level, size, or geographic location, nations' growth policies and their intent to use IT proactively have become a kind of global standard. Socialist states are no different, recognizing the potential IT has as an attractive tool to secure national competitiveness. However, they have maintained relatively isolated economic systems and policies. Despite the common characteristics of globally standardized intent and the goal of utilizing IT, there also exist points of difference. Even the socialist states generally accept the global standards when it comes to utilizing IT for "economic" purposes, but when it comes to the "political, administrative" or "social" aspects of IT, they may have specialized intents and goals. The main goals of socialist states in utilizing IT are increasing the transparency and efficiency of their centralized, planned economies, and strengthening their social and administrative control systems for the ultimate purpose of strengthening central authorities and political systems. To them, IT is an effective tool that can eliminate inept systemic waste and strengthen the current political system. North Korea, which has been termed the most oppressive and isolated country politically and economically (RSF, 2001, 2003: Freedom House, 2003: O'Driscoll, Feulner and O'Grady, 2002), also started full-speed promotion of IT in the late 1990's. North Korea under Kim Jong Il has proposed as its new national vision building a "powerful and flourishing nation" and, putting forward a strategy of economic development based on "S&T-centered policy," is implementing a new national strategy of leaping toward an "economically powerful nation" based on developing the IT industry. At the center of the North's national strategy to become a powerful and flourishing nation is their economic development strategy to achieve economic prosperity. Their main goal is building a powerful and flourishing nation through an economically powerful nation, based on their own fortified confidence of political, ideological, and military prowess. At the center of this new strategy to rebuild their depleted and outdated economy is the "IT strategy." From an economic perspective, the IT strategy is the driving force behind their strategy to build a powerful and flourishing nation. They too are seeking a way out of their economic doldrums by nationally promoting and supporting the IT industry which has become a global standard. North Korea's "IT strategy" can be seen as a generally inclusive strategy not limited to the industrial side only. The North is promoting transparency of their planned economy and general increased efficiency, and efficiency in administrative work as well by establishing an electronic government based on building a nationwide computer network in the form of an 6 intranet. They are also promoting their national regime, foreign economic cooperation, and investments through the opening of Internet Websites. They are not stopping at just promoting IT as a growth engine, but they are also trying to utilize it in wider purposes as a mechanism to increase efficiency in governmental control and strengthening. In other words, they, too, accept IT as a central tool to strengthen national competitiveness and recognize it as a potential resource for political and administrative as well as industrial purposes, displaying their intent to utilize it at the national strategic level.

3. Analytical Structure of North Korea's IT Strategy: IT Industry, Electronic Government, and the Internet

Looked at from the wider perspective of the national level, IT generally is utilized for three reasons: national strategic growth of industry, establishing electronic government, and as the technology basis for wide usage of the Internet. Socialist states do not differ as to why they want to employ IT, i.e., for increased productivity and economic growth. However, there may be slight variations for establishing electronic government or wide usage of the Internet. In other words, electronic government is employed generally for internal purposes such as increasing the efficiency of a centralized planned economy and the central government's control over local entities; and the Internet is utilized mainly for external purposes such as promoting the state's own regime and economic benefits. North Korea has shown their clear intent to promote IT at the national strategic level. Beginning in the late 1990's, the North began to show interest in developing the IT industry for "Information Transformation of the People's Economy" and developing the software industry. In 2001, it officially proposed a blueprint for strengthening national competitiveness based on vigorous growth of the IT industry. Even though they have not yet opened to the Internet, they are using some foreign servers, such as ones in Japan and China, to establish and operate Internet Websites directly for the purposes of regime promotion, economic cooperation, and attracting foreign tourists. In their domestic fields, they have now established an intranet-concept computer network called the Kwangmyo'ng system which they use to process all of the work from certain government agencies using Internet-based technology, enabling them to open homepages for government organizations and public agencies, and quickly transmit and share information among agencies. So even the North is not stopping at mere recognition of IT as a central mechanism to strengthen national competitiveness in the 21st century information age, but actually has taken steps to implement a strategy to promote the IT industry, increasing efficiency in the public arena, external regime promotion, economic cooperation, and foreign investment. There have been some lively and varied discussions going on recently about North Korea's IT industry development strategy. Regarding the North's IT industry, some objective facts and data were obtained and research on them has made a certain degree of progress. These were possible due to positive IT economic cooperation between the North and the South. Both governments have shown high interest in such IT economic cooperation, and the North has shown far more interest in it than in any other field. In addition, our South Korean major corporations proactively sought to participate in the economic cooperation, backed up by the South Korean government's strong intent to promote it, all of which have contributed to the high interest among South Koreans regarding the North's IT industry. However, both domestic and foreign studies of the North's IT utilization and its Internet Website operation, which is a part of its overall IT strategy, have been limited to initial 7 discussions of the Websites' histories and current contents, and there are almost no discussions of their intranet-based electronic government as yet. It is also true that not much progress has been made on the subject of the North's "IT strategy," its basic framework for all these sectoral IT uses. The reasons why only such primitive studies have been possible so far on the subject of the North's "IT strategy" and why our country, South Korea, has not been able to establish a detailed counter strategy for such moves by the North are that the North's "IT strategy" is still somewhat in a passive and defensive mode, and the consequent difficulties in accessing the objective facts and data. So, it is absolutely true that, when one wants to study the construction of their intranet-based electronic government, because one cannot access the North's internal computer network, it is difficult even to understand their current conditions, let alone analyze them. The only way one can analyze the North's Internet strategy is by studying some partial Websites that have been opened by the North, because the Internet has not yet been opened there. The reality is, therefore, that a fundamental difficulty exists in approaching data to analyze the North's "IT strategy" even for scholars because of the regime's isolated nature. However despite all of these limits, this book attempts comprehensively to analyze and estimate the North's "IT strategy" on a forecasting and exploratory level, based on accessible North Korean materials and data such as the North Korean government's press releases and periodic publications, and the North's foreign and domestic IT strategy-related Websites. This book analyzes how the North has utilized IT since the mid-1990's and for what purposes in the categories of IT industry, electronic government, and the Internet. However to see these categorical IT strategies from a comprehensive point of view, one has to see them in connection with the North's national strategy. That is because the time period in which the North has started its "IT strategy" generally matches the time when the Kim Jong Il regime started, so the North's "IT strategy" can be seen as the Kim Jong Il regime's own national strategy that differs from Kim Il Sung's. This book's analysis of the North's "IT strategy" is based on the premise that the North Korean government's intent and policy on the reform and opening of its economy determines the contents of its "IT strategy," and, in addition, they are the core determinants for the strategy's success or failure. For instance, among the socialist countries, China is regarded as having the highest level of economic liberalization and it has taken the most proactive and commanding IT strategy. Vietnam closely follows China's IT strategy steps with its own proactive policy. In contrast, Cuba, which is right under the nose of America, seems to have taken somewhat selective reform and openness policy steps, so they are comparatively slower and more defensive than China or Vietnam. Myanmar follows Cuba's steps for its priorities and in maintaining its regime. North Korea's "IT strategy" lies somewhere between the slower and defensive strategy and the proactive and aggressive strategy, depending on where they want to place their national strategy priority, especially at the level of survival strategy: guaranteeing security or rebuilding the economy. When the North and the United States recently clashed over the issues of Pyongyang's firing of long-range missiles and acknowledgement of nuclear development after the 2000 North- South summit meeting, the North's "IT strategy" did not show any superficial changes due to the military-security element taking priority. However, taking the macro point of view that a nation's decisions are always politically motivated, and considering the stark fact that the North always puts politics and ideology at the top, it can be concluded that the contents of the North's "IT strategy" and its success or failure will ultimately be decided by their political factors. Additionally, along with the North Korean government's showcasing their intent regarding reform and openness in July 2002, they have promoted and taken small but gradual 8 steps showing their intent proactively to develop the IT industry, activate North-South IT economic cooperation, open access to mobile telephones, establish the Kwangmyo'ng intranet system, open Internet Websites to enliven the economy, and more detailed planning for general opening to the Internet. So considering all these developments, the North's "IT strategy" may change to a positive and aggressive mode, once the military and security issues with America are constructively resolved and their policy priority switches from guaranteeing security to rebuilding the economy.

Chapter 2.

North Korea's National Strategy and S&T-Centered Policy under Kim Jong Il

Our interest in North Korea, whether it is political, economic, or social, is always connected with our interest in how they might change or the issues associated with such possibility. The period from 1994 to 1997 when Kim Il Sung died and his son Kim Jong Il took over was a time when our interest reached its peak. People knew from historical facts that dramatic changes always follow right after a dictator's death. However, after Kim Il Sung died, his son Kim Jong Il was able to take over power without much difficulty and actually has been successful in governing the people while upholding his father's mandate. Kim Jong Il even proclaimed a "harsh march" styled after the 1930's' hardship and for better or worse was able to patch up economic crises of chronic depletion and insufficient availability of foodstuffs. However, the fact was that right before and after Kim Il Sung's death, North Korea was faced with overall national crises, some of which included a worsening fear of the West after the collapse of communism, alleviating the regime control apparatus as it went through a power transfer, long-term negative economic growth due to chronic economic ineptness, a North Korean version of exodus with people leaving their home villages because they had received no food or freedom. While facing all these deep national overall crises, North Korea proposed a new national strategy by its new leader Kim Jong Il -- the so-called building of a "powerful and flourishing socialist nation." This new strategy of building a powerful socialist nation was first proclaimed in the Rodong Sinmun, (an official North Korean government newspaper – translator), dated 22 August 1998, and it was the new national strategy for the new age under Kim Jong Il. Some may view it as merely an old political slogan to temporarily solve the political and economic crisis that they were facing at the moment. However, the North has tried systematically to implement its ideology as a new national strategy different from the times of Kim Il Sung. So what is this new national strategy that aims to make North Korea a powerful and flourishing nation? How is Kim Jong Il going to do it? What are some of the specifics of such a strategy and what methods will they employ? The North has proposed that by becoming "a politically, ideologically powerful nation," "a militarily powerful nation," and "an economically powerful nation," they can ultimately achieve the status of a powerful and flourishing nation. According to their theory, they already have become a politically, ideologically, and militarily powerful nation, so they need only to become an economically powerful nation to achieve the status of a powerful and flourishing nation. So their theory is that the success or failure of their new intended economic development strategy will determine whether or not they will achieve that status. It is clear that the basic premise behind this theory is their achieving an economically powerful nation to ultimately arrive at the powerful and flourishing nation status. North Korea's basic economic policy after mid-1990's was a parallel implementation of revolutionary economic policies and S&T-centered policies. Of those two, the S&T-centered policy was the foundation for future-oriented, mid- to long-term economic policy. Science and technology are the driving force of economic growth in modern countries and they are accepted as the tools that determine national security. Also not to be regarded lightly is their important place among national resources, along with natural resources, capital, and labor. All modern countries –including of course advanced, industrialized countries, but emerging developing

10 countries, too -- are putting much effort into promoting S&T and have taken them as important national policies. North Korea is no different and they have based their strategy for building a powerful and flourishing nation on a science- and technology-centered policy. However, the North's science- and technology-focused policy cannot be called a detailed strategy to bring about economic growth, but rather is a central or basic policy orientation. This means that their actual economic growth strategy is established by lower level economic areas such as strategic industries at the industrial sector level, and concentrated national level promotion needs to be followed through. North Korea, as it entered the 2000's, has adopted the IT industry as the new strategic industry under Kim Jong Il's regime, and started to promote an ambitious plan to achieve the status of an economically powerful nation and the ultimate powerful and flourishing nation status at the same time by a "single leap" based on vigorous growth of the IT industry. For its initial stage, the North has utilized the effects of IT to achieve political and economic goals in both foreign and domestic arenas. For instance, it has opened up some Internet Websites using foreign servers to generate commercial benefits and to promote its regime to foreign audiences. Domestically it has established and operated a nationwide computer network efficiently to produce, manage, and operate its planned economy. We will now take a close look at how the North's theory of building a powerful and flourishing nation as its new national strategy comprises sectoral individual strategies. Then we will look at the implied meaning in the North's economic growth strategy which it proclaimed as the most important aspect of their overall new national strategy, especially the science- and technology-centered policy, and their direction in implementing those policies. By looking at those, we will know how the IT industry as the strategic "single leap" industry sector, growth strategy, and both foreign and domestic "IT strategy" aimed at utilizing the political and economic benefits of IT has been associated with the overall framework of the national development strategy and the economic development strategy. In other words, how it was formed within the core structural ramifications.

1. The Launch of Kim Jong Il's Government and the New National Strategy

1) Basic Goal of the National Strategy: Survival and Prosperity

When a nation is managed in unreasonable and inefficient ways, national competitiveness and the people's quality of life will surely decline. To strengthen national competitiveness and improve the quality of life for the people, a mid- to long-term strategic approach with reasonable and efficient national management is necessary. When national management is bogged down in solving immediate problems facing the nation, unexpected social expenditures and unintended mistakes are sure to follow, undoubtedly impacting national competitiveness and the quality of life. Therefore, there is an absolute need to propose and let the people know where the nation is heading and for what purposes and clearly to explain and forecast to them the overall national strategy established for reasonable and efficient national management. Usually one thinks of military strategy first when national strategy is the issue. However, that is a reflection of the old days of the Cold War era. Time has passed and these days the scope of national strategy is no longer limited to military strategy. The world has moved on from the days of the Cold War with the effects of the full-blown globalization that has been going on since then. A wide array of concerns such as political, economic, social, and cultural factors now constitutes national strategic thinking. From this multi-dimensional view, national strategy now 11 means "mid- to long-term principles of action, ideology and tools that are necessary to materialize national interest and goals by efficiently utilizing a nation's available resources in the environment the nation is provided with" (Ryu Sang-yo'ng, 2001, pages 16-17). In other words, national strategy, as a tool and method that provide a nation's current and future direction, can be defined as a systemized solution that offers mid- to long-term national goals that the nation seeks and the tools and methods accordingly required to achieve them. National strategy also includes a conceptual structure that shares common hypotheses and premises for the targeted goals. Therefore, it is necessary to conduct and include such points as a new conceptual structure generated from wide consultations and discussions among policymakers on the elements of the tools and methods, the strategies and policies to achieve such goals and expand national interests, countermeasures that protect the nation from foreign threats and minimize such threats, the most approachable and efficient as well as beneficial methods, and ways to maximize opportunities given to the nation at certain times (Han Pae-ho, 1998, page 3). These new kinds of national strategy concepts are separated from a policy or system in conventional means. When national strategy is being enforced, policy and system are the central tools of strategy to carry out that strategy, but they are very much dependent on the level and forecast of different items and elements being considered at each time (Ryu Sang-yo'ng, 2002, pages 17-18). First, there is always the possibility that national interests and national goals can change anytime, however slight they may be, due to the progression of time. However, national strategy is enforced on the clear premise that it must be forged ahead no matter what changes may occur for the mid- to long-term view, so it is characteristically "long term." Second, it is difficult to have a national strategy that focuses on only one interest or goal, or considers only one variable element. National strategies are generally characterized by a "complex nature," considering all points of politics, the military, the economy, and culture. Third, it is essential that a national strategy present a mid- to long-term national vision for the future and is sharply focused on materializing that vision. Therefore, it must have the element of "forecasting" future directions and principles of action, along with an objective analysis of the current situation the nation finds itself in. The most important element in national strategy can be determining what the foremost national interests are and how they should be achieved in terms of priorities. National interests can be variously determined and set according to the situation a nation faces or historical traditions or national values the nation has traditionally sought. A national objective is a set of specific goals to materialize and maintain national interests. Most of the time, a country's shared and common goals can be just basic "survival" or general "prosperity." Survival is usually associated with military and security goals, whereas prosperity is a goal concentrated on economic elements. In other words, such representative national goals of survival and prosperity can be at the same level as "regime maintenance" and "economic growth" that are usually spoken of in general terms. The issue of which one of these two national strategy goals should be given more weight depends on the definition of national interests and how each of them is prioritized for the nation. In this regard particularly, the degree of threat of the nation's military and security environment and the level of that threat, can have substantial impact overall. If a nation has a military and security environment that is not threatening at a significant level, then the nation is more likely to focus on economic development and growth in utilizing its national strength and resources. If the nation's strength level is relatively weak and has only a few available resources, however, the economic growth field more likely will not be substantially supported either.

However, if a nation is in an unstable current environment where its military and security goals are the most pressing issues, then it has no option other than to utilize all its available national strength and resources for the purposes of maintaining the regime instead of economic growth. In consequence, strengthening national competitiveness or improving the quality of life for the people will be relegated to a second tier of importance. In other words, the national strategy that a nation selects is dependent on its military and security environment and the range of related national strength and available resources.

2) Background of the National Strategy Adopted by the Kim Jong Il Regime

On 8 July 1994, North Korea's leader Kim Il Sung died of arteriosclerosis and myocardial infarction followed by a heart attack around 2 o'clock. The news of the death of the nation's supreme absolute ruler was made known to the world 34 hours later by the North Korean media on the next day, 9 July. It was expected at the time that his son Kim Jong Il would immediately take over and become North Korea's next supreme leader. However, even after Kim Il Sung's funeral ended, Kim Jong Il still did not officially proclaim a transfer of power but continued to emphasize the so-called eternal living stature of his father, Kim Il Sung, and started a "ruling by the Great Leader's dying instructions," almost as if taking up his dead father's dying words. This "ruling by dying instructions" proclaimed by Kim Jong Il is what North Korea's general political atmosphere in a transition of power has been for the last four years and two months since the Kim Jong Il government officially began on 5 September 1998. During this transitional period, as North Korea has been faced with numerous foreign and domestic problems, they have used the deceased Kim Il Sung's charisma very effectively to overcome those problems, which means that North Korea's political leadership under Kim Jong Il during this transitional period of four years after the death of Kim Il Sung relied on the dead Great Leader's authority to rule over the people without such political acts as proposing a new political ideology or a set of policy programs. However, North Korea started to rework the system in a more dynamic way beginning 8 July 1998, the 4th anniversary of the Great Leader's death. On 26 July 1998, after the election of delegates for the 10th session of the Supreme People's Assembly (SPA) election, the first meeting of the 10th delegation was convened on 5 September. The meeting completely modified the socialist constitution that had previously been amended back in 1992, and in its place, a new "Kim Il Sung Constitution" legalizing the dead leader's dying instructions was officially proclaimed. Under this new constitution, the new Kim Jong Il regime was officially proclaimed, effectively giving Kim Jong Il the title of Chairman of the Military Committee as "the nation's highest, supreme leader ruling and overseeing all the political, military, and economic apparatus to organize and lead our fatherland socialist country's tasks at hand."2 Since the Kim Jong Il regime was a product and essentially a continuation of the old Kim Il Sung regime, it was highly expected that it would follow the old system's policies, but because the new Kim Jong Il regime was launched in very different foreign and domestic situations, it could not just follow the old regime's policies all the way. The international and domestic situations that North Korea found itself in the 1990's when Kim Il Sung died and Kim Jong Il's

2 The beginnings of the Kim Jong Il era and the official Kim Jong Il regime should be separated by their time periods. The beginning of the Kim Jong Il era was July 1994 when Kim Il Sung died and Kim Jong Il took over as heir to the position of North Korea’s supreme leader; but it was only September 1998 that saw the official beginning of the Kim Jong Il government, when the new constitution was established that reworked the governmental system and set the new ruling structure after Kim Il Sung’s death. 13 regime started were filled with unprecedented and worsening foreign and domestic problems and crises. North's Korea's tumultuous experiences in the 1990's overlapped the fall of the socialist bloc and its ultimate disintegration. The fall of the Soviet Union and the ultimate ending of its military alliance, as well as China's recognition of South Korea, not to mention the halting of foreign aid from the Soviet Union and finally the loss of foreign economic cooperation with the socialist countries (structured trade, preferential prices) all substantially damaged North Korea's foreign relations with its allies. Particularly, the disintegration of the socialist bloc accelerated North Korea's economic stagnation that had been visible since the 1980's.

(Table 2-1) Estimated Economic Growth Rate of North Korea (unit: %)

Year 90 91 92 93 94 95 96 97 98 99 00 01 Growth Rate -3.7 -3.6 -6.0 -4.2 -2.1 -4.1 -3.6 -6.3 -1.1 6.2 1.3 3.7 Source: The Bank of Korea (2002)

The North Korean economy continued to show negative growth in the 1990's (refer to Table 2-1) until finally in 1993, the North Korean government had no choice but fully to accept that their third Seven-Year Economic Plan had failed. Thereafter, the situation became far worse with the death of its supreme leader Kim Il Sung in 1994. Adding to the regime's inability in tackling the daunting economic issues were all kinds of natural disasters such as floods, which resulted in a terrible loss of agricultural production. The sudden meltdown in the supply side of the economy resulted in devastating shortages of food, energy, natural resources, and foreign currency reserves, ultimately exposing the dire situation for the country and the true nature of the overall unprecedented crisis the North Korean regime faced. It was indeed the worst crisis in its history since the establishment of the people's government and it looked as if it were at the tipping point of falling into complete regime collapse. Despite all those troubles and crises, the reason that North Korea was able to continue without completely collapsing can be said to result from its dictatorial political system centered on the absolute supreme leader. If only economic aspects were concerned, North Korea would have collapsed completely a long time ago. The regime's continuance in spite of a nearly collapsed economy reflects a very high-level and capable political control system. This fact reveals the North Korean regime as one that displays "non-symmetry" between a terrible economic apparatus and a strong political apparatus (Okonoki Masao, ed. 2000, page 30). However, this kind of asymmetrical politico-economics essentially limits the flexibility and dynamism of North Korea national strategy. North Korea's foremost national goal in the 1990's --amidst all kinds of foreign and domestic crises -- was maintaining the regime, mere "survival." With the fall of the socialist bloc and the subsequent demise of the existing military and security environment, basic survival became the regime's top priority. Also, the North's long-term, chronic economic crisis itself was seen as a factor that could have grown into a threat against the regime, so it had no choice but to focus

14 all of its available national strength and resources on maintaining the regime. The foreign and domestic situation the North found itself in forced the regime to choose regime maintenance as the top priority, over any other issues. In the majority of capitalist societies, a basic goal of national strategy can be said to be survival and prosperity, which usually are undertaken by way of maintaining government and economic growth in parallel. By contrast, the socialist countries' basic goals of national strategy are undertaken in two separate steps. That's because their political principles call for ultimately achieving the goal of a communist state with no classes, after the intermediate goal of labor classification and industrialization of all its people (Johnson, 1970, p. 8). However, despite such differences in setting the stages of general immediate goals, the middle goal of socialist countries can be seen to be at the same level as the capitalist countries' overall general national strategic goal of maintaining government and economic growth (Hong Yong-p'yo, 2000, page 3; Kwak Su'ng-chi, 2000, page 103). North Korea, too, sets its national strategic goals as a typical socialist country, while still reflecting its own conditions. The North's top priority after the fall of communism and the end of the Cold War became survival -- how to maintain the regime amidst approaching encompassment by Western countries. Considering that the worsening of the North's economic situation accelerated in the 1990's after the collapse of the socialist bloc and the end of the Cold War, the North's national goal of regime maintenance contained both military and security considerations, as well as goals for the economic aspects. Therefore, North Korea's national strategy may be viewed as ultimately aimed at maintaining the regime, with the politico- economic goals of "guaranteeing security" and "rebuilding the economy" implied therein.3 The fact that the North's regime maintenance strategy has crossed into the economic side, subsequently expanding over military and security aspects that had been seen as the threats to the regime, indicates that the elements of economic crisis have become a dangerous and destructive element of their own, comparable to the level of the military threat. The North's economic crisis therefore is not limited to a certain level or sector but has become an issue affecting the entire North Korean economy, to the point where it is affecting the entire society, resulting in an overall unprecedented social crisis. So, overall, the North cannot afford to ignore either security guarantees or economic rebuilding issues as elements that have to be resolved in order to achieve their top national priority of regime maintenance. Of course, considering the nature of the North's authoritarian regime, and its tendency toward giving militarization more weight in recent times, they could have just selected a basic strategy based on the principle of "security guarantee first" and "economy rebuilding second," but the reality for North Korea is that the current situation is not one in which they can choose between the two; rather, they need to resolve both issues in order to achieve "survival." The North, therefore, had no choice, from its beginning, but to have a national strategy aimed for survival through both elements -- security guarantee and economy rebuilding. In the previous regime of Kim Il Sung, various political slogans and political theories had been proposed, in efforts to resolve problems facing them and to back up their propaganda in each different time as foreign and domestic politico-economic conditions changed. The

3 Regarding this subject, Sin Chi-ho (1999) explores the changes in North Korea’s survival strategy after 1989, viewing its development of nukes and economic opening as one facet of the North’s strategy for regime maintenance through "security guarantees" and "economy rebuilding." Also, Ko Yu-hwan (2000) sees North Korea’s survival strategy after the collapse of the socialist bloc as opening its economy to the outside and entering the capitalist world economy by means of unifying its own regime through proposing "our own brand of socialism," securing economic aid through threats of war and the development of nukes and missiles, and seeking survival through improvement of the North Korea-US relationship. 15 frequency of issuing such political slogans and propaganda increased as the situation worsened with the beginning of the 1990's. After Kim Il Sung's death, the Kim Jong Il era, which opened among accumulated crises, began with the "harsh march." The North Korean government first began to circulate the term "harsh march" in early 1995, as a political argument aimed at suppressing possible ideological vacillation and overcoming the domestic and foreign trials and tribulations following the collapse of socialism and shortages in material resources caused by the economic difficulties after the death of Kim Il Sung and to demand that the North Korean people bear more hardships. In the 1996 New Year's Joint Editorial, the North Korean government proclaimed that "today the Party and the revolution are asked to do such monumentally important work. The current situation demands that all of our Party members, soldiers of the People's Army, and all people of the nation fight head on, with the ‘spirit of harsh march' born in the forests of Paektu." First mentioned in the 1996 New Year's Joint Editorials along with the Red Flag Ideology, "harsh march" is based on the "Three Positions of Socialism" theory, which proclaimed that the immediate problems of the country and socialism could be overcome and defended strongly by establishing the three positions of political ideology, economy, and military.4 The "Three Positions of Socialism" theory is thus North Korea's foremost theory to overcome the stark realities and is reflected in the term "harsh march" (Kwak Su'ng-chi, 2002, page 94). As the country slowly began to crawl out of the most difficult conditions under the banner of "harsh march," the Kim Jong Il regime reset the political discourse of the country by proclaiming a newly modified constitution on 5 September 1998. This modified constitution greatly changed the previously existing power structure of North Korea. First of all, the titles of Chairman and the Central People's Committee were abolished altogether, and the Permanent Committee of the Supreme People's Assembly was changed to the Executive Committee of the Supreme People's Assembly, with the Politburo changed into the Council of Ministers. Also, the Military Committee was given the new function of "overall management of military operations" in addition to being "the supreme military command organ," and the Chairman of the Military Committee was given an additional function of "leading overall military operations." Those changes meant that the "Great Leader Kim Jong Il" was still undoubtedly in full control of the centralized power over the Party and the military, but the responsibilities of the head of state were divided, with responsibility for foreign and economic policy now distributed at the Cabinet level. Kim Jong Il was thus successful in centralizing his power by taking full control over the military. By distributing and delegating authority and responsibility for the economy to the Cabinet, he also succeeded in establishing a system whereby he would be able to avoid political burdens if any related policy failures were to occur (Ham T'aek-yo'ng, Kim Cho'ng, 2000, pages 14-19; Yi Chong-so'k, 2000, pages 90-93).

4 "The struggle for our Party and people will go on with the red flag of revolution flying high above, and it is our struggle to make our own-style socialism’s Three Great Positions – the position of socialist political ideology, and economic and military positions -- a never-defeated fortress. If we can firm up our socialist positions in the three areas of ideology, economy, and military, there is nothing to fear and nothing we cannot do." "Let’s march forward bravely in the New Year, holding the red flag high above." Common editorial in the Party Newsletter [Tangbo], Military Newsletter [Kunbo] , and Youth Newsletter [Ch’o’ngnyo’nbo], 1 January 1996. 16

2. National Strategy in the Era of Kim Jong Il: Building a "Powerful and Flourishing Socialist State"

As the Kim Jong Il regime began with the newly modified constitution and under the new governmental system which it constructed, it proposed a political governing theory for the era. The theory of a "Powerful, Flourishing State" was the new political slogan, replacing the previous "Three Positions of Socialism" in the age of "harsh march." However, this new theory was not just an ordinary theory meant as a theory of political governance, but rather, it was a theory that was systematically backed up by new political thinking on how to achieve the two essential goals of stabilizing security and solving the chronically depleted economy within a scope of a national strategy. There is a difference between the theory of Three Positions of Socialism and the new theory of building a "powerful and flourishing nation." Whereas the former emphasized revolution building to solve the immediate problems and crises, the new theory was proposed as a set of goals the new regime would adopt and seek (Kwak Su'ng-chi, 2002, page 93). The new "powerful, flourishing state" theory as national strategy for the era of Kim Jong Il was announced in an political discussion column in Rodong Sinmun, dated 22 August 1998, entitled "A Powerful and Flourishing Nation." The column stated that the new national strategy was formulated based on essential historical progress in an effort to build a powerful and flourishing North Korea, as the following text indicates.

Building a powerful and flourishing nation under Juch'e is a design our Dear Leader General has given to us as his oath made with patriotism and loyalty to lead our country into the twenty-first century and make the new century a glorious one before our previous supreme leader, country, and our people. Building a powerful and flourishing nation is an unavoidable requirement stemming from historical stages that our revolution has continued on under the flag of Juch'e, and it is an enormous, endlessly glorious holy work for our entire people.

In addition, the discussion stated the goals of such powerful and flourishing nation as building a country where self-sufficiency, self-autonomy, and self-defense are realized, a country full of self-sufficiency and creative in all aspects of society, in other words, "a socialist state under Juch'e." In addition, it also proposed a strategy to achieve economic development by focusing on ideology and military led by the supreme leader as a way to build a powerful and flourishing nation in the twenty-first century.5 The theory of building a powerful and flourishing state has been mentioned in the New Year's Joint Editorial every year since it was first proclaimed in August 1998 and has been used as a slogan to evaluate each previous year's efforts in building a powerful and flourishing nation for North Korea, propose a vision for the new year, and achieve all of these goals.

This is a new year of transformation in which we will go forward with building a strong and powerful country under the direction of our great Party. This is the year we will go at full speed.6

5 Cho Tong-ho (2001, page 51) interprets this powerful and flourishing state theory as a North Korean version of the "rich country, strong army" theory, viewing the military-first policy as corresponding to a strategy for a "strong army," and strengthening national economic power as leading to a "rich country." 6 "Let’s make this year shine as a year of great transformation for building a powerful and flourishing country." Rodong Sinmun, Korean People’s Army, Youth Vanguard joint editorial. 1 January 1999. 17

This is a year of full speed ahead to establish a decisive movement toward the future by building a powerful and flourishing nation under the leadership of our great Party.7

This is a year we shall establish our road to building a powerful and flourishing nation in the 21st century under the leadership of our great Party. This year shall truly be a great year of transformation.8

This is a year of full speed ahead to forever glorify the history and achievements of our Great Leader, a year of a new leap forward to build a powerful and flourishing country.9\

This new year of Juch'e 92 shall be a year of full of brave attack mode and a full throttle transformation with everyone marching at full speed toward the mountain peak of a powerful and flourishing nation under the flag of military-first ideology.10

(Figure 2-1) Procession of the Three Pillars of Building a Powerful and Flourishing State

1998 A Powerful and Flourishing Socialist State

Three Pillars of Building a Powerful and Flourishing State

Politically, Ideologically Militarily Powerful Economically Powerful Powerful Nation Nation Nation

Political, Ideological Military Position Economic Position Position

Three Positions of Socialism

Harsh March 1994

Thus, North Korea was proclaiming their national goal of building a powerful and flourishing nation to domestic and foreign audiences together. All of North Korea's political and economic strategies were being established within this framework of building a strong state. Then the question may arise: how are they going to achieve all of those goals? How will its subordinate infrastructure levels be built in order to carry out such national goals?

7 "Let’s make this year, the 55th anniversary of the Party’s establishment, a year of proud victory, amidst the flames of a great tide of Ch’o’llima." Rodong Sinmun, Korean People’s Army, Youth Vanguard joint editorial. January 1, 2000. 8 "With the spirit of victory from the harsh march, let us open up a path of advance in this new century." Rodong Sinmun, Korean People’s Army, Youth Vanguard joint editorial. 1 January 2001. 9 "Let’s make this year, the 90th anniversary of our Great Leader’s birth, a year for a new leap forward toward building a powerful and flourishing nation." Rodong Sinmun, Korean People’s Army, Youth Vanguard joint editorial 1 January 2002. 10 "Following the flag of military-first ideology, let’s make widely known our republic’s dignity and power." Rodong Sinmun, Korean People’s Army, Youth Vanguard joint editorial 1 January 2003.

To answer such questions, let's take a look at how their strategies are categorized. They are basically categorized into three areas. Foremost, they see building a powerful and flourishing nation as possible by creating an "ideologically and politically strong nation, militarily strong nation, and economically strong nation." When those goals are ultimately fulfilled, they believe they will have achieved a powerful and flourishing socialist nation. This is closely related to the theory of "our own brand of Three Socialist Positions" proclaimed back in 1996's Joint Editorial, which consisted of a political and ideological position, military position, and economic position (see figure 2-1).11 According to this theory, by strengthening its political and ideological position, a powerful political and ideological country can be achieved, and with strengthening the military position, a militarily powerful country is then achieved, with the final strengthening of economic position that will bring an economically powerful nation (Kim Kap-sik, 2001, page 201). The more detailed and systemized theory of building a powerful and flourishing nation was proclaimed in the 2000 New Year's Joint Editorial under the name of "The Three Pillars of Building a Powerful and Flourishing Nation." According to the proclamation, "We must go forward in a full throttle mode, taking the path of focusing on ideology, barrels of guns, and technology and science. Ideology, barrels of guns, and S&T are the three pillars of building a powerful and flourishing nation, for strengthened ideology, powerful guns, and developed science and technology are essentially a powerful and flourishing socialist state itself under Juch'e." Then another question arises as to what meaning these subsequent subordinate strategies would have on the road toward building a "powerful and flourishing nation"?

1) Ideologically Strong Nation

In Rodong Sinmun's 22 August 1998, political discussion, which first officially proclaimed the theory of building a powerful and flourishing nation, ideology and the military were clearly listed as the basic foundation of the theory. It stated that "holding a grip on ideology and the military is the same as holding a grip on building a powerful and flourishing nation under Juch'e." Building a powerful and flourishing nation begins then with "building an ideologically powerful nation" and subsequently leads to building "a country of Juch'e uniformly colored with Comrade Kim Jong Il's thoughts." The discussion also wrote that a socialist economy is "a dynamic economy moving forward by the power of its ideology." So according to this theory, "the power that ideology projects is limitless" and that is why "the twenty-first century will witness a powerful and flourishing country built upon Juch'e," basically ideology serving as the foundation to build such a powerful and flourishing state.12 It obviously reflects the basic nature and characteristics of the North Korean regime, which emphasizes ideology over material stimulation. In the 2002 New Year's Joint Editorial, North Korea also proclaimed "our [own] ideology" consisting of "the Four Supremes." The editorial asserted that, "The new year's revolutionary grand march is a struggle thoroughly to realize the supreme ideology of our leader, our ideology, our military, and our system to glorify the people of Kim Il Sung with dignity and honor. Our own brand of socialist achievements will surely be victorious because our leader is great, our ideology is supreme, our military is powerful, and our system is superior. The

11 "Let’s march forward at full speed for the new year, holding high the red flag." Party Newsletter, Military Newsletter, and Youth Newsletter joint editorial, 1 January 1996. 12 This "ideology-centered" theory by North Korean authorities ultimately means strengthening the Juch’e ideology and leadership political system. (Cho’ng U-kon, 2001, page 4). 19 ideology of Four Supremes is the spirit of socialist Korea that moves dynamically toward the final victory of Juch'e, and it is an eternal slogan for building a twenty-first century powerful and flourishing nation." The reason why North Korea is so focused on "ideologically powerful nation" in their process of building a powerful and flourishing nation is because ideology is their ultimate fortress in maintaining the regime. The fall of communism and the subsequent halt of military and economic aid from their old sponsors Soviet Union and China that had guaranteed regime and economic development meant that North Korea now had to stand alone as a true "Juch'e country." Therefore holding onto their regime and maintaining it is the most important issue of all. Thus, the reason why they regard ideology as the basic foundation on which to establish a powerful and flourishing nation is that they know that when ideology changes, it will become the starting point for regime softening and then regime collapse. So only through a strong ideology can "fierce ideological confrontation with imperialism" be waged in advance of reform and opening and "the dangerous yellow wind of capitalism and the elements of non-class aspects which are not important at all" be blocked. Additionally, only if an ideologically strong nation is built can they have the people further internalize the consciousness that they are the masters in building a socialist economy. North Korean authorities absorbed as common knowledge this important concept of ideology as their experiential lesson from the fall of communism in the Soviet Union and Eastern Europe. With regime maintenance set as the most important goal for themselves, building an ideologically powerful nation in the overall scheme of "building a powerful and flourishing socialist Juch'e nation" in the twenty-first century became their most important mental and ideological foundation.

2) Militarily Powerful Nation

Along with ideology, the "military" is another important foundation on which to build a powerful and flourishing nation. It is basically regarded as the final Maginot line that keeps the regime from collapsing. If building an ideologically powerful nation for the goal of building a powerful and flourishing nation is meant to reinforce and internalize the North Korean people with the ideology of Juch'e and the regime under a supreme ruler for the purpose of strengthening the regime on the domestic level, building a "militarily powerful nation" is an attempt to stabilize the regime by responding to foreign entities with physical force against the possible threats of regime collapse or instability. North Korea under Kim Jong Il insists that building a militarily powerful nation is possible through the new governing principle of "military-first politics" which "puts military first and grants a prioritized power" (Ko Sang-chin, 1999, page 17). Under the realities of a possible total regime collapse in the last few years, the North Korean leadership proposed this "military- first politics" as a new governing principle to reinforce, strengthen, and justify the regime (Yi Su-so'k, 2000, page 224). The leadership stated, in an attempt to explain why the new military-first politics was implemented as a new way of governing and political principle, "The economy may fall at any time, but it can always come back and stand up like before, but when the military falls behind, a hundred-year plan is gone forever. Therefore a strong army is essential before peaceful conditions upon which to build the economy can be guaranteed"13and further explained that

13 North Korean continues to be adamant about strengthening its military, even if the economy is further weakened. "Our country North Korea has paid a dear price to build our current strong army. All people of North Korea must 20

"political power may be the basic tool to materialize politics, but it is the military that keeps political power in place14" (Kim Kap-sik, 2001, page 108). Additionally, they recognize that their People's Army is the one organ that is most effective in overcoming current problems in both foreign and domestic areas. They believe that the People's Army is their final fortress in safeguarding the nation and the regime, in addition to being a tool to strengthen their position in foreign negotiations in order to bring in the foreign resources necessary for resuscitating their depleted economy, and finally it is also the most trustworthy organization in the whole process of rebuilding the economy (Yi Ki-tong, 2001, page 279.) The high regard for the People's Army is well illustrated in the following statement made by Kim Jong Il himself: "We must start with strengthening the People's Army and establishing a strict social atmosphere that values the military. Without the army, there are no people, nor socialist state or Party, so in this regard, the army itself may be called the people, the nation, and the Party" (Choso'n Central Broadcasting, 24 January 2000). The People's Army of North Korea is seen as the one organization that all elements in North Korean society must learn from. Its importance in the society is well illustrated in the following articles in Rodong Sinmun, (4 January 2001 and 9 January 2001): "For all people to achieve a transformative innovation in thought and from Japanese influence ….it is highly important to learn from and follow the fighting spirit and moral character of the People's Army." The People's Army also plays a major role in economic activities as well. As the role of the People's Army in the process of building up the economy was strengthened with the appearance of the new slogan of "military-first politics," [the Army] plays the role of activated labor, from indirect social capital to agriculture and the export industries (Kim Yo'n-ch'o'l, 1998, page 218). The People's Army was also given another important role to play in the North Korean government's newly promoted S&T-centered policy. As previously seen in their capabilities of nuclear development and missiles, the sector in which the North's S&T is most advanced is the military-related field, because in conducting the S&T-centered policy it is the most modeled- upon organization (Han Ho-so'k, 2001, page 4). All these points indicate that not only is the North Korea's People's Army a final fortress in safeguarding the regime and the country on both foreign and domestic levels and a tool to strengthen its position in foreign negotiations, but it also is a vanguard in expanding a social atmosphere for progressive attitudes and thinking. So there is no doubt that the military will continue to exert more influence as North Korea forges ahead with its economic revival strategy and S&T-centered policy.15 Additionally, since building a powerful and flourishing nation is an economic growth strategy based on an "ideologically and militarily powerful nation," it is clear that the role and importance of the new political principle and governing mandate of military- first politics will continue to strengthen.

3) An Economically Powerful Nation

North Korea's own evaluation of the stages in their plan of building a powerful and flourishing nation regards as successful the stages from "harsh march" and "military-first politics" through the building of a politically and ideologically powerful nation and a militarily do their very best and sacrifice everything to have a strong army above all else." , 9 October 1999. 14 "Our Party’s military-first politics shall be always victorious and never experience a defeat." Rodong Sinmun, workers’ Joint Editorial. , 16 June 1999. 15 This kind of economic policy that emphasizes "military-first politics" to build a powerful and flourishing state is a formulation for mobilizing natural resources that can increase economic efficiency without reforming the structure of the economic system, 2001, page 6. 21 powerful nation, so for them only the stage of building "an economically powerful nation" remains to be fulfilled.16 Rodong Sinmun, dated 9 April 2000, stated, "Our people's struggle to achieve an ideologically and militarily powerful nation has already produced great achievements. Now if only we can achieve an economically powerful nation, our country will be able to boast that finally in both name and fact we have risen to the stature of a truly powerful and flourishing nation." The proclamation also appears clearly in the joint editorials. The 1999 New Year's Joint Editorial stated, "Economic development is the most important task in building a powerful and flourishing nation. When our political, ideological, and military power is supported by economic power, we will be able to say that, in both name and fact, we have ascended to the position of a powerful and flourishing nation." Again in 2001, the New Year's Joint Editorial stated that, "it is a socialist principle that our forever-victorious army and political, ideological power must be backed up by a powerful economy." By defining economic development as the most important task in building a powerful and flourishing nation, North Korea is emphasizing the importance of "economic power" as a pre- condition for "military power" and "political, ideological power." Particularly in 2001, North Korea proposed the concept of "national economic power" as a specific element for an economically powerful nation that is on the road to building a powerful and flourishing nation. The 2001 New Year's joint editorial stated, "There is no task more important than striving to have national economic strength," suggesting that securing national economic strength is a paramount important task in order to achieve the status of a powerful and flourishing nation. Their future focus, therefore, will be on building an economically powerful nation in building a powerful and flourishing nation, and one may say that their economic development strategy lies at the center of their national strategy. As a positive objective in heading toward an economically powerful nation for the ultimate goal of building a powerful and flourishing nation, North Korea has proposed "constructing a self-reliant national economy" (Chang Myo'ng-il, 1999, pages 6-8; Kim Chae-so', 1999, pages 5-7). They also emphasize the importance of "our own brand of socialist economic system" with regards to building a powerful and flourishing nation (Kim Ung-ho, 2000, pages 2- 4), pointing out the importance of the nation's centralized political leadership in developing economic projects. "One of the important requirements for forging socialism and building a powerful and flourishing nation is strengthening the nation's centralized, unified leadership for the economic projects." (Ch'oe Yo'ng-uk, 2000, pages 5-7). An analysis of this policy direction of economic development proposed by North Korea pointed out that North Korea will go forward with their own suitable environment for economic development and will likely keep to their position of self-reliant national economic development based on the self-sufficiency principle until the end (Cho'ng U-kon, 2001, page 8). However, another analysis has recently been made which contradictorily focuses on North Korea's dual policy position of "official statements" and "actual benefits" (O Su'ng-ryo'l, 2001, page 198). The New Year's joint editorial for the year 2000 stated, "Rather than looking at others, we must develop our own self-reliant national economy one by one based on the principle of self-sufficiency that we have built up until now with blood and sweat. It is important to adamantly guarantee actual benefits in all sectors." The New Year's joint editorial in 2002 further argued, "Earning the maximum actual benefits possible while strictly keeping to our socialist principles, this is the basic direction of completing socialist economic management that

16 This self-evaluation by North Korea also contains their "inconsistent ambition" to build an economically powerful nation by tackling as a priority the economic problems that persist, despite their achievement of a politically, ideologically, and militarily powerful nation at a certain level. (Ham T’aek-yo’ng, Kim Cho’ng,, 2000, page 16). 22 our Party upholds." In other words, while in name they are proclaiming a self-reliant economic development policy centered on heavy industry, they are emphasizing the importance of efficiency in economic policy and of securing actual benefits such as foreign exchange and technology through promoting exports and attracting foreign capital. So by pursuing both "official statements and actual benefits," North Korea's leadership is aiming to maintain their regime through a strategic choice of both security guarantees and economic rebuilding. This is yet another proof that the new Kim Jong Il regime needed a new kind of economic development strategy to maintain its regime. The regime is basically proposing a new developmental strategy for the purpose of "normalizing production, putting the economy on the right path, and stabilizing and improving the people's quality of life" (Rodong Sinmun, 1 January 2000, joint editorial); and it can be explained as a "revolutionary economic policy" and "a strategic path for building a rich, powerful fatherland"17 based on "S&T-centered policy."18 Therefore in summary, North Korea's plan to build a powerful and flourishing nation is a strategy aimed to maintain its regime through security guarantees and economic rebuilding, and particularly they show a strong intention to adopt economic growth policies with emphasis on the issues of economic growth (economically powerful nation), based on their confidence of maintaining the regime (ideologically, militarily powerful nation) (Yi Chong-so'k, 2000, page 89). Despite their emphasis on "military-first politics" as a new political governing principle which is representative of the Kim Chong Il regime's inclination toward militarism, it cannot be denied that on the underside of that principle lies an economically pragmatic tendency.19 To wit, their ambition to build the economy based on the foundation of a strong military is really the core of their theory of building a powerful and flourishing nation. The arena of science and technology is the central core mechanism to adhere to such economic pragmatism in order to build a powerful and flourishing nation. After building a "politically, ideologically powerful country" and "militarily powerful country," the only thing left for them to complete is building "an economically powerful country" to achieve the ultimate status of a powerful and flourishing nation, and the center of that "economically powerful country" is science and technology. So the North's national strategy of building a powerful and flourishing nation can only be achieved by building an "economically powerful nation" through their economic growth strategy, and that economic strategy is essentially centered on developing science and technology.

17 "Let us adopt science-centered policy and build a powerful and flourishing nation." , , joint editorial, 4 July 2000. 18 The slogan for the Party Central Committee proclaimed on 31 July 2000, for the 55th anniversary of the establishment of the North Korean Workers’ Party actually contained the words "We must bring about a new transformation in building an economically powerful country by strictly implementing the Party’s revolutionary economic policies and science and technology-centered policy." , 1 August 2000. 19 Even if one says that, at the level of official propaganda, the Kim Jong Il administration proclaims a strong line of militarism, it is appropriate to view that as coupled with practical economic policies for actual realization of economic reconstruction, and, in fact, it is not true that one side cannot possibly co-exist with the other. (Yi Chong- so’k, 1998, pages 102-104). 23

3. The Process of Change in North Korea's Economic Development Strategy

The basis of economic policy adopted by North Korea in the 1950's for its own socialist economic development was the "self-reliant national economic policy."20 In the first meeting of the Third Supreme People's Assembly, held in October 1962, Kim Il Sung defined as a top priority the development of heavy industries as "a path to self-reliant national economic development" and stated the following with regards to the meaning of "self-reliant national economic development" (Kim Il Sung, 1962, page 398).

It means establishing a comprehensive, consolidated economic system where all areas of the economy are organically connected together to grow the economy in various fields, equipping the economy with modern technology, and building strong raw material bases, so that domestic manufacturing of heavy and light industrial products can be guaranteed, as well as growing agricultural products that are needed to enrich our country and improve people's lives.

A more detailed analysis of this statement pointed out that "Juch'e is the ideological and methodological basis of self-reliant economic theory," and the "basic policy line" of self-reliant economic development is developing heavy industry as the most important economic sector, while still developing light industry and agriculture at the same time. Establishing socialistic production relationships is defined as "socio-economic pre-conditions" and self-sufficiency as a "basic principle" in a self-reliant economy (Hong Su'ng-u'n, 1984). This "self-reliant national economic policy" consistently has been the central North Korean economic policy core element since the establishment of the regime, and it is a systemic principle forming the basis of North's Korea's system, along with Juch'e for ideology and the supreme-leader system in politics (Kim Ku'n-sik, 2000, pages 95-96).

(Figure 2-2) The Process of Changes in North Korea's Economic Development Strategy

Category 1950-1992 1993-1997 1998 – present

Basis of Economic Self-reliant national Policy economy line Economic Develop- Heavy-industry-first Revolutionary economic Revolutionary economic S&T- centered policy ment Strategy policy strategy (Three Big Firsts strategy (agriculture and policy) power first) Form of Unbalanced development Catch-up strategy Unbalanced development Leaping forward strategy Development strategy strategy Strategy Pattern of Economic Extensive growth pattern Internal growth pattern Growth Strategic (main) Heavy industry Agriculture, light Agriculture and power IT industry Industries industry, trade *Author prepared.

20 North Korea’s line of self-reliant national economic policy was not only a political choice by the North, but also the result of sanctions implemented by the West (Brune and Hersh, 1978, pp. 19-20). 24

If national strategy means a systematic treating of goals a nation must pursue in the mid- to long-term, including the kind of tools and methods to be employed for achieving such goals, then policy ideas that maintain a certain degree of consistency and uniformity to propose the nation's basic policy direction also must be systematically expressed. Particularly, strategic directions for economic development must be defined by proposing a central policy line or basis that sets the national strategy's economic goals and the ways to achieve them. North Korea's economic development strategy, as shown in figure 2-2, has gone through varied changes in each stage since the 1990's. However, self-reliant national economic policy line as the foundation of their economic policy has continued without fundamental revision since the establishment of the North Korean regime as an unchallenged, principled economic policy idea (Goldstein and Keohane, 1993, p. 9). Accordingly, the changes in North Korean economic development strategy, rather than meaning an expression or fundamental change in the self- reliant national economic line, mean only changes in the sectors of emphasis. In other words, that means that the North's changes in economic strategy have been adjustments in their investment priorities or changes in their national strategic industries as their foreign and domestic environments have changed.

1) The Heavy-Industry-First Policy (1950 – 1992)

Following the "self-reliant national economic" policy first proclaimed in 1950, North Korea's economic development until the early 1990's was based on an "unbalanced development strategy," allocating investment to heavy industry as the top priority. However, North Korea authorities publicly asserted that "concurrent development in light industry and agriculture, with priority on the development of heavy industry" was what actually happened,. Of course this was not a policy aimed to develop all three sectors by equal allocation of resources and investments. It was rather concurrent development of light industry and agriculture, while heavy industry received a far more important top preference (Yi Cho'ng-ch'o'l, 2000).21 They asserted that raising productivity through preferential growth in heavy industries, which produce production mechanisms, would guarantee the development of agriculture and light industry.22 For better or worse, the North's unbalanced growth strategy focusing on heavy industries first was actually very efficient for quick and short-term economic growth. As Dieter Senghass has pointed out, North Korea, like the majority of the socialist countries, saw that, rather than distributing its limited resources evenly for balanced growth of all industry, concentrating investment in the industry that manufactures the means of production could bring about quick growth in the nation's economy (Han Sang-chin, Yu P'al-mu, translation, 1990). However, over the long term of course, the unbalanced growth strategy entailed inherent contradictions and accumulating inefficiency when it collided with the limits of the insufficient linkage between light industry that supplies everyday goods and agriculture that supplies foodstuffs, as well as the

21 According to North Korea’s Economic Dictionary, "At the center of socialist industrialization is preferential development of heavy industry. Only by creating powerful heavy industry with a mechanical manufacturing sector at its core can a self-reliant industrial system be secured and overall technology rebuilding in the people’s economy realized," clearly emphasizing the preferential development of heavy industry. Economic Dictionary Vol 1, 1985, pages 715-716. 22 North Korea has allocated more than 70% of its available financial expenditures to the heavy industry sector, in accordance with its heavy-industry-first policy. As a result, its industrial structure was quickly reorganized into heavy industry at its center, and it resulted in increases in industrial sector’s ratio among overall gross domestic production from 23.2% in 1946 to 40.1% in 1956, 41.3% in 1960, 57.3% in 1970, 63.6% in 1980, and 60% in 1987. Also the ratio of heavy industry among total industrial production greatly increased, from 51.7% in 1949 to 69.0% in 1980, to 67.3% in 1987 (National Reunification Research Institute, 1993, pages 246 and 248). 25 limits of market expansion due to the problems of "economies of scale" (Kwo'n Yo'ng-kyo'ng, 2002, page 103). Moreover, the North Korean growth strategy reached a critical point in growth when synergy arose between the extensive growth strategy that increases production by linking domestic natural resources and labor (Yang Mun-su, 2001c) and the passive foreign trade policy that only a minimum of raw materials and capital should be imported for socialist economic development and that views export as nothing more than a way to acquire the foreign currency needed for importing those raw materials and capital. As the 1990's rolled around, the unbalanced growth strategy giving priority to heavy industry, coupled with the accumulated economic difficulties and the collapse of the socialist nations, began to develop into a systemic crisis. In the early 1990's, the North was faced with stark policy tasks to overcome its systemic crisis, when they had to find ways to supply the people the needed foodstuffs and consumer products essential for survival by developing agriculture and light industry and increasing foreign trade.

2) Revolutionary Economic Strategy (1993 – 1997)

After Kim Jong Il was inaugurated as Chairman of the National Defense Commission (NDC) (Kukpangwiwo'njang) in 1993, changes began to appear in the line on self-reliant national economic policy. The North Korean authorities officially admitted that the Third Seven-Year Plan (1987–93) had failed and subsequently set a buffer period for the "necessity of having certain adjustments and adequate preparations on the road to the next higher economic development stage" (Ri Ki-so'ng, 1994, page 2). They ultimately proclaimed the "Three Big Firsts" policy, which would "reorganize the economic structure in accordance with the demands of the changed environment and revolutionary development and in economic construction would practice Agriculture First, Light industry First, and Foreign trade First" (Kim Il Sung, 1993, page 280). Of course this new proposal for growth strategy did not exclude the "the people's economy's preferential sectors" – coal industry, electrical power generation industry, railways and transport industry – but agriculture, light industries, and foreign trade were given preference. The new proposal was officially adopted with the title of "Revolutionary Economic Strategy" in the next year, 1994. It was truly "revolutionary" for the fact that they once had been so adamant on giving heavy industry their foremost focus and the related policy of Three Big Firsts. Their emphasis on preferential sectors of the people's economy and metal industry along with the Three Big First policy in the revolutionary economic strategy were rather not a result of the previous heavy- industry-first strategy, but they were defined as necessities to efficiently proceed with the Three Big First policy, the sort of relationship that exists between ends and means. To them, the preferential sectors of the people's economy are "important factors to decisively increase agricultural and light industry production," furthermore, they see development of the preferential sectors as "basic pre-conditions with which the better to contribute to improvements in the people's quality of life" (Han Tae-so'ng, 1995, pages 10-11). Therefore, the "revolutionary economic strategy" is a "strategy to improve people's quality of life by modifying the economic structure from heavy-industry-first to centering on light industry and agriculture, and shifting great efforts for speed and investment to light industry and agriculture" (Han Tae-so'ng , 1995, page 10). In more detail, it is a new growth strategy that differs from the existing unbalanced growth strategy which had put first priority on heavy industry by "setting basic requirements of boldly reducing existing investments in construction and shifting the funds and material resources from it to improving the agricultural economy and 26 increasing products for everyday life and for export," and with it, "increasing the speed of producing everyday consumer products, rather than production mechanism manufacturing, and accordingly increasing the resulting surplus investments and modifying the balance among the people's economy sectors appropriate to the changed environment" (Ri Chun-hyo'k, 1996, page 15). Thus, the "revolutionary economic strategy" can be seen as a new alternative growth strategy based on the North's judgment that their previous heavy-industry-first policy had distorted the balance of their overall economy. Of course they are emphasizing again the preferential sectors in the people's economy and even if the existing preferential order of heavy chemical industry and light industry have not changed places completely, at least the fact that the new strategy is aimed to adjust the imbalance and guarantee balance among the sectors of the people's economy proves that it is a very substantial departure from past practice, which always relegated improving the people's quality of life to a secondary level. Again, however, the North's old self-reliant national economic policy framework has kept its central importance throughout all these changes, and it should be clearly noted that their heavy-industry-first policy was not completely abolished. Their new shift toward increasing investment in the consumer goods production sector with emphasis on light industry still does not mean "reducing the share for the manufacturing of the means of production in the overall investment," and while proclaiming the new Three Big First policy, their heavy industry policy was still emphasized as "a strategic path that has to be maintained throughout the period of developing the socialist economy" (Ri Ki-so'ng, 1994, pages 2-5). The Three Big First policy was defined as "realizing the economic structure from heavy- industry-centered to agriculture- and light-industry-centered." However at the same time, they made sure that it is a "firm guarantee to strengthen the foundation on which to build our self- reliant national economy" (Pak Yo'ng-ku'n, 1996, page 6). So, from this perspective, the Three Big First policy can be said a growth strategy within the boundary of self-reliant national economic policy. However with the death of Kim Il Sung in 1994 and as the country's economic crisis deepened and the regime's crisis peaked, the North's "revolutionary economic strategy" fell into just a "formalized" mode. That is, political consolidation to complete the power transfer and regime consolidation to overcome the regime's crises pushed economic strategy down the list of priorities (Kim Ku'n-sik, 2000, pages 101-102). To be sure, the strategy was still being emphasized until 1997, and the "Three Big Number One policy" was proclaimed at that time, but they were nothing more than formal gestures. As the overall systematic crisis deepened, "harsh march" was emphasized as a new slogan to counter the crisis, and the role of the People's Army took center stage as the central organ of power. The "military-first politics" was newly proclaimed, which stated that the army itself was the Party, all strongly hinting at the possibility of a shift to a new strategy.

3) Revolutionary Economic Policy and the Science-and-Technology-Centered Policy (1998- Present)

Kim Jong Il, who succeeded to power after the death of Kim Il Sung, ended the old "harsh march" in 1998, proclaimed a new "Socialist Forced March," and also on a positive note proposed the so-called "Powerful and Flourishing Socialist Country theory," reflecting a desire to create a rich socialism. Along with the new proclamations, beginning in 1998 the old "revolutionary economic strategy" was replaced with the new "revolutionary economic policy." The new "revolutionary economic policy" focused more on the priority sectors of the people's economy and the metal industry, rather than on the previous "Three Big Firsts" which 27 were the core of the "revolutionary economic strategy." Among the three sectors of the "Three Big First policy," only agriculture was still emphasized, which was a change in core policy. Compared to when the "revolutionary economic strategy" was demanded, the necessity of the "Three Big First policy" to improve the lives of the people still existed, but the contents of the "revolutionary economic strategy" have been reduced to the preferred agriculture and the metal industry, while the old self-reliant national economic policy is reaffirmed again (Kim Ku'n-sik, 2000, page 105). The "revolutionary economic policy" put its greatest focus on agriculture and power generation. It was a policy that for its realization relied on growth in volume from the twin aspects of mobilizing the masses for an absolute increase in available labor and from the consequent forced accumulation. It was clearly inadequate as the basis for an economic growth strategy for the new era to develop the preferred agricultural sector and the metallurgical industry in order to increase agricultural production as a way to solve the food problem or to normalize the people's economy (Kim Ku'n-sik, 2000, pages 108-109). Kim Jong Il regime's new mid- to long-term, forward looking "S&T-centered policy" began to become public with the 16 January 1999 editorial published in Rodong Sinmun, which called for "materializing a science-first ideology to open the path to a powerful and flourishing nation." However, the science-first policy first had been publicized a year before, in 1998, when the joint editorial extraordinarily began to promote scientists, sciences, and technology. Rodong Sinmun, dated 1 January 1998, asserted, "Scientists and engineers are using the existing economic facilities efficiently to solve our immediate science and technological problems in revolutionary ways, which is essential in building socialism," and "these well-learned people are the front-line sentries safeguarding our socialism with their scientific and technological knowledge." The 1999 New Year's Joint Editorial also proclaimed that S&T are "a powerful motive force in building a powerful and flourishing nation, and our country's growth and development are in their hands." With such emphasis on S&T, the North Korean government designated 1999 "the year of science," and the Rodong Sinmun, dated 16 January 1999, continued to emphasize the importance of S&T when it stated, "We must hold high the Korean Workers' Party's science- first ideology and bring in a new era of developing science and technology, so that we can strengthen Korean-style socialism's power in all directions. Let us forge ahead on the road of making our country powerful and flourishing!" The article also wrote, "Our struggle against the imperialists is mainly a struggle in scientific and technological ways," and, "Unless we quickly develop our level in S&T, we can guarantee neither a strong military for our country nor a powerful self-reliant national economy." 23 The North's emphasis on S&T was further upgraded into one of the "Three pillars of a powerful and flourishing socialist state" in 2000. Previously, their Three Positions in socialism called for positions of politics and ideology, economy, and military; and their Three Great Goals in building a powerful and flourishing socialist state were building a politically and ideologically, economically, and militarily powerful nation, but the New Year's joint editorial proclaimed, "We must now forge ahead with our new year in an all-out march with holding steadily onto ideology, barrels of gun, and S&T-centered policies. Ideology, gun barrels, and science and technology are the Three Grand Pillars of building a powerful and flourishing nation. If ideology is strong, barrels of gun powerful, and S&T well developed, they will be a powerful and flourishing socialist state under Juch'e." So, the regime was promoting S&T as the foundation for building an economically powerful nation and economic development itself as the development of science

23 "Let us realize science-centered ideology, and forge ahead toward building a powerful and flourishing nation." , 16 January 1999. 28 and technology.24 In the New Year's joint editorial for 2000 again, S&T were treated as identical to "everything that has to do with economic growth." Considering that the three goals of building a powerful and flourishing socialist state were becoming politically and ideologically, economically, and militarily powerful, the fact that now S&T were regarded as on the same level as ideology and barrels of gun showcased how the North's future core economic policy was going to be.. Their argument is based on their belief that since they "have a strong ideology and powerful barrels of gun now, so if [they] can grow science and technology, [they] shall reach a powerful and flourishing nation status."25 Also in the Party Central Committee's slogan announced on the 55th anniversary of the establishment of the Party, Kim Jong Il's new science- centered policy was centrally showcased, emphasizing quick development of the latest S&T fields such as electronic engineering and bio-engineering, as well as strengthening electronic automation engineering and computer engineering so that they can create a modern industrial sector for the 21st century (Rodong Sinmun, 1 August 2000). They have determined S&T as "one of the basic keys to achieve our country's prosperity and social progress," and went on to label it as nothing less than representative of the "nation's overall strength and military power" (Ri Ch'ang-ku'n, 2000, page 9). The emphasis on science and technology has featured prominently in the New Year's joint editorials ever since 1998. In 2001, the joint editorial stated, "as a priority in securing our national economic competitiveness, technological rebuilding for the people's economy is a central factor in our current economic plans," and in 2002, it further said, "a nation's prosperity and progress are backed up by science, technology and related talent sources, so we need to quickly develop S&T and especially, we must concentrate on developing information technology and the information industry." The new S&T-centered policy proposed as a part of the overall new economic development strategy proclaimed in 1998 had several new aspects. IT industry was particularly promoted with more emphasis than ever as a pillar on which to build a "powerful and flourishing country." It was the North's attempt at transforming from its previously existing extensive growth strategy that focused on growth from the expansion of labor and capital to the new internal-oriented growth strategy aimed at increasing productivity through technological innovation and subsequent efficiency in production facilities. The emphasis on the IT industry also showed a significant change from the previous growth strategies in that it chose a "leapfrogging strategy"26 through leaping technological innovation and personnel training, all with a mid- to long-term view.

24 "This year is the 55th anniversary of establishment of the Party, and let’s make this year shine as a year of proud victory, amidst the flames of the Great High Tide of Ch’o’llima." , 1 January 2000. 25 "Stoutly grasping science- centered ideology, let us build a powerful and flourishing nation." , joint editorial, 4 July 2000. 26 The concept of this leapfrogging strategy is described in more detail in chapter 4. 29

4. Economic Development Strategy in the Era of Kim Jong Il: The S&T-Centered Policy

1) The [North's] History of Science and Technology Policy

North Korea's S&T policies, shown in figure 2-3, have been generally implemented within the goals and scope of each periodic economic development plan. In more detail, the North's S&T policies from national liberation in 1945 through 1998 can be categorized as: "the consolidation period" through 1960, "the Three Great Technologies Revolution period" from 1961 to 1977, and "the Three Great Policies period (Juch'e-orientation, modernization, [and] science-orientation)" after 1978.27

(1) Consolidation Period (1945-1960)

The S&T policy during this period began with the securing of technicians needed to restart the various manufacturing facilities, which had been operated mainly by Japanese technicians under the previous Japanese colonial rule, and reallocating them to each appropriate field of specialization. In 1948 when the communist people's government was established, some

(Figure 2-3) North Korea's Economic Development Plans and Major S&T Policies

Stage Period Economic Science and Technology Policy Development Plan Basic construction 1947 First One-Year Plan Signed economic, cultural cooperation with period 1948 Second One-Year socialist countries 1949-1950 Plan The Academy of Sciences established (10/52) 1954-1956 First Two-Year Plan Heavy-industry-first policy Three-Year Plan for Post-war 1957-1960 Reconstruction Research on local industries strengthened First Five-Year Plan 10-year S&T development plan Completing 1961-1970 First Seven-Year Technological innovation by the masses industrialization period Plan (extended three Concurrent development of economy and years) military Self-reliance, Juch'e 1971-1976 Six-Year Plan Three Great Technologies Revolution strengthening period 1978-1984 Second Seven-Year Juch'e-orientation, modernization, science- Plan orientation of the people's economy 1985-1986 Period of adjustment 10 future goals chosen S&T automation Downturn in foreign 1987-1993 Third Seven-Year First and Second Three-Year Plans for S&T trade, a period of Plan Development hardship 1994-1998 2000 Long-Term Plan for S&T development Harsh march Agriculture-, light-industry-, [and] foreign- trade-first policy Electronics, bio-, and energy engineering Building powerful and 1998~ Powerful and flourishing nation strategy flourishing nation S&T-centered politics period Vitalization of IT research Source: Yi Ch'un-ku'n, Kim Kye-su (2001, page 29)

27 The data used for the categorization were from the Ministry of Unification (2000), and the detailed contents were based on the works by Cho So’ng-ryo’l (1998), Yi Ch’un-ku’n [and] Kim Kye-su (2002), and Pak Ho-so’ng [and] Kim Chong-il (2002). 30 training and research organizations began to operate. In 1948, the North Korean government separated Kim Il Sung University's existing engineering, agriculture, and medical sciences departments and established the Kim Ch'aek College of Industry, Pyongyang Agricultural College, and Pyongyang School of Medicine, followed by eight new engineering schools, including the Pyongyang College of Mechanical Engineering, to meet the technological demands of the country's socialist industrialization. During the height of the Korean War in October 1952, "the Academy of Sciences (Kwahagwo'n)" was established to solve the S&T problems arising during reconstruction, to secure speedy growth in S&T fields when the war ended, and to organize and guide scientific research projects in a unified and planned way. After the Korean War ended, the North's S&T policy focused on reconstruction projects. During the "Three Year Planning for Post-War Reconstruction (1954-1956)," the government concentrated on getting economic aid and technological cooperation from other socialist countries as much as they could and finishing up their post-war reconstruction work. As a result, the North signed numerous S&T cooperation agreements with the old Soviet Union as well as East Germany, Czechoslovakia, Bulgaria, China, and Albania. From these countries, many engineers and their technology came which were necessary for post-war construction and economic rebuilding. The post-war reconstruction work also saw great efforts in developing the mechanical engineering industry and metal industry overall, as they were necessary for the reconstruction projects. Their so-called "Ch'o'llima Movement" and "Expanding the Mechanical Tools Movement" were also concentrated as an effort to popularize technical innovations. In August 1960, the Party Central Committee held an extended all-member meeting to set the government's future S&T direction. The main policy details were going full speed ahead with technological innovation movements in all fields of the people's economy and improving and reinforcing training of the technical talent pool.

(2) Period of the Three Great Technologies Revolution (1961-1977)

This was a time when the North's First Seven-Year Plan and Six-Year Plan periods were undertaken, which saw a policy concentration on heavy industries and the Three Great Technologies Revolution to strengthen the Four Great Military Lines. North Korea's Seven-Year Economic Development Plan (1961-1970) that began in 1961 was an ambitious plan aimed to achieve socialist industrialization of the country. The main S&T policies ran the gamut from improving the country's science and technology to a world-class level within a short period, focusing scientific strengths on establishing a self-sufficient industrial system based on the country's own natural resources, and pioneering new scientific fields, to conducting research projects to apply scientific research results to production,, including nuclear power, proactive promotion of basic science fields, and implementation of nine-year obligatory technological education. In accordance with the Seven-Year Plan and goals for developing science and technology, in 1962 the North Korean government established the "State Science and Technology Commission" and reorganized the existing S&T agencies, and beginning in 1967, implemented generally obligatory nine-year technological education. During this period, the North newly established 40 four-year factory colleges in various factories and industrial facilities all over the country to train scientists and technicians en masse and in 1961 the Institute of Doctors was established to educate and train high-level scientists. Beginning in 1964, they adjusted the education limit for bachelor's degree institutions (master's degree in our terms) from three years to two to four years, and the Science Award was also established, by a decree from the Supreme People's Assembly on 17 December 1963, to promote scientific and technological research.

However their efforts in science and technology during this period began to get distorted as the regime implemented the so-called "parallel progress in building the economy and military" and the "Four Great Military Lines." The country was able to achieve a certain high level in the military area through their own efforts in technological development, despite the generally backward conditions in industrial technology, but when their limited manpower and physical resources were allocated to military buildup purposes, the resources needed for economic construction were greatly limited. The Six-Year Plan for Developing the People's Economy (1971-1976) officially adopted in November 1970, called for a new set of policy goals aimed at "securing our socialism's physical and technological basis by improving technological revolution to an even higher level during this period and liberating laborers from hard physical labor in all fields of the people's economy." One particular element about it was that it designated the new technological innovations as new goals for the late 1970's period and at the same time proposed the Three Great Technologies Revolution to "close the gaps between hard and light labor, and agricultural labor and industrial labor, as well as liberate women from the heavy burden of housework and laborers from hard and difficult labor." The S&T policy during the Six-Year Plan that began in 1971 also called for more reinforcement in training engineering and professional talent and improving various outdated production facilities. In a speech given at the "Natural Science Workers' Conference" in December 1972, Kim Il Sung said that North Korea was ahead of other countries in social sciences and ideological fields, but still backward in science and technological fields. He then went on to propose raising the level of quality of equipment and facilities in the metal and chemical industries during the Six-Year Plan, particularly to solve scientific and technological problems necessary for the petrochemical-based organic compound industry and for the creation of light metal industrial complexes such as for aluminum. Kim further suggested research projects in the latest industrial sectors for development of the semiconductor, nuclear energy, and electronics industries. With all these proposed policy directions and goals, a broad technological revolution movement was commenced as a part of the Three Revolutions in Ideology, Technology, and Culture. Various official titles were established and given in fields of S&T, and reward programs were reinforced to promote further development of science and technology through movements for socialist competition. In addition, to meet the challenges of reduced economic aid from and lack of progress in technological cooperation with the socialist countries after the 1960's, when the North's post-war reconstruction was completed, during the Six-Year Plan the regime started to seek diversification of economic and technological cooperation and capital and technological cooperation by introducing facilities and technology from the advanced, capitalist countries of the West as well.

(3) The Period of Promoting the Three Great Policies (Juch'e-orientation, Modernization, Science-orientation) (1978-)

This period began with the launching of the Second Seven-Year Plan (1978-1984). The basic goals of the Second Seven-Year Plan were set as "reinforcing socialist economic structure by further strengthening Juch'e-orientation, modernization, and science-orientation of the people's economy to raise the people's quality of life one more level."28 Accordingly, in the S&T

28 Juch’e-orientation, modernization, and science-orientation of the people’s economy meant that they would concentrate on Juch’e-orientation as the basis of all and then implement modernization and science-orientation for the people’s economy. The main goals of Juch’e-orientation of the people’s economy were, by relying on domestic 32 field, policy goals were set to "speed up science-orientation of the people's economy by exploring scientific research projects" and "to promote modernization of the people's economy that deepens and develops technological revolution." For these purposes, they decided to concentrate all their efforts on solving scientific and technological problems that came up during the building of their socialist economy by a strict reinforcement of Juch'e in science research projects and developments in science. The detailed goals were: 1. Promoting research projects that efficiently use domestic fuel and raw materials for strengthening the self-reliance of industrial sectors, 2. Developing mechanical engineering for creating and manufacturing modern mechanical facilities that are efficient and suitable for domestic conditions, 3. Conducting research to improve the horticultural varieties of grains such as rice and corn and of garden crops, and 4. Strengthening scientific research conditions. To achieve all these goals, beginning in February 1978, under the direction of Kim Il Sung, scientists and engineers in each specialized field were organized into "scientist vanguards," with which they were allocated to production and construction fields and to further concentrate on the technological innovation movement. Following the completion of the Second Seven-Year Plan and two more years of adjustment and preparation, the Third Seven-Year Plan (1987-1993) was launched. The S&T policies in this period were undertaken as an extension of those of the previous Second Seven- Year Plan. The only difference in the Third Plan period was shifting the focus to increasing investment in S&T sectors and the latest technology, because of how outdated the technology had become, from concentrating too excessively on self-reliance in S&T science research projects until the mid-1980's. Also, while technological innovation was taken as the foremost important goal, the government also greatly emphasized expanding and developing foreign trade and external economic cooperation as well. The Third Seven-Year Plan proposed the goal of a broad technological reconstruction by strengthening the movement for technological innovation, with high development in S&T as one of the basic tasks. For these purposes, the government decided to invest 3% to 4% of the gross domestic product in science and research projects, and further to strengthen cutting-edge areas of S&T research such as miniaturized electronic computers, fiber optic telecommunications, and bio-engineering, as well as technological restructuring of existing production facilities. The government recognized that these outdated S&T facilities were roadblocks to its efforts in building the economy, so under Kim Jong Il's direction, a "Three-year plan for S&T development" in two phases was announced. The first plan (July 1988 to June 1991) called for proactively promoting modernization of the people's economy with the latest science and technology as basic goal and designated six S&T fields as main fields of research concentration. Electronics engineering was particularly strongly emphasized, which was seen as their intent to proactively implement the results of miniaturized electronics that were then fast spreading mostly in the advanced countries since the 1970's. The Second Plan (July 1991 to June 1994) was conducted as an extension of the First Plan, but it showed some difference at least in the fields of concentration. Whereas the first plan had concentrated on technological innovations in electronics engineering, bio-engineering, and thermal engineering, the second plan proposed a wide variety of goals in the mechanical, electronics, automation, agriculture, and chemical industries. It was aimed to eliminate the side effects that resulted from setting technological natural resources, to solve the problems of raw material, fuel, and power generation, [and] completing an economic structure in accordance with the economy’s size and level of S&T development, so that they could establish a self- contained system without relying on foreign countries. Modernization of the people’s economy aimed to modernize all technology in all fields and bring about comprehensive mechanization and automation of production. Science- orientation called for improving production technology processing and methods, based on the results of new science and technology, and raising management activities generally to a high scientific foundation. 33 developments in the latest S&T in such short amount of time, which could not be done in the first place after all. It also set more realistic goals for technological innovation, including in the field of mechanical industry, where they already had substantial technical advances of their own. As the government recognized the difficulties of getting results quickly in the science and technological developments, it then proposed a new, long-term plan, entitled, "2000 Forecast Goals of Science and Technology" in October 1991 at the time of the "National Scientists' Conference." Its main policy details were: 1. Establish a foundation for basic sciences such as mathematics by the year 2000, 2. Promote the development of cutting-edge S&T such as those that use computers and nuclear energy, 3. Develop all industrial fields, such as the metal, electronics, and mechanical engineering industries, light industry, and agriculture. 4. Invest 5% of annual gross domestic product (GDP) in S&T fields until the year 2000 and train two million engineers and professionals, including PhDs and para-PhDs. 5. Expand communication and cooperation with UN S&T organizations such UNDP and secure more aid funds to introduce advanced technology. 6. Modernize and improve research conditions in field research laboratories such as building research complexes, as well as factories and business facilities. Along with systematic efforts in establishing plans for S&T fields, the government tried to focus on generalization and popularization of science and technology by holding various events to present results of research, technological innovation awards, technological innovation exhibitions, and technology classes.

2) Building an Economically Powerful Nation and the S&T-Centered Policy

(1) The Stature of the S&T-Centered Policy

On the subject of building a powerful and flourishing country in the 21st century, North Korea has stated, "A powerful and flourishing socialist country means being a scientifically and technologically powerful nation. Building an economically prosperous and militarily powerful nation both depend on developing science and technology. Without S&T, there can be no building a powerful and flourishing nation." It further proclaimed, "With the power of science and technology, we must seize the high peak of a powerful and flourishing nation in the 21st century and let the whole world know the dignity of our great country and our people" (Rodong Sinmun, 4 July 2000.) In another statement, it boasted, "There can be no powerful and flourishing nation without science and technology. Science is not only about levels of technology, it is rather a most important issue that decides a country's future and whether we can build a powerful and flourishing country for ourselves or not depends on it" (Choso'n Central Broadcasting, 3 March 2001.) Moreover, it stated, "When others walk only a step, we must run ten steps or even one hundred steps, because we need to move quickly to catch up with the rest of the world and step up to the world-class level as soon as possible" Democratic Korea 2 February 2001. So the North regards today's modern world as a place where no economy can grow without development in S&T (Kim Hye-so'n, 1999, page 35) and since science and technology are the watershed point that decides a country's rise or fall, they recognize that, if they fall behind in S&T, they and their future generations will be forced to live as backward, outdated people (Rodong Sinmun, 4 July2000.) Under this general perception, the North has set an economic growth strategy based on its S&T-centered policy and at the same time sees S&T as the main tool to transform itself into "leapfrogging growth."29

29 The North’s "S&T-centered policy" symbolizes the North’s transformation from the previous extensive growth strategy of concentrating on growth through increasing labor and capital to an internal-oriented growth mode 34

As described earlier, it was not that North Korea had not focused on science and technology before at all. The first time North Korea started to seek S&T with great interest was in 1984, when Kim Il Sung visited European countries and witnessed the fast growing technological innovations going on in those countries. In the following year, in August 1985, Kim Jong Il presented a scholarly paper entitled "On Further Developing Science and Technology." It was followed by the first Central S&T Festival in 1986, clearly indicating national interest in promoting science and technology. Along with ever-growing interest in S&T, investment in the field in large amounts began when the Three-Year Plan for S&T Development was first established in 1988. Moreover, at Kim Jong Il's direction, the "Korea Computer Center" was established in October 1990 as a hub for comprehensive computer research and development. In addition, the Second Three-Year Plan for S&T Development proposed establishing a "modernization plan for science and technology" by the year 2000, with an immediate goal of industrializing the production of mega- size integrated circuits in all fields nationwide and speeding up commercializing of 32-bit miniaturized computers as well as research on and development of 64-bit miniaturized computers (Pak Ch'an-mo et al., 1994, pages 8-9). On the occasion of establishing the Second Three-Year Plan for S&T Development, Kim Jong Il in October 1991 via a letter to those attending the National Scientists' Conference, entitled, "Let us bring about a new transformation in the field of S&T development," defined "today's age as one of science and technology" and stated that developing S&T, by advancing a technological revolution, would quickly increase productivity, which would become an important guarantee of securing a self-reliant and creative material and cultural life for the people (Kim Jong Il, 1991). The North's interest in science and technology was also reflected clearly in the amendment of their constitution in 1992. In the previous 1972 constitution, an article stated, "The Nation shall promote technological revolution to eliminate gaps between heavy labor and light labor as well as between agricultural labor and industrial labor; liberate laborers from physically hard and difficult labor; and gradually eliminate gaps between physical labor and mental labor" (Article 25). In the 1992 constitution, this article was modified to, "Technological revolution is a basic key to developing a socialist economy. The Nation shall always conduct all areas of economic activities while putting issues of technological development in first place and advance S&T development as well as technical modification of the people's economy…"(Article 27). The modified article was still in effect in the 1998 constitution. Another article in the 1972 constitution stated, "The Nation shall strictly adhere to Juch'e in scientific research and, strengthening creative cooperation among scientists and manufacturers, promote science and technological development of the nation (Article 44)." In the 1992 constitution, that was separated into two articles, which stated, "The Nation shall adhere to Juch'e in scientific research, proactively implement advanced science and technology, and explore new S&T areas to raise our country's science and technology to the world-class level" (Article 50) and "The Nation shall establish a rightful S&T development plan and strictly enforce rules…" (Article 51). Those articles, which more finely divide and emphasize science and technology than before, have continued into the 1998 constitution. Those changes show the government's positive efforts to guarantee at the constitutional level the introduction of advanced science and technology and plans for S&T development, concentrating on increasing the productivity of production facilities through technological innovation. From the perspective of a mid- to long-term view, their emphasis on developing the IT industry through a "leapfrogging strategy" of leaping technology innovation and concentrated training of specialized manpower showed significant differences from prior development strategies. 35 showing how serious they were in this field. To summarize, the North's policy foundations for science and technology, based on the relevant constitutional articles, are: 1. Continued pursuit of technological revolution, 2. Strengthening creative cooperation between scientists and industrial manufacturers, [and] 3. Strict enforcement of Juch'e in scientific research projects (the Ministry of Unification, 2000). First of all, the technological revolution is a part of the North's efforts in Three Great Revolutions for Constructing Socialism along with ideological and cultural revolution, and it has become materialized in the details for the Three Great Technological Revolution projects aimed to reduce gaps between heavy and light labor, and agricultural and industrial labor, as well as liberating women from the burden of housework and laborers from hard and difficult labor. Second, the creative cooperation among scientists and manufacturers is aimed directly to link the results of scientific research projects with production technology, to enable them to creatively solve various problems related to S&T that may arise in the actual processes of economic projects and production facilities. For this purpose, the government has emphasized even to the general laborers that they must better themselves with wisdom and rid themselves of passivism, conservatism, and technology-phobia. Third, what they mean by strictly enforcing Juch'e in scientific research projects is that they will proceed with S&T development based on their own research personnel and develop theories in accordance with the principles of Juch'e ideology and self-sufficiency, as well as give first priority to technology developments that can use domestic raw materials and fuel. It is generally recognized that the occasion in the late 1990's when North Korea started to shift more focus to science and technology than ever before came after the test launch of their first satellite, "Kwangmyo'ngso'ng 1," in August 1998, when the stabilization of the Kim Jong Il regime became visible and the power transfer had been completed. The success of the test launching was a great boost to the confidence of the North Korean leadership in their abilities in S&T and became the turning point for their change in attitude toward science and technology.30 The time when Kim Jong Il's S&T-centered policy was officially proclaimed to foreign and domestic audiences was the following year, 1999, after the successful satellite launch when the power transfer had been completed and building a powerful and flourishing nation was selected as the new national strategy, which incidentally was the year right before the 21st century. Kim Jong Il himself gave on-the-spot guidance at the "Academy of Sciences," which may be considered the mecca of North Korean science and technology, on 11 January 1999, and designated 1999 as "the Year of Science." Additionally on 16 January 1999, through an article in Rodong Sinmun, Kim proclaimed, "Without speeding up our efforts in developing S&T, we can neither strengthen the nation's military power, nor adequately develop the might of our self- reliant national economy," adding, "only if we bring about a new transformation in the development of science and technology can we solve the many problems that arise in building a powerful and flourishing country,"31 to emphasize the development of science and technology. In addition, Kim Jong Il's great interest in S&T was clearly reflected in the government's national budget. In 1999, the North Korean government increased the budget for science projects by 6.3% over the previous year, and in 2000, that for S&T development projects by 5.4% from the previous year (Choso'n Central News Agency, 4 April 2000.) The North has continued to sponsor S&T-related events. In March 1999, a nationwide conference for scientists and engineers reviewed results and experiences from past S&T

30 So’ Chae-chin (2001a, pages 318-323) points out that, given the proclamation time and contents of their "S&T- centered policy," traces appeared that the North had been affected by the Soviet Union’s perestroika policy. 31 "Let us materialize science-centered policy and forge ahead with building a powerful and flourishing country." , 16 January 1999. 36 developments and discussed future tasks and directions. About the same time, the 14th Central S&T Festival and an expanded session of the Choso'n Science and Technology Federation's 24th All-Member Conference were held. Especially at the national conference of scientists and technicians, Party Secretary Ch'oe T'ae-pok emphasized that electronics engineering scientists and technicians had solved the S&T problems arising in R&D on electronic materials and computers, numerically controlled equipment, automated devices, and robots, pointing out that their work had provided a firm foundation for realizing the Party's policy of automating, robotizing, and computerizing the people's economy, and further suggested that they thoroughly carry out the core tasks in the next Five-Year Plan for Science and Technology and additionally in cutting-edge S&T development. A new "Ministry of Electronic Industry" was established in November 1999 to take charge of the sector. So, North Korea's emphasis on S&T since 1999 shows clearly in the speeches and actions of the S&T leadership, starting from Kim Jung Il himself, as well as in its system, including the government budget and the establishment of new government agencies. One may say that the "S&T-centered policy," which came into full force in 1999, has become the basic line for North Korea's economic development in the era of Kim Jong Il. The North's "S&T-centered policy" has the characteristics of having been strengthened by Kim Jong Il's "science politics." As the statement made by Choso'n Central Broadcasting on 19 May 2001, stated, "The General's Juch'e "science politics" has promised a brilliant future for our information industry," science politics has indeed become a new governing element for the Kim Jong Il regime. Along with the regime's intent to promote an environment that emphasizes society-wide S&T trend through science politics, it also contains intent to get rid of any possible deviation in ideology or internal disturbance or insecurity due to the introduction of advanced information technology and facilities.32 The new S&T-centered policy kept the principle of "self-reliance" but at same time, changed its meaning. They argue that their country should "not remain sitting down with the old and outdated things in its hands, but instead must boldly throw out the things that must be eliminated and upgrade our technology" (Rodong Sinmun, 4 January 2001), further arguing that "The new century wherein we will build a powerful and flourishing country demands that we heighten our level of self-reliance, too," adding, "Our self-reliance today is at a high level, with the ability to create new things based on the latest science and technology" (Rodong Sinmun, 30 January 2001) Other arguments have been made, such as, "We should recognize that today's self- reliance does not mean creative contrivances for what we lack, but a self-reliance based on modern science and technology" (Democratic Korea, 6 February 2001), emphasizing that "We can raise our economy to the world-class level only by basing ourselves on advanced science and technology" (Democratic Korea, 22 April 2001). All these arguments show that North Korea is still adamant about keeping the self- reliance principle as the basis for its S&T policy and rather they are arguing that self-reliance without modern science and technology cannot stand. Another of these arguments is, "developing economy based on self-reliance principle does not mean building an economy with the doors closed" (Democratic Korea, 22 April 2001). This is a clear sign that they are searching for a change of policy orientation from the old, closed self-reliance to an open self-reliance (Sim Kyu-so'k, 2000, page 83).

32 Department of Intelligence Analysis, the Ministry of Unification. (No. 540), 19- 25 May 2001. 37

(2) Implementation Strategy for the S&T-Centered Policy

The North's "S&T-centered policy" is not a policy limited to certain industrial sectors, but rather is a basic policy orientation for economic policy or basic orientation applied to all sectors of the people's economy. North Korea is concentrating on spreading IT throughout the Cabinet agencies, factories in all levels, and business facilities, and has opened educational facilities for the IT industry, as well as expanding telecommunication facilities for establishing IT infrastructure, and automation and modernization of the people's economy for IT utilization (Kim Yo'ng-yun, 2002, pp 64-65). First of all, the S&T-centered policy has adopted the automation of production process through "upgrading technology." On the subject of technological upgrades of the people's economy, the 2001 New Year's joint editorial mentioned, "it is a central key to our economic projects" and termed it "an immediate task we must not delay anymore." So this policy is being implemented in field production facilities such as factories and business facilities to increase the efficiency of the people's economy. For meeting the challenges of shortages of electrical power and foodstuffs, they needed to develop scientific technology that could be utilized quickly and implement such technology in the actual production fields. Also, the S&T-centered policy is being promoted as a primer for "leapfrogging growth" through developing the IT industry. The North's intention to have leapfrogging growth in the economy by developing S&T is clearly seen in the joint editorial published in Rodong Sinmun and The Worker, both on 4 July 2000, under the title "Let us build a powerful and flourishing nation by firmly grasping the S&T-centered policy."

Our Party's science-first policy is a great and bold scientific revolution ideology that will raise our science and technology to the world-class level in the shortest amount of time possible….It is true that there are stages to go through in developing S&T. However, if one only follows one step at a time what other have already gone through, one can never surpass them. Our Party's S&T-centered policy demands leapfrogging growth in science and technology without being tied to any prefabricated precedents or existing formulas. The intent of our Party is to achieve in a short period what others did in several hundred years and to attain world-class creativity in all fields of science and technology.

(Figure 2-2) Structure of North Korea's National Strategy and IT Industry Development Strategy

National Building a Powerful and Flourishing Socialist State Strategy Maintaining the regime

National Security Guarantee Goals Economic Rebuilding Politically, Ideologically Powerful Nation Militarily Powerful Nation Economically Powerful Nation

Strategy by Supreme Ruler system, Juch'e ideology Individual Military-first policy Field Science- and technology-centered policy IT industry development

So the regime is emphasizing that the Party and the nation must be dynamically active for leapfrogging growth of S&T, and insisting that the Chairman of the National Defense Commission Kim Jong Il is proceeding with developing science as a national strategy. In addition, they are arguing, "high-caliber revolutionary orientation plus S&T is a sure path to

38 successful socialism" and emphasizing that the Party, the nation, and the leader all show positive policy concern for science and technology. The North is also concentrating on expanding various scientific educational facilities and IT infrastructure as well. Therefore, there is no doubt that the North has adopted S&T-centered policy as its economic growth strategy.

Chapter 3.

The Current State of North Korea's IT Policy and Infrastructure

Just as the process of industrialization requires advance investments in social industrial infrastructure such as roads, ports, and railways for economic development, similar investments are also required for the Information Age as well, which in this case means establishing networks of information and telecommunication (IT) infrastructure. North Korea has positioned itself to achieve a "leapfrogging" kind of economic growth through developing the IT industry since the late 1990's. The question we need to ask is how successful it has been in establishing the required IT infrastructure to achieve such an ambitious goal. The clear problem in this regard however is the fact that it is a very daunting task to correctly determine the current status of the North's established telecommunication network. The North Korean government has been pretty much uncooperatively silent in letting the outside world know about their network status, so it is impossible for anyone outside the regime to have a clear grasp and objective picture about how they have been implementing the important telecommunication infrastructure network. The only ways to obtain such information have been estimations based on the statistical data collected by the International Telecommunication Union (ITU) a few years ago and news articles sporadically reported by the North Korean media. So the data on the current status of the North known to South Korea generally have been limited to estimates and speculation. It is believed, based on such estimates, that the North still is mired in a period of so- called "traditional telecommunication" mode, a very basic communication method primarily relying on human voice, which makes their current status equivalent to that of the South's in the 1970's. According to Peter Hayes, of the Nautilus Institute for Security and Sustainability, an American non-governmental organization, people who are used to living in Internet-wired countries would feel that digital communication is really impossible in North Korea. Hayes further stated that North Korea's propagation rates of the Internet, telephone, and personal computer are close to "zero" (Hayes, 2002). The country is also at the very bottom group when compared to other countries in IT infrastructure. According to a report prepared by ITU, North Korea was the 8th overall worst IT country, next to Armenia, Iraq, Tajikistan, Uzbekistan, Kyrgyzstan, Angola, and Liberia. In the same study, North Korea was ranked 111th in 1999 and 138th in 2000, falling 27 ranks further down (ITU, 2002a. p. 16). So how bad is the country's information structure status with all these reports made about it? What are the reasons for such a poor situation in North Korea? Moreover, is it even possible for the country to leapfrog into a developed, strong IT industry country with such outdated infrastructure and establish a functioning electronic government system? Before we can analyze the situation and learn why North Korea is one of the world's worst when it comes to telecommunication infrastructures, we should first take a look at their own attributes in telecommunication technology and management systems on a theoretical basis. To study further the possible causes for such a poor situation and the conditions that North Korea should have in order to improve the situation, we will also take a look at South Korea's own telecommunications industry in the 1960's to 1970's, during which time it was under dictatorial rule, to use as a basis for the intended comparative study. A comprehensive analysis on North Korea's telecommunication policy and current infrastructure status based on various discussions

40 made by foreign and domestic observers will follow. Finally, the reasons for the North's poor infrastructure situation will be analyzed, based on the above theoretical and comparative views as well as observations on telecommunication policy and the current status of infrastructure.

1. Development of IT Management Systems and the IT Industry: Theoretical and Comparative Bases

1) IT's Technological Attributes and Management Systems

The governance regime for telecommunications is the entirety of a systematic array, including the rules and the enforcing agency, that regulates economic activities and commercial transactions related to telecommunication in and out of an economic system during a designated period of time (Hulsink, 1999, p. 25). An IT governance regime is a direct reflection of market structure,33 or that structure also can be decided by people, because the governing rules or regulations for selling IT services must reflect the market structure that distributes those products. As the table 3-1 shows, telecommunication market structure may take various forms on a spectrum from perfect competition and monopoly at the two extremes to oligopoly and monopolistic competition (Shaw, 1998, p. 52).

(Table 3-1) Types of Telecommunication Market Structure

Category Perfect Oligopoly Monopolistic Monopoly Competition Competition Number of No limit A few More than one One companies Production No limits of any Few limits in Output limited Output limited decisions kind are set by output by production according to companies specialization governmental authorizations and rules Structural Companies all Strategic pricing Companies No competing relations independently is interactive active company active independently whatsoever Dynamics in Fast changing Gradually Changing No changes in structural relationships evolving relationships business changes relationships according to structure or consumer trends almost none Source: Shaw (1998, p. 53).

One of the reasons for innovative and decisive development in the telecommunication industry in recent times is due to the transformation of telecommunication governance regimes. In the 100-year period from the late 19th century to early 1980's, during which

33 "Market structure" is a term used to explain the characteristics of interactions between competitors in a market. The physical interactions between competitors in a market include the following three major elements: 1. communication of information among the companies that is the central factor in setting prices, 2. physical barriers against entering a market, 3. the number of companies and the share of the market that those companies control or exercise influence over (Shaw, 1998, p. 52). 41 telecommunication spread all over the world, the telecommunication industry was monopolistic regardless of whether in advanced, industrialized countries or poor, undeveloped ones. However, in the mid-1980's, the United States and Britain began to implement deregulation and privatization of the industry, and those new competitive modes quickly spread to rest of the advanced, industrialized countries. With the selection of telecommunication as an item for negotiation in the Uruguay Round (UR) negotiations, competition within the industry became a truly worldwide phenomenon. Finally by the time the World Trade Organization (WTO)'s basic telecommunication negotiations were finalized in 1997, more than 90% of world's telecommunication markets had become competitive mode markets (Ko Kyo'ng-min, 2001). However the most decisive factor in the phenomenal growth in the telecommunication industry can be attributed to the development in telecommunication technology, and moreover, it can be concluded that market structure and governance regimes accordingly changed and finalized with the sequential developments in technology. The history of telecommunication technology can be divided into two developmental stages. The first stage was the period of "traditional" communication that began with the invention of the telephone. That period was characterized by a large scale, concentrated monopolistic market structure. The second stage, that began when digital technology was introduced, is characterized by previous market domination based on the liberal framework (Davies, 1994, p. 203; Kim Yu-hyang, 1998, p. 56). The first stage of telecommunication technology began in the late 19th century and lasted until the early 1980's, a period of about 100 years. This was the time when information and telecommunications first propagated and the industry was all but totally in monopolistic mode, whether in advanced or underdeveloped countries. The basic structure of IT was either government nationalizing telecommunication industries and transferring them to a government agency or public company to operate, or private companies monopolizing them under government regulation. Regardless of the method, the common consensus during those times was that telecommunication needed to be run by the state in a hierarchical and consolidated way (Hulsink, 1999, p. 6). This was the way the industry was run, because the state recognized telecommunication as both socio-economic infrastructure and a public sector service that supplied public benefits. The view was that telecommunication had to be based on a nationwide communications network, requiring large-scale capital and high-level technology, so if the sector were run in a competitive mode by various corporations, it would make accumulating large-scale capital and high-level technology difficult to achieve, as well as leading to potential problems with ineffective resource distribution, with possible duplication of investments society-wide. Therefore it was concluded that concentrating capital and technology into one single source would serve the public better by providing efficient services for all. There were two basic reasons for such monopolistic network and strict regulation by the state of the telecommunication market in the industry's early years. First, because the need for "natural monopoly"34 arises due to the technological characteristic of a telecommunication network requiring large-scale "sunk capital," a policy of allowing competition may not be effective for the overall benefit of society. This natural monopoly of the telecommunication industry became justified with the following technological or demand factors (See Baumol, 1977, p. 809; Pak So'ng-t'aek et al, 1997, pages 27-30;

34 Natural monopoly means an industry in which it is possible with a single company to minimize production costs in an entire industry under given technology and production conditions. Natural monopoly differs fundamentally from other monopolies because, whereas other monopolies eliminate competition in one way or another, natural monopoly results naturally, even when other companies are permitted to compete under the same conditions (See Baumol et. al, 1988, Sharkey, 1982). 42

Petrazzini, 1995, p. 12-13). These were: "Subadditivity" of cost, whereby a single company's production cost is lower than those of multiple companies; "Economies of scale" that require fixed investment for a long period of time in the early stages of an industry; "Economies of scope" whereby it is more efficient when one single company rather than multiple companies establishes all of the telecommunication network; and "network externality," whereby a telecommunication network's overall value increases as the number of subscribers to that network rises and the existing subscribers become able to communicate more with other subscribers. The other reason was that it seemed a monopolistic enterprise system was more efficient in actualizing and maintaining so-called "universal service," with its premise of providing equal service to all people. Universal service is aimed to provide equivalent basic telephone service at low rates to all people. Such universal service requires the ability to provide equal rate scales to all users, even when there are significant differences in the services provided and related cost measures. A representative example would be cross-subsidy, whereby rates for local telephone service that people use in "universal service" rate scale may be set below cost, but that deficiency is offset by pricing other services such as long distance and international calls at higher scales.35 As people began to accept telecommunication service as a requirement with its ever growing propagation, the IT industry came to be characterized as a public sector service (Kim Chae-hong, 1995, p. 13).36 With it, it became a widely accepted theory that private companies were not the most suitable entities to operate telecommunication service, because of their priority on earning corporate profits, rather than public service.37 For this reason, accordingly, the telecommunication industry was accepted as a unique industry that, unlike others, should be operated based on the principle of government interference and not be left to market function. However, after the 1970's, this belief system of telecommunication industry as a monopolistic industry with all its inherent attributes began to be strongly challenged by the disruptive changes occurring, including the accelerated development and innovations in related telecommunication technology, as well as expanded new services and the subsequent results of increased demand for various high quality services. That was the time when the so-called "digital revolution" began to rise in full scale. With the revolutionary innovations in the "convergence technology" that fused telecommunications and computers together, it was now possible to process data at strikingly higher speeds than one could ever possibly imagine, and with the other innovations such as expanded storage and transmission, as well as miniaturization of terminals, the whole telecommunication industry now entered the era of "multimedia" communication service that provided voice, data, and images together, rather than the old telecommunication based on voice "electrical" communication service (Blackman, 1998). The Digital Revolution was indeed a dramatic turning point in the history of telecommunication, shattering the old view of the telecommunication industry as a service sector based on a monopolistic governance regime which the existing businesses all over the world "worshipped" and leading to a total restructuring of the market and its management system.

35 The term "universal service," which originally meant that all people in a nation would enjoy a public service at suitable fees, was used in the transportation, education, and election sectors in the late 19th century in America. However, after 1907, when AT&T chairman Theodore Vail coined the new slogan "one policy, one system, and universal service" the term was applied chiefly to the telecommunication sector. Vail’s term "universal" originally meant "everywhere," but after 1910, it changed to mean "everyone." The concept of universal service was finally adopted in the 1934 US telecommunication law (Hong P’il-ki, 1993; Kang Hwi-wo’n, 1999, pages 158-159). 36 Public service is an industry that, possessing nationwide networks aiming to provide service to all people in an entire nation, is characterized by public benefit and natural monopoly. 37 For a detailed explanation of universal service, see Hills, 1989, Ch’oe Yo’ng, 1998, pages 86-98. 43

Important results of this revolutionary change were that, first, the innovative changes in technology weakened the notion of a natural monopoly as the basis for the telecommunication industry. New transmission technologies of microwave, fiber-optic, and satellite technology, transformation of exchange systems from electronic to digital and the change in the information communication method from analog to digital all led to significantly higher transmission efficiency. All this resulted in the possibility for higher efficiency of economy of scale and range that was unparalleled in the traditional telecommunication industry. The technological revolution also brought diffusion among service sectors. The traditional ways of transmitting voice, data, and pictures by different methods were gone and now it was possible to send all of them via a single method, with two-way communication also possible in all fields. Those developments then led to more accelerated combined wired and wireless telecommunication. Second, the innovations in technology brought significant decreases in service fees and new variety in services offered, which in turn then led to globalization of people's economic activities as the demand for such services dramatically attracted more users. All these revolutionary changes ultimately resulted in further weakening of the old theory of natural monopoly as the basis for the telecommunication industry (Wenders, 1990, p. 125.) In the traditional telecommunication system, the basic telephone and telegraph were the primary services offered, but with the technological revolution, a new era of IT networks was ushered in, through which people were able to exchange a variety of information. Increased demand from corporations led to further development in data telecommunication. Particularly, multinational corporations needed IT networks to connect headquarters and branch offices located abroad for exploring new markets, and financial corporations needed inter-company communication network to process various data quickly and efficiently. Those demands were not limited to certain companies and the need for data transmission. In fact, nearly all companies in all sectors as well as the general populace now started to ask for the various new services of wireless and supplemental telecommunication. All these specialized and various services now seemed impossible to be regulated by the old monopolistic system. The change in technological qualities of IT meant that telecommunication was no longer a "public good" in the old terms, but now was considered a "rival good." It further meant that the characteristics of information and telecommunications had changed from being "general product conditions," fulfilling the general interests of capital, to being "specific production conditions" as new sources of each individual corporation's competitiveness and profitability (Ku Kap-u, 1998, pages 132~134; Kim Yu-hyang, 1998, page 65). Additionally, the transformation of telecommunication facilitated a new environment for domestic and international relations involving communication issues in various ways. In the domestic arena, the general relationship between government and capital further expanded into that between government and each individual corporation. Internationally, telecommunication service became a type of commodity, which was impossible in the traditional era, and accordingly became an issue for international trade (Ko Kyo'ng-min, 2001, page 66.) In summary, considering the close relationship between the telecommunication governance regime and the stages of technological development, a large-scale, concentrated "national monopolistic system" was the central principle in organizing telecommunication in the old analog technology era. However, as industry adopted IT, new unregulated competition became the new principle, according to which a more workable organizational structure came into being in the rapid and unpredictable telecommunication technology changes in the digital technology era (Davies, 1994, p. 203). Thus, the technological innovation in telecommunication was each country's foremost motivation for changing their telecommunication governance regime and, at same time, it produced a common background in restructuring the world's IT marketplace (Hulsink, 1999, p. 10; Singh, 1999, pp. 29-33). 44

2) Telecommunications Before National Liberation (1885-1945)38

Telegraphy, the original medium of modern IT, was first introduced in Korea in 188339 and was imported two years later in 1885, as one of the new culture and products. The Korean government of that time showed great interest in such new concepts and products and expressed their positive intentions toward the introduction of telecommunications by creating Korea's first- ever communications management agency, called "Ujo'ngsa," to exercise jurisdiction over the mail and telegraph as a part of a larger agency they created, the Ministry of General Negotiation and Trade Affairs, to direct the acceptance of Western products (Korea Telecom, 1992, page 54). At the time, the international situation surrounding the weakened Korea was dominated by competition between Japan and Qing dynasty China for control of Korea's sovereignty. The powers competing for supremacy regarded telecommunication, which had just been introduced in Korea, as an important mechanism to control the country, and their rivalry led to furious competition for the right to string telegraph lines. China got the jump on Japan when it concluded with the Korean government a contract to build the "So'ro (Western Route) Telegraph Line," to connect the cities of Inch'o'n-Seoul- Pyongyang-U'iju. It was made possible by a joint venture between China and Korea with their signing of the "U'iju Telegraph Contract" on 6 June 1885. That was, however, an unequal treaty, according to which China, in exchange for supplying capital and technology, took control of operation and management of the So'ro Telegraph Line.40 After the So'ro telegraph was strung and began services, the Korean government opened the "Seoul Telegraphy Agency" to manage the line, but in reality, it was nothing more than a branch office of the Telegraph Bureau of Qing China (Korea Telecom, 1992, page 58). In 1888, the second telegraph line, called the "Namno (Southern Route) Telegraph Line," was laid, connecting Seoul and Pusan, at the Korean government's own initiative. The "Korea Telegraphy Agency" was inaugurated as a separate agency from the earlier Seoul Telegraphy Agency to manage the new telegraph line, and the government also issued its own set of telegraphy regulations, entitled "Telegraphy Charter." However, in reality, the line was strung in response to pressure from Japan, which earlier had lost out to China despite its vested rights from having signed the "Pusan Underwater Telegraphy Line Stipulation" with Korea in January 1883.41 The Namro Telegraph Line was meant to connect the So'ro Telegraph Line with the

38 I relied mostly on Ko Kyo’ng-min (2001, pages 75-81) for this discussion. 39 The first time telecommunication was ever introduced in Korea was in December 21, 1883 when the Hanso’ng Sunbo (Seoul Ten-Daily) published an article entitled, "On the Telegraph," stating "The telegraph is the fastest thing of all…Because it is the basis of wealth and a source of openness, all countries are competing to set it up" (Korea Telecommunication, 1992, p. 53.) 40 The U’iju Telegraph Contract provided that, for a period of two years and five months after opening of the So’ro Telegraph, [the Korean government] could not grant non-Chinese countries or companies the right to construct additional telegraph lines on sea or land and even expansion or extension of telegraph lines by the Korean government had to have prior authorization from the Telegraph Bureau of Qing China (Korea Telecommunication, 1992, page 56.) 41 Japan, insisting that the "U’iju Telegraphy Agreement (6 June 1885)" was in violation of Article 2 of the "Pusan Underwater Telegraphy Line Stipulation (January 1883)" and that it had rights of priority, urged Korea to abrogate its treaty with Qing China (Korea Telecommunication, 1992, page 50.) Article 2 of the"Pusan Underwater Telegraphy Line Treaty" states: "The Government of Korea, during a period of 25 years calculated from the day of completion and commencement of signaling on this marine and overland electrical cable, will not permit the building of other telegraph lines that would compete for profit with this marine and overland telegraph line, nor will it permit the laying of undersea cables by the governments or companies of other countries, and the Government of Korea undertakes to establish cables at its option, in places that are not competitively profit-seeking." (Legislative Research Bureau, Library of the National Assembly [of Korea], 1964, page 177. 45

Japanese telegraphy office in Pusan as a part of a larger Japanese scheme to connect its IT network in mainland Japan to Korea's, so it amounted to acceptance of the demands from Japan (Korea Telecom, 1992, page 59.) A third line, the new "Pungno (Northern Route) Telegraph Line" was completed in 1891, connecting the cities of Seoul-Ch'unch'o'n-Wo'nsan, and built and managed independently by the Korea Telegraphy Agency. As the previous So'ro and Namro telegraph lines were built for the interests of China and Japan, respectively, the new Pungno line appeared in terms of geography to have been constructed for the benefit of Korea's northern neighbor, Russia, but it was built not by direct pressure from Russia, but out of the Korean government's own desire to have a close relationship with Russia (Chin Yong-ok, 1999, page 285.) In another arena, the Korean government adopted the telephone a little later than telegraphy, installing the first telephone circuits in 1898 inside the royal palace, under the management of the Telecommunication Department of the Ministry of Agriculture, Commerce, and Industry. However, as the telecommunication networks gradually expanded, the department was separated from the ministry and became its own independent agency, which was called the "Agency of Telecommunication," and, following the 1902 opening of a telephone line for commercial use between the cities of Seoul and Inch'o'n, full-scale commercialization of telephone service began in 1903, with the agency playing the role of main governmental agency for oversight. As has been described so far, the early stage of Korea's adoption of modern telecommunication systems was characterized by initiatives led by the government and foreign powers in the midst of the confusing international situation at the time of the historical Coming of the West era. As the powerful Western imperialist powers came ashore, which subsequently led to weakened national power for Korea, and under the condition that the country opened its doors to the Western powers relatively late compared to China and Japan, such adoption of modern telecommunications seemed unavoidable in the end. Therefore the source of monopolization for telecommunication in that era can be said to have been the result of partially "delayed modernization."42 However the Korean government's own efforts in proactively adopting and implementing modern telecommunication mechanisms and its expectations of further growth were mercilessly challenged by the more powerful foreign nations' own schemes, as the power struggle between China and Japan waged on until the balance of power tilted toward Japan. On 1 April 1905, Japan signed what was called the "Korea-Japan Telecommunication Agreement"43 with the Korean government, letting the world know its clear naked ambition on Korea. It was a precursor for the eventual outright colonization of the country, which subsequently led to Japan's invasion of mainland China. Telecommunication was undoubtedly the most important central mechanism by which Japan could implement its future war plans. Throughout history, communication networks have played one of the most central roles in conducting wars; and it was clear that the treaty was meant to provide a way for Japan to implement its designs to colonize Korea and subsequently invade mainland China.

42 In most European countries, nationalization of telecommunication was a result of "delayed industrialization." To overcome the lack of private capital for operating telecommunication business entities, they needed to nationalize the telecommunication networks (Hills, 1986, p. 63). 43 The main provisions of the agreement included: 1. Japan will manage all mail, telegraph, and telephone business in Korea, 2. Japan takes possession of anything related to existing telecommunication projects, including land, buildings, machinery, equipment, and all other facilities, 3. Free use of public and expropriation of private resources, including land and buildings, for purposes of expanding telecommunication projects as needed (Legislative Research Bureau, Library of the [Korean] National Assembly, 1964, p. 186.) 46

In fact, telecommunication has always been a main tool the modern imperialist powers have employed as part of their overall larger schemes to expand their ambition, especially when modern telecommunication mechanism were first commercialized on a massive scale. During this time, the imperialist powers mainly utilized international telegraphy networks to communicate with their various foreign colonial governments (Lee, 1996, p. 58.) Japan's installing of telegraphy circuit lines in Korea was no different than the motives of other imperialist powers. It was the time when the Western imperialist powers first started to massively utilize the new telecommunication mechanisms of telegraphy and telephone as major tools for their imperialistic expansions and operations (Brock, 1981, p. 55), so considering Korea's situation basically under the control of foreign powers at the time when telecommunication mechanisms were implemented, its conditions to grow IT as an industry were greatly limited. Japan, which continued to take over Korea's sovereignty after seizing its communications, in 1906 installed a Telecommunication Management Agency under the direction of its Office of the Viceroy for the Korean Kingdom, unifying the telecommunications system and operating it under the new structure. Japan then utilized the new agency in its scheme to invade Mainland China and suppress the anti-Japanese Korean freedom fighters (Korea Telecom, 1992; the Korean Ministry of Information and Communication, 1985a). So all throughout this period, Korea's telecommunication facilities were used mainly for Japan's ambition to expand its imperialistic efforts, and such colonial rule could only work against Korea's own autonomous development in the telecommunication industry.

3) South Korea's Monopolistic Development of Telecommunication Industry (1960's ~ 1970's): "The Five-Year Plans for the Telecommunication Sector"44

For the transitional three-year period immediately after Liberation (1945 – 1948), Korea's telecommunication sector was managed and operated by the American Military Government. During that period, Korean telecommunication business projects were basically limited to utilizing the existing facilities and maintaining and repairing them, rather than building or expanding new ones (See Korea Telecom, 1992, page 85.) Because the previous Japanese colonial government almost never let any Koreans have important roles, the new American military government basically lacked qualified technicians to man the facilities. In addition, the Korean government heavily relied on foreign aid for operating, maintaining, and financial backing of the telecommunication facilities, so investing appropriately in such poor conditions was impossible, considering that the government still faced budget deficits every year during this period. In 1948, the sovereign Korean government was officially established, and after receiving administrative rights from the American military government, the new government commenced to build new telecommunication projects on its own initiative. However, obvious difficulties lingered on all fronts such as technology, materials, and finance, leaving the telecommunication sector still in a very poor state to say the least. What made it worse, however, was the outbreak of the Korean War, which devastated much of the telecommunication facilities. From the time of the war's end in 1953 to 1957, the country's focus was on rebuilding what was left of the remaining facilities and structures wherever there were any. About 80% of the telecommunication facilities were destroyed during the war, paralyzing almost all existing communication means, so the most immediate need was building just the very basic communication systems (Korea Telecom, 1992, pages 89-90; Larson, 1995, page 32.) Financial

44 I mostly relied on Ko Kyo’ng-min (2001, pages 83-90) for this section. 47 funding for the rebuilding efforts mostly came from foreign aid, rather than the Korean government's own budget supplies or available domestic capital. Such was the case of development of Korean telecommunication since the time of first adoption– repeating the vicious cycle of monopolistic building, destruction, and rebuilding again. With such dire conditions in financial funding and technology capabilities, at least until the late 1950's the Korean telecommunication industry, which was lucky just to stay alive on that basic maintenance level, almost completely lacked any possibility of strong and sustainable growth. The Korean Ministry of Communication (1988, p. 3) has defined the historical periods of Korean telecommunication industry's development into the following stages, based on points such as sovereign right to nationwide telecommunication facilities, characteristics of telecommunication management, industrial technology, [and] usage: Initial import and creation (1885-1910), stagnation under hardships (1910-1945), recovery and reconstruction (1945-1961), developmental growth (1961-1980), and leapfrog growth (after 1980). However, even with this historical stage categorization, Korea has not experienced a normal functioning of telecommunication system for nearly a century from the time of first implementation. Only after experiencing tumultuous hardships in the earlier stages was full-scale developmental growth able to begin, in the late 1960's. For a newly independent country like Korea in the post-World-War-II period, as in the cases of other similarly newly liberated countries, national government had full control over how to manage the telecommunication sector. The state forcefully played a central role in managing and operating nationwide telecommunication systems, not just for security reasons but for economic development reasons as well (Hills, 1999, p. 172; Mody & Tusi, 1995, p. 81.) Under such circumstances, South Korea, too, saw its development in telecommunications led by the national government from the time its government was established in 1948. The sector became a quasi-nationalized industry and was practically a government monopoly. Moreover, beginning in the 1960's, as the government proceeded with its "Five-Year Plans for Telecommunication Projects" as part of its national economic development plan, parts of the sector's infrastructure were significantly ameliorated. These cases of Korea's development or underdevelopment in the telecommunication sector proved that its growth was closely related to the overall national directions in politics and economy, meaning that the government's growth strategy in telecommunication was rather directly linked to and unthinkable without the overall strategy for economic growth (Ku Kap-u, 1998, p. 141.) In the early 1960's, South Korea's telecommunication infrastructure was still very backward. That was because the country had gone through a brutal and exploitative Japanese colonial rule in the early part of the century and with the American military rule, it experienced distorted development. On top of that, the Korean War resulted in the burning to the ground of any remaining telecommunication facilities. It should be noted, however, that the similarly newly developing countries in the post-World-War-II period had experienced the same dire situations in telecommunication infrastructure. For those countries, investment in telecommunication development was in a slump, remaining at only 0.3% of total GDP at least until the 1970's, and never exceeding 0.6% until the end of 1980's (Saunders et al., 1994, p. 5). Such a low investment ratio was due to the following factors (Singh, 1999, pp. 21-22.) First of all, people's basic daily needs for food, water, and electricity far out-weighed their need for telecommunication. Thus, national policies were concentrated more on generating such everyday consumer needs than on telecommunications. Second, discourse on economic development was more focused on primary and secondary industries as well as service industries. Third, at least until the early 1970's there were almost no studies to prove that countries could significantly benefit by developing telecommunication systems. Fourth, even many European countries had somewhat low telephone propagation rates, so the developing 48 countries did not place great importance on developing their telecommunication infrastructure. Finally, the old bureaucratic telecommunication systems that were the remnants of previous colonial rule remained in place, even after superficial privatization, so the general public was neither offered new types of telecommunication services, nor were incentives available to change the old "policy thinking" on these issues. However for South Korea, its telecommunication infrastructure experienced a new turning point in the early 1960's when political revolution in the form of a military coup established a new national government and a new national strategy for the sector. General Park Chung Hee took charge of the nation's political realm as the leader of the successful May 16th Coup in 1961, and throughout his leadership, "economic development" was his first and foremost objective. Park proclaimed and successfully implemented the so-called "Five-Year Plans for Economic Development" as a national economic growth strategy under a grand nationwide set of goals, an economic master plan led by his own personally fierce political leadership. With this new dramatic historical development, "Five-Year Plans for Telecommunication Projects" also commenced and systematic development and investment in the telecommunication industry was implemented beginning in 1962, which was the first of its kind since the end of the devastating Korean War (Larson, 1995, p. 32; Singh, 1999, pp. 62-64.) The "Five-Year Plans for Telecommunication Projects" were carried out four times, spanning the decades of the 1960's and 1970's. Throughout their implementation, "voluminous expansion" of infrastructure aiming to fulfill the demands for telecommunication services became the highest priority. Such ambitious projects required a lot of financial resources obviously, and the Ministries of Economic Planning and Information and Communication expanded further and further the nation's internal funding to meet the financial demands of these enormous projects. In the Third Five-Year Plan for Economic Development, the ratio of investment in the field of telecommunication was 5.3% of indirect social investment, or 3.1% of total investment, greatly increasing to 12.2% and 4.6%, respectively, in the following Fourth Plan period, indicating how forceful and serious the government was in investing in the telecommunication sector (Government of the Republic of Korea, 1971, pages 182-183; 1976, pages 162-163.) As a result, as the table 3-2 shows, the internal funding for the Second Plan period was about 67.75 billion wo'n, but in the Third Plan period, it increased to about 328.38 billion wo'n, an increase of 4.8 times. What was more, it continued to increase to 1.52669 trillion wo'n in the Fourth Plan period, an increase over the previous period of 5.9 times. However, internal funding alone could not meet the demands of such furiously fast growth in the telecommunication infrastructure at all -- not by a long shot. So the Ministry of Economic Planning and the Ministry of Information and Communication started to look for available foreign capital funding from abroad in any way they could. A total of 44 foreign loans were successfully signed and implemented from the First through the Fourth economic plan periods, distributed among 23 projects (Ministry of Communication, 1982, pages 856-857.) The percentage of such foreign capital funding in the total investments was about 22%, and particularly, 91.4% was concentrated in the Fourth Plan period (Ministry of Communication, 1985b, page 763.) The "Five-Year Plans for Telecommunication Projects" greatly expanded from year to year, with the decade of the 1970's experiencing a phenomenal growth rate averaging more than 15% yearly. Such once unthinkable realization of true leapfrogging growth was finally achieved by the end of the 1970's (Ministry of Communication, 1988, page 48.) Table 3-3 shows the macro results of the "Five-Year Plans for Telecommunication Projects" implemented in the 1960's and 1970's. Compared to 1961, the year before such systematic plans were undertaken, subscribed telephones increased about 18 times, long distance telephones about 45 times, and international telecommunication about 30 times. The telephone propagation ratio per 100 49 persons also grew 21-fold, from 0.4 lines in 1961 to 8.4 lines in 1981. The automation ratio also dramatically increased, from a 50% level in 1961 to almost 90% in 1981.

(Table 3-2) Details of Financial Funding for the Five-Year Plans for Telecommunication Projects (Unit: Ten thousand wo'n)

Category Internal Funding Foreign Funding Total First Plan 1,677,529 278,512 1,956,041 (1962-1966) (85.8%) (14.2%) (100%) Second Plan 6,774,635 726,445 7,500,078 (1967-1971) (90.3%) (9.7%) (100%) Third Plan 32,838,135 3,869,208 36,707,344 (1972-1976) (89.5%) (10.5%) (100%) Fourth Plan 152,668,631 51,505,518 204,174,250 (1977-1981) (74.8%) (25.2%) (100%) Total 193,958,930 56,378,783 250,337,713 (77.5%) (22.5%) (100%) Source: Ministry of Communication (1985b, pages 750-771) *"Internal funding" is supplied by business projects themselves, and all are calculated as proceeds of the capital account budget. "Foreign funding" is supplied by national bonds issued under obligation of telecommunication projects or by loans (foreign loans).

(Table 3-3) Results of the "Five-Year Plans for Telecommunication Projects" (Unit: Circuits, %)

Projects 1961 First Plan Second Plan Third Plan Fourth Plan (62-66) (67-71) (72-76) (77-81) Subscriber 123,154 213,260 359,180 809,370 2,172,350 telephones Long distance 1,777 1,480 6,201 16,758 79,421 telephones Telegraphy 265 515* 400 2,600 1,855 International telecommunications 26 - 194 423 786 Propagation ratio per 0.4 1.2 2.3 3.4 8.4 100 persons Automation ratio 52.6 64.8 70.1 77.7 87.1 Source: Ministry of Communication, 1985b, pages 750-771) *A figure combining all telegraphy networks and other specialized facilities.

However, despite the series of four successful implementations of planned economic initiatives that resulted in dramatic increases of overall economic activity and income levels as well as subsequent increases in demand for telecommunication services, investment in the telecommunication sector still was insufficient to meet the ever-growing demand, nor was just expansion of investment itself able to solve the demands for telecommunication services. The limits of the "Five-Year Plans for Telecommunication Projects" were most clearly indicated in the unbalanced level of supply and demand in telephone service. After the 1970's, telephone service had experienced chronically excessive demand for services, and these prolonged delays even became a society-wide phenomenon (Korea Telecom, 1992, page 336.) Such prolonged delays began in the early 1970's, growing ever worse as time went on. By 1979, the total number of delayed requests for telephone service was 1.5 times more than the yearly

50 average supply at the time, based on subscribers on waiting lists to have their telephone services turned on. The problem was not just limited to the issue of available quantity but quality as well. There were no special services or public data transmission services other than regular telephone service, and domestic long distance DDD communication was possible only within select areas, centered on the major cities. There were also problems with wrong connections at all call levels -- local, regional, and international -- in addition to the problems of broken telephone sets due to outdated telephone terminals and networks. Bad connections and calls cut off in the middle of telephone conversations were all too common, all of which led to an outpouring of complaints from the consumers. Nevertheless, the four "Five-Year Plans for Telecommunication Projects" implemented during the period of 1962-1981 were regarded as a very successful policy endeavor, however many problems there may have been, associated with unbalanced supply and demand and low- quality services, all of which became social issues, too. Such dramatic increases in demand for services were obviously a result of the country's successful implementation of economic development strategies which ushered the country into a successful industrialization process and benefited the people's quality of life. However, investments for social infrastructure were more concentrated on electric power and transportation, and because the telecommunication sector was relatively smaller in overall size than the other two sectors, it was difficult to supply adequate investment funds.45 Also, the inherent limits of government-sponsored corporations contributed to their not being able to meet all of the out-pouring of demand for IT services from the public. Such slow response in meeting the overwhelming demands subsequently caused citizen discontent and became obstacles to economic growth.

2. North Korea's IT Policy

1) The Meaning of Telecommunication and the Role it Plays in North Korea

The telecommunication industry is generally a multi-product industry and a complex industrial group that produces and supplies multiple services from the same industrial facilities and has a nationwide network (Marcellus, 1988, p. 154). Therefore, telecommunication in capitalistic societies is defined as "social overhead capital (SOC)" or infrastructure that is absolutely necessary for a nation's economic and social development. Telecommunication also plays a role in improving the quality of people's lives by making their lives more convenient in their everyday functions in administration, education, culture, medical and health services, leisure activities, and other fields. However, in North Korea, the meaning of telecommunication and the role that it plays are defined differently than in capitalistic societies. In North Korea, the term corresponding to "telecommunication" is "ch'esin," meaning "information and communication." North Korea uses the term, "ch'esin" (information and communication), to mean "telecommunication as social overhead capital." According to their "The Great Leader Kim Il Sung's Working Class Terminology Dictionary," "telecommunication" and "information and communication" are defined as follows:

45 Plans for investment in social overhead capital and other service sectors in the year 1965 show transportation had 33.5% of all planned investment funding, and electricity had 21.6%, whereas telecommunication’s percentage was only 5.5% (The Federation of Korean Industries, 1986; Ministry of Communication, 1988, page 33.) 51

"Telecommunication (t'ongsin)" refers to certain methods that people use to communicate and exchange news (information), reports, and instructions…. Telecommunication, a powerful means that guarantees exclusive command of all fields of revolution and construction, plays the role of the nerve system of a country.

"Information and communication (ch'esin)" refers to a part of the people's economy that promotes social production and the people's lives through projects that receive and transfer communication ("t'ongsin"). Information and communication is a productive sector that participates by generating material wealth with various means of communication, such as mail, broadcast, telegraphy, and telephone and is a social service sector that works to ensure that the state and the people's communication needs are met as a powerful tool that guarantees the Party and the state's exclusive command in all fields of politics, economy and culture with various communication mechanisms, it plays a role like the nerves of a country, and contributes to raising the workers' ideological education and their material and cultural life.

As these descriptions indicate, telecommunication in North Korea means transmitting various collected information and facts through newspapers, TV broadcast, magazines, and other media, and information and communication means an industrial sector of the people's economy that conducts telecommunication tasks, in other words, an industry sector that provides production and services through communication mechanisms. Therefore, in North Korea the relationship between telecommunication and information and communication is the sort of relationship between tools and goals. The role of information and communication is to guarantee the Party and the state's exclusive command and to raise the level of people's ideological education as well as their material and cultural lives, because they believe both those objectives can be achieved through utilizing communication tools. As the figure 3-1 illustrates, information and communication in North Korea are categorized into three groups, according to their technological level. However this kind of categorization method is a "traditional" method that does not reflect the new "digital revolution" that became the standard for fast development in technological revolution of information and telecommunication (IT) after the 1970's. The reason why modern innovations in IT have not been reflected in the information and communication sector can be found in the North's unique characteristics in its information and communication sector.

(Figure 3-1) North Korea's Method of Categorizing Information and Communication

Mail Communication Mail, parcel, wire transfer, savings and distribution of periodic publications

Information and Electric Wired and wireless telegraph and telephone Communication Communication

Broadcasting Cable broadcast, radio broadcast, television broadcast

The North's information and communication sector, or telecommunication policy, places its first priority on the function of "command communication" to the people and "industrial communication" that guarantees the state's role as an exclusive directive body and generates material wealth, above its function as a provider of convenience and communication means for the consumers' everyday lives. Therefore the main focus is on utilizing telecommunication as a tool quickly and accurately to transmit the Party and the state's lines and policies to all sectors, units, and laborers to ensure the Party and the state's centralized and uniform rule over them.

Additionally, in North Korea it serves as a tool to guarantee the directions and commands of the Party and the state economic directive agencies, as well as a general public educational tool to conduct the Three Revolutions in the areas of ideology, technology, and culture. Moreover, it also serves as a political tool to control and monitor the people's communication in all formats. Therefore the North's telecommunication policy primarily is aimed to meet the requirements of public administration, rather than as a tool for the general public service of fulfilling the citizens' needs for communication, which is then considered a secondary purpose. These are the reasons why the North Korean regime still uses the traditional categorization method described above, and it seems that they feel no great need to change this method anytime soon. The North Korean general public's propagation rate for telephone lines as well as general telecommunication services remain at a very low level. Instead of servicing the general public, the North Korean government is concentrating on operating and expanding "industrial telephones" that are installed in factories, business facilities, and farm co-operatives for the purpose of guaranteeing "command communication" from the state's centralized, uniform rule to the subordinate governmental agencies and the people, and generating material wealth and improving productivity. The North Korean "Economic Dictionary II" (1985) defines the role of "information and communication," the term for telecommunication used in North Korea, as follows.

Information and communication under socialism is a national nerve system that connects all types of relationships occurring in social life, such as in politics, economics, culture, and the military by delivering news quickly and accurately through telecommunication and broadcast. It is mainly categorized into command communication and industrial communication to guarantee the Party and the state's economic instructions and management of all sectors of the people's economy and by forming close productive relationships among factories, business facilities, and co-operative organizations positively serves economic construction. It also directly serves the people's lives by ensuring residents' communications and broadcast. Particularly, it quickly and correctly delivers and infiltrates the Party's lines and policies to all sectors, all units, and all laborers, and for the observance of the same dynamically guarantees the Party and the state's centralized, uniform guidance. Information and communication, the nerves of modern warfare, also play an important role in strengthening national defense.

Based on this discussion, we may say that the term "information and communication" in North Korea is used to mean performing the four functions of 1) economic construction, 2) service, 3) implementing the Party's lines and policies, and 4) strengthening national defense. However, these defined functions are not much different from what they are in a capitalistic society. Prior to the worldwide adoption of liberalized telecommunication policies and the signing of the WTO General Agreements on Basic Telecommunication Policies in 1997, which had first begun in the United States and Britain in the 1980's, even capitalist countries regarded telecommunication as an untradable "public good" for its importance as social overhead capital for promoting a nation's economic activities and its characteristic of directly connecting national defense and security systems, which then served as a basis to justify its monopoly (Ko Kyo'ng-min, 2001). So if there ever are differences between capitalist and socialist systems in their telecommunication sectors, they are only "relative differences," based on which aspects are given more political priority. For a socialist country like North Korea, as described before, telecommunication service is concentrated on the national priorities of implementing the Party's policies for maintaining its regime, as well as economic building and strengthening the military, over the matter of serving the communication needs of the general public. Under a strict national monopoly,

53 telecommunication in North Korea, as a means to guarantee the guidance by the Party and the national economic agencies, and in its role as a propaganda tool thus has reflected more priority on political, military, and policy considerations. Therefore, there has been almost no recognition for it to function as a mechanism to serve the people's information and communication exchange needs, that is, to provide individuals communication services for the individual's welfare and rights. Rather, policy has been focused on the aspect of using it as a systematic ruling apparatus to deliver in a uni-directional way the information the policy authorities consider the people should know. Consequently, that understanding of the concept and functions of this North Korean-style telecommunication, or "information and communication" was one of the fundamental reasons why the country has had relatively weak telecommunication infrastructure. Maintaining the regime rather than meeting the demands of the communication needs of the people has had more priority in North- Korean-style telecommunication policy and therefore, implementation of the Party lines and policies, economic building, and strengthening national defense have been given far more weight. In constructing IT infrastructure, top priority was given to meeting the demands of public administration such as in politics, military and the economy, rather than to providing "general services" to the residents.

2) IT Management Systems

The "traditional" management system for telecommunication that is primarily based on voice, such as telegraphy and telephone, has been recognized as a model for public monopoly. Before telecommunication began to spread all over the world in the late 19th century and up until the early 1980's, this approximately 100-year period was very much dominated by monopoly in nearly all countries, regardless whether they were advanced or backward. In North Korea, during the period of August to October of 1946, the former Japanese-owned industrial facilities were nationalized by the newly established communist government, and it became a basis for their socialist economic apparatus. Afterwards, all industrial activities in the country were reorganized and conducted under exclusive national planning (Cho'n Hyo'n-su, 1999, page 63.) Nationalized monopoly of telecommunication in North Korea actually began earlier before the establishment of its people's republic with the nationalization of industries, transportation, and banks. On 10 August 1946, a "Decree on Nationalizing Industries, Transportation, Information and communication, and Banks" was proclaimed that effectively seized industrial facilities formerly owned by Japanese -- without compensation. The telecommunication sector in North Korea has remained a nationalized industry to this day, under strict central supervision. Before the nationalization, the North Korean regime established the Agency of Information and Communication under the North Korean Temporary People's Committee in February, 1946. On 9 September 1948, with the establishment of the North Korean administration, the agency was promoted to the Ministry of Information and Communication and then in 1963, in order to establish and concentrate a command system, all telecommunication organizations were merged into a single management system. Further reorganization and developments followed in 1972 when the regime's new socialist constitution was proclaimed. When the Cabinet was reorganized as the Council of Ministers, the Agency for Railways, and the Agency for Oceanic Freight and Land Transportation under the administrative control of the Central People's Committee were consolidated and reorganized into a single Transportation, Information and Communication Committee, and the Ministry of Information and Communication was also renamed the Department of Information and Communication. With the new reorganization in place, the 54

Department of Information and Communication delegated its policy decision rights to the Central People's Committee and was left having only administrative rights, being demoted to an administrative department under the committee. However, more changes came in December 1976, when the department was again separated from the previous Central People's Committee and reorganized as a ministry under the Council of Ministers. Additionally in 1998, when the new constitution was amended, and with it, the titles of National Chairman, the Central People's Committee, and the Council of Ministers all were abolished the Cabinet system was introduced, restoring the Department of Information and Communication as the Ministry of Information and Communication once again, under the Cabinet. Currently, the ministry responsible for conducting telecommunication tasks in North Korea is the Ministry of Information and Communication, under the Cabinet. The ministry's tasks are categorized into three areas: electrical telecommunication, postal telecommunication, and broadcast. As figure 3-2 shows, electrical telecommunication is managed by the Choso'n Information and Communication Company, and there are the International Communication Center in Pyongyang and 220 regional offices for telegraphy and telephony in cities and counties (kun) under it. In the postal telecommunication area, there are about 1,500 post offices that handle postal work, and three television broadcasting channels are in operation -- Choso'n Central TV Broadcasting, Mansudae TV Broadcasting, and Kaeso'ng TV Broadcasting.

(Figure 3-2) North Korea's Agencies with Responsibilities Related to IT

However considering the fact that the North regime has very strict control over the functions of telecommunication to implement the Party's policies, economic building, and strengthening of national defense as described earlier, it would not be totally correct to state that the Ministry of Information and Communication has a full control over all policies and projects related to telecommunication issues. Other than the communication ministry, there are the Workers' Party, the Department of National Security, and the Ministry of People's Security wielding influence to ensure centralized and uniform guidance by the Party and the state. For instance, responsibilities for radio frequency management are placed under the Ministry of Communication's Radio Frequency Management Agency, the Department of National Security, and the Ministry of People's Security. For the general public to make international telephone calls, prior authorization from the Workers' Party (4.13 Communications Office) is required, and the International Satellite Telecommunication Agency is controlled by the Department of National Security. Any governmental agency or university that wishes to make international phone calls or use a fax is required to submit to the Workers' Party written documentation of the contents in advance (Kim Yu-hyang, 2001, page 3.) The Ministry of Electronics Industry was established as a Cabinet-level department in November 1999, for the purpose of overseeing the IT sector. Under the ministry, there are the Electronics Product Development Company, in charge of manufacturing computers, and the Pyongyang Integrated Circuit Factory, which manufactures semiconductors. The Electronics Product Development Company particularly expanded its role as Chairman Kim directed in 2001 to increase propagation of computers in such places as administrative agencies, business facilities, and schools. The Academy of Sciences, a Cabinet body, oversees and coordinates North Korea's S&T development and research, conducting [research] in IT at the Comprehensive Research Lab for Programming and the Computer Sciences Institute. Training for IT is provided by the Cabinet-level Ministry of Education, and particularly, the Bureau for Guidance of Programming Training under the ministry is in charge of producing computer education materials and re-training educators (Ku Hae-u, Cho'n Pyo'ng-chun, 2002.) Additionally, the Choso'n Computer Center, Pyongyang Information Center, Central Information Agency of Science and Technology, Pyongyang Programming School, and the Yakcho'n Research Institute are in charge of IT development research projects. Since North Korea adopted developing its IT industry as a major objective in 2001, the Workers' Party has emerged as the vanguard of promoting the IT industry. Under the Workers' Party, the Department of Military Industry has established the Consolidated Information Technology Industry Company and has been leading the computer and telecommunication industries. Especially, an agency called the Office of 21 was newly established in December 2001 under the Party's supervision, representing the "21st century" and showcasing Chairman Kim's view that "the 21st century will be the age of information industry." The person in charge of the Department of Military Industry and the Office of 21 is Chu Kyu-ch'ang, who is known as a central figure in the North's military industrial complex and the person in charge of the development in 1998 of the Taep'o-dong missile program, 7 March 2003.) So all these developments indicate that the North's IT Industry is in a very favorable position and obviously its importance and proportion to all industrial sectors are regarded very highly by the regime. Also from these developments, one can sense that the North has taken a gradual and sequential step-by-step approach to establishing the related system. Therefore, the North's telecommunication management system is a clear monopolistic system, but the governmental agencies in charge of operating it are not in a "concentrated" mode, but rather are "dispersed." This is a contrast to the recent worldwide trend whereby governments are establishing exclusive governmental agencies to promote efficiency in the information sector and electronic government systems, as well as utilizing centralized promotional systems. 56

However North Korea still has not implemented such an efficient, centralized promotional system. Considering that the North's political power is concentrated in the Party and the Party has started to fully involve itself in management of the IT industry, it may be thought that there will be no great difficulties in centralized guidance for telecommunication policy. Nevertheless, the dispersed nature of the North's IT-promoting governmental agencies with all their policy bodies, industry oversight agencies, R&D agencies, and training agencies may become a roadblock to the development of an efficient and effective IT industry.

3) Stages of Telecommunication Development and Policy Changes

The process of the development of telecommunications in North Korea since Liberation, when it first established modern telecommunication systems and began to build basic infrastructure after the War, up through the 1990's has gone through several stages, as follows:46

(1) The Stage of Reorganization and Post-war Reconstruction (1945 – 1950's)

North Korea's nationwide telecommunication networks first began to be implemented after Liberation in August 1945 and under the ensuing military rule by the Soviet Union. North Korea established the Agency for Information and Communication in February, 1946, and further established a total of 405 regional post offices and eight telecommunication administrative offices under it at the provincial level, having a first set of modern style telecommunication facilities. After the nationalization of telecommunications on August 10, 1946, the old secure telephone lines under the Japanese colonial rule were dismantled and using the same core equipment, telephone lines established between Pyongyang-Wo'nsan and Pyongyang-Hamhu'ng, actively pursuing a full scale expansion of telegraph and telephone networks. However, the Korean War destroyed the communication networks they had established since 1945. So the decade of the 1950's was spent mostly reconstructing and modifying the destroyed facilities and building new circuit lines and networks, as well as improving the telephone lines in major cities to cable networks. In these projects, the North relied on the Soviet Union's advisers, technicians, and financial support, due to their overwhelming lack of needed technical personnel and destroyed facilities. Based on the support from the Soviet Union and the North's own efforts to rebuild their post-war economy, reestablishing the telegraph and telephone networks in Pyongyang and between each city and province was almost completed by 1954. In 1958, a modern automated telephone operation center was installed in Pyongyang and an automated telephone exchange center was installed in the city of Sinu'iju as well.

(2) The Settlement Stage (1960's)

As North Korea entered the 1960's, it started to establish its own independent telecommunication sector under its authentic ideology called "Juch'e." This was also the time when the Juch'e ideology was greatly propagandized throughout the society, along with initiatives to have technological independence. However, their technical level still was not sufficient enough at all, and they could not get much farther than illegally copying and reassembling Soviet-made telecommunication equipment.

46 See the combined works of Yi In-chu (1987), Hwang Tong-o’n (1997), Kim Yu-hyang (2001), and Nam So’ng-uk (2002). 57

Throughout the 1960's, the government focused its policies on meeting the people's communication needs, improving telecommunication quality, expanding industrial telecommunication, and expanding regional telecommunication facilities through the 1st Seven- Year Plan for Economic Development (1961-1970.) The Ministry of Information and Communication was established in 1963 in order to focus more on overseeing telecommunication operations nationwide. With it, automated telephone exchanges were implemented between Pyongyang and all other provinces, and cables for the communication lines began to be installed.

(3) The Initial Modernization and Internationalization Stage (1970's – late 1980's)

With the ever growing demands for telecommunication services, the North Korean government began to pay closer attention to telegraph and telephone services in the 1970's. In 1973, Kim Il Sung ordered an expansion of "new industrial telephones" that was aimed to produce some telecommunication equipment on its own efforts, including terminals which had been mostly imported up until then, and this accordingly resulted in the expansion of industrial telephone networks between the headquarters administrative offices and operations offices of each province as well as between the headquarters administrative offices and major companies. Also in 1973 to 1974, the government imported then-latest telecommunication equipment from Japan, and installed cables in the telecommunication lines and small size telecommunication relay networks for wireless telecommunication. In September 1976, the Ministry of Information and Communication was separated from the Transportation, Communication, and Information Committee as an independent department to concentrate on expanding the telecommunication projects. In the years following the 1980's, the government began to focus on connecting each regional communication sector, national economic agency, and manufacturing unit, and particularly, modernizing telecommunication and broadcasting facilities to facilitate science- oriented telecommunication was given great emphasis. In 1987, a communication center was installed in Pyongyang to oversee telegraph, telephone, telex, voice recording, and picture transmitting, and fax services. Also in 1989, the government imported some 10,000 telephone units from China and supplied them to major cities for the purpose of supplementing their insufficient number of telephones. With all the policy implementation, the government proclaimed that the general, various telecommunication propagation task was completed by the decade, however the supplied devices were not to meant to meet the demands from the general public, but rather were aimed to supply devices for industrial purposes and wired broadcasting only.

(4) The Modernization Stage (Late 1980's – 1990's)

North Korea began to face its own limits in industrialization policy in the mid-1970's, and by the 1980's, the country's industries became all but stagnated, forcing them to adapt to the new environment and modify their strategy, which resulted in their shift to focus more on foreign trade beginning in the late 1980's. Expansions in foreign and domestic telecommunication facilities and modernization policies followed with the new focus. First, the regime started to upgrade the old telecommunication lines to optical cables as a main project for the new direction in the 1990's. It also started to expand telecommunication relay networks and replace the old manual switchboards with automated machines. As a result, most of the telephone networks in major cities like Pyongyang were replaced, and upgrading the telecommunication lines to optical cables under the project "Modernizing Telecommunication" 58 was successfully implemented, connecting the cities of Pyongyang and Hamhu'ng. Currently, the same types of upgrades are being undertaken with other cities as well. Especially, the North Korean government has been successful in manufacturing their own manual switchboards and optical cables which they are installing. Such telecommunication development stage can be used in analyzing the status of the country's developments in each stage, but it is still difficult to have a real picture of the characteristics or changes implied in the regime's telecommunication policy. The reason probably is due to the regime's efforts in placing preferential priorities that were primarily implemented in order to guarantee the Party and the state's exclusive command and ideological education toward the general public for which their characteristic view of telecommunication as "socialist information and communication" were intentionally emphasized. Therefore, a clearer picture would be that the changes in telecommunication policy were implemented so long as there were no real changes required to the regime's inherent characteristics. However, yet, the North's continuation of telecommunication policy cannot be said as a result of their decreased interest in the industry. The North's interest in the fields of electronics and IT can be analyzed in two aspects. One is their technological innovation in electronics, which has experienced great achievements since the late 1970's, and the other is Kim Jong Il's own policy shift toward globally oriented information and telecommunication revolution focusing on the Internet that started in the mid-1990's (Kim Yu-hyhang, 2000, page 114.) North Korean first began to show great interest in electronics when Kim Il Sung toured Europe in 1984. As he was traveling and visiting many European countries, Kim witnessed the "micro-electronics" revolution that was going on at the time in the Western European countries. This was when he recognized the importance of the latest technology centered on electronics field, and he started to send groups of North Korean learners about the sector all over Europe. The shifting mood took further momentum with the stagnation of North Korean economy and industries which was the result of the unbalanced growth strategy centering excessively on heavy industry, reinforced by the new wave of reform and openness policies sweeping the socialist countries during the late 1980's. With these momentous factors, the North Korean regime started to change its decades-old economic policy centering on heavy industry -- which had been the centerpiece of its economic policy ever since the establishment of the regime -- to focus on light industries instead. The result was the "Five-Year Plans for S&T Development" that began in 1988 as a part of the new changed economic policy. The North's second policy change occurred in the mid-1990's, when they started a new growth strategy centering on high-tech industries such as electronics and telecommunication. Especially, there have been evidences proving that they attempted to offset their failure in the industrial economy by implementing the new digital economy as the country slowly started to recover from the devastating food shortage crisis in the 1990's. Examples of the new policy included the nationwide program contests that have been held every year since 1999 and the establishment of the "Ministry of Electronics Industry" in December 1999 that was given the responsibilities of overseeing the IT sector as its central governmental supervisory agency. The new interest in IT policy in the Kim Jong Il Era became far more detailed than ever before as the new century began and it was implemented in the form of "leapfrog growth" for the IT industry as a strategic industry.

3. The Current State of North Korea's IT Infrastructure

It is very difficult to understand precise data about the North's information and telecommunication infrastructure. It seems as though North Korea has not disclosed any relevant data on its telecommunication sector since 1993 or 1994. When it comes to the case of North Korea, even the reports and database of the ITU, which systematically research and publishes its findings on telecommunication related data for all of the countries of the world, are frequently left with empty columns or still show old data without any recent upgrades. It was confirmed by the author that most of the ITU's current data on North Korea's telecommunication infrastructure cannot be accepted as reliable.47 The 2002 edition of World Telecommunication Indicator Database that ITU published on all of the world's countries' telecommunication data through the year 2001 had North Korean data for the year 1993, and some of them were 1994 data.48 Also ITU's World Telecommunication Development Report's 1998 edition shows North Korean data for 1993 or 1994 as if they were for the year 1996. Perhaps because ITU itself recognized the difficulties in obtaining correct North Korean data, it excluded North Korea from its list of researched countries in the World Telecommunication Development Report 2002. So for this study, only domestic data49 were primarily used, to shed light on North Korea's status in telecommunication infrastructure on an "exploratory level."

1) Telecommunication Infrastructure

(1) Local Public Telephones

Telephones in North Korea are mostly installed in workplaces and public agencies for military or public administrative purposes, and personal residential telephones are hard to find and use. Only certain high ranking Party officials have their own personal telephones, and the general public can only use the so-called industrial telephones installed in farm co-operatives and factories for public communication. Public telephones are installed in places like post offices, department stores, and hotels for personal use. As table 3-4 shows, North Korea had about 1.1 million local telephone lines in 1993, or five lines per 100 people. Compared to South Korea for the same year, North Korea's local telephones were about 1/17th and the number of lines per 100 persons was about 1/7th of the South Korean rate. The number of public telephones was about 3,000 in 1993, which was 1/88th of the number for South Korea and public telephones were installed only in parts of certain large cities, such as Pyongyang and Hamhu'ng.

47 One researcher stated the following as he pointed out problems in the reliability of data regarding North Korea’s telecommunications. "ITU’s 1996 data show North Korea’s number of lines as of 1995 as 1.089 million lines. However, even considering the fact that the North’s economy was in a depressed state from 1996 to 1995, it is hard to accept at face value that the number of main lines increased by only 11,000 in three years. It shows that the ITU’s official data on North Korea are really unreliable. However it can be estimated that North Korea’s telecommunication environment is significantly backward from ITU’s data showing the North’s number of lines hovering around one million in recent years (Kong Yo’ng-il, 2001b, pp 5-6)." 48 The author checked the above facts by using computer files of the Library of the (Korean) National Assembly (search numbers FC002266, FC002267) and microfiche (search number MH037288).

49 See the works of Kim Sang-t’aek, Kong Yo’ng-il (2000), Kim Yu-hyang (2000), No Su’ng-chun, Pak Chong- pong (2000), Kong Yo’ng-il (2001a), Pae So’ng-in (2001b), Ku Hae-u, Ch’on Pyo’ng-chun (2002), the Ministry of Telecommunication and Information (2002), and Nam So’ng-uk (2002). 60

(Table 3-4) Comparison of North and South Korean Telecommunication Facilities

Category (based on '93) South Korea (A) North Korea (B) Comparison (A/B) Telephone subscribers 18,606,872 1,100,000 16.9 times Subscribers per 100 38 5 7.6 times Ratio of digitalization 58.80 4.60 12.7 times Public telephones 265,000 3,000 88.3 times Telex subscribers 5,348 1,862 2.9 times Volume of international 510,479,166 3,127,000 163.2 times calls received (minutes) Volume of international 355,406,272 3,072,000 115.7 times calls sent (minutes) Number of people on 0 16,440 waiting list Number of public 59,907 15,000 4.0 times employees in telecommunications Source: ITU (2002b) *The ITU data were for 2002, but since its statistics for North Korea were for 1993, the ITU used South Korean figures for 1993 for comparison.

It would not be an exaggeration to state that there are hardly any residential personal telecommunication facilities for private use in North Korea, with the exception of certain high- ranking Party officials. Also, because the majority of telephones are manual exchange-based, it is said that only about 50 to 60% of requested calls can actually be processed. The North Korean government started a telecommunication modernization program in the mid-1970's with a goal of installing two million lines during its third Seven-Year Plan (1986-1993), but that goal was not reached. It may be said that the cause of the failure stemmed from concentrating too much of the focus of public administration in communication policy on maintaining the regime, rather than on providing services to the general public.

(2) Long-Distance Telephones

North Korea's long-distance telephone system is set up primarily for industrial and administrative purposes rather than personal use. Long distance telephone facilities are centered on Pyongyang and are connected to each regional province, city, county, and ri. They are constructed so that, instead of connecting regional cities directly, all calls are redirected to Pyongyang and then distributed back, in a centralized governing structure. This structure is closely related to the country's public administrative structure, whereby the regional management system (central region – province – city, kun) is bonded in each field to the axis of the centralized system for management (Cabinet -- ministry -- management bureaus -- business facilities). On 8 April 1997, the regime announced, in celebrating Information and Communication Day, that it had completed automation of long-distance telephone calls between the central and peripheral regions, including cities and provinces based on "light fiber telecommunication" (fiber-optic telecommunication) and "numerical method telecommunication" (digital method). This suggests that the North had indeed converted its old manual switchboards in 70 cities and counties to automated ones by the end of 1997. However, the switches between other regions and Pyongyang still mostly consist of manual switchboards. The majority of the manual switchboards are mechanical step-by-step types or use the crossbar method. There is only one

61 automated switchboard actually in use, in Pyongyang, an E10A automatic switchboard made by France's Alcatel company. Also the North's rate of digitalized long-distance telephone exchanges (Figure 3-4) is only 4.6%, based on 1993 data. So even with the undertaking of modernization of telecommunication networks in 100 cities and counties, the modernization of exchange equipment has been insufficient, so it is hard to expect any time soon that the country will have the benefits of fiber optic networks, such as expanded lines, high speed data, or image transmission.

(3) International Telephone Calls

North Korea's international telephone networks consist of wired, wireless, and satellites. The wired international exchange facilities use a digital-based E10B switchboard imported from France's Alcatel. This switchboard is installed in the International Communication Center established in 1989, which enables users to make automated international telephone calls (IDD) from Pyongyang to 170 cities worldwide. The number of international telephone lines increased from five in the 1970's to 33 in the 1980's, and as of 1997, there were 120 available international telephone lines. For international communication networks, North Korea has relatively high-quality lines that connect with the old socialist bloc countries. Noticeably, it also has the wireless communication network connecting Pyongyang-Beijing-Moscow and the wired communication networks connecting Sinu'iju-Beijing and Ch'o'ngjin-Vladivostok. With the West, there is the indirect communication network relayed through the shortwave wireless connecting Pyongyang- Singapore-Hong Kong and by China's Beijing Ground Station. Communication between North Korea and the United States has been realized via AT&T since 1995; currently, international calls can be made from the three cities of Washington, New York, and Los Angeles to Pyongyang. Internet-based VoIP service was introduced in June 2000 by the American STARTEC Global Operating company. It is also now believed that Internet telephone calls can be made between Pyongyang and Seoul since the installation of optical fiber cables between North Korea and China and a server made by China's China Telecom in the Choso'n Lottery Joint Company located in Munsu-dong, Pyongyang. However, it still is impossible to make calls to Pyongyang from Seoul using an Internet telephone. In early June, 2002, the first ever telecommunication conference between the North and the South was held, and agreement reached on an "international telephone gateway exchange project," which was proposed by the South with an aim to link it with the need for continued investment thereafter in CDMA projects. North Korea continues to modernize both its domestic and international telecommunication networks. On 25 August 2001, it started operating a North Korean-Thailand joint venture called the "Raso'n International Communication Center" through the establishment of a company, the Northeast Asia Telephone and Telecommunications Company (NEAT&T). The Raso'n Center, operated jointly by North Korea and Thailand, invested $15 million in the project, which was completed in two years and two months with the installation of 200,000 lines.

(4) Satellite Telecommunication

In 1984, North Korea became a member of the old communist bloc's satellite telecommunication organization, INTERSPUTNIK. Thereafter, adopting French technology, it constructed a satellite communications ground station in Pyongyang for the International Electrical Telecommunication Satellite Organization (INTELSAT) in March 1986 that made possible satellite communication and satellite TV relays with various Western countries, except the United States, Japan, and other Pacific countries. In addition, the North also completed the International Communication Center in 1989 as a headquarters for domestic and satellite telecommunication systems and to efficiently manage the telecommunication systems. In the first half of 1989, the North also constructed the "Intersputnik Satellite Telecommunication Ground Station"to establish a direct satellite telecommunication network with the Soviet Union and the Eastern European Bloc countries, with technology assistance from the Soviet Union. Then, in August 1990, the North Korean government, with assistance from the UNDP, constructed a modern style Meteorological Satellite Receiving Station so that it could contribute to the meteorological agency's monitoring plans. Thereafter, in November 1990, a direct satellite circuit was established and exclusive international line service agreements were signed between North Korea and Japan, adding three telephone lines, 10 telex lines, and one telegraph line between the two countries. Since 2 July 1999, North Korea has been broadcasting news stories related to North Korea, dramas, and documentaries in the Korean language to Asia, Europe, Australia, and North Africa for six hours a day via a ThaiCom satellite rented from Thailand's Sinawat Satellite Company. As of the end of 1999, the North was operating 69 lines, including direct telephone lines, via satellite with a total of nine countries. To communicate with other countries, the North uses a relay type system through those nine countries. In May 2001, North Korea also became the 145th member of INTELSAT, located in Washington D.C., USA, which gave them an 0.05% ownership share of INTELSAT, and it is anticipated that North Korea's international telephone calls and satellite relay broadcasts will become smoother via satellite.

(5) Mobile Communications

North Korea's wireless communication network is even more backward than its wired network, and is an area that with almost no development at all. Unlike wired signals, wireless signals can be sent anywhere through the air, so for a country like North Korea strictly limiting contact with the outside world, the authorities cannot welcome the opening of the wireless market, which could threaten the very existence of the state. Therefore wireless communication usage is limited to the military and the Agency for National Security for defense and national security purposes only. As such, public airwave mobile telephony and wireless paging are almost totally non-existent, except for limited areas of Najin and So'nbong, downtown Pyongyang , and the Ku'mgang Mountain tourist area. The first company that started a mobile communication business in North Korea was a joint venture company between the North's Choso'n Information and Communication Company and Thailand's Loxley Company called Northeast Asia Telephone and Telecommunications (NEAT&T). NEAT&T first installed and opened 1,500 circuits for wireless paging and 500 mobile telephone circuit lines in Najin and So'nbong in July 1998. The company, which is responsible for establishing telecommunication networks in the area, is planning to construct a telecommunication center and a satellite ground station in Anju-dong and Sinhu'ng-dong in the

63 city of Najin by the year 2000 and install an additional 40,000 manually switched lines, 1,200 mobile communication circuit lines, and equipment for 1,500 circuits of wireless paging. In August 1998, Lancelot Holdings Ltd. signed a 30-year monopoly service agreement for international automated telephone (IDD) and mobile communication with North Korea's Choso'n Consolidated Telecommunication Company. Lancelot Holdings had the rights to a CDMA-based mobile telephone business throughout North Korea, but it was not of the scale to manage the business all by itself without some type of joint venture infusion with other prominent telecommunication companies. Thus in 1999, Hong Kong's Pearl Oriental Holdings Ltd. purchased a 50% interest in Lancelot Holdings' business rights for about $3 million, making it possible for the two companies jointly to start their IDD and mobile communication business projects in North Korea. Meanwhile, NEAT&T has installed four antenna relay facilities around Pyongyang and started to send frequency waves within a four-km perimeter to test mobile phone operability in parts of Pyongyang, and it had plans to start a full-scale mobile telephone test beginning 1 August 2002. If the testing goes well, they are planning to start an actual mobile telephone service in Pyongyang and Raso'n in October, with mobile telephone numbers starting with 193- 0001. The mobile handsets that will be used are of the GSM-style that China is using, with an integrated circuit (IC) chip attached to the Nokia, Motorola, or Siemens handsets. So it has been confirmed that the North Korean government began mobile telephone services in Pyongyang and Raso'n in November 2002, with about 3,000 subscribers so far. The relative low number of subscribers is believed to be due to the high subscription service fees and call rates, since they are just starting the services and needed enough funds to establish needed communication systems and equipment (Yonhap News, 1 February 2003). The North Korean government is working hard at improving their mobile communication business. From 4 June to 8 June 2002, telecommunication policies officials from both North and South Korea met for the first time for a telecommunications policy conference held in Pyongyang, and signed an agreement that will enable them jointly to pursue a CDMA-based mobile telephone business in Pyongyang and Namp'o in North Korea and a project to upgrade the International Telephone Portal Office. However, since the sea battle that ensued in the Yellow Sea and the North's nuclear situation that followed, those plans are going nowhere. Since then, the North began at the end of 2002 to establish mobile communication networks in the capital of each province and by September 2003, it had succeeded in completing mobile communication relay facilities in 40 locations throughout the country, as well as in opening mobile telephone services centered on Pyongyang, each provincial center, and sections of major roads (the sightseeing road between Pyongyang-Hyangsan and the major roads connecting Pyongyang-Kaeso'ng, and Wo'nsan-Hamhu'ng) (Yonhap News, 8 September 2003). As of September 2003, there were about 20,000 mobile telephone service subscribers in North Korea. However since the price of a mobile phone is as high as $750 (670,000 North Korean wo'n), equivalent to 28 years of a general laborer's wages, it would be unimaginable for regular citizens to benefit from such mobile telephones anytime soon (NKchosun, 4 September 2003).

2) Fiber-Optic Networks

One of North Korea's current main focuses in the field of telecommunication infrastructure is modernizing telecommunication via constructing fiber-optic networks. North Korea's modernization efforts in telecommunication started to accelerate on 25 August 1993, when then-Party General Secretary Kim Jong Il sent a letter entitled "Let Us Go Full Speed Ahead with Modernization of Telecommunication" to the National Conference for Telecommunication Employees. The letter clearly emphasized that telecommunication projects 64 are an important tool to guarantee instructional communications from the exclusive leadership by the Party and the Great Leader and to provide more independent and creative living conditions for the general working public. To achieve the goals, the North, beginning in the 1990's, proactively sought to modernize its communication networks between Pyongyang and regional cities by constructing fiber-optic cable-based communication lines, expanding communication network relay offices, and upgrading the manual type switchboards to automated ones. In April 1992, the North completed the Pyongyang Fiber Optic Cable Factory with aid from the UNDP, establishing a base to continue their fiber-optic cable projects for communication networks. On 27 January 1995, construction was completed of fiber-optic cable over the 300 km distance between Pyongyang and Hamhu'ng, and another 530 km fiber-optic project was completed among Hamhu'ng, Ch'o'ngjin, Najin, and Hunch'un in the same year. In 1997, Pyongyang's regional telephone office and the city of P'yo'ngso'ng, were connected, as were the eastern and western coastal areas which are 700 km apart. It was also planned in 1998 to lay fiber-optic cables between Pyongyang and 50 cities and counties, and so far it has been reported that 36 cities and counties,, including the Pyongyang to Sinu'iju and Pyongyang to Namp'o sections, have been completed (Korea Computerization Association, 2000a, page 382). As Table 3-5 shows, telecommunication modernization projects centered on fiber-optic cable construction have been completed in 100 cities and counties,, including P'yo'nganbuk Province. With these modernization efforts, the North now has telecommunication networks that can quickly deliver messages from the central government to regional administrative centers. However, it would take far more time to fully expand the networks that can benefit the general public since the issue of governmental information control is still in play. Additionally, the North's telecommunication modernization projects have not been accompanied by connecting devices such as switchboard facilities, so it is hard to expect to see the benefits of expanded telecommunication circuit lines, high speed data transmission, or image transmission actualized any time soon.

(Table 3-5) Status of Trunk Telecommunication Network Modernization in North Korea in the 1990's

Period Details Aug. 1990 Agreement between North Korea and UNDP on fiber-optic telecommunication project Fiber-optic cable construction pursued between Pyongyang-Hamkyo'ngbuk Province and among major cities in Kangwo'n [and] P'yo'ngannam Provinces Apr. 1992 Construction of fiber-optic cable factory in Pyongyang (supported by UNDP) Jan. 1995 Laying completed of fiber-optic cable between Pyongyang and Hamhu'ng (300km) Dec. 1995 Laying completed of fiber-optic cable from Hamhu'ng through Ch'o'ngjin and Najin to Hunch'un (530 km) Jan. 1998 Automated telephone services established in 70 cities and counties by the end of 1997 Feb. 1998 Completion of laying fiber-optic cable and automation between Pyongyang and Sinu'iju, and from Sinu'iju to 16 cities, counties and three labor districts in P'yo'nganbuk Province (400 km) Sep. 1998 Completion of fiber-optic cable networks in 36 cities and counties Plan to upgrade or create new fiber optic networks in 50 cities and counties in 1998 Mar. 2000 Completion of second stage fiber-optic cable laying in P'yo'nganbuk Province -- Modernized telecommunication in all cities and counties in the province Source: Ku Hae-u, Cho'n Pyo'ng-chun (2002).

According to the Chinese telecommunication industry, a backbone network connecting Beijing to Pyongyang was set up by November 1999 that could be used to construct Internet infrastructure from China Telecom (Newsmaker, 24 February 2000), and it is reported that, in P'anmunjo'm, the old copper-core cables have been replaced by a fiber-optic cable network that can be used for 300 telephone circuits, one TV circuit (45Mbps class), and more than five data transmission circuit lines --, including for text files and images (Han'guk Ilbo, 12 August 2000). However, given the fact that the North still lacks digital telecommunication and semiconductor technology, which is the foundation of fiber-optic telecommunication technology, it would be difficult for the North actually to use or expand fiber-optic telecommunication. Since the North's telecommunication modernization projects have been concentrated on the capital, Pyongyang, area, the overall nationwide level of modernized networks remains very low (Ryu Cho'ng-u, 2001, page 4). Demand for telecommunication and information infrastructure is heavily dependent on not only the current economic development level, but also long-term economic growth, because growth in the IT industry can have a ripple effect on overall economic development by inducing new technological developments, not just in traditional industries but in the latest state-of-the-art technological industries as well (Yun Ch'ang-ho, Yi Yo'ng-su, 2000, pages 48-49). So it is a consensual view now that the North's current level of telecommunication and information infrastructure continues to stagnate at a very low level. In fact, the North's low level is among the world's worst. Therefore considering the current low level, it is believed that modernized infrastructure will require monumental amounts of investment.50

3) Computer Hardware Industry

North Korea organized an "Electronic Calculator Manufacturing Group" and started its research efforts on computers in the 1960's with ethnic Korean scientists who had fled China during the Cultural Revolution. The first outcome, at the end of the 1960's, was the development of a first-generation computer called the Cho'njin [Progress]-5500, and at the end of the 1970's, they were able to come up with a second-generation computer called "Yongnamsan-1," showing all the world the relatively high-level computer technology abilities they had accumulated .51 In 1982, they imported XT-class major components from Japan and elsewhere and were able to build the 8-byte Ponghwa 4-1 computer, and afterwards, in order to produce computers of 16- bytes and higher, in April 1987 with aid from the UNDP completed construction of an experimental integrated-circuit factory inside the facilities in Pyongyang of the Electronic Engineering Research Institute, under the supervision of the National Academy of Sciences. North Korea also began to design and manufacture its own 16-byte computers in 1988, and by 1992, it had the capacity to manufacture 1,000 such computers in a two-year period. The North continued its efforts to develop more-advanced computers, and they are now able to manufacture 32-byte computers, which they have successfully industrialized. It is now understood that North Korea has the manufacturing capacity to produce about 30,000 32-byte IBM PC-compatible computers yearly. They import nearly all components through places such as Taiwan, Hong Kong, and China, and then assemble the final products. Currently, North

50 According to one study, the North probably will need $5.2 billion just to establish key telecommunication networks and, even if only large metropolitan cities and special economic zones were chosen for the construction, it still would cost them $2.6 billion (Yun Ch’ang-ho, Yi Yo’ng-su, 2000, page 66). 51 North Korea’s first independently developed computer, the Cho’njin-5500 had the capacity to store 4,096 digits, a very elementary type. However, considering that South Korea did not develop its own computer, the Sejong 1, until 1973, it can be concluded that the North had better technology than the South at the time. 66

Korea produces 486DX class computers, and North Korean export product catalogs feature Pentium class IBM PC-compatible computers with Windows NT Server OS installed.52 The main computer manufacturers of North Korea are the Electronic Engineering Research Institute under the National Academy of Sciences, the Pyongyang IC Production Factory, and the Semiconductor Research Institute at Kim Ch'aek University of Technology. However, most of them are believed to be only at the laboratory level. At the Computer Assembly Factory recently built at the Electronic Products Development Company in Pyongyang under the Ministry of Electronics Industry. The computers manufactured are Pentium-III- and Celeron-class computers of the latest type, with additional TV cards, PCL (voice) cards, and LAN cards pre-installed (Choso'n Sinbo, 17 May 2001). However, rather than full-scale production, this is believed to be only on the level of imitative production, a test of assembly.53 The main computer operating systems North Korea uses are MS Windows and Windows NT, and, as in China, they are focused on promoting and developing the Linux operating system. The reason why North Korea is focusing on promoting and developing Linux, in addition to the economic benefit of its being free of charge, is believed to be their wish to distance themselves from Microsoft's control over the operating system.54 North Korea also was reported to have started its own operating system development in 2002. According to recent North Korean media reports, a team of various personnel from Kim Il Sung University, Kim Ch'aek University of Technology, and Pyongyang Computer Technical College was put together to establish an agency in which to develop an independent "North Korean model" computer operating system. Other media reports have surfaced that suggest the current level of North Korean computer manufacturing technology. According to these reports, there is a computer assembly factory called the "Electronic Products Development Company" under the Ministry of Electronic Engineering, and since the fall of 2002, this company, which employs about 700, has been assembling and manufacturing computers under the name "Ach'im [Morning]-Panda Joint Computer Company" as a joint venture with China's Nanjing Panda Electronics Group Inc. The latest model computers manufactured by the company are Pentium III and Celeron class computers, with TV cards, PCL (voice) cards, and LAN cards pre-installed (Choso'n Sinbo, 17 May 2001). The company assembles and manufactures about 135,000 Pentium-class computers, in six versions, under the Achim-Panda brand and also manufactures 100,000 computer monitors. Their prices are set at 796 euros (about 103,000 Japanese yen) for the top- of-the-line model, Achim-Panda 3000-byte (Pentium 4, 1.8GHz, 256MB of RAM, 80GB hard disk, 17-inch monitor), and 400 euros (about 52,000 yen) for the Ach'im-Panda 1,000-byte model (Celeron 733 MHz, 128 MB of RAM, 20GB hard disk, 17-inch monitor) (Choso'n Sinbo, March 15, 2003). The current propagation rate of computers in North Korea, with about 120,000 to 130,000 computers in use, is about one per every 185 persons. The computers are mostly used in governmental agencies such as the Workers' Party and its Department of National Security, large

52 Their computer products for export markets have performance capacities of AT386SX-33MHz, AT386DX- 40MHz, and AT486DX- 40.66MHz, and most have 8MB or 16MB of memory. However, their level amounts to no more than products assembled from parts almost all imported from Taiwan, Hong Kong, and China (Ku Hae-u, Cho’n Pyo’ng-chun, 2002). 53 According to the Wassenaar Arrangement, high-powered computers are prohibited from being taken into North Korea; however North Korea has been able unofficially to obtain some parts and completed products through third countries like China and successfully produce Pentium III-class computers that they distributed to related agencies for research purposes, which indicates that they are still at the initial stage (Yonhap News, 19 May 2001). 54 MS Windows operating systems use source codes that have not been disclosed, so there are possibilities that some high-level national infrastructure information requiring special security measures may leak out, but since Linux is an open-source software, it is believed to have a higher security level than MS Windows with respect to information leakage. 67 companies, and college computer science departments. As for personal computers, they are mostly in use at educational facilities and research centers, including Man'gyo'ngdae Student Castle for Boys, Pyongyang First Higher Middle School, electronic engineering departments of colleges and universities, Choso'n Computer Center, and Pyongyang Programming Center (Pae So'ng-in, 2001a). The government has been trying to expand computer availability recently. Currently, most of the computers are 386-class, and there are about 30,000 286-class, with fewer than 500 586-class units total (Ministry of Unification, 2001, page 50). College professors and students mostly use 486-class computers accordingly, and there are many new workstations and Pentium-class computers in use at research centers such as Choso'n Computer Center and Pyongyang Information Center, as well as at Kim Ch'aek University of Technology and Kim Il Sung University.55 According to the January 2001 issue of Choguk, a sister monthly magazine to the official newspaper Choso'n Sinbo of the labor union [in Japan – Ed.], the number of computer users in North Korea had increased 4.6 times in the previous two years, and the number of computers subscribing to the Kwangmyo'ng information communication network also had increased 2.2 times in just about a year, showing a fast expansion of the information industry for the country (Yonhap News, 7 January 2002). In November 1999, the North Korean government established the Ministry of Electronics Industry to improve and upgrade their still-backward hardware know-how and to improve overall industrial conditions in the private sector. They are also emphasizing the importance of growth in the electronics engineering field, as well as showing proactive interest in computers, high- density integrated circuits (VLSI), artificial intelligence, and automation. The North Korean government's future S&T goals in 2000 included investing 5% of total GDP in developing S&T for all fields of industry, including computer hardware. North Korea also seems to have developed and distributed many software programs recently for automation of manufacturing processes and office automation in economic management and operations, so it is estimated that computer popularization will continue in factories and business facilities. In particular, they have started to install large numbers of Pentium-class computers mostly in places like the Workers' Party headquarters and the Ministry of the People's Defense, and it is believed that these steps were taken to prepare for a full-scale Internet era by improving their telecommunication apparatus (Nam So'ng-uk, 2000, pages 79- 80). Also, it has been reported that the North independently supplied more than 80,000 parts for its Kwangmyo'ngso'ng-1 satellite, which was launched in August 1998, clearly indicating that they have some high-level hardware technology with respect to the field of military weapons systems. The North's inherent lack of sufficient capital and technology is, however, one of the main reasons why its computer hardware industry is still regarded as backward, but there is another reason, which is that the North is prohibited from importing the latest intelligence-related equipment and technology from foreign countries, due to the provisions of the Wassenaar Arrangement. It has been speculated that the North Korean government changed the name of the Pyongyang Calculator Factory to Electronic Products Development Company as a desperate measure against the economic sanction policies by the United States and other Western European countries. In their own words, "if we follow the provisions in the treaty written by the Western countries, Korea cannot even import computer products, let alone produce calculators or

55 At Pyongyang Information Center, they are selling various Pentium III computers,, including Compaq Presario, IBM Aptiva, Acer Celeron, Acer Aspire, Fujitsu Celeron, and Philips. Prices range from $1,200 to $2,200, depending on the performance level. However, purchases by the general public are rather limited; they are mostly purchased by educational facilities, research agencies, and companies (Pak Ch’an-mo, 2002, page 6). 68 computers" so "we changed the factory's name by deleting the word ‘calculator' as a measure against their economic sanction policies, a reflection of Korea's current realities" (Choso'n Sinbo, 15 March 2003). In this regard, a point has been made which emphasizes that the North is concentrating on software over hardware because of the international limits placed by the provisions of the Wassenaar Arrangement, which particularly limit importing strategic materials (Pak Ch'an-mo, 2002, page 5). Thus the field of computer hardware in North Korea, because of the constraints of the Wassenaar Arrangement, its financial situation, and technological level, is still unable to get out of its backward conditions.

4) Software Industry

North Korea's situation in the hardware area is indeed in a very backward condition, as described above, but its software sector is evaluated as comparatively competitive. North Korea in the 1980's already had begun concentrated efforts at training professional software personnel and establishing research centers. Kim Jong Il himself began visiting computer research agencies in 1993 to encourage development of computer programming, and in 1996 when he visited the Academy of Sciences, he emphasized the importance of adopting foreign computer technology, even directing the distribution of foreign professional magazines to each research institute.56 The regime also has held the "National Programming Contest and Exhibition" annually since 1990, trying to promote software development and the general public's interest in software. The North has been very successful in developing many kinds of software in great numbers, in fact, it is almost impossible to introduce or list all of them here; what's more, these software programs have been evaluated as relatively high-quality material. In particular, their technology in voice recognition, text recognition, and fingerprint recognition are known to be at the world-class level, and their other technology in various control systems and automation systems are also regarded very highly and as internationally competitive. The majority of software programs that they have independently developed are compatible with IBM PCs, Japan's NEC PC 9800 series, or the Macintosh, and have been developed with an eye to both domestic consumption and foreign export. There are no clear data on the number of IT personnel in the North, but it is estimated to be around 7,000 (the Ministry of Unification, 2001, page 50). However, in a broader sense, it is believed that there may be as many as 100,000 in the entire spectrum of IT industry, of whom only about 5,000 are known to be working in related fields (Pang Yo'ng-ch'o'l, 2000).57 North Korea's most renowned software development agencies include professional research centers such as the Academy of Sciences; Pyongyang Information Center; Choso'n Computer Center; and U'nbyo'l Computer Technology Research Institute [U'nbyo'l K'omp'yut'o'gisuryo'n'guso], which now is consolidated into the Choso'n Computer Center; Kim Il Sung University; Kim Ch'aek University of Technology; and Pyongyang Computer Technical College. The following are descriptions of the main programs those software research centers have developed.58

56 The Ministry of Unification, "Weekly North Korean Trends", No. 448 (1999). 57 Based on media reports that Pyongyang Computer Technical College so far has produced 8,000 graduates, it may be estimated that North Korea has 7,000 or more professional personnel in IT (Yonhap News, February 2002). 58 I mostly relied on the work of Pak Ch’an-mo (2001) for the following tables on programs North Korea has developed. 69

(Table 3-6) Representative Programs Developed by the Academy of Sciences' Department of Computer Science

Title English Title Brief Descriptions Pidulgi Dove Electronic phrase dictionary. Consists of Korean to English, English to Korean, Japanese to English, and English to Japanese. Contains 1,000 basic phrases for tourists. Ku'ltongmu Word-Mate Korean and Japanese language educational software. Learning the words by playing computer games (Korean to Japanese, Japanese to Korean). Mae Hawk Automatic Korean text recognition program Mujigae Rainbow Computer-assisted Japanese-to-English translation system Su't'o'di Study Tetris Educational computer game that lets you learn English words and physics T'et'u'risu' formulas while playing games. Pijinesu' Business An expert system to help write business letters in English on a computer. Mangnanigong FreeBall First in a series of intelligence-developing computer programs. Player (Ch'o'nggaeguri (Tree-Frog 1) tries to catch randomly moving balls. 1) Saengmatch'ugi Colcon Intelligence-developing game where the player tries to match colors by (Ch'o'ggaeguri 2) (Tree-Frog 2) moving colored corners. Yosulsangja Magic Box A game where player tries to arrange three or more colored boxes in the (Ch'o'nggaeguri (Tree-Frog 3) center of the screen, horizontally, vertically, or diagonally. Arranged boxes 3) disappear from the screen. Yong Dragon A game where the player tries to fence in a dragon moving freely on the (Ch'o'nggaeguri (Tree-Frog 4) screen. 4) Yori-300 Foods-300 Electronic cookbook listing 300-odd Korean folk dishes Paeksu'ng [Ever-victorious] Soccer support system Namsan [Namsan] Program supporting Korean document correction Ku'm [Gold] Placer gold and diamond marker prospecting system

(1) Academy of Sciences

The Academy of Sciences, established in December 1952, is North Korea's most renowned research organization. Under the Academy of Sciences, the General Programming Laboratory (Department of Computer Science), which was established in 1970, is responsible for research on software theory and related practical issues, in addition to conducting joint international research. The Department of Computer Science's goals include developing programs for both domestic consumption and foreign export, training personnel for the software field, expanding software technology and products, and adopting software technology in each economic sector. In more detail, the software fields that the Department of Computer Science focuses on are automated office work programs, spreadsheets, bank management and import-export management systems, Korean-English translation support systems and Korean text recognition programs, and "edutainment" programs to develop intelligence through playing games. Products successfully developed here are exported through the Paeksong Trading Company, attached to the Academy of Sciences. Additionally, P'yo'ngso'ng College of Physical Sciences under the Academy of Sciences also plays a part in training personnel and in software development.

(Table 3-7) Representative Programs Developed by the Pyongyang Information Center

Title English Title Brief Descriptions Ch'angdo'k Changdok Document editing program. Can edit in multiple languages, including Korean, English, Japanese, Chinese, and Russian. Tan'gun Tan'gun Korean complete word processing program. Can input and output Korean in English Windows 95. Cho'njach'ulp'an DPT Electronic printing system for Korean, English, and Japanese, with Ch'egye Chinese characters (Electronic Printing System) Insik Insik Automatic Korean recognition program (recognition rate 95%) Kohyang Gohyang Data management system (DBMS) Tu'l Dul 2-dimensional computer-assisted design support system Sanak Sanak 3-dimensional computer-assisted architectural support system Tamjing Tamjing Korean Japanese machine translation program Ch'ejilgwa Siksa Health management system (Body types and food intake) T'aja Hakkyo Children's program to learn typing Korean and English in a fun and (Typing school) easy way Samch'o'lli Korean map booklet program P'yo'ngyang Multimedia program for Pyongyang tourism Choso'nu'i Multimedia program Ryo'ksawa Minsok (Korea's history and customs)

(2) Pyongyang Information Center

Pyongyang Information Center [P'yo'ngyangjo'ngbossent'o'](Program Information Center: PIC) is one of North Korea's two most renowned comprehensive computer utilization agencies, along with the Choso'n Computer Center. It was established in 1986 with support from the General Association of Korean Residents in Japan [Chaeiljoch'ongnyo'n, or GAKRJ, a pro- DPRK Korean-Japanese organization—Ed.] and the UN Development Program (UNDP) for purposes of developing computer systems and providing an educational center for overall modernization of industry.59 It started with only 10 staff members but has grown to have more than 200 professional personnel and 20 to 30 staffers. This center, which was responsible for developing Ch'angdo'k, currently consists of three centers, for publishing, applied software, and databases. At PIC, there are 1.5 computers available for each person, which is a very high computer–to-human ratio, and all of them are imports from foreign countries, with about half of them being IBM-compatible machines. There are plenty of workstations for use as well, and most of them are American SUN company products (SPARC/2, SPARC/10), with a few Japanese products such as SONY News. About one-quarter of the research staffers use workstations. PIC has been developing and supplying some 60 different types of application programs, including business management programs and technology preparation programs, to 100 different agencies, greatly contributing to automation and science-orientation efforts at business facilities and farms as well. PIC also conducts S&T exchange and cooperation programs with many

59 See Hayes (2002) for background information on the founding of the Pyongyang Information Center. 71 countries around the world and is expanding its efforts in joint research and development, one of which is the co-founding of the O&P Programming Training Institute with Japan's Osaka Information Center (OIC) for purposes of training and educating general corporate executives. They are also doing research on computer network firewalls. Some of the products developed at the center are sold through PIC's branch store in Singapore.

(3) Choso'n Computer Center

The Choso'n Computer Center (or Korea Computer Center: KCC) was established in October 1990 for purposes of computerizing each economic area, advancing the technology for developing programming, and promoting technological exchange projects in the computer science field. It absorbed the U'nbyo'l Computer Technology Research Institute in 1999, becoming North Korea's best computer agency. According to North Korea's introductory publications on KCC60, the center is a "renowned computer technology R&D base" that conducts "standardization of software technology, spreading new technology, and training talented personnel" and "is guaranteed excellent workers from the state on a priority basis and receives as well special preferred treatment in business operations" as a "central base for research, development, and propagation of computer technology." KCC is a basic R&D agency, consisting of system program development group, multimedia program development group, business management program development group, computer specialist system development group, control system development group, and application program development group61 and, in addition to 550 staff members in software development, has 100 staff members in basic technology research [and] 150 staff members in development support, for a total of some 800 staff members in research and development. Programming environments include mostly Unix, Solaris, Linux, Windows 95/NT, Mac OS 7.5 and higher, and programming languages, including Visual C/C ++, Visual Basic, JAVA, and Power Builder. KCC is also actively engaged in science and technological exchange programs with foreign countries. The "Choso'n New Development Company" is responsible for all foreign business and exchanges of the KCC, including joint development of software and devices, custom developing, exporting software package products, and technology and personnel exchange programs. It also has branch offices in regions all over the world for conducting cooperative projects and expanding relations with foreign corporations.

60 From the data library on "North Korean S&T Research Societies" of the Science and Technology Policy Institute (Korea) (www.stepi.re.kr) 61 In addition, there are eight other technological sections responsible for supporting the development groups, such as by doing research on standardizing software, technology and methods for programming development, [and] quality management technology; providing data surveys and services needed in developing new technology and products; and conducting quality control on the products developed. 72

(Table 3-8) Representative Programs Developed by the Korea Computer Center

Title English Title Brief Descriptions Koryo' KORYO A specialist system (Expert System) for traditional Koryo' medical care. For Ch'imgu Acupuncture treatment and education through acupuncture. Ku'mbinmal Golden Horse A system categorizing body types and diagnosing through fingerprints Comprehensive ISDM A system used in treating diseases with the Koryo' prescription and medical service treatment systems. Consists of testing, diagnosis and Koryo' medical system system Intelligent Intelligent Salesman POS (Point of Sales) system for shops ledger system Moho-37 MOHO-37 "Fuzzy" computer control system for dressing mineral ores T'oso'ng-6 Saturn-6 An air traffic control system, consisting of radar signal processing, radar data processing, [and] data recording and replay systems. Chimun FVS-P A system that identifies individuals using the unique characteristics of Jamulsoe fingerprints and opens doors. Koryo' An input device for hand-written writing (Koryo' Pen). A comprehensive system for Korean, English-Korean, Korean-English dictionaries (Samhu'ng), Korean input system (Naenara), Changgi programs (Ryukyo'ng Janggi), and paduk programs (Ryukyo'ng Baduk). U'nbangul (Silver Bell) Sheet music editing program Samilp'o A large collection of Korean songs Mongnan (Peony) Korean writing recognition program

KCC is "placing its first priority on developing computer science technology and implementing comprehensive computerization for the people's economy as a central base for the computer technology industry, and also focusing on revitalizing S&T exchange programs as well as commercial trade with foreign countries. In the future, the center will strengthen its focus on training a pool of talent and reinforcing the physical and technological foundations for the computer science technology sector and highly developing group power in the scientific research field to prepare for breaking through to world-class status in the 21st century." The majority of KCC-developed software applications are for IBM PCs, and efforts also have been made to increase user-friendliness by utilizing GUI (graphic user interface.) The center is now selling some of its products through a Sinhu'ng company branch store located in Beijing, China. They have also recently worked on some projects ordered by foreign entities, including multimedia, computer security issues, and database-related projects. There are five categories for KCC-developed software: 1) Fingerprint recognition system application program (fingerprint identification system (Micro AFIS 96S), body type categorization and diagnostic system, fingerprint access management system), 2) Medical-related programs (electronic treatment system, computer-assisted comprehensive medical service system), 3) Office automation-related programs (such as intelligent ledger system), 4) Design support programs (such as textile printing design support program), and 5) Facility control- and manufacturing-related programs (such as T'oso'ng-6 and Moho-37). In particular, it is known that the air traffic control system developed by KCC is evaluated to be better than a similar Russian-made product and is priced lower than a similar German product; it was installed in Pyongyang International Airport in 1993 and has been in use ever since. The POS system for general merchant shops is also known to be widely in use in Pyongyang's department stores.

(4) U'nbyo'l Computer Technology Research Institute

U'nbyo'l ("Silver Star") Computer Technology Research Institute was established in 1995 with the average age of research staff at only 26, which made it a perfect place for dynamic, lively research activities. Most of the young researchers had graduated from Pyongyang First Higher Middle School and studied at renowned universities such as Kim Il Sung University. Before the center was merged into KCC in 1999, it promoted the sale of its products through the Website of its Japanese branch, Silver Star Japan, located in Kifu [Prefecture]. Some of the products were also sold at North Korean specialty bookstores in Tokyo. The center has developed many products using the latest information technology, including artificial intelligence, fuzzy theory, image processing, text recognition, and machine translation. In particular, U'nbaduk (Silver Star Go), by winning the grand prize at the Fourth FOST Cup World Computer Go Competition held by the Foundation for the Fusion of S&T (FOST) in Japan in 1998, showed the very high level of North Korean software technology. At the Fifth FOST Cup in 1999, the center, competing under KCC's name, again won the top prize, receiving recognition as a level-2 from the Japanese Go Association.

(Table 3-9) Representative Programs Developed by Silver Star Computer Technology Research Institute

Title English Title Brief Descriptions U'nbaduk Silver Baduk (Go) A computer go program developed by applying artificial intelligence algorithms. Computers and humans can play against each other; human-to-human play is also possible through the Internet T'aegwo'ndo Taekwondo Contains Taekwondo's basic forms, movements, training, exercise, special techniques, and self-defense moves Choso'n stamps Korean Stamps Lists 3,700 North Korean stamps issued from 1946 until 1996. May search by years or topics. U'njanggi Silver Chess Computer janggi program (of many types, including Japanese janggi, soldiers' janggi, and Western chess).

(5) Kim Il Sung University

Established in 1946, Kim Il Sung University's Department of Electronic Calculation was originally a part of the university's Department of Mathematics, but it was subsequently separated from the department, and since then, graduates of this department have been working in various research centers, such as the KCC and the Korean Academy of Sciences' General Programming Laboratory. Recently, a computer sciences college was established, where they are training even more talented personnel. Many software products have been developed at Kim Il Sung University, some of which are: anti-hacker programs such as hard disk protection (Intelligent Locker) and broadband anti- virus programs (Worluf Anti-Virus), a simulation and analysis system for linear and non-linear engineering problems (SIMANAS), a computer-assisted education system (COMPSAT), military competition games, medical programs such as for hepatitis diagnosis and treatment, and file conversion program.62 Kim Il Sung University also boasts personnel with specialized

62 Considering the high-level programs that have been developed so far, it is inferred that their hacking technology is also very high. According to analysis by the US Department of Defense, North Korea’s hacking technology has reached the level of the US Central Intelligence Agency (CIA). 74 knowledge in encryption technology, and is currently working on many other programs, including applications for future Internet animation, multimedia content, game software, applications for mobile computers, applications for IMT 2000-based mobile telephones, natural language processing programs, and Linux-based programs for processing multiple languages.

(Table 3-10) Representative Programs Developed by Kim Il Sung University

Title Brief Descriptions Ryongnamsan Text recognition program. Won 1st prize at the 11th National Programming Contest and Exhibition Pyo'l Economic dictionary software Sagye Fish farming information software 127-3 Voice recognition program. Recognition system for continuous speech, based on Korean phonemic units. Won 1st prize at the 9th National Programming Contest and Exhibition Source: Nam So'ng-uk (2002, page 163.)

(Table 3-11) Representative Programs Developed by Kim Ch'aek University of Technology

Title Brief Descriptions Sindong Text recognition program. Won 1st prize at the 8th National Programming Contest and Exhibition Puru'na Janggi program. Won 1st prize at the 8th National Programming Contest and Exhibition Yeji A basketball strategy instructional system, containing 370 strategies. When data about defense, attack, and dribbling are entered, the best strategy scenario appears. A team that used this software won a second place at Poch'o'nbo sports competition game held in February, 2000. Source: Nam So'ng-uk (2002, page 164.)

(6) Kim Ch'aek University of Technology

Kim Ch'aek University of Technology, originally the Department of Engineering at Kim Il Sung University, was separated from the university in 1948 to become an independent school and is now regarded as the best engineering school in North Korea. In addition to the Department of Computer Science, Kim Ch'aek University of Technology also has a separate Computer Research Institute and Information Center pursuing both education and research, and about 10% of the student body of 12,500 is enrolled in computer-science-related departments. In May 1993, at the direction of Chairman Kim Il Sung about $3-million-worth of laboratory equipment was imported, including many computers, such as one SUN SPARC, one Macintosh computer, about 130 486-based computers, about 100 386-based models, and about 500 286- based models. They currently have many Pentium-based models as well. The college also has excellent LAN facilities and is connected to the nationwide computer network. The college's primary research areas are machine translation, geographic information processing (GIS, used for location positioning by oceanic freighters), 3D-graphics processing, and text recognition, along with computer-assisted design (CAD). The college also has developed various programs, including a multilingual text recognition program called "Sindong 2002," capable of reading Korean, Chinese, Russian, Japanese, and English, a fax transmission program, a photograph processing program, and a data encryption program, all of which have been sold for several years and used widely in foreign countries such as Japan. They were also responsible for developing information encryption products like CryptoFAX and Steganography, which were joint projects with DIGIKO, a company related to the GAKRJ in Japan.

Additionally, the college has developed a driving education program that enables users to learn driving skills based on virtual reality, without actually driving.

(7) Pyongyang Computer Technology College

The Pyongyang Computer Technology College, established in 1985 for the purpose of training hardware and software engineers, became famous overnight at the end of 1997 by sweeping many awards in nationwide computer and foreign language competitions. The college plays a large role in educating talented personnel who will be employed in various commercial institutions, along with training educators for the computer science field.

8) Computer Network: Kwangmyo'ng

In North Korea, Internet connections regarding international telecommunication networks are currently prohibited but, back in the early 1990's, local area networks (LAN) were installed in major agencies such as the Academy of Sciences and Kim Il Sung University. Also in June, 1997, an intranet-based elementary computer network was established and began operating, and in October 2000, in commemoration of the 55th anniversary of the establishment of the Workers' Party, a fiber-optic telecommunication network (intranet) connecting the entire nation was established and limited testing service began at the end of 2001. By November 2002, the computer network that had been in operation only regionally began full-scale service as a truly nationwide network. This computer network offered speeds of 1GB for the Pyongyang metropolitan area and 2.5GB between Pyongyang and the regional provinces, through which users could access homepages from anywhere in the country. In addition, to expand the computer network, the government has waived all subscription and user fees and allowed people to use homepages and e-mail if they subscribed to the computer network through local telephone offices. However, the term "national computer network" used by North Korea is "not an international computer network, the Internet, but rather a type of a huge nationwide intranet" (Choso'n Sinbo, 1 February 2003.) One way effectively to control the Internet is to establish a state-controlled Internet service provider (ISP) and an intranet that limits connections with the outside world. Such method has been well adopted in Saudi Arabia. When the Internet was first launched in February of 1999, the kingdom of Saudi Arabia ordered all site connections to go through the Internet control center (KACST)'s proxy server (RSF, 2001).

(Figure 3-3) Approximate Structural Chart for North Korea's Intranet

Source: North Korea's World of Science, No. 5, 2000; Re-quoted by the Korea Computerization Association (2002, page 372)

(Table 3-12) Main Websites Connected to North Korea's Domestic Network, "Kwangmyo'ng"

Agencies Research Institutes Factories, Business Facilities Department of National Security Korea Computer Center Choso'n 8.28 Trading Company Police Agency Central Satellite Communication Choso'n Consolidated Department of Social Culture Agency Equipment Trading Company The Workers' Party Central Kim Il Sung University So'gyo'ng Trading Company Committee Kim Ch'aek University of Ryo'ngbong Joint Venture Ministry of Information and Technology Company (Yonghun Branch Communication Korea Academy of Sciences Company) Ministry of Foreign Trade S&T Information Center Choso'n Taehu'ng Oil Refining Academy of Agricultural and Ryunjo'n Joint Venture Science Company Office of Inventions Choso'n P'yo'ngwo'n Trading Pyongyang Information Center Company 6.26 Technology Service Center Choso'n Man'gyo'ngso'gam People's Grand Study House Trading Company Source: Korea Computerization Association (2002, page 367)

However, unlike Saudi Arabia, North Korea has set up an intranet while still not connecting to the Internet and its intranet has been managed and operated by the state. The current nationwide computer network established and operated by the North Korean government is called "Kwangmyo'ng," with its host server located at the Central Information Agency of Science and Technology (CIAST). Kwangmyo'ng, an S&T data search system developed by CIAST, is connected to about 1,300 major national facilities, including all committees and ministries of the Cabinet, the central governmental agencies, Kim Il Sung University and other colleges, the Pyongyang Information Center, the Office of Inventions of the Academy of Sciences, the People's Grand Study House, and major factories and business facilities (See Table 3-12.) CIAST, a professional information service agency established on 5 August 1963, is responsible for operating North Korea's domestic computer network. CIAST is the agency that developed "Kwangmyo'ng" as a document information search system and manages over 30 million data items, in addition to providing information services through a computer network developed for searching S&T data. According to North Korea's introductory publications, "the Central Information Agency of S&T is the state's information service center that provides computer network and other media which all the state's economic leaders, scientists, technicians, professionals, and other members of society use in their decision-making processes and analyses on foreign and domestic information data needed for science research and technology development, economy management and in other sectors of society".63 As described above, CIAST was responsible for developing "Kwangmyo'ng" and has provided various information services while managing the computer network for S&T data searches. It also is "compiling national databases of a few hundred thousand items and foreign databases of several tens of millions of items by analyzing hundreds of national publications, about 23,000 unpublished articles, and about 1,000 foreign magazines, in addition to producing about 80 information publications and numerous CD materials." By utilizing these databases, the center is "providing computer network services, CD services, informative publication services, and customized services." In addition, they also provide "strategic data, trend data, intelligence analysis in three dimensions, and predicted data service." The center's organization chart is shown in Figure 3-4.

63 Data from introductory material on the "Democratic People’s Republic of Korea Central Information Agency of S&T" found in the data library on "North Korean S&T Research Societies" of the Science and Technology Policy Institute (Korea) (www.stepi.re.kr) 78

(Figure 3-4) Organization Chart for the Central Information Agency of S&T

Source: Data from introductory material on the "Democratic People's Republic of Korea Central Information Agency of S&T" found in the data library on "North Korean (Our People's) Science and Technology Research Societies" of the Science and Technology Policy Institute (Korea) (www.stepi.re.kr

CIAST's core strength is the "Computer Center" which consists of about 100 computer professionals who successfully developed the domestic computer network, Kwangmyo'ng; they also have taken on such important projects as "developing various Internet response programs, a computer encyclopedic dictionary, various different types of search programs, and game programs," centering around "establishing Websites."

4. Reasons for the Backwardness of North Korea's Infrastructure

The original foundations of North Korea's telecommunication industry policy are actually similar to those of South Korea's. The two governments saw their policies separated when the American and Soviet military governments each took over their countries immediately after the liberation from Japanese colonial rule. As each separate government was established in the two

79 countries, a system of "divestiture" became the norm for the two for the first time since telecommunication was adopted 63 years ago. Because each country firmly established totally different telecommunication systems, the end-results of their telecommunication sectors are now complete opposites: whereas the South has become one of the world's emerging leaders in telecommunication, the North is now considered as one of the most backward countries in the world. What's more, actual reality for the North is that it is not even entirely equipped with the old, traditional telecommunication means of voice-based telephone terminals. The North however has made some progress in the field recently, and is fully forging ahead with modernizing its telecommunication apparatus, centered on establishing fiber-optic networks in addition to establishing an intranet-based domestic computer network system with about 10 regional networks and 1,300 governmental agencies, factories, and business facilities all connected together. Yet, despite such recent progress made by the North, the differences between the two Koreas in the field of telecommunication are far more significant than any other field they could compare themselves to. So one might ponder this question: What made the North so backward in telecommunication infrastructure that it is considered one of the world's worst? The first reason would be the issue involving the North's basic recognition of what telecommunication is for and about. As mentioned earlier, the North defines telecommunication as "socialist information and communication," and designed and established it mostly for "governmental use," so they are too excessively focused on its "public" side. Rather than focusing on its role as a tool to increase the quality of life for individuals, they understand it as a mechanism for central control of the general public, to grow industries, and to maintain the military's chain of command, rather than giving greater priority to its public function of guaranteeing "directional communication" and generating material wealth through "industrial telecommunication." So accordingly, the North's telecommunication networks exist separately for administrative and industrial networks. The main focus, therefore, is on utilizing IT as a tool to guarantee the state's centralized control by quickly and correctly delivering the Party and the state's directives and policies to all sectors, units, and laborers. Constructing telecommunication infrastructure for personal and individual use is not within the spectrum of their thinking. With such one-sided established concept of telecommunication, constructing infrastructure for the purpose of benefiting individuals was never taken seriously and obviously not much investment has been made for such purpose. Secondly, from the standpoint of national strategic goals, the North has consistently and heavily focused on utilizing IT for military purposes and as a tool to strengthen its centralized state control, rather than utilizing it for growing its overall economy. In contrast, one of the reasons the South was able so remarkably to develop its IT industry during the 1960's and '70's was the launch of the government of Park Chung Hee, who set "economic development" as the most important national goal. President Park did not, in fact, completely ignore the goal of regime maintenance; however, he set the goal of economic development as a higher priority, utilizing the nation's strength and all available resources in pressing for rapid economic growth. Park also, as part of the expansion of social indirect capital necessary for economic development, implemented a series of Five-Year Plans for developing telecommunications and successfully obtained large-scale foreign loans that sufficiently funded the projects, resulting in remarkable improvement in the country's telecommunication sector. Such a course of economic development was obviously not the case seen in North Korea, where, as a national strategy, they were more interested in maintaining their regime than in economic development, and because, persisting in the line of an independent national economy, they continued to rely mostly on domestic strength and available resources. By placing greater emphasis on utilizing telecommunication infrastructure as a mechanism for the central government's unified political 80 rule in such a singular way, no large scale investments in infrastructure were ever seriously undertaken. Third, there was the fact of the North's lack of technological adoptions from abroad and capital funding due to their chronic economic problems. The South Korean experiences proved that the most important factors in successful implementation of telecommunication infrastructure are technology and financial funding. To achieve those objectives successfully, foreign economic cooperation and large-scale capital injections or loans were required. However, the North took a policy road that was completely different from the South's. The North's economic policy continued to be based on their principle of a "self-reliant national economy," which made it impossible to undertake any kind of dynamic and successful economic cooperation with foreign countries as has been the case for the Southern government. It was only in the 1990's that the North finally opened its eyes and changed its mind, and started seriously to find ways to improve their telecommunication infrastructure. However, there was still the United States' sanction policy with its defining of the North as a dangerous terrorist state, and the provisions of the Wassenaar Arrangement that prohibited the North, as a communist country, from importing any materials that could be convertible to military or regime maintenance purposes, which additionally contributed to the North's not being able to have any kind of meaningful foreign technological cooperation or obtain foreign loans. Fourth, the North's telecommunication bureaucracy had its own inherent limitations in conducting telecommunication policy independently with full autonomous authority. A partial reason derives from the fact that the entire North Korean economy is basically geared toward political and military purposes, which ultimately led to such non-professional telecommunication agencies as the Workers' Party, its Department of National Security, and the Ministry of Security being given the tasks of conducting telecommunication policies for their own objective: ensuring exclusive, centralized rule. This has resulted in the North's unbalanced telecommunication structure, a kind of star-shaped structure, centered on Pyongyang. Along with mature conditions in economy and technology, political "freedom" is necessary when it comes to technological evolution, but this element was clearly not factored in, in the North's case. Their telecommunication policy is very much subordinate to political direction, and therefore implementing and conducting the policies have to be done parallel with that political orientation. The North's new approach in developing IT industry in recent times also still shows the same ways. The regime has separated telecommunication and IT, and also categorized research, development, and education separately to manage and operate them in a dispersed way. In other words, North Korea needs to change its thinking on how it views telecommunications and change the related management system. Fortunately, it is now evident in some ways, through its recent efforts to implement high-speed telecommunication networks or attempts at having more joint projects with foreign companies starting in the 1990's, that it is slowly changing its basic view on telecommunication. However, one still cannot ignore the stark fact that the North may still have undertaken such new steps just as a tool to maintain or even strengthen its system of centralized political control and for a more efficient planned economy. In all, the North needs to change its belief in the role of telecommunication and adopt, in some ways, the notion of telecommunication as a general service to benefit the people. They can still utilize it as a management tool for political and economic control, as well as a mechanism to strengthen military power and implement the Party's directions and policies, while at the same time utilizing it for economic development and servicing the general public's communication needs. In addition, North Korea should have a specialized agency only for telecommunication that is endowed with the authority independently to pursue telecommunication policies separately from ongoing political concerns. Telecommunication management system based on 81 development in technology means that if a backward nation wishes to grow its technology, it first needs to change its attitude and views on the management system. As the case of South Korea demonstrates, the starting point in telecommunication development was in the early 1980's, when it split up the monopolistic management system and started "monopolistic competition" by specializing the business system in each separate service sector. This change in management system aimed to grow the infrastructure quickly as the most important goal for the 1980's' telecommunication policy and also to meet the demands for new services, including data and mobile telecommunication. Furthermore, the South Korean government ensured the independence of the Ministry of Telecommunication for efficient policy planning and implementation, and in 1994, the ministry was expanded and reorganized as the Ministry of Information and Telecommunication, overseeing the entire information and telecommunication arena. That model was repeated in China's case also. China's own starting point for its recent dynamic IT growth also was the time when it expanded and reorganized the Ministry of Telecommunication Industries. In other similar cases, including China's, when competitive systems were adopted in telecommunication field, such change from the old monopolistic system did not necessarily mean an outright, entirely liberal economy of competition. They could still keep the old monopolistic systems and, based on the same system, monopolistic competition could be implemented in transitional ways, so that gradual change could be implemented to a competitive mode, after going through a phase of "limited competitive mode." So, for North Korea to adopt a new kind of IT management system, the first priority is that they change their concept of telecommunications.

Chapter 4.

The North Korean Economy's "Single Leap" and the IT Industry’s Growth Strategy

The IT industry in the mid-1990's and after powered the "New Economy" in the United States and provided the economic foundation which enabled the US to strengthen its position as the only superpower in the world with a record-long period of economic prosperity. It is also no secret that Finland and Sweden, two small European countries regarded as economically powerful, can trace their national competitiveness to the development of their IT corporations, represented by Nokia and Ericsson. Ireland also, only 10 years ago regarded as the "sick man of Western Europe," now is experiencing super high yearly growth of 9%, remaking itself as the "Celtic tiger" of Western Europe, for which they can thank the development of their IT industry. In Asia as well, behind the phenomenal growth of smaller countries like Singapore and Taiwan was their super-developed IT industry that served as their main engine of growth. A similar case can be also found in India. Although its entire economy still shows some backwardness, its software industry has become a revitalizing source for the economy. Moreover, Japan, too, since 2000 is newly pushing forward with an IT revolution to compensate for the so-called "ten lost years" of long economic recession. Nor are we an exception. Following after light industries in the 1960's, heavy industries such as steel in the 1970's, and consumer electronics and autos in the 1980's, Korea's IT industry finally emerged as the leading growth sector in the 1990's. With the ever-expanding Internet and investments in information infrastructure, from 1991-1999 the average annual growth in value added by the Korean IT industry reached 23.9%, far exceeding the overall economic growth rate of 5.9% during that period, and assuming the role of the locomotive in overcoming the problems of the IMF economic crisis (Industrial Analysis Team, Department of Research, The Bank of Korea, 2000, page 4). Especially since the end of that financial crisis, the IT industry's average contribution to GDP growth has exceeded 30%, leading overall economic growth,1 and providing the rapid growth that enabled Korea to emerge as a world-class IT power in the 2000's (Hong Tong-p'yo, et al., 2003). Thus it was that, after the 1990's, the IT industry has become the source of the maturing of global capitalism and the driving force of the globalized economy.2 The IT industry is the vanguard of economic growth and, considering that the conversion to a digital economy is a worldwide phenomenon, growth of the IT industry has become a tremendous factor in the increased efficiency of the entire economy while emerging as the central focal point of all industrial sectors. As development of the IT industry has also enabled many countries to enjoy economic prosperity, their competition to take the lead in the IT revolution is becoming fiercer. North Korea started to show great interest in the IT industry beginning in the late 1990's and by 2000 various projects had been implemented for the purpose of growing their IT industry. In early 2001, the North proclaimed, "With our victory in ‘harsh march,' let us go full speed ahead to the new century," emphasizing the importance of IT and its related technology upgrades as the central link to secure economic growth, finally concluding that they could no longer delay

1 After the 1997 Asian financial crisis, the IT industry led the Korean economy with an average yearly growth rate of 18.8% and in 2001, IT industry production constituted 12.9% of GDP and 26.8% of total exports. 2 See the Korea Computerization Institute (2002, pages 441-444) for a brief discussion of recent major trends in the world IT industry and of the expanding proportion of IT industry in national economies. 83 such an urgent national undertaking. A week later, a political discussion in the Rodong Sinmun stated, "We must prepare ourselves with a strong national competitiveness within a very short period of time so that we can in a dignified way enter the ranks of the powerful nations in the new 21st century world economy," and proposed a so-called "single leap," through which, they added, "Rather than timidly imitating others and just following their tails, in one move we should bring in the world's best in a big way." Thereafter, North Korea began to show great interest in the IT industry. Chairman Kim Jong Il himself spoke about how the new 21st century would change from the 20th century's era of mechanical industry to an era of information industry, and the North Korean media followed, emphasizing the need to establish a national information technology development plan and implementation, encouraging and spearheading interest in the IT industry on the part of people around the nation. In North Korea, development of the IT industry was on the verge of taking its place as an important national policy. North Korea has taken various initiatives to expand the IT industry's ripple effects to the entire economy, rather than just for the IT industry's own growth. For example, it is undertaking technology upgrade projects in factories and business facilities to increase productivity by utilizing IT, founding new educational facilities to train specialized IT personnel, and reorganizing the educational system. In addition, software development projects are being undertaken full-scale in colleges and research centers. The government is setting forth actively on technology exchange and cooperation with foreign countries as well. They are also concentrating investment in telecommunication network modernization projects and subsequent installations of fiber-optic networks, which have resulted in 10 regional networks so far, and a nationwide computer network based on those has now been completed, showing active governmental pursuit of various IT strategy-related projects. So the North Korean government is not hiding its ambition to utilize IT industry as a tool to revitalize the economy and grow IT as the prominent strategic industrial sector. They have proposed building a "powerful and flourishing nation" as a new national vision in the Kim Jong Il era, have proclaimed "S&T-centered policy" as the basis for their economic growth strategy, and finally are pursuing a strategy to leap frog toward becoming an "economically powerful nation" based on IT industry growth. Of course there is room for the opposite opinion. As reported by the North Korean media, the North's strategy for IT industry growth suggests that they are still awash in theories and discussion on the propaganda level, rather than suggesting detailed goals, directions, or methods by which to implement such proposals in clear, specific ways. What's more, it has not been verified whether North Korea has the kind of resources and capacity to carry out such an ambitious leap for its IT industry growth. Nevertheless, when all of the recent North Korean media reports regarding their IT industry are closely and comprehensively analyzed, one may conclude that these recent promotions and propaganda are actual, mid- to long-term strategies rather than just temporary patches to overcome their current problems, and very much indicative of how serious the North is about growing its IT industry as an important stepping stone to recover from its devastating economic crisis. One particularly noticeable feature of the North's intention to grow its IT industry is that they are more serious than ever before about North-South IT economic cooperation projects, and it should noted that, even when military and security issues emerged as core issues between the North and the South, only the economic issues continued smoothly without major change. In this chapter, the focus will be on systematic review of the IT industry growth strategy the North is currently undertaking and planning to implement in the future, based primarily on North Korean media reports, with an emphasis on its significance as a development strategy. In 84 doing so, first of all, the North Korean IT industry's level as a strategic sector will be analyzed from a theoretical point of view, and its so called "single leap" or "leapfrog growth" will be conceptualized from the point of view of a developmental strategy. In addition, the political and economic background against which the North's decision was made to select the IT industry growth as its "single leap" strategic sector will be critically evaluated, together with tends in current research work done by South Korean researchers on the North's IT growth policies. Thereafter, the North's IT industry growth strategy will be categorized into short-term, mid-term, and long-term policy goals (strategies), and their current growth policies and future mid- to long- term policies will also be analyzed. Lastly, some conditions central to their success in that IT growth strategy will be reviewed.

1. IT as a Strategic Industry and the "Single Leap" Strategy: Theoretical Observations

1) IT as a Strategic Industry

The strategic importance of each industry may vary according each country and time period. If a country grows all its industry indiscriminately or provides huge amounts of resources to conventional or fading industries that have lost efficiency and competitiveness, it will lead to decreased efficiency in resource allocation and may subsequently disperse and weaken the nation's competitiveness. Therefore, each country selects industries that are relatively high in competitiveness and nurtures them strategically (Nester, 1991, pp. 15-16.) In other words, a strategic industry should be selected based on factors such as how much it can contribute to the overall national economy; for example, industries should be selected that are high in flexibility of demand and fast in technological innovation as well as potentially highly positive in their ripple effects on other industrial sectors (Yi Kyo'ng-t'ae, 1991, page 77).64 From consideration of these facts, it is often a high-technology sector that gets selected as a strategic industry. High-tech industries are generally highly technology intensive, rapid in technological innovation, and capable of generating large amounts of added value. In addition, their high profit elasticity as land- and resource-conserving industries means that they are expected to grow rapidly and they also have huge ripple effects on related industries (High-Tech Industry Development Council, Korea Institute for Industrial Economics and Trade, 1989, page 2.)65 High-tech industry generally does not refer to certain specific industrial sectors, but, as a variable concept, usually refers to industries that are at the forefront of the latest technological innovations. The variability of high-tech industries arises from the country they are located in and changes in their industrial characteristics. For instance, each country selects criteria for the scope of high-tech industry depending on that country's own technological level. Also even in the same industry, a product that used to be considered a high-tech product may change in later years to one from a conventional industry (Hwang Chong-so'ng, 1994, page 257.)

64 Even an industry considered, regardless of the scale of its demand or speed of technological innovation from a static point of view, to be comparatively disadvantageous compared to other industries is still recognized as a strategic industry if the state decides to grow such an industry in a concentrated mode and it is judged potentially to be a comparatively advantageous industry (Korea Institute for Industrial Economics and Trade, translation, 1989.) 65 With regard to the general definition of advanced technology consult Nelson (198, page 1) and Tyson (1992, page 18) 85

High-tech industries also have the characteristic of being a "leading industry," in addition to being strategically important to a nation's economic growth.66 High-tech industries have the characteristic of leading techno-economic progress during a time of techno-economic paradigm shift. In other words, at one point or another each techno-economic paradigm that has existed previously progresses into a new paradigm as it arrives at its final limitations (Freeman and Perez, 1988, pp. 45-49.) High-tech industries at these times of paradigm shift are the industries that will most likely generate core elements on which the new paradigms will be based. Therefore, if a country, even a backward country, successfully enters a high-tech industrial sector, it will continue to have the advantages of having first advanced into the sector. High-tech industries are not an easy sector for a backward country to get into, however. Backward countries, in competitive aspects, generally do not have sufficient R&D capabilities and comparatively advantageous capital. However, that does not mean that they are totally incapable of having a potential future in the sector. Even a backward country with relatively insufficient capital and a lower technological level, if vigorously led by the state's strategic initiative67 and successful in entering into high-tech industries, may not only realize rapid economic growth, but even narrow the development gap with the advanced countries (Perez and Soete, 1988, pp. 475-478.) In today's world, the IT industry is considered to be one of the best venues for strategic industry that may contribute to vigorous growth of a country's economy. In fact, the nations that have led industrialization movement as well as the late-starting nations are all concentrating their national strength on IT as their central axis for national growth. The IT industry is, indeed, the most prominent high-tech, strategic sector of all. IT (Information Technology) generally refers to hardware such as computer and multimedia, software that increases efficiency in households, corporations, and governments, and the tangible and intangible technology information tools that connect both areas harmoniously as a whole. IT industry also refers to the manufacturing of information delivery-related devices and to related service sectors as well. In sum, the IT industry include industries that deliver and display information, use electronic processing for recording, measuring, and investigation of physical phenomena as well as for control of physical processing in "manufacturing" sectors, and industries that process, deliver, and reveal information by electronic tools in the "service" sector (Ch'oe Kye-yo'ng et al. 2002, page 57.) However with the phenomenally fast speed at which related products and services are generated and grow, their precise technical terms have not yet been clearly defined. That is why there are some differences in the terminology, as defined by each international organization or country, as shown in Table 4-1.

66 As to high-tech industries, whereas their importance as strategic industry may be a theory limited to national economies, their importance as leading industries applies to economics in general (Nelson, 1984, p. 1). 67 Even in capitalistic societies, countries that are not yet industrialized to a certain level (late-starting, or even late- late-starting) need to have direct state intervention in order to industrialize and catch up with the developmental gaps, and such leadership is generally considered to be necessary and even justified (Gerschenkron, 1962). 86

(Table 4-1) Categorizations of IT industry

Organization Term Scope of Inclusion Details United States Information H/W Computers and related devices (Department Technology Computers and related devices wholesale and retail of Commerce) Manufacturing Calculators and office machines Industry Magnetic and optical recorders (IT Producing Electronic parts such as semiconductors, electronic Industry) tubes Measuring devices for industrial purposes Telecommunication Audio and video devices Devices Telephone and telegraph equipment Radio, TV and telecommunication equipment Software and Services Computer-related services such as programming Software manufacturing and wholesale/ retail Telecommunication Telephone and telegraph communication Services Radio and TV broadcasting OECD Information Manufacturing of IT Computer and office calculator equipment communication devices Electronic parts such as semiconductors, electronic technology tubes industry Radio, TV and telecommunication equipment (ICT Industry) Measuring devices and monitoring equipment Product-related services Wholesale and retail of IT equipment IT equipment leasing Intangible services Communication Computer-related activities Korea IT Industry Manufacturing of IT Computers and peripheral devices (National devices Calculators and office machines Statistical Electronic parts such as semiconductors, electronic Office) tubes Image, voice and telecommunication equipment such as radio, TV, and telephone Measuring, testing and navigation devices IT services Broadcasting and telecommunication Software and computer Software manufacturing related services Computer-related services such as programming IT equipment distribution IT construction Sources: Department of Commerce (1999); OECD (1999); [Korean] Statistics Office (1999)

The term "IT industry" first emerged along with the PC in the 1980's and the Internet and mobile communication in the 1990's as they have become known as growth industries, and the inclusiveness of its definition is continuing to expand as more and more powerful growth continues. Additionally, more subordinate level industries continue to evolve as well, not to mention the IT industry itself growing further, so still newer forms of services will be generated, and this trend will get more complex and continue for sure in the future. Therefore, the IT industry is a very dynamic industrial sector that has the capacity with the passage of time to produce further related industrial sectors with more technological innovation and impact. To the late-starting countries, the IT industry is viewed as their opportunity to "hop over" the normal development speed or accelerate that speed, and stimulate their domestic economies as well as to "connect" to the world economy (Singh, 1999, p. 3.) In addition, the IT industry is a sector that leads the changes taking place in the paradigm of techno-economy. With all of the different current views on the changes taking place -- such as the so-called knowledge based

87 economy, the "new economy," and the digital economy – the IT industry is at the core of that paradigm shift (Cho Hyo'n-tae, Im Ki-ch'o'l, 2000, pages 15-19.) Fast growth in the IT industry not only can result in increased production by the IT industry itself, but also can contribute to increased efficiency in other industries that rely on IT- related commodities for capital goods. Regarding its contribution to increased productivity, the IT industry has special characteristics as capital goods compared to conventional capital goods, due to the following two factors.68 First, the knowledge information goods that are produced by utilizing IT capital goods have the characteristic of continually reducing the marginal cost of subsequent production, which leads to generating "economies of scale." For example, digital goods such as software require substantial amounts of money for initial development but, once commercialized as finished products, with the principle of increasing returns of scale kicking in, future additional production cost drops to near zero. Second, increased investment in IT capital goods will eventually work to enliven production, utilization, and distribution of knowledge, resulting in "network externalities" or "spillover effects" (ripple effects). For instance, corporations can reduce costs and increase efficiency in all of their business activities such as production, purchasing, selling and inventory management as they can easily find information on product production technology, customers' needs, and inventory status through utilizing the Internet. Additionally, these network externalities lead to benefits of reducing transaction costs as more and more users utilize them, while the amount of information available for access greatly increases.69 An illustration of the stages in productivity enhancement due to growth in the IT industry is shown in Figure 4-1.

(Figure 4-1) Stages of Productivity Increase through Growth in the IT industry

Realization of Economies of Scale

Investing in IT Capital Goods Increase in Total Factor Productivity

Network Externalities Increase in Labor Productivity

Increase in Capital Intensity

Source: Industrial Analysis Team, Department of Research, the Bank of Korea (2000, page 10)

68 I referred to the works by the Industrial Analysis Team, Department of Research, the Bank of Korea (2000, pages 9-10.) 69 For networks, the additional cost due to increase in the number of users is almost nil, except for the initial installation cost, while the value of networks quickly increases in proportion to the number of connections possible among users (Metcalfe’s Law), so the more the number of users increases, the more the external benefits expand. 88

The degree of importance of the IT industry as a high-tech, strategic industry to North Korea is perceived the same as in capitalistic societies. Commenting on information technology, Dr. Ri Sang-so'l, Director of the Doctoral Academy of the Central Information Agency of S&T of North Korea, once stated in Rodong Sinmun, dated 23 May 2001, that it is (1) a tool for social progress, (2) a key to promote economic development, (3) a driving engine for S&T development, and finally (3) a tool to usher in a new era in social and cultural life. North Korea further described the strategic nature of S&T in the June 2002 issue of Youth Literature, declaring, "The latest science and technology are one of the important metrics that define a country's political, economic, and military status in a competing world." They also see high-tech as something that creates and accumulates new knowledge and technology, shows the way for new directions and trends in technological development (creativity), brings in huge economic benefits through increased productivity of labor and efficiency of resource utilization (profitability), and promotes further technological development by widely infiltrating and spreading to other established industrial sectors (penetration). However, they also point out that at the initial stages of conception, design and manufacturing of high-tech R&D projects it is impossible to know whether the latter will be successful and that, if product manufacturing and sales do not complement each other, the risk of failure is high. The IT industry in North Korea can play the role of increasing efficiency in economic planning and industrial activities by promoting "modernization and information-orientation of the people's economy" and of spreading positive ripple effects to the overall national economy by being injected as raw material for the productivity of other industry. Because of this strategic importance, North Korea plans to focus sharply on growing IT industry as a strategic industry for "leapfrog growth" of its economy.

2) Concept and Characteristics of the Leaping Strategy

North Korea's "single leap" theory, which will be explained in more detail in a later chapter, is a term that expresses by implication their intention to find an escape to revitalize their economy or for leaping growth of the people's economy overall. The term "single leap" can be analyzed as a development strategy that, rather than trying a "catch-up strategy" that follows the paths of development that the advanced nations have taken before, rather adopts a "leapfrogging strategy" that tries to jump over and bypass the development stages standardized by the advanced nations. The "catch-up strategy" standardized by the advanced nations is a method that aims to increase efficiency in economic growth by transforming a nation's leading growth industry in sequential industrial development stages that include a light-industry growth strategy based on abundant labor, a heavy- and chemical-industry growth strategy based on concentrated investment of accumulated capital, and finally a high-tech-industry growth strategy through accumulated technological know-how. In contrast, the "leapfrogging strategy" is an industrialization strategy that starts by selecting high-tech industry as a strategic sector and "leapfrogs" directly into developing the latest technology without securing middle-level technology, and then raises the efficiency of light industry and the heavy and chemical industries by using the positive ripple effects of the technology to stimulate production. This strategy, in which technological know-how is the important production factor, is considered to be a risky one, with a relatively high ratio of failure.70

70 There have been some studies conducted on the capital investment aspect of the leapfrogging strategy rather than its technological innovation side. According to a study by Yi Yo’ng-hun (2002, pages 71-72), when actual investment in a nation’s economy is far lower than required investment, in other words, when the country is mired in 89

Discussion of "leapfrogging development," the theory that a developing economy and society can reach the stage of industrialization from feudalism by a short "take-off" period lasting only 20-30 years, goes back to the theory first proposed by Rostow (1960). The theory is in the same vein as Gerschenkron (1962), who argued that late-starting countries would not likely just imitate all the developmental stages that the advanced countries have gone through, but could even change those developmental stages by using their "advantages of being backward," in some cases even bypassing certain stages.71 In the IT sector, the concept of "leapfrogging development" appeared first in the 1980's, based on the belief that IT could be used by developing countries to accelerate their speed of development and thus shorten their stages of development (Singh, 1999, p. 4). The term "leapfrogging" is used in three ways in studies related to the IT industry (Singh, 1999, p. 5). First, it is used to mean that the IT industry can help developing countries bypass the sequential developmental stages and transform from being an industrial society to a post-industrial society. Second, it is used to mean "growth engine" so as to help developing countries accelerate their speed of development. Third, it is used in a technical way to describe bypassing an unexplored sector's technology or production cycles. Therefore, the term "leapfrogging" is used interchangeably in both technical and economic ways (Soete, 1985.) Since the "motive" for the majority of "leapfrogging" is found in the technological aspect, "leapfrogging" in this study is understood in the technological sense. However it should be noted that, because technology's leapfrogging development increases efficiency in the overall economy and competitiveness, a nation's ultimate goal in moving forward with a political strategy of leapfrogging essentially rests on the economic aspect. In describing passing over an unexplored sector's technology or production cycle, "leapfrogging" in technical means is advocated in a "non-linear model" which is one model of technological innovation. Models of technological innovation are categorized as "linear" or "non-linear." According to this method, the old "linear model" had a sequence of basic sciences- -applied sciences--engineering--mass production, through which basic science contributed to production. That model certainly emphasized that basic science had to develop by stages into research and development for it to contribute to final production. However in today's "non-linear model," technological innovations that bypass any stage may be generated simultaneously in multiple ways through the "learning-by-doing" process in any stage from basic science, applied science, and engineering, to mass production. This means that, in addition to the two factors of capital and labor, linkage to technological innovation can triggered off simultaneously through the learning-by-doing stage, whether in the stage of basic science, applied science, or production (Kim Hyo'ng-kuk, Yu So'k-chin, 1998, page 26). In sum, S&T is a new growth factor that may replace the two production factors of capital and labor.72 For example, product technological innovations need to be distinguished in the cases of the machine and the semiconductor industries. In the semiconductor industry, technological innovations such as 1 mega--4 mega--16 mega--64 mega emerge in breakthroughs of technology stages, so a late-starting country may well become a technologically early adopting country, depending on whether it has strategic technological competitiveness. However, such innovation the swamp of poverty, it can place itself in the mode of self-sustaining growth by attracting great amounts of foreign capital and greatly expanding its volume of capital, and thereby may not only escape from the vicious cycle of poverty but even pay off all foreign debts, and someday transform itself into an advanced country, something called the "big push" strategy. 71 See Karunaratne (1982, p. 212) for an early study of the stages of growth as meaning "leapfrogging." 72 P. Krugman argues that, as the injection of the two production factors of labor and capital increases, economic growth strategy needs to change to increasing productivity by the contribution of other factors (Krugman, 1994, pp. 62-78). 90 in mechanical products progresses in accumulative fashion, so it is indeed very hard for a late- starting country to leapfrog into a technologically advanced country. International transfer of technological products' technology normally occurs from technologically advanced countries to countries with mid-level technology and then to technologically backward countries, in a "flying seagull" shape (Akamatsu, 1962), but for high-tech industries such as IT, a "flock of sparrows" model (Moon, 1989) may be applied (Kim Hyo'ng-kuk, Yu So'k-chin, 1998, page 28). With its recent phenomenon of receiving worldwide attention, the IT industry is known for its fast rate of technological change, but its technological attributes are such that it is characterized not by technological continuity but rather by discontinuity. For example, in the mid-1970's telecommunication changed from analog to digital, which are almost completely distinct in technological character. Because, as a new technology, digital is starting anew with the setting of standards, a gap has been opened wide enough for late-starting countries to be able to get on the bandwagon utilizing a leapfrogging strategy (Antonelli, 1991, pp. 92-93; Hobday, 1990, pp. 102-103.) Therefore, for such a technological leapfrogging strategy to succeed, a late-starting country is required to have a strategy whereby, rather than first developing basic- or mid-level technology, it imports and actively uses the latest research results that advanced countries possess, prior to their becoming commercialized, so that the basic and original technology behind them is not only acquired but combined with its own technology, enabling it to turn out its own creative technology and commercial products. This "mid-entry strategy" is a survival strategy that aims to overcome limits in R&D resources and secure competitiveness (Cho'ng Ku'n-mo, 1998, pages 16-17.)

2. North Korea's "Single Leap" Theory and Trends in Research on the IT Industry's Growth Strategy

1) North Korea's "Single Leap" Theory

The term "single leap," (or "leapfrogging,") was first officially used in North Korea with the publication in the 7 January 2001, edition of Rodong Sinmun, of a political discussion entitled, "More Bravely, Faster, Higher." The opinion piece stated, "Our gutsy intention is not to trim our clothes to imitate others' or follow their tails, but rather in a single leap to bring in the best in the world in a big way," insisting that, "We already have tasted the sweet success of such single leap phenomena, in the birth of the artificial Earth satellite Kwangmyo'ngso'ng 1, and our achievements in the earth-shattering land reorganization policy." The opinion column continued, emphasizing "To develop the strongest national competitiveness in the shortest amount of time possible, so that we can majestically enter the ranks of the world economic powers in the 21st century is the Great General's courageous decision and brilliant strategy. As for speed, this is the strategy used in partisan warfare called ‘A Thousand Ri at a Single Stride' and as for method, it is the most smashing and brilliant stratagem of single leaping," introducing the "single-leap" strategy as an argument for the important strategic method of strengthening the nation's competitiveness. When viewed from the position of this "single leap" theory, North Korea is expressing its will to follow a "single-leap" strategy in both speed and method, North Korean style, rather than a "catch-up strategy" of following the development model or strategy of the advanced countries. The springboard for the North's "single leap" is, of course, science and technology. The North's "single leap" theory through developing S&T is based on "leapfrogging in a 91 technological way" (Sigh, 1999, p. 5). As such, the IT industry is the strategic industry that the North has chosen for its leapfrogging in a technological way. NDC Chairman Kim Jong Il has said that "if the 20th century can be understood as an era of mechanical industry, the 21st century will be known as the era of information" (Rodong Sinmun, 20 April 2001), and proposed the necessity of making IT the strategic industry for the new era. He also further argued that "Therefore, we must clearly establish a development plan for information technology and move forward, grasping IT development as the country's most important project" (Rodong Sinmun, 23 May 2001). In 2002's New Year's joint editorial, too, North Korea stated, "While quickly developing S&T in a broad sense, we also need to concentrate our energy on developing IT and the information industry," and "We must make our IT and information industry a top-level industry in the shortest amount of time possible, and it is an important task we must fulfill," (Rodong Sinmun, 18 January 2002), clearly displaying again their intention to grow the IT industry as the top priority in strengthening their national competitiveness. The North also further emphasized the importance of the information industry and encouraged all the people all over the country to get involved, stating, "Growth in the information industry will free our laborers from hard physical work and emancipate them, and because the benefits the industry bring will all be dedicated to expanding the people's welfare, everyone has a stake in the growth of the information industry" (Rodong Sinmun, 29 April 2001). The North's confidence that it can achieve such a "single leap" goal stems from the possibility that the IT industry can develop by flying leaps. The North has stated that "Our own brand of socialism has decisive superiority in developing the information industry" (Rodong Sinmun, 29 April 2001), and proclaimed that, with the IT industry as a major growth strategy, they would have the ability to recover the economy in one quick move, and their ambition subsequently to join the ranks of the powerful and flourishing nations. So the North's "single leap" strategy may be called a "strategic choice" to prepare a springboard of self-reliance by concentrating on developing the IT industry, a high-value-added industry amidst the realities of North Korea, which has such devastatingly insufficient capital and resources. Indeed, the North defines the IT industry as an "urgent task that cannot be put off anymore" in its people's economy and, while establishing a comprehensive "IT development plan," they aim to pursue a "new self-reliance," not "today's self-reliance that creates and invents from the old outdated mode, but a high-level self-reliance that is based on today's modern S&T" (Rodong Sinmun, 30 January 2001; Minju Joson, 6 February 2001) as a springboard for its growth strategy. From 2001 onward, the North has continued to emphasize that it cannot achieve the status of a powerful and flourishing nation without making all of the sectors of its people's economy information-oriented, and it has chosen IT as a strategic growth industry under the banner of "new self-reliance." Time and time again, the North has made its points about how IT industry development is crucial as the central link in its "single leap" strategy for economic recovery, while proactively promoting the IT industry through various methods such as S&T exhibitions, academic discussions on information orientation, and media press propaganda. At the same time, it is also focusing on working cooperatively with foreign entities to import advanced technology and obtain foreign capital from the West for purposes of PC manufacturing, software development, and expanding IT networks. So, one can say that North Korea is dreaming of achieving a leap for its entire economy through quick development of its IT industry, that is, a leap for its economy in general through a technological leap toward its goal of building a "powerful and flourishing nation."

2) Political and Economic Background behind the Selection of the IT-Industry Development Strategy

North Korea had previously proclaimed its policies aimed at achieving the status of a powerful and flourishing nation, by focusing on ideology, military ("barrels of guns"), and science and technology. The North has emphasized that it needs to improve its current levels of S&T in all fields, devising many practical measures to develop its IT industry. It seems to be focusing on growing the IT industry not just for the goal of building a powerful and flourishing nation, but also to contribute to regime stability, which indicates that political background motives are also in play. As the importance of IT increasingly becomes clear and spreads throughout the country, NDC Chairman Kim Jong Il's emphasis on IT has become more obvious. One example is the efforts to "make all the people information-oriented" as a part of a popular reform movement. Despite serious difficulties with insufficient electricity and food shortages, the increased emphasis on IT hints that North Korea's IT strategy is not simply for economic purposes. One may conclude that the North Korean leadership has chosen the IT industry as a strategic industry and is dreaming of a "single leap" for political, as well as just economic considerations. North Korea has chosen its IT growth strategy from the points of view of its short- and mid- to long-term economic development strategy. First for the short-term goal, the North seems to have chosen the IT industry as the best plan to revive its economy, which is plagued by shortages of fuel, raw materials, and energy, and has reached its limits in productivity. The country is facing a host of serious problems both domestically and internationally. Domestically, it has been ravaged by some serious food shortage problems. The government basically is not capable of feeding all its people. There are also the problems of energy and electricity. Factories are not running; industrial facilities are pretty much full of obsolete, outdated machines, urgently needing replacements, and the required capital investment to do so, as well. Not to be forgotten also is its problem of insufficient manpower, adding to the continuing, chronic economic depletion. Its international relationships are not any better, either. The US economic sanctions are still effective, almost cutting North Korea off from any possibility of having badly needed injections of foreign capital or technological support for any chance of economic recovery. So choosing the IT industry as its "single leap" strategy to overcome and escape from the current depressing state of the country with all of the walls hitting them left and right -- whether the problems be its own limits of internal strength to overcome the obstacles or almost impossible foreign aid -- can be seen as a result of the North's recognition of the IT industry as a tool to solve the problems in a short amount of time, as it is doing all it can to dig out of the mess/ difficulties it finds itself in (Bureau of Intelligence Analysis, Ministry of Unification, 2001a, page 7). North Korea seems to have only one way out of the current economic mess: to increase the productivity of the entire economy. With that motive, the North is placing automated and computerized management systems in business facilities and factories. An extension of this effort is the new proposal for modernization and information-orientation of the entire people's economy through growth in the IT industry, which aims to increase industrial productivity and reduce reliance on foreign raw materials for the final goal of economic recovery. This reason is analyzed to be its primary reason for choosing IT as the new strategic industry, for the ultimate goal of increasing economic efficiency (productivity.) Next, looking at it from a "mid- to long-term economic strategic" point of view, the choice of IT as the new strategic industry seems to have developed as a result of the North's leadership's more positive recognition, a manifestation of a sense of crisis that the nation's existence and development were impossible, if it were rejected and isolated from the wave of 93 information-orientation sweeping the entire world. As is recognized even in North Korea, the 20th century-style of industrial structure of mechanical manufacturing concentrating on the heavy and chemical sectors no longer guarantees survival. The ratio of North Korea's manufacturing to its entire economy is too low to expect industry-related benefits, and it also has insufficient investment reserves. Certainly, a simple economic recovery alone could not guarantee North Korea's future. It seems, therefore, that North Korea has chosen the strategy of IT industry growth for short-term economic recovery, while still adhering to mid- and long-term considerations, after realizing that the traditional "catch-up strategy" of industrial development would not be sufficient to narrow the gap with other countries. It is a kind of "detouring" strategy, the choice of jumping directly into information orientation, rather than depending principally on industrialization in a 21st-century in which industry is rapidly evolving. Moreover, one must point out the political considerations of maintaining the regime and strengthening the basis of its authority that lay behind the selection of the strategy of developing the IT industry. First, the IT growth strategy does not require a change in regime (or its reform) to be utilized as a tool for economic growth. Unlike traditional industries that require large injections of manpower, IT is an industry such that growth can be possible with only a few elite, professional personnel literate in the latest scientific technology and creative ideas (Korea Computerization Association, 2002, page 409). The one thing the North worries most about is how they are going to maintain the regime and its current security level at this potentially critical time of economic reform and openness. To have economic reform and an open policy, import and adoption of foreign capital or technology are needed, but the IT industry is seen as one industry that can effectively block off any potential threats to the regime, such as the capitalistic elements that will inevitably flow into society during the process of implementation. In other words, the IT industry is the most appealing industry for North Korea's political situation, because it can grow through concentrated training of relatively few professional personnel and scientists, while minimizing the breadth of openness.73 Additionally, it is believed that the regime may have thought of implementing a strategy of IT industrial growth from the angle that it could strengthen the political base of the Kim Jung Il regime. The North is utilizing its "single leap" strategy through growth in IT industry as a way to highlight Kim Jong Il's leadership (Kim Yu-hyang, 2001, pages 195-196; So' Chae-chin, 2001b, page 197). The political leadership and the media continue to promote IT industry as central strategic industry and element for their master plan to achieve a full economic recovery and a "powerful and flourishing nation." A media report even showcased Kim Jong Il as saying, "I am personally conducting research on computer technology, while leading scientific research in the field" (JoongAng Ilbo, 19 June 2000), and all of the media are very busy propagandizing the IT industry as personally led by Kim Jong Il himself, with slogans such as "Today's world is a world of electronic calculators – Kim Jong Il." They are working to plant in the people the hope that the country can achieve "single leap" growth without relying on others if only science and technology are developed fully, as an offsetting vision to satisfy with a substitute the people's demands for reform and openness (Yi Ki-tong, 2001, pages 286-287). Moreover, the North Korean regime is utilizing the IT industry growth strategy as a means to highlight Kim

73 However, looking at the IT industry from a longer term point of view, it is more likely that IT will play the role of a catalyst to bring about change in the political system, rather than being a stabilizer for the regime. That is because growth in IT will bring in knowledge and information that move freely without any limits in time and space. However, for that to be most effective, the medium of the Internet has to be in place, and that is why North Korea has blocked connection to the Internet and allows use of only an intranet that is connected internally within North Korea. In addition, they limit the strategy for IT industrial growth to sectors that are not burdensome to the regime. 94

Jong Il as a leader who has set forth a vision appropriate to the new era of information industry and the digital age.74 In conclusion, the political background of the North's decision to adopt the IT industry growth strategy stems from the regime's need to firm up its system, which has been weakened by economic crisis, and also to highlight the economic policy lines of the Kim Jong Il government at its official launch as different from Kim Il Sung's old economic policy lines, while cementing the new regime's political and social power bases. Whether the regime's new "single leap" growth strategy based on adoption of IT industry development succeeds or not may be said to be significant, for it can be an important turning point that puts the finishing touches on the transition from the Kim Il Sung era to the new one of Kim Jong Il. That is because it can be an "epochal turning point" for North Korea's new developmental strategy for the 21st century. It can also be an "economic turning point" with its basing the new developmental strategy on the latest high-tech industries, in contrast with the past, when traditional industries such as heavy and light industry were focused on, and finally with its nationwide large-scale project led by the country's new leader, Kim Jong Il, it can be a "political turning point." Therefore, the new "single leap" strategy by developing IT industry is not only an economic project that aims for a quick recovery and leaping development of the North Korean economy, but at the same time also possesses the character of a political project aiming to showcase to the nation and the world the ability of Kim Jong Il as a new leader for a new era, through success of the new strategy, whereby it is solidifying its position as a major national strategy.

3) Trends in Research on IT Industry Growth Strategy

The recent emergence of the North's "single leap" growth strategy has led to much speculation and discussion about its future, with all its implied meanings. Foreign and domestic views on the strategy have varied greatly, with some arguing that it has the potential to succeed, and others predicting its inevitable failure. The first topic of discussion is whether the policy of IT industry development is a temporary policy of the North, aiming for economic recovery, or a mid- to long-term development strategy. One side argues that the North's intention to develop an IT industry is nothing more than a temporary, one-time policy and symptomatic treatment to raise the efficiency of its economy. They base their argument on the fact that, when the North's inferior technology and meager raw materials are considered, it is a policy to increase productivity in existing industrial facilities as a "tool," primarily through the automation of factories (Ch'oe Sin- rim, 1999, 2002; Kim Yu-hyang, 2001; Kim Sang-hun 2002; Hayes, 2002). The other side argues that such growth strategy was adopted by the North based on its realistic recognition that the traditional light and heavy manufacturing industries could not provide any possibility of

74 "Our Dear General is characterized by extraordinary qualities of foresight that can see into the far future of humanity’s development of science, deep scientific knowledge that surprises even professional scientists in the field, and endless, broad and abundant knowledge, which we all admire and respect. Our Great General is well informed about modern science and technology from electronic automation engineering to chemistry, biology, and architectural engineering. He even knows all about computer science and related business projects, which are considered to be the essence of cutting-edge science, and the Dear General’s wisdom and extraordinariness in making wonderful suggestions for developing computer programs in our style are incomparable. It is no coincidence that the people of the world are highly praising our Dear General, as a ‘politician who is more sensitive to everything about S&T, including electronics and space technology, than any other politician.’" "To Grasp Firmly Science-First Ideology and Build a Powerful and Flourishing Nation." Rodong Sinmun, The Worker, joint editorial, 4 July 2000. 95 normalizing the country's economy, so the high-tech IT industry was selected as a strategic alternate plan for growing the economy. Because the North has very high potential in military and basic S&T, it is promoting the IT industry through foreign technological cooperation and capital importation as a mid- to long-term strategy, they argue (Kim Ku'n-sik, 2000, 2001, 2002; Pak Ch'an-mo 2001, Pae Chong-ryo'l, 2001; Ch'oe Sin-rim, 2001; Hong Sun-chik, 2001; Pae So'ng-in, 2001b). As for the other question regarding how the IT industry will grow and develop in the future, there are also both "positive" and "negative" views. The negative view side argues that, because North Korea's technological and industrial basis is too weak to develop the IT industry and also because it still clings to its self-reliant line on building the national economy, not showing any signs of fundamentally modifying or giving up that core belief, it is unlikely that North Korea would significantly benefit from its strategy of concentrating on building high-tech industries. The positive side, however, puts more weight on optimistic prospects for development of the IT industry because, considering North Korea's poverty in capital and resources, development of the IT industry is the only way to escape from the vicious circle of poverty. They note that NDC Chairman Kim is personally leading and encouraging that way and that recently the North has been spurring forward its training of IT specialists and technological agreements and exchanges with foreign entities. These two different arguments can each be summarized this way. The negative argument depicting the IT industry growth strategy as a temporary policy aimed to raise economic efficiency as a symptomatic treatment subsequently leads to a final negative forecast, predicting that the North's inherent backward economic conditions and political situation would not result in any success at all. On the other hand, the positive argument viewing the strategy of IT industry growth as a real mid- to long-term national strategy that aims to "leapfrog" the North Korean economy into a great success, argues that, on the basis of Kim Jong Il's great interest in the strategy, the prospect for development is truly the only possible escape from the vicious cycle of poverty and, because the strategy is widely backed up with policy support, the potential for leaping development of the IT industry cannot be ignored. So the two sides of the argument can be sorted out as a "short-term negative argument" and a "long-term positive argument." In summary, the "long-term positive argument" regards the North's efforts in developing the IT industry as its springboard for a long-term development strategy, while the "short-term negative argument" sees the strategy as a mere tool to raise its backward productivity rather than strategic thinking for an economic leapfrog development through the development of IT industry. However, this kind of dichotomous view of "short-term negative argument" and "long- term positive argument" regarding the North's IT industry development strategy is not a very convincing approach. For instance, the "underestimated view" that minimizes the North's efforts as nothing more than "froth" -- due to the fact that they do not have sufficient conditions and ability to undertake such computerization and information orientation policies with their own self-styled "self-reliance" -- is a rather unbalanced view that willfully ignores the North's genuine intention to achieve economic recovery and success through developing the IT industry. By the same token, the "overestimated view" that argues the North is capable of achieving significant results right away with its interest in IT is also an unbalanced view that does not take into account the facts of the actual North Korean situation and conditions for implementing the growth strategy (Kim Ku'n-sik, 2002, page 42). Nor would another theory that attacks both arguments as wrong or a compromise theory accepting both arguments be a correct approach, either. Rather, the best way would be an objective approach aimed right at the essence of North Korea's strategy for developing its IT industry.

The North's recent proposals of "S&T-centered policy" and IT industry growth policies contain both short-term and long-term characteristics and they were all proposed at about the same time, through multiple channels. For example, one day, a policy is strongly promoted that concentrates on "technology upgrades," with the goal of raising efficiency in the existing economic system. On another day, a new policy different from that is proposed, in which training of IT professional manpower is proposed for the purpose of earning foreign currency through certain sectors of (potential) comparative advantage such as the software industry and for more active technological exchanges and agreements with foreign countries. Thereupon, another policy is proposed, this time about a business project to connect Pyongyang to other provinces with an ultra-high-speed network for modernizing telecommunication networks. What's more, the government is even proposing its old "self-reliance" concept in a flexible new way as a means to enhance efficiency in their IT industry growth strategy, while actively pursuing technology and personnel exchange programs with foreign countries. While the regime might say, "Growing the economy based on the principle of self-reliance does not mean growing the economy with the doors closed" (Minju Joson, 22 April 2001), it is also turning its attention to adopting advanced foreign technology. What all these indicate is that the North's self-reliance is changing from being a "closed" self-reliance to the new "open" self- reliance as a way of managing the economy (Sim Kyu-so'k, 2000, page 83; Ministry of Unification, 2001, page 49). This is a clear example of how the North Korean regime itself has finally accepted and recognized the need to engage in foreign cooperation, especially in the area of adopting technology and capital. Generally speaking, industrial development strategies are established and undertaken within a framework of macro-national or economic development strategy, and such development strategies usually contain short- and long-term goals in periodic stages. Therefore, when all of the various evaluations within South Korea and the North's recent trends in S&T and related IT industry growth strategy are comprehensively put together and viewed,75 the North's intention is first to set the goal of building a "powerful and flourishing nation" as its macro-national development strategy, with achieving an "economically strong nation" as the economic strategy part of a broader national strategy based on "S&T-centered policy," and finally to develop the IT industry in sequential stages as a central industrial development strategy. So, the North's multifaceted policy proposals may seem confusing and not systematic at all, but actually what it needs is more comprehensive and systematic analysis of its IT industry-related policies from a developmental strategic point of view.

3. Policy Goals of the IT Industry Growth Strategy at Each Stage

Considering the current backwardness of the leading sectors of the North Korean people's economy as well as of their heavy and light manufacturing industries, it is hard to find an alternate sector suitable for new growth. Despite having poured concentrated investments into

75 For example, as a part of the North’s "macro" economic development strategy, the Federation of Korean Industries proposes a "leapfrogging model" strategy for growth through concentrated development of new service sectors such as the IT industry. The Federation, when it proposed a blueprint for the North’s own economic development strategy, based on the experiences of South Korea’s economic development, suggested that the North needed to have its own "North Korean economic development model" for a quick economic recovery, leading to policies of unbalanced growth, centered on special economic districts, to a leapfrogging-type growth strategy, and to forming a Northeast Asia economic bloc (Northeast Asia Team, Northeast Asian Economic Center, the Federation of Korean Industries, 2002). 97 heavy industry, agriculture, light industry, trade, and energy, not much in the way of significant results has been achieved. So having reached the end of its rope in economic recovery efforts, North Korea is devoting new attention to and placing its hopes on S&T-related industries as a new escape route. So in this regard, the North is newly joining the currents of the knowledge- and information-based age,76 and has taken up the IT industry, which is attracting attention as a new growth industry, as an industry to lead its industrial growth. A high-tech industry such as IT is a sector very difficult for a late-developing country to get into. That is because late-developing countries suffer great inadequacies from the point of view of not only comparative advantage, but also economically in R&D capabilities and in capital. Moreover, a socialist country like North Korea -- with a planned economy and self-reliance as its core economic principles -- certainly cannot be seen as in an advantageous position to get into high-tech industry, where the cycles of technological change are rapid and the demands of the market ever changing. Despite all these inherent and seemingly difficult obstacles, however, North Korea still is going ahead with its IT industry growth strategy as a way to revitalize and "leapfrog" its economy through concentrated investment in IT industry capital and technology. It is not adopting the traditional method, the so-called "catch-up strategy," but instead going directly for the "leapfrogging strategy" with concentrated development of high-tech industries. So, the question is then, how are they going to accomplish such a "leapfrogging strategy" to develop their economy? It is true that the North's single-leap strategy and IT industry growth strategy hold our interest far more than any other fields in their economy. Especially the great interest in their IT industry shown by NDC Chairman Kim and other North Korean government officials, coupled with the positive atmosphere and expansion of economic cooperation resulting after the 2000 North-South summit meeting, have led to more attention and focus on the North's IT industry strategy. As a matter of fact, the IT field continues as the most active area of economic cooperation between the two, despite some awkward moments in their relationship due to problems in the military area. However, one should note that it was only in early 2001 that the North first seriously proposed its "single-leap" strategy, and it has not yet made public any systematic IT growth strategy. So in fact there are fundamental limits on analyzing the North's growth strategy based on evidence. Nevertheless, when one pulls together the various media reports made by the North Korean government regarding its IT-related projects, the testimony and judgment of South Korean officials who have conducted IT economic cooperation meetings with Northern officials, and the related domestic analyses based thereupon, it appears that the North, in its own way coming up with policy tasks in an organized manner, is steadily pursuing development of its IT industry. Figure 4-2 illustrates the North's stages for growing IT industry, the policy goals and tasks for each stage, and the details of policy implementation, based on all of the North Korean media reports and the various domestic analyses made so far. Now I shall turn to analyzing the North's IT industry growth strategy and its policy objectives, tasks, and implementation in the short, medium, and long term.

76 North Korea’s recognition of the new knowledge-based information society in the 21st century is well illustrated in the following. "Knowledge is strength and national pride also comes from knowledge. We have had our slogan preaching that struggle is the only way for survival, but in today’s world, in this new 21st century age of information industry, we must continue our struggle under a slogan preaching that knowledge is the only way for survival. Insufficient knowledge gives birth to nihilism and reliance on others. A people without knowledge cannot have self pride." "A people with strong national pride is invincible" (Rodong Sinmun, 21 June 2001). 98

(Figure 4-2) Conceptualized Diagram of North Korea's Strategy for Development of the IT Industry, by Stages

Policy Goals Policy Tasks Details of Policy Implementation

p Strengthen Establish IT Expand National Plan & Investment in

le Lea Competitiveness Implemen- Infrastructure g tation & Hardware Sin Long-Term Goals North KoreanEconomy's

Computerization

y of Business Management Adopt IT in Train Production Professional & IT Personnel Management & Develop

le's Econom Activities S/W Industry

p Automation of

Mid-Term Goals Mid-Term Goals Production Peo Information-Orientation of

Repair,

y Maintain Normalization of Outdated Technology Production Facilities & Upgrades

Econom Automate Mfg. Processing Short-Term Goals Modernization of People's of People's Modernization

1) Short-Term Policy Objectives: Modernizing the People's Economy by Upgrading Technology

(1) Technology Upgrading for Normalization of Production

In the 2000 New Year's joint editorial, North Korea proposed the three pillars for building a powerful and flourishing nation -- ideology, military ("barrels of guns"), and science and technology, revealing that they would concentrate national power on economic strengthening to successfully build an economically powerful nation. In the 2001 New Year's joint editorial, the North also proposed for the first time a concept of national economic power as the basis for the strengthening and revival of socialism, while at the same time setting forth technology upgrading77 projects for factories and business facilities as strategic goals for the first stage of strengthening national economic power. In 2001, the regime defined its technology upgrading as "a central link for the current economic projects" and "a task that cannot be put off any longer" which were set as the initial tasks to be accomplished for strengthening national economic power. About the same time, the regime also proposed the so called "single leap" strategy for "entering in a dignified manner the status of an economically powerful nation status in the 21st century by establishing powerful national competitiveness within the shortest amount of time possible." So the North was basically proposing the "single leap" strategy as an important method to strengthen national competitiveness. Beginning in the late 1980's, as the socialist bloc countries began to crumble, North Korea's foreign economic conditions were hammered, and food and energy shortages became almost chronic. In addition, the North's economic growth ratio recorded negative growth in 1990, and for the nine-year period until 1998 the country registered continuous negative growth, (see Table 1-1), falling into the "swamp of poverty (poverty trap)" (Yi Yo'ng-so'n, Yun To'k- ryong, 1999; Yi Yo'ng-hun, 2001a, 2002). Despite some signs of recovery after 1999, the issue of economic recovery is still a daunting concern for the country, and normalizing productivity is seen as their most pressing goal to achieve. What the North means by normalizing production is "proceeding with production in a normal, smooth way" (Kim Ryong-pin, 2001, page 12). The first thing that is required for normalizing production is repairing broken and outdated facilities and machinery in factories and business facilities, or replacing them with modernized (automated) ones. In this regard, the North's short-term goal in strengthening national economic power is normalizing production by repairing, maintaining, or replacing old and outdated facilities and machinery in factories and business facilities through technology updates, and automating production processing so that production capacity can be expanded. The technology upgrading project is one of the important methods in implementing "modernization of the people's economy." Earlier, back in December 1977, the North already had set Juch'e-orientation, modernization, and science-orientation of the economy as its principle foundations when proclaiming the Second Seven-Year Plan. According to "The Works of Kim Il

77 The North Korean term "upgrading " is used for a meaning different from that of the similar word "improvement". According to the North Korean Grand Korean Dictionary, "improvement" means "repairing something that is lacking or wrong to make it well again", and "upgrading" means "fixing something that is outdated with something more advanced, as in rebuilding or reconstructing it." So, "kaeso’n" usually means changing economic structure, business management, or economic operation to something practical and rational, and "kaego’n" usually refers to technological innovation or cutting-edge modernization of facilities. North Korea uses the term "kaeso’n" when they are referring to strengthening the unit management system of agricultural cooperatives, rationalization of business management, or strengthening the independent profit system. "Kaego’n" is mainly used when referring to technological innovation in or importing the latest high-tech industrial facilities by factories and businesses,. (Nam So’ng-uk, 2001a, page 59; 2001b). 100

Sung," "modernization of the people's economy means upgrading outdated technology to new, advanced technology to raise the level of the technology and equipment of the people's economy," and "the goal of modernization of the people's economy is comprehensive mechanization and automation of production," as in "modernization of technological methods." The regime further proposed developing the machine industry, electronics industry, and automation industry as important tasks to achieve in modernizing the people's economy (Kim Il Sung, 1980, page 325). The very recent "modernization of the people's economy" now has come to mean not just modernization of one piece of mechanical equipment or one production process in a factory, but now applies to overall thorough-going systemic modernization of product design, production, sales, and financial management (Rodong Sinmun, 12 August 2001). According to Min Kyo'ng-ch'un, Director of Industrial Management at the Socialist Economic Management Research Institute of North Korea's Academy of Social Sciences, "the technology upgrading projects that are going on around the country are not just a repeat process of past years, but complete technological renewal" (Choso'n Sinbo, 24 January 2001). The concentrated implementation of technology upgrading in factories and business facilities is based on their judgment that normal operation of those places cannot realistically be accomplished with broken-down and outdated equipment. In fact, the factory operation ratio in North Korea is less than 30%, clearly indicating how desperate the situation of stagnating industry is and the pressing need to "modernize" the existing factories and business facilities by replacing equipment and implementing automation for normalized production. North Korea, after emphasizing upgrading the quality of the products of production and of construction in the 2000 New Year's joint editorial, has been emphasizing IT propagation on a large scale to factories and business facilities to improve efficiency through information- orientation in industrial facilities. In 2001, the government established in each region "model factories"78 equipped with the latest technology that operate all production processing stages by computers, and proposed expanding the technology upgrading projects to the entire country by having nearby factories learn from the experience of the model factories. To recover from the immediate crises of energy and food shortages, it is urging the development of scientific technology that can be utilized quickly and the propagation of such technology in production facilities (Yang Mun-su, 2001a, pages 186-187). At the Fourth Meeting of the 10th Session of the Supreme People's Assembly, held on 5 April 2001, Cabinet Prime Minister Hong So'ng-nam, in his report on national affairs, emphasized that the government would do its very best at the main tasks of economic buildup, reviewing and improving the current economic bases by maximizing their operational ratio and upgrading them with modern technology, and would exert "Herculean efforts" to develop electric power, coal, metals, and rail transport. Prime Minister Hong then further set forth a policy that will "boldly clear away the outdated processes that consume too much electricity and production processing that does not have actual profitability, and upgrade them in a modern way using the latest technology that will result in a high return on investment and materials that the people can actually benefit from." In the same meeting, Finance Minister Mun Il-pong stated, "factories and business facilities need to upgrade with modern technology and adopt new production facilities based on the latest high technology, and a great deal of investment will be made for these purposes" (Yonhap News, 5 April 2001). Such technology upgrading projects, that have been promoted since 2001 throughout North Korean industry, have been proliferating, especially after General Secretary Kim Jong Il's

78 The North Korean government has cited as examples of "model factories" the basic food production bases in each province, and, in Pyongyang, a hypodermic syringe factory, a pharmaceutical laboratory, an ostrich farm, and the Taehu’ngdan’gun Potato Starch Factory. (Minju Josun [Democratic Korea], February 4, 2001). 101 instructions. In January 2000, while General Secretary Kim was visiting industrial districts in P'yo'ngbuk Province and making rounds in the facilities there, he set forth as guidelines new industrial tasks that are aimed at improving and strengthening the existing facilities' operational management and bringing a "new revolutionary transformation" to the economic projects. The goals included normalization of production, strict enforcement of the Party's economic policies, improving productivity through technology upgrading, more construction of modernized factories, raising laborers' technological and functional levels, and accepting advanced technology (See Yonhap News, 30 January 2000). For implementing the new policies, in 2001 the North established as the main task "general technology upgrade projects" at all factories and business facilities and started implementing the policies in multiple ways in each central and regional governmental unit. The Cabinet-level State Planning Commission set up plans for technology upgrade projects based on the data submitted by each ministry and central agency, and each city and province, in accordance with the peculiarities of its region, then created technology upgrade projects for the major factories and business facilities in its area as one of their core economic goals in 2001 (Rodong Sinmun, 1 February 2001). The North's technology upgrade projects can be backed up by its software technology, which is comparatively superior to other sectors. The North's software policy is focused on developing practical programs and other programs useful for factory automation. Thus their technology upgrade projects are aimed at lowering costs and raising quality and increasing production by digital control (numerical control) of machinery and flexible production systems (factory automation), using computers. Also their plans call for moving forward with computerization of production control in other fields such as electric power, metal working, machining, and the chemical industry, as well as increasing computer utilization in rail, air, and other forms of transportation (Rodong Sinmun, 19 July 2000; Choso'n Sinbo, 20 December 2000). North Korea then began a nation-wide campaign for the "new thinking" that Chairman Kim had proposed, to increase public awareness of the new technology upgrade projects. Party and government officials began to visit and inspect in droves the factories that have been propagandized as modern factories, such as the instant noodle factory in Pyongyang and the ostrich farm. Moreover, the joint editorials continued their propaganda work, urging people and each factory and business facility to dynamically move forward with the technology upgrade projects in all sectors of the people's economy and adopt the modern, latest technology, to produce undamaged products (Hong So'ng-po'm et al., 2002, page 40).

(2) Characteristics of the Technology Upgrade Projects

The North's technology upgrade project plan was submitted to the State Planning Commission (SPC) of the Cabinet in January 2001, following a "detailed analysis of the situation of each factory and business facility, with each ministry and central organization of the Cabinet selecting and prioritizing candidates for technology upgrading," while "comprehensively distinguishing those that needed complete renewal through concentrated investment from those that could proceed with technology upgrades on their own, on the basis of their own production." After that, the SPC finalized the plans for technology upgrade projects, based on the data submitted by each ministry and central organization. Table 4-2 lists the characteristics that emerged during pursuit of the technology upgrade projects in the year 2001. As the table shows, the project got its full-scale start following Chairman Kim's visit in January 2001 to Pudong district in China, when he subsequently began to emphasize IT industry development in March of that year. The projects were mostly 102 concentrated on repairing and maintaining outdated machinery and equipment in factories and business facilities and computerization of production processes. Factory automation was especially given top attention, in the form of concentrated efforts on projects to form model units equipped with computer control.

(Table 4-2) Characteristics of North's Technology Upgrade Projects in 2001

Category Details Plan Plan for technology upgrade projects was established by the Cabinet-level State Planning Commission, based on data submitted by each ministry and central organization Full-scale start of technology upgrades began in March 2001 Details Concentrated on computerization of production processes, along with repair and maintenance of outdated equipment Sectors Electrical power, energy, metal working, machinery, light industry, railways, transportation, and the agricultural and livestock industries Main Focus Focus on priority sectors such as energy and metal working, and on equipment automation Because the ripple effects of technology upgrades in the metal working industry and engineering are larger than in other industrial sectors Project Types Rather than separate technology upgrades in smaller size factories or business facilities, proceed with comprehensive upgrades at larger size factories and business facilities like consolidated business or consolidated companies Because larger size factories and business facilities have relatively higher numbers of technological manpower and also technology related equipment such as computers can be supplied in preferential ways Method of Collaboration among industry, academia, and research centers Technological Scientists from the Academy of Sciences and professors and researchers from renowned Support universities like Kim Il Sung University or Kim Ch'aek University of Technology who are at the forefront of the latest high technology are sent to factories and business facilities to solve S&T-related problems Participation by "scientist and technician storming parties," technology development teams composed of technicians and technical workers, for developing the technology and improving production processes in factories and business facilities (for example: 4.15 Technology Innovation Storming Parties, 2.17 Scientist and Technician Storming Parties).

The New Year's joint editorial for 2001 stated that "this year the most important front lines in building a socialist economy are the electric power, coal, and metal industries, and railway transportation," and continued, saying, "we must go forward, strongly pressing for building large-scale hydroelectric power plants, normalizing electrical power generation at a high level, and maximizing coal production. Metal working factories must push forward with modernizing their facilities to innovate in the production of steel products and to maintain and strengthen rail transportation so that it can satisfactorily meet the increasing demands" and "the light industries need to produce more primary consumer goods and basic foods that are urgently needed in people's lives." So accordingly, while technology upgrade projects have been inclusively undertaken across all the sectors,79 as Table 4-3 shows, in accordance with the

79 See the works by Kim Yo’ng-yun (2002), and Hong So’ng-po’m et al., (2002, page 44-60) for relatively detailed discussion of examples of technology upgrade projects in each industrial sector. 103 priorities of economic construction, more emphasis was placed on normalizing industry by improving factory operability ratios through upgrading technology in the priority sectors such as energy, including electric power and coal, and metal working and machinery. That was because the production inducing effects of technology upgrades in sectors such as metal working and energy are larger than in other sectors. The technology upgrade projects were undertaken at larger-scale factories and business facilities such as consolidated business facilities and consolidated companies.

(Table 4-3) Status of Technology Upgrades by Industrial Sector in 2001

Sector Electrical Metal Light Railways, Agricultural Other Total Power, Works, Industry Transportation and Energy Machinery Livestock Industries Number of 12 (26) 11 (24) 10 (22) 6 (13) 4 (9) 3 (6) 46 (100) cases (%) Source: Intelligence and Analysis Bureau, Ministry of Unification (2001b).

For example, in the heavy industry sector, the projects undertaken were centered on prominent special-class facilities such as the Pyongyang and Pukch'ang Coal-Burning Power Plants, Tae'an Heavy Machinery Consolidated Company, and Kim Ch'aek Steelworks Consolidated Company, and as for light industries, the upgrade projects were undertaken in each industrial sector, such as in the silk industry, shoe industry, and food industry. It seems that they were selected because of their relatively more abundant technical manpower and preferential status in receiving computers and other technology-related equipment. As for technological support methods for each factory and facility that received technology support, a combination of industry, academia, and research centers has been utilized. Scientists working at the Academy of Sciences and professors and researchers from prominent universities such as Kim Il Sung University, Kim Ch'aek University of Technology, Pyongyang College of Mechanical Engineering, and Pyongyang College of Construction and Building Materials Industries who are at the forefront of the latest high technology have been sent to each field office of factories and business facilities to conduct problem-solving tasks.80 In addition, technology development teams called "4.15 Technology Innovation Storming Party" or "2.17 Scientist and Technician Storming Party" composed of technicians and technical workers participated in larger numbers to develop various technologies and improve production processing at the factories and business facilities. Even as 2002 began, the joint editorial pages continued to state that they would keep forging ahead with the technology upgrades and modernization of industries as main focus areas, and again emphasized concentrating on IT and developing the IT industry as well as training more talent in the latest high-tech fields. Particularly, the regime insisted, "We must undertake technology upgrades and modernization, starting from the important and pressing sectors, and push forward with these tasks one by one in a steady and honest way." According to the Vice Director of the Academy of Sciences, Kang Tong-ku'n, as they clearly recognize the heightened national interest in developing S&T for building a powerful and flourishing nation, the new

80 For example, some 100 science and technology-related problem cases at the Pyongyang Coal-Burning Power Plant Consolidated Company were solved by cooperation between Kim Il Sung University, Kim Ch’aek University of Technology, and Pyongyang College of Mechanical Engineering (Choso’n Central Broadcasting, May 22, 2001). 104 year's focus for scientific research projects will be technology upgrades and modernization of industrial sectors and developing the latest high-tech industries, so that they can increase their S&T level to a world-class level in the shortest time possible (Rodong Sinmun, 2 January 2002). Characteristics of the technology upgrade projects that became prominent in 2002 were restructuring of industrial entities to aim for "practical benefits" and more active import of advanced foreign technology. The North Korean authorities have said that they are proceeding with industrial restructuring policies based on "practical benefits," within the larger framework of building an economically powerful nation by improving national economic strength. A bureau director at the State Planning Commission, Ch'oe Hong-kyu, said, through the official publication, Choso'n Sinbo, of GAKRJ, that the industrial restructuring and technology upgrade projects were being conducted "strictly on the basis of practicality." For such practical reasons, North Korea's largest glass factory, Namp'o Glass Factory, was closed down because its equipment was too old. So considering all these aspects, the North's industrial restructuring is essentially being conducted based on the principle of "giving life to those who can live, and letting die the ones that cannot survive," free of the influence of old, irrational practices still left in the finance and personnel management sectors. It is being confirmed that the government first analyzes in detail information on the personnel, facilities, and financial structure of all factories and business facilities before they decide whether partially to restructure or totally to close them down. Particularly, it is understood that the government, by delegating the authority for economic planning to the first-line agencies, has systematically arranged for plans for improving the operation of rational and efficient factories and business facilities, as well as for the splitting up and specialization of industrial entities or their modernization and information-orientation (Yonhap News, 22 January 2002). Additionally, the government is emphasizing the importance of importing advanced foreign technology for the technology upgrade projects in factories and business facilities all around the country. A paper published in early 2002 in one of North Korea's most prominent quarterly economic magazines, Economic Research, pointed out that, while self-reliant efforts at rejuvenation were still important to achieve technology upgrading, one should positively promote closely connecting with the advanced technology of the world as the new era of IT industry called for, and decide correctly the issue of which problems they can solve on their own and which require the adoption of advanced foreign technology. It continued, saying that whereas technology upgrades in the past were limited only to modifying some of the problematic facilities and production lines and passive upgrades such as "patching up where something had sprung a leak," today's technology upgrades should be done in a way that "looks toward tomorrow, even if only one thing is constructed, and produced with an attitude that aims to guarantee raising our modernization to the highest level possible." Even mechanical equipment that people previously had cobbled together on their own with great effort should be boldly cleared away if it is too old and outdated, because, it criticized, continuing to work with such equipment would only become an element blocking progress (Yang Ho-nam, 2002, pages 19- 21). Also, North Korea recently started to adopt advanced foreign technology, which is different from its previous practices of buying the equipment and production lines of factories and business facilities from foreign countries or modifying existing ones into modernized modes.81 The regime additionally is sending foreign trade representatives to wherever they

81 For example, one of the model factories promoted by North Korean authorities is the Kanggye Chicken Factory in Chagangdo, which was built with equipment manufactured in a European country and installed with technological guidance by European engineers (Yonhap News, 28 April 2002). 105 could adopt technology for use in the fields of agriculture, livestock, energy, mining, and IT, and foreign technology learning groups are also being sent, consisting of specialized technicians, in all directions. Whenever they go abroad for visits, high-ranking North Korean officials are also asking their foreign hosts for training opportunities, in order to adopt their advanced technology (Yonhap News, 28 April 2002). This is seen as their attempt to learn advanced foreign knowledge and adopt foreign companies' technology and equipment for the purpose of modernizing their economy, all in a way that is not a threat to maintenance of the regime. At the end of 2002, the regime greatly propagandized through the media the results of their technology upgrade projects that had been going on since 200182, and the New Year's joint editorial for the following year, 2003, also made it clear that technology upgrade projects would continue to be pursued, saying, "clear modernization goals must be established in all sectors and units to forge ahead with the technology upgrade projects one by one in a diligent manner."

2) Medium-Term Policy Goal: Information-Orientation of the People's Economy through Developing the Software Industry and Training Talent

(1) Information-Orientation of the People's Economy in North Korea

North Korea's definitions of modernization and information-orientation differ from those widely used in Western society. The North defines modernization and information-orientation of the people's economy as, "Required demands for building an economically powerful nation and decisively heightening the people's lives with innovations by accomplishing a high level of achievement in production based on developments in the latest scientific high technology." It further adds, "Modernization of the people's economy is a strategic line in constructing socialism" and "all sectors of the people's economy are based on information technology." The information-orientation of the people's economy is set as a high stage of modernization, consisting of "information-orientation of production and economic activities."83 It then adds that the potential power of the physical technology base can be raised when "modernization" combines with "information-orientation." The North Korean regime also argues

82 "As the first year of the new century dawned and the bonfires of Ranam were spreading across the nation, coal production greatly increased and construction of hydro-electric power plants all over the country, including the Ku’mjin River Power Plant, continued to be carried out actively. Also struggles for normalization of production and modernization of equipment at major factories and business facilities that can contribute positively to the people’s life, including the Ragwo’n Machinery Consolidated Business Facility, were strongly being pursued. Production at the Taedong River Beer Brewery, Pyongyang Catfish Factory, Sakchu Food Factory, and other modern production bases has also begun, and the people are actually benefiting from the technological upgrading and modernization of large-scale poultry bases. The noble patriotism of all the people and their sense of duty all contributed to the successful completion of a waterworks project between Kaech’o’n and Lake T’aeso’ng and the excellent harvest at the potato agricultural cooperative at Taehu’ngdan’gun. Furthermore, the Party’s double cropping agricultural production policy was proven to be a correct decision, opening the prospect that in the near future the problems with feeding the people can be solved. The land classification work in Hwanghaenam Province has been completed and land classification in Pyongyang, P’yongannam Province, and Namp’o all are proceeding vigorously. Countless other cities, villages, and workplaces across the country, including Ch’angso’ng-gun, are turning into beautiful socialist environments, and a project to tidy up Pyongyang as a world-class city is also being actively pursued." "The Victorious Year Which Saw the Accomplishment of a New Leap toward Building a Powerful and Flourishing Nation." Rodong Sinmun, December 31, 2002. 83 Information-orientation of production means "all production processes being connected to information facilities." For implementing information orientation of economic activities, the North also emphasizes the importance of "establishing a system of computer networks for overall nationwide business and economic activities," and further asserts that "It is important to forge ahead with developing the computer and programming industries." Rodong Sinmun, 17 May 2001. 106 that, in the 21st century information age, "the important thing in information-orientation of all sectors of the people's economy is developing information science and information technology," and that "Korean-style socialism has abundant potential to make our information industry step up to the world class in a short amount of time," hinting at strategic pursuit of the IT industry (Rodong Sinmun, 17 May 2001). Based on all these indications, it is clear that the North is proclaiming information- orientation as the next step in normalization of production, or modernization, by upgrading technology. The meaning of information-orientation is "automation of production" and "computerization of management" through the implementation of information technology needed in production and business management activities to improve productivity. If automation of production is seen as an extension of normalization of production by means of technology upgrades, then the focus of information-orientation may be said to fall on computerization of management. For North Korea, where the right to make decisions about economic activities is concentrated in the government, particularly the central planning authorities, information- orientation, or computerization of management, has implications as important as those of normalization of production. Because all authority and decision-making rights are concentrated in the hands of the central planning authorities, and because not only information regarding national-level economic activities, but even economic information on each local unit is also concentrated in the center, the central planning authorities have enormous volumes of economic data to process. By contrast, however, the center's capacity to process information is very limited, which has led to a gap between the volume of data to be processed and the central government's processing capacity. These reasons have become a major factor causing waste and inefficiency in the planned economy. Information-orientation work through "computerization of the people's economy," in other words, expansion of industrial information-orientation, while partially alleviating the enormous imbalance between the amount of data to be processed and the center's data processing capacity, can also raise the efficiency of managerial operations (Yang Mun-su, 2001a, page 196; 2001b, page 212; 2001c, page 410). The central tool for that accomplishment is IT, within which software could be called the core area. Among the areas in North Korea's IT sector, the field of software gathers the most attention (Korea Computerization Institute, 2002, page 410). In North Korea the software industry garners more respect in terms of technological level than any other industrial sector. That point is indirectly proven by the fact that four out of five North-South economic cooperation projects approved in 2001 were software co-development cases (Kim Sam-sik, 2002, page 35). North Korea recognizes the IT industry as an escape from its economic difficulties but, given its overall inferior conditions in technology and capital, it seems to have concluded that, rather than investing full-force in IT infrastructure or hardware, it should focus on growing its software industry. The North is backing up its chosen course with concentrated training of IT specialized personnel and creating a kind of IT-minded society. Thus, considering the characteristics of North Korea's IT industry and the developmental level of its software, the strategy of training specialized IT personnel and growing the software industry to achieve "information-orientation of the people's economy" can be viewed as the North's medium-term IT policy goal.

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(2) Developing a Software Industry and Training IT Specialists

The North has been developing software in a concentrated way since the late 1980's, which is possible because the development of a software industry requires less capital than hardware and has the benefit of generating results utilizing excellent talent in a relatively short period of time. Accordingly, agencies and institutions in charge of the development of and research and training in software have been established for this purpose, including the Consolidated Programming Research Lab under the National Academy of Sciences in 1970 and, in 1988, an Academy branch for Electronic Automation, for research in basic fields and source technology of IT, as well as the development and propagation of software. Other software R&D institutions established include the Pyongyang Information Center, a specialized programming development agency built with aid from GAKRJ and UNDP in July 1986, and the Choso'n Computer Center (KCC), established in October 1990 as a central base for the software industry. As previously described in an earlier chapter, the efforts made by the North Korean government's policy to grow software R&D succeeded in developing many excellent software programs. The North Korean government has been emphasizing the importance of developing S&T on a yearly basis through its New Year's joint editorials at the beginning of each year, and focusing on establishing bases to grow specialized IT talent, as well as tending to the educational system, establishing and reorganizing universities and research centers.84 In addition, as Table 4-4 illustrates, numerous S&T events have been held in the past years for purposes of spreading and expanding R&D results in each sector. The North, right from the start of 2002, emphasized that, "To build a powerful and flourishing socialist nation," it must "carry out all economic activities with developing science and technology in mind so that they can be directly connected to the development processes of S&T" (Democratic Korea [Minju Choso'n], 6 January 2002). Additional efforts include consolidating the programming school under the Academy of Sciences and the Integrated Circuit Technician Training School, which established the new Information Technology School [], and a resolution passed by the extended all-member Cabinet conference that reaffirmed its determination to strongly continue with S&T education programs at the nationwide level.85 The North has also been emphasizing training the IT field talent pool on an almost daily basis from 2001 to the present, which is again a very clear indication that the regime links IT to its economic recovery as if it were a matter of life and death. The regime is definitely pouring all of its efforts into training a pool of specialized IT talent.

84 Chairman Kim Jong Il said at the Kim Ch’aek University of Technology (KUT), when giving on-the-spot guidance (9/2001), "To raise our science and technology level to be world-class in the shortest time possible, we must train and grow more talented individuals in science and technology" and he has put considerable effort into reorganizing educational and research organizations of all kinds, including establishing at KUT the new "College of Information S&T" and "College of Mechanical S&T." See the work by Kim Yu-hyang (2001, pages 201-212) for a detailed discussion of the North’s IT specialized talent training system. 85 Bureau of Intelligence Analysis, Ministry of Unification Weekly North Korean Trends, No. 575, 19-25 January 2002). 108

(Table 4-4) S&T-Related Events Held, 2001-2002

Event Dates Name of Event 30 Jan 2001 28th Expanded All-Member Conference, Central Committee, Korean Federation of Science and Technology 23-26 April 2001 16th Central S&T Festival 20-23 April 2001 Tools and Parts Exhibition and National Technology Innovation Exhibition Celebrating the 40th Anniversary of the Model Taech'ang Requisition Team 2-3 May 2001 3d Pyongyang Medical Sciences Conference for Koreans Compatriots at Home and Abroad 4 May 2001 Scholarly Conference and S&T Exhibition Celebrating the 15th Anniversary of the Establishment of Kim Manyu Hospital 5 May 2001 Central Research Forum on Juch'e ideological theories for the Age of Information Industry 14-17 May 2001 National Geology S&T Conference and Exhibition of Mineral Samples 16-29 Aug 2001 Second National Education Sector Programming Competition 28 Aug 2001 National Youth S&T Exhibition Celebrating the 10th Anniversary of Youth Day 30 Aug 30 2001 National Boy Students' Palace and Center S&T Assistants' Contest 6 Sep 2001 Mathematics and Computer Contest for National Boy Students' Palace and Center Assistants 12-16 Sep 2001 Second National Education Sector Programming Exhibition 21 Sep-8 Oct 2001 12th National Programming Competition and Exhibition 2 Oct 2001 German S&T Book Show Celebrating the German National Holiday 22-25 Oct 2001 Pyongyang International S&T Book Show 1 Nov 2001 National Fish Farming S&T Conference 19-20 Nov 2001 National Forestry S&T Conference 26-30 Nov 2001 National First Higher Middle School Students' Science Idea Contest 28-29 Nov 2001 National S&T Conference on Electronic Automation Engineering 29-30 Nov 2001 National Veterinary and Livestock Industry S&T Conference 21 Feb-30 Apr 2002 7th National Invention and New Technology Exhibition 2-5 Apr 2002 17th Central S&T Festival 29-30 Apr 2002 Pyongyang Medical Sciences Forum 5 Jun 2002 National Scholarly Forum on Potato Diseases 10-14 Jun 2002 Pyongyang International S&T Book Fair 18 Jul 2002 National Architecture and Construction Sciences Forum 20 Aug 2002 National Youth Exhibition of Information Technology Results 26Aug2002 National Youth Forum on Computer Technology Experiences 30 Aug- 3 Sep 2002 National S&T Contest for Boy Students' Palaces and Centers 4-5Sep 2002 National S&T Conference to Celebrate the 50th Anniversary of the Establishment of the National Academy of Sciences 2-10 Sep 2002 Second National Exhibition of College Scientific Research Results 2-10 Sep 2002 3d National Education Sector Programming Exhibition 11-13 Sep 2002 National Farm Equipment Exhibition and Conference on Technology Innovations 17-20 Sep 2002 Pyongyang International Economic Technology and Infrastructure Exhibition 1-9 Oct 2002 13th National Programming Competition and Exhibition 15 Oct 2002 7th Exhibition of Health Science Inventions and New Technology 21-24 Oct 2002 3d National Celebration and Exhibition of Medical S&T 22-24 Oct 2002 1st National Hypothesis and Ideas Symposium Sources: Ministry of Unification (2001, page 52); Bureau of Intelligence Analysis, Ministry of Unification, Weekly North Korean Trends, No. 615, page 18.

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(Table 4-5) Current Status the Founding of IT Specialized Personnel Training Institutions

Year IT Specialized Personnel Training Institutions

1970 Consolidated Programming Research Lab established under the Academy of Sciences (to develop programs for office automation) 1983 Curricula expanded or reorganized for electronic engineering departments in each university and college Electronic Calculator Research Institute established within the Academy of Sciences and Kim Ch'aek University of Technology 1985 A four-year computer personnel training institution, Electronic Calculator College, was established in Pyongyang and Hamhu'ng 1986 An institution specialized in programming development, the Pyongyang Information Center, established (July) A computing center established at Kim Il Sung University 1988 Department of Computer Engineering established at Kim Ch'aek University of Technology (October) Computer education started at middle and high schools (after the National Computer Programming Contest and Exhibition was held) 1989 Semiconductor Research Institute established at Kim Ch'aek University of Technology 1990 Korea Computer Center (KCC) established (October) 1991 Computer Personnel Training Center established at Kim Ch'aek University of Technology (April) Pyongyang Programming Center established (July) 1996 Pyongyang Information Center started to operate the "O&P Training Center" jointly with Osaka Information Center of Japan (April) National Programming Training Facility established at the direction of Kim Jong Il (June) 1997 Computer Training Center and Pyongyang Programming School opened at Maritime Transport University, located inside the Najin-So'nbong Free Trade Zone (April) 1999 Pyongyang Electronic Calculator College was expanded and reorganized into the Pyongyang Computer Technical College. A Department of Computer Engineering was created at Kim Ch'aek University of Technology and a Department of Computer Sciences in the college's School of Physical Sciences School of Computer Sciences established at Kim Il Sung University (September) Ministry of Electronic Industries established at the Cabinet level (December) 2000 Programming Training Center and Computer Training Center established under the Cabinet's Ministry of Education (March) "Computer magnet classes" established (at the Ku'mso'ng First Higher Middle School and Ku'mso'ng Second Higher Middle School, affiliated, respectively, with the Man'gyo'ngdae Boy Students' Palace and Pyongyang Boy Students' Palace) 2001 Computer classes for gifted computer students established at the First and Second Higher Middle Schools (April) Programming Education Guidance Bureau established in the Cabinet's Ministry of Education Pyongyang Information Technology College was officially recognized to participate in the North- South Social and Cultural Cooperative Projects (June) College of Information S&T and College of Mechanical S&T established at Kim Ch'aek University of Technology 2002 Patriotic Computer Lecture Hall established at the Pyongyang People's Grand Study House (July) Programming Development Lab and Training Center established at the Pyongyang Information Center (October)

The regime is also proceeding with reorganizing its existing talent pool training system. At Kim Il Sung University, many "electronic calculation centers" have been installed for the purposes of teaching college level courses and developing software, and in May 1997 a research information center was established for software R&D, with yet another computer college opening in 1999. Also at the Kim Ch'aek University of Technology, software research and education are being conducted at its "Calculator Department" and "Calculator Research Center," and the Electronic Calculator Research Institute and Department of Computer Engineering were

110 established in 1983 and October 1988 respectively, followed by the establishment of the Computer Personnel Training Center in April 1991 and the College of Information S&T and College of Mechanical S&T in 2001 at the same college. The North Korean government has continued with reorganization efforts for its education system, to develop the talent pool not just at the university level but also has expanded and strengthened computer education at each school grade level, noticeably establishing gifted student programs from elementary schools to university graduate schools for the new information age (see Table 4-6).86

(Table 4-6) Trend of Strengthening the Education of Gifted IT Students in North Korea

Year Details 1984 Specialized education for gifted students started at Pyongyang First High School 1985 Choso'n Calculator College (Pyongyang, Hamhu'ng) established 1986 First Higher Middle Schools opened, in each province and directly-governed city in the nation 1996 Pyongyang Programming Training Center established 1997 Computer Information Center at Kim Ch'aek University established 1998 Obligatory computer education begun for 4th grade and above higher middle school students IT courses offered at Kim Il Sung University, College of Physical Sciences, and Kim Ch'aek University of Technology 1999 First Higher Middle Schools opened in each city and kun in the nation Pyongyang Computer Technical College established 2000 "Programming Guidance Bureau" and "Programming Center" established at the Ministry of Education Hamhu'ng Computer Technical College established, and many others 2001 Four "computer classes for gifted students" in operation --Man'gyo'ngdae Students' Palace, Pyongyang Boy Students' Palace, and Ku'mso'ng First and Second Higher Middle Schools 2002 IT curricula at major universities and research centers established or reorganized --Kim Ch'aek University, Sariwo'n College of Engineering, the Academy of Sciences, Oceanic Medical Sciences Research Institute [Haeyangu'ihagyo'n'guso] and others 2003 IT courses established at major universities and departmental systems reorganized --Kim Il Sung University, Pyongyang Computer Technical College, Hu'ich'o'n College of Telecommunications [Hu'ich'o'nch'esindaehak], and others Source: Bureau of Intelligence Analysis, Ministry of Unification, Weekly North Korean Trends, No. 653, (28 July 2003).

Gifted IT student education programs in North Korea started in 1984 at the direction of Kim Jong Il for the purpose of educating and training specialized IT personnel from an early age. The gifted student education system is geared to produce masters and doctoral degree graduates in their 20's. For that purpose, schools specializing in educating gifted students have been newly established to introduce new technology at all levels in each economic sector and to utilize the graduates as research scientists, technicians, and specialized officials at production sites, with IT

86 "We must strengthen our training system for information technology personnel. We need to establish a firm foundation for educating gifted computer students and computer education needs to be taught in all schools." "The New Generation, Growing up to Become the Promising Ones of the Age of Information Industry" (Rodong Sinmun, 26 April 2001). 111 classes expanded and reorganized at existing schools to provide continuous gifted student education programs after the students graduate. The North Korean students also have come to prefer to take computer-related courses at schools, as their regime's efforts to promote the information technology era and the new trend of training specialized talent sweep the society, with schools prioritizing IT education as their top educational concern. It is also being forecast that, as the government concentrates on the S&T field centered on the computer information sector, regional areas too will see great expansions of new colleges and specialized technical schools in tune with the policy (Yonhap News, 14 April 2002). The North Korean regime is indeed serious about spreading a society-wide "IT-mindset" by propagandizing and educating about the importance of S&T and information technology in omni-directional ways. The main political base in North Korea, the Workers' Party, itself is emphasizing that changes are needed for the new IT era, demanding that rank and file officials arm themselves with S&T and encouraging the workers at each factory and business facility to learn IT-related knowledge as quickly as they can. Most recently, it has also demanded that the economic agencies and business facilities computerize their economic planning. Their idea behind that is that, in order to proceed with computerization of overall business management activities, it is essential first to computerize the tasks of a planned economy, since a socialist economy is run based on plans (Yonhap News, 18 April 2002). So, in conclusion, the main reason behind the North's continuing emphasis on proclaiming the need to train specialized IT personnel and its efforts in reorganizing, establishing, and reinforcing the existing education system into one that is directly and indirectly related to IT is its belief that the software industry is one of the most achievable objectives within the "single leap" economic strategy.

(3) Characteristics of the Mid-Term Policy Goals

It is highly likely that the North's decision to choose software as its strategic industry is a case of benchmarking other successful foreign cases. The North recently ran a newspaper article about the status of developing countries' information industries, in which it wrote, "Many developing countries are going full speed ahead with growing S&T industries, and some have already started to overtake some of the advanced countries" (Rodong Sinmun, 10 June 2002). The North has also mentioned India as one of the top developing countries, adding that its information technology level has reached a world-class level. It further explained that such great achievement by Indians is a result of concentrating their efforts on educating and developing talented personnel for the information technology sector, such as Internet specialists and computer program developers, after the Indian government considered the relatively weak basis of their manufacturing sector (Yonhap News, 19 June 2002).87 India's successful history of software development was a true inspiration and benchmark for the North Koreans. Despite having a computer propagation rate of less than 0.5% and an overall Internet user rate of 0.37%, India overcame its lowly IT infrastructure conditions to become an emerging leader of the IT field, beginning in the late 1990's. With concentrated effort in growing the software industry, India reached the status of an IT-powerful nation in a very

87 The North Korean government also introduced the United Arab Emirates as another example of a successful IT country, explaining that, in order to construct a networked city to became an S&T center in the Middle Eastern region, they were making the entire city a trade zone and providing a variety of preferential treatments, in order to attract cutting edge S&T. The government, also noting that domestic demand and high-tech markets are recovering in Southeast Asian countries, forecast that those countries’ future economic growth rates would far surpass those of the advanced countries (Yonhap News, 19 June 2002). 112 short period of time.88 Another benchmark case for the North Koreans is the case of Ireland, which had instilled in them the belief that they could achieve the same success in the software industry. Ireland became known as the "Silicon Valley" of Europe after it became hugely successful in the software industry, enabling it to reach advanced country status from that of a mid-level country. Of the world's ten biggest software corporations, seven are in fact operating in Ireland, causing the country to be called "the capital of the European software industry."89 Here are the reasons why the North is going ahead with its "information-orientation of the people's economy" as a mid-term goal through training specialized IT personnel and developing the software industry. First of all, the software industry is generally a knowledge- based industry and a high growth industry, a central core sector of the digital era that is primarily based on IT technology and creativity. It is also a foundational industry that can increase competitiveness in other industries as well, especially the traditional industries' productivity, which then may result in increased national competitiveness (Korea Computerization Institute, 2002, page 454). Looking at it from a comparative advantage point of view, the software industry is one industry the North can claim as a comparatively advantageous industry among all IT industry. Considering the North's level of IT industry, the software industry has a very high probability that it may create profits in a relatively short period of time. Second, also considering the North's economic situation and its limited conditions, the software industry has the most suitable set of characteristics to become a strategic industry. Other IT industry sectors, such as infrastructure or hardware, can be daunting for the North to take on as targets for strategic industries because they require longer term, large-scale investments and the North certainly is not in a position to do that, given how depleted its capital situation is, not to mention its subpar technological level in those sectors. However, the software industry is one that can be developed almost infinitely with only excellent brains and creative ideas. What's more, the North already had an excellent talent pool in the fields of science from its socialist education that focuses on basic sciences. Indeed, the North already has developed and exported some excellent software products, a sign of increased technological level, as a result of establishing computer training centers such as the Korea Computer Center and the Pyongyang Programming Center. So, given all the facts of the North's overall economic situation and its limited capabilities, the software industry has become its strategic industry of choice, on which to concentrate its energy to generate profits in a relatively short amount of time.90 Third, in developing the software industry, some political and social aspects must be considered. The main factor was that the software industry has the fewest possible elements that may become threats to the regime. Among the important factors discussed for achieving success in growing the software industry are foreign cooperation for the introduction of foreign capital or technology, such as active investment by foreigners or the building of physical and personnel networks abroad. The software industry is one in which capitalist elements threatening the regime that may infiltrate during the processes of technological cooperation or importing capital can be effectively blocked. Because the software industry can be developed based on the excellent brains and creative ideas of only a very few specialized personnel, the North Korean government can solve the problems by sequestering the specialized IT personnel from the

88 See the work by Song Min-so’n (2001) for India’s success with its software industry. 89 See the works by Kwo’n Nam-hun (2000) and Kim Tu’k-kap (2001) on Ireland’s success in the software industry. 90 Among the North’s many software program developments, "voice recognition" is known as the most highly developed program of all, achieving significant technological advancement (Pak Ch’an-mo, July 2002). According to the results of a survey of the seven South Korean IT corporations that are engaged in business projects with the North, "voice recognition" was the business field in which they most preferred (43%) to participate with the North. (Yonhap News, 30 September 2002). 113 general public, setting up special districts and putting them in compounds or clusters , so they can be effectively controlled. Also, the software industry can realistically realize the regime's goal of achieving the status of an economically powerful nation, which it started in 1998 under the new motto of constructing "a powerful and flourishing nation." As a strategic industry, it has a very strong possibility of fulfilling the regime's goals, showing to both domestic and foreign audiences the successful image of having a developed IT industry. Compared to IT infrastructure or hardware development, the software industry can also achieve success in a relatively short amount of time, a factor that greatly appealed to Kim Jong Il's plan to demonstrate the visionary and leadership qualities of a leader. The North has this software industry growth policy as a mid-term objective, since its current software technological level is not sufficient to have the kind of export competitiveness that can generate large-scale profits right away, nor does it have the capacity to train qualified R&D personnel in two to three years, so it is a mid-term objective aimed at seeing results in four to five years. The North is trying to achieve software industry development through training of specialized IT personnel. In fact, research and development (R&D) is the key to developing the North's software industry. The most direct investment in R&D is training software-related specialized personnel. That is, after the specialized personnel are trained and followed by concentrated investment in R&D, the initial goal can be achieved without sunk cost, which is the reason why the North is concentrating its investment on training specialized IT personnel. In sum, considering all these aspects, it is not possible for the North to achieve noticeable results in developing the latest high technology right away in the short term, since its efforts are mostly concentrated in certain comparatively advantageous fields such as the software development field while strengthening educational institutions such as universities and research centers under sponsorship from the central government, as well as the fact that training of the talent pool can be done only in the mid- to long term. So the North Korean government's strategy to develop the software industry through training specialized IT personnel is one of its mid-term policy goals aimed at seeing the planned outcome in four to five years.

3) Long-Term Policy Goal: "Single Leap" of North Korea's Economy through Strengthening National Competitiveness

(1) Possibilities of Pushing Forward with the Long-Term Policy Goal

Compared to its short- and mid-term policy goals for growing IT industry with their clear directions and detailed objectives, the North's long-term policy goals have not been too visible in their overall structure and orientation. In fact, it does not even seem that there exists a clear set of long-term goals they are thinking of with respect to their IT industry development strategy. What's more, the North's true capacity in resources and skill level to achieve a truly leap frog growth in IT industry has not been tested or proven at all. However, despite such unproven grounds for the North's long-term policy goals with no clear set of detailed objectives or policy tools revealed so far, many domestic North Korean specialists are speculating that there is a very high likelihood that the North has a set of long- term IT development policy goals (Kim Ku'n-sik, 2000, 2001, 2002; Pae So'ng-in, 2001b; So' Chae-chin, 2001c; Yang Mun-su, 2001a; 2001b; Yi Yo'ng-hun, 2001b; Hong Sun-chik, 2001). However, some scholars argue against such rosy observations, saying that the North's IT industry growth plan is not a central vehicle for its overall economic development strategy but rather a "tool to increase efficiency in existing industrial facilities." They back up their argument by

114 pointing out the North's lack of related industrial conditions and insufficient social environment suited to a digital way of living (Kim Sang-hun, 2002; Kim Yu-hyang, 2001). However, the following two facts still strongly support the idea that the North Korean government indeed has long-term growth plans for its IT industry which cannot be overlooked. First, if one looks at the North's clear and strong interest in the IT industry and its growth strategy from a point of understanding them as the North's future economic vision, it makes perfect sense undoubtedly that with a very high probability the government will forge ahead with long-term goals. National strategies are generally initiated from a mid- to long-term rather than a short-term point of view (Ryu Sang-yo'ng, 2001, pages 17-18), and the fact that the North has not developed the industrial or social conditions should not be used as a reason deliberately to avoid the North's strategic point of view. A clear example with respect to this point would be none other than the success achieved by South Korea, which successfully underwent a compressed growth period in the 1960's and 1970's made possible by the state's concentrated investment, in an environment and under conditions unfavorable in several ways . In fact, although the current state of development may be important in selecting an industry as a strategic growth industry, once it is determined that an industry has the possibility of having a comparative advantage if the state decides to concentrate its investment, that industry has already been recognized as a worthwhile strategic growth industry (Industrial Research Institute, translation, 1989). Second, if one looks at the concept of "single" in "single leap" as a concept of development strategy, rather than understanding it merely from a chronological point of view, it is very possible that the North will pursue it as a long-term strategic goal. In other words, even though the meaning of "single" is important as a simple concept of time to grow the IT industry now under the present circumstances through concentrated effort so that it can leap in a one-to- two-year or three-to-four-year span, there is also the need to understand it as a concept for development strategy through realizing a "single leap" or "leap frog" strategy for growth of the latest high-tech industries, omitting the stage-wise growth or catch-up strategy through traditional industry such as light and heavy industry. Of course the fact still remains that the North, while unable to solve its own "food problems," still boasts that it wants "majestically to take its place in the ranks of the world economic powers in the 21st century, by equipping itself with strong national competitiveness in the shortest amount of time possible," an assertion that does contain something that is hard to take at face value. Thus, the North's "single leap" of its economy through development of its IT industry should be viewed, from the point of view of long-term strategy, as a facet of its strategy of leaping by development of its IT industry. The North has recently been emphasizing the importance of developing its IT industry whenever it has had the chance to do so for the purpose of concentrating its society-wide capacity. In January 2001, the regime promoted the idea of a "single leap," in which it argued that the country needs to be included among the economically powerful nations in the 21st century world by working toward possessing strong national competitiveness in a shortest amount of time possible. Thereafter, the North started emphasizing developing plans for its IT industry and implementing them as the nation's most important projects (Rodong Sinmun, May 23, 2001). In its 18 January 2002 edition, the same newspaper wrote, "We must raise our information technology and industry to the highest level in a shortest amount of time possible as we go forward with this most important task of building an economically powerful nation," adding that, "achieving the important objectives in the latest S&T fields is a most serious matter that may well decide our country's future," and concluding, "the most immediate task before us is building an ‘economically powerful,' S&T powerhouse of a country that is firmly based on modern science and technology." With regard to implementation of the "Five-Year Plan for 115

Developing Science and Technology," the article then states that "no matter what happens in the future, we must carry out the S&T development plan according to the principles of revolutionary discipline."91 Thus it appears that North Korea is considering long-term strengthening of its national competitiveness at the level of national strategy. However, the regime still has not proposed any specific detailed policy objectives related to IT for the purpose of strengthening national competitiveness. They have been just emphasizing and urging that such IT industry growth plans should be undertaken. So its long-term strategy for the IT industry at the moment can be seen as basically the abstract proposal of a "single leap," and at the level of agitation only. Another way of looking at the regime's intention is the possibility that the North's current mid-term policy goals of developing the software industry by training specialized IT talent is being undertaken as a long-term policy goal, because, as in the cases of India and Ireland, the regime may be trying to develop the software sector amidst its IT industry as an especially competitive industry. Whatever the North's long-term IT strategy may be, one thing is clear and that is the necessity to solve the difficult issues accumulated, such as, among other things that are required for leapfrog development of the IT industry, acquiring the latest high technology and capital for R&D. Even if one assumes that North Korea succeeds to a certain degree in the short-term policy goal of modernizing the people's economy or normalizing production through technological upgrades, and in information-orientation of the people's economy by training specialized IT personnel and developing the software industry, as a mid-term policy goal, the most important issues that North Korea will face are its weak IT infrastructure and hardware sector.

(2) Directions for Promoting the Long-Term Policy Goal

Investment in IT infrastructure is a requirement to build the overall IT industry. Particularly, demands for IT infrastructure are dependent not only on the current economic development level but even more on long-term future economic growth, because growth in the IT industry can induce more new technological development in the latest high-tech sector and not just traditional industries, leading to positive ripple effects and overall economic growth (Yun Ch'ang-ho, Yi Yo'ng-su, 2000, pages 48-49). However the reality for North Korea is that it has a weak telecommunication foundation on which to build its IT industry for the long term. Especially their very low IT infrastructure level probably will need considerable additional investment.92 Therefore, it can be concluded that whether North Korea can revive its economy by developing IT industry as a strategic sector through the "single leap" strategy or not may be dependent on how it solves the problems of long-term investment in IT facilities and related infrastructure. To improve its IT infrastructure and hardware field and develop a software industry competitive at the world level, the North must first be successful in importing the latest high technology as well as in attracting capital on a large scale. The regime has been working hard to train specialized IT personnel in a nationwide concerted effort, but that is not enough to secure a complete set of technological capacity. The North still needs to conduct technology exchange

91 "Let Us Firmly Grasp Science and Technology and Bring About a New Flying Leap in Building a Powerful and Flourishing Nation" (Rodong Sinmun, 23 January 2002). 92 According to one study, about $5.2 billion would be needed to build basic telecommunication networks in North Korea, or still about $2.6 billion, even if only large metropolitan cities and special economic zones were selected for such construction (Yun Ch’ang-ho, Yi Yo’ng-su, 2000, page 66). 116 and cooperation with advanced foreign countries to fully industrialize IT high-tech, and therein lies a clear set of limitations a developing country faces when it tries to develop S&T industries without technology adoption and support from advanced countries. Moreover, the North does not have sufficient capital available either, nor does it seem to have capacity to solve the capital problem on its own, therefore foreign cooperation, a window for adopting technology and capital, is a necessity for the North. The North has shown indications in recent trends that it is willing to be more seriously involved in such endeavors. For example, on 18 June 2002, the regime participated in a Special General Assembly of the UN held in New York and urged international organizations responsible for IT technology to support the developing countries with their technology.93 The regime also signed a total of eight S&T agreements in the first half of 2002 with organizations in five countries, including research centers in Russia, Germany, Malaysia, and Australia (Yonhap News, 28 June 2002). North Korea also sent a team of delegates to the Third World Telecommunication Development Conference (WTDC) held in Istanbul, Turkey, last March in addition to bilateral agreements, and in April became an associate member of the International Electro-technical Commission (IEC), an international standardization organization in the electrical field, indicating that it is very active in getting its hands on the latest information through international organizations and in adopting advanced technology. Additionally, even though it did not rise to the level of signing agreements, a team of delegates from the Kim Ch'aek University of Technology visited Germany and Austria last May, and delegates from the Academy of Sciences also visited Germany and discussed S&T cooperation matters (Yonhap News, 28 June 2002). Also, the North recently announced that it had achieved excellent results from modernizing computer networks connecting entire regions of the country. It revealed that "The transmission networks (telecommunication networks) connecting the central region and each province by the latest technology of ‘movable number method (digital)' to raise transmission capacity and speed were successfully completed." Notably, the newspaper officially termed the computer networks an "information highway," to which it added, "Other projects to expand the information highway and raise the technological level on a nationwide basis are currently being positively undertaken." (Rodong Sinmun, 12 May 2002). So it indicates that there are some active projects going on inside North Korea to construct IT infrastructure for the purpose of developing the IT industry. When such policy measures related to IT are viewed as a trend, it seems that the North is considering the development of the IT industry with a view to the long term. As such, it appears that the North is now displaying considerable ambition on several fronts for "leap frog" growth based on developing the IT industry, but it is not clear whether such thinking will be limited to technology upgrades or the software sector, or will advance into a central element of the overall economic development strategy, while expanding investment in hardware and IT infrastructure. Even if it does grow to become a central element of economic development strategy, it remains unclear how long it will continue (Yang Munsu, 2001a, page

93 The North Korean delegate stated, "Today’s telecommunication technology is advancing at a speed that is unimaginable. Future conferences of world leaders on the subject of information and telecommunication therefore need to concentrate on involving developing countries in new telecommunication technology." The delegate also argued that "The cooperation system between UN agencies such as the International Telecommunication Union (ITU) and the UN Development Program (UNDP) should be improved accordingly" and urged the two organizations to proactively seek to train personnel in telecommunication technology, finally adding, "North Korea, firmly grasping telecommunication development projects as our most important objectives, is increasing investment in this field as well as exerting efforts proactively to adopt telecommunica-tion technology in all sectors of the people’s economy" (Choso’n Central Broadcasting, 26 June 2002). 117

202; 2001b, page 220). The reason is that the structural problems of the North Korean economy cannot be solved at a stroke, just based on development of the IT industry. Achieving leap-frog growth through strategic cultivation of the IT industry is an important task indeed, but the problems of the existing structural economic recovery, including the chronic food shortage and normalization of priority sectors of the people's economy, are also important tasks. For the North Korean economy to be successful with its "leap frog" growth through developing the IT industry, not only does the IT industry itself need to be successful, but its potential spillover benefits to other industries need to materialize so that they can lead to increased productivity. Therefore from this point of view, the North's IT industry development plan can lead, in the short-term view, to increased production efficiency from modernization and information-orientation of the people's economy; in a mid-term view, to increased R&D skills and export competitiveness from growing the software industry through training specialized IT personnel; and, in a long-term view, to increased overall efficiency of the economy with expanding IT infrastructure and a growing hardware sector, while at the same time strengthening the capacity of the IT industry itself. In conclusion, the North's long-term IT industry development plan can be successful only if it is undertaken in parallel with its short- and mid-term goals. For the long-term plan to succeed, the key would be accumulating the latest IT-related technology and importing foreign capital through technological exchanges with, cooperation with, and aid from its traditionally friendly countries such as Russia and China, as well as Western countries and Southeast Asian countries and international organizations. Lastly, the North's trend in expanding IT cooperation with foreign entities is gradually becoming ever more visible, so the changes to the North Korean economy, from the "July First Economic Policies" would appear to exert a positive influence on the development of its IT industry, which is based on a new concept of self-reliance.

4. Conditions for Successful Implementation of the Strategy for IT Industry Growth

Because the North is faced with exhaustion of natural resources and structural foreign relation problems such as its worsening relationship with the United States and international isolation, they are unable to select the best strategy possible as they implement the policy of a "single leap" through developing the IT industry (Yi Chong-so'k, 2002, page 4). Even for democratic countries with market economies, such leap frog economic growth requires tireless efforts by the state in implementing it and other factors such as a friendly international environment and positive world economic trends. However, the reality for North Korea is that none of those elements is in support of it in a friendly atmosphere that can promote its IT industry. Especially, the North's current worsening situation with the United States and the entire international community not only creates tension in the Korean Peninsula but has become a serious stumbling block to the regime's economic reformation policy of the "July First Economic Management Improvement Measures" and implementation of the openness policies consisting of special economic zones in Sinu'iju, Ku'mgang Mountain, and Kaeso'ng. Additionally, such tension has become a big obstacle to foreign technology cooperation and capital injection, which are the key elements for developing an IT industry. There may be said to be three variables for successful implementation of the North's IT industry development plan. They are: the international factors that may affect the North's foreign IT technology cooperation and capital injection; the domestic variable factors of North Korea's own IT R&D capacity and the regime's strategy and will to grow the industry; and the 118

North-South relationship factor that can positively affect the North's undertaking of a more efficient development plan for the IT industry. Now we shall turn to discussing the basic elements of a successful IT industry growth strategy by analyzing those three factors.

1) International Factors

(1) The United States' Economic Sanctions against North Korea

An improved bilateral relationship between North Korea and the United States is not only an important prerequisite for guaranteeing the North Korean regime and its economic recovery, but it is the most central factor in forging ahead with the IT industry development strategy for the North as well. Recently, the Bush Administration branded the regime a part of the "axis of evil" and started to implement heightened political pressure to stop its nuclear development. The American government also limits North Korea's foreign economic exchanges through various economic sanction measures that have been implemented since the Korean War began. The American sanctions against North Korea are not just bilateral economic and diplomatic control measures, but they are aimed comprehensively to limit the North's efforts to obtain foreign technology cooperation or capital injection. The United States began its economic sanctions against North Korea on 28 June 1950, immediately after the Korean war began, implementing the Export Control Act, banning all exports to the country, and on December 17th of the same year, it applied the Trading with the Enemy Act, a generalized measure against communist countries, essentially stopping all trade with North Korea. Subsequently, as Table 4-7 shows, the United States has implemented various laws and executive regulations in complex ways to implement economic sanctions against North Korea. Such examples include not granting the most-favored nation status to North Korea in accordance with the Trading with the Enemy Act, banning foreign aid to communist countries in accordance with the foreign aid law, which includes North Korea, not granting Generalized System of Preference (GSP) to North Korea, which is already banned from receiving most-favored nation status in accordance with the Foreign Trade Law, and a ban on providing Export-Import Bank credits, insurance, or foreign loans, in accordance with the Export-Import Bank law. Those economic sanctions resulted in limiting the import of North Korean products and, in addition, export of American products to North Korea. In addition, American private investment in North Korea has been effectively controlled.

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(Table 4-7) Details of the United States' Economic Sanctions against North Korea

Date Area Details Related Basis Remarks June 28, 1950 Export Ban on exports to North Korea Related export Dept. of Commerce law policy Dec 17, 1950 Investment Freezing North Korean assets in US Trading with the Designated North Finance De facto ban on trade and financial Enemy Act Korea as a dangerous transactions with North Korea country Sep 1, 1951 Trade Ban on granting Most Favored Foreign trade Banned granting Nation (MFN) status to North Korea agreements Generalized System of extension law Preferences (GSP) to communist countries Aug 26, 1955 Weapons Ban on export to and import from Regulations on Dept. of Treasury sales North Korea of defense industry international arms policy materials and services trade Aug 1, 1962 Foreign Aid Ban on aid to North Korea Foreign aid law Ban on foreign aid to communist countries Jan 3, 1975 Trade Ban on granting Generalized Trade law System of Preferences (GSP) to North Korea May 16, 1975 Trade Listed North Korea in Z group of Export banned countries to implement management law comprehensive embargo policies Oct 5, 1986 Finance Ban on providing credits to North Export-Import Applies to all Korea by Export-Import Bank of the Bank regulations communist countries United States Jan 20, 1988 Terrorism Comprehensive economic sanctions Export Applied after North on North Korea, including trade, aid, management law Korea was designated providing credits by Export-Import a terrorist country Bank confirmed following the KAL To oppose aid by international passenger airplane organizations to North Korea downing Apr 4, 1988 Weapons Ban on sales and import or export International arms A modified version of sales of radioactive materials or related trade regulations Aug 26, 1955 services to countries supporting transaction ban applied international terrorism Mar 6, 1992 Weapons Ban on exporting materials listed as Weapons export Measures against sales prohibited military items, and control law North Korea's prohibition of signing contracts with proliferation of missile US government for two years technology to Iran and Ban on North Korean activities in Syria (extended until manufacturing of missiles, May, 1996) electronics, aerospace, and military cargo aircraft Source: Yang Un-ch'o'l: (2001, pages 18-19)

Since the late 1980's, when the former socialist bloc countries began to crumble, the trend of American economic sanctions against North Korea has changed from applying sanctions based on generalized regulations against communist countries to sanctions against terrorist countries. Once a country is designated as a terrorist country, such country is subject to bans on all military materiel-related exports and imports, based on regulations of the export management law, Arms Export Control Act, and international arms transaction laws. So the only way the United States can withdraw its economic sanctions against North Korea is if the regime can prove it neither supports international terrorism currently, nor will do so in the future. Most of the American economic sanctions are at the discretion of the executive branch. In other words, it is possible that loosening of the economic sanctions can happen at the American president's discretion (Yang Un-ch'o'l, 2001). Coupled with the North Korean government's

120 intention to improve relations with the United States, the bilateral relationship experienced a very positive period as the decade of the 1990's began with the inauguration of the Democratic President Clinton and his proactive engagement policy on North Korea, during which the US economic sanctions against North Korea entered a period of a relaxation as the former socialist bloc countries crumbled and North Korea and the United States signed the Geneva agreements in 1994. The signing of the "NK-US Basic Agreement (Agreed Framework)," as it came to be known, between the two nations on 21 October 1994, resulted in a partial lifting of bans on trade, investment, telecommunication, and financial transactions, as described in Table 4-8. Additionally in 1999, North Korea received further economic sanction reductions from the US with the signing of the Berlin Missile Agreements following its proclamation about delaying missile test launches. The economic sanction lifting ordered by President Clinton on 19 June 2000, provided substantial mitigation of general restrictions such as the ones applied in accordance with the Trading with the Enemy Act and export management regulations. The lifting included most civilian level trade and investment categories, such as allowing the import of most North Korean products into the US, the export of American consumer goods and financial services to North Korea, and American corporations' investments in North Korea. However despite relaxation of economic sanctions across categories, the United States still brands North Korea a terrorist country, so sanctions related to designated terrorist countries or missile regulations and those sanctions based on multi-lateral principles remain in effect. Particularly, as Table 4-9 shows, trade in sensitive, dual-use materials, including weapons, that can be used for both civilian and military purposes, is still strictly regulated (Yang Un-ch'o'l, 2001, page 27). In addition, even though, with the relaxation of sanctions, certain American corporations are showing interest in investing in North Korea, because of the North's non- transparency in economic operations and the inability to forecast , those corporations remain at the level of preliminary surveys or are just beginning to start initial trade.

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(Table 4-8) The United States' Relaxation of Economic Sanctions against North Korea

Date Area Details Related Basis

Jan 3, 1989 Non- Allowing travel to North Korea through American Partial modification of commercial tourist agencies Foreign Asset Control fields regulations Feb 2, 1989 Publishing Allowing export and import of publications and Partial modification of related financial transactions Foreign Asset Control regulations Apr 24, 1989 Humanitarian Allowing export of humanitarian items such as grain, Partial modification of purposes medicine and medical equipment export management law Jan 20, 1995 Commercial Direct telephone lines to North Korea permitted (April Agreed Framework credit, 1995, AT&T) between North Korea finance, trade, Allowing the use of credit cards and the US etc. Allowing media companies to open branches Allowing North Korea to use American banks when trading with third countries Allowing direct trade for magnesite Allowing capital transactions related to opening and operation of liaison offices Allowing transactions related to light water reactors March 1996 Humanitarian Allowing UN organizations and the International Partial modification of purposes (American) Red Cross to grant funds and related Foreign Asset Control transactions for humanitarian purposes in North Korea regulations Allowing all transactions involving American citizens donating basic necessities to North Korea from third countries Apr 7, 1997 Humanitarian Allowing the provision of funds to UN organizations Modification of purposes or the International Red Cross and all related Foreign Asset Control transactions for humanitarian aid regulations Allowing all transactions related to American citizens providing basic necessities to North Korea from third countries Dec 9, 1997 Finance The Office of Foreign Asset Controls, US Dept. of the Partial modification of Treasury, surveyed North Korean bonds in the US, and Foreign Asset Control announced that bonds owned by Americans needed to regulations be applied for by March 9, 1998 Jun 19, 2000 Allowing importing of most products, including raw Executive orders materials, into the US Allowing export of American consumer goods and financial services to North Korea Allowing American corporations to invest in North Korean mining, oil, lumber, cement, transportation, road construction, and tourism industries Allowing civilians to send funds to relatives and individuals in North Korea Allowing freight of general cargo (non-sensitive materials) by ship and air to North Korea Allowing commercial airplane flights among North Korea Sources: Cho Tong-ho, Kim Sang-ki (1999, page 5), Namgung Yo'ng (2001, pages 199-200), Yang Un- ch'o'l (2001, pages 25-26).

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(Table 4-9) Detailed Items Contained in the Continuation of Economic Sanctions against North Korea

Items subject to national security controls Computer digital control devices Biological and chemical weapons Digital computers above CTP 6 or assembly related Missiles (MTCR) equipment, machines that manufacture magnetic or Nuclear weapons optical storage devices, hard disk assembly component Military equipment materials Airplanes, helicopters, engines and related equipment Microprocessors Encryption and decoding equipment Semiconductor manufacturing equipment Underwater activity equipment Aircraft exterior and spar milling machines Systems for submarines Detectors of explosives Scuba gear and related equipment Commercial funds and equipment under the control of Aircraft pressure maintenance [and] de-icing CCL's ECCN 1c992 equipment Sources: Federal Register (6/19/2000, pp. 38152-38160); re-quoted in Yang Un-ch'o'l (2002, pages 31- 32)

All these situations between the North and the US reveal the fundamental limits of North Korean diplomacy, which tries to garner guarantees for the regime or economic compensation by raising the issue of military matters, especially its nuclear development. The United States will maintain its regulations related to North Korea as a communist, terrorism-supporting country until it is sure that North Korea has not halted its nuclear, missile development, and weapons of mass destruction programs, and that export of major parts to the North will not help North Korea's expansion of armaments. Moreover, under the Bush Administration, which appears more hard-line in its understanding of North Korea, relations between the two countries can only become stiffer. Adding fuel to the fire was the occurrence of the 9/11 terrorist incident, which caused American foreign policy to make a sharp turn to its new policy of rooting out terrorism, hardening its position toward North Korea. The suppressed atmosphere reached its peak when, in his address to Congress delivered on 29 January 2002, President Bush designated North Korea a part of the "axis of evil." The barometer of retention or relaxation of US sanctions against North Korea depends on the level of political and military discord and tension between the North and the US. Therefore, to have the Americans reduce or lift the sanctions against them through an actually improved relationship with the US, North Korea must propose a formulation for a solution which international society can accept to the current issues in NK-US relations such as giving up its nuclear development and about its exports of missiles and related technology and also get off the humiliating list of terrorist countries. It is in the North Korean regime's nature to maintain the regime's stability as its most important goal, therefore, the issues of politics, military, and security are always at the top of the its list of national policy priorities. That is the reason why the importance level of North Korea's economy policy changes according to how foreign and domestic political, military, and security issues change. So from this point of view, the most important prerequisite for successful development of North Korea's IT industry is peace and stability in the Korean peninsula, and the regime's foreign relations, particularly improved relations with the United States. An established peace system in the Korean peninsula and improved relations with the United States are the minimum requirements for the North's economic recovery as well as success for its strategy of mid- to long-term IT industry growth. Who would seriously invest in or cooperate with a

123 country with an unstable political regime and military confrontation still going on and branded a rogue country by the world's only superpower? Thus, North Korea's current diplomatic strategy of obtaining regime guarantees by raising military issues or of even exchange between military and economic issues can result in neither the regime guarantee it wants, nor a fundamental solution for its economy preparing for a "single leap." It seems that the only way for the North to take if it wants to get foreign capital, the latest technology, and receive necessary external economic aid, such as from international financial organizations, would be to be reborn as a responsible member of the international community, earning trust by solving the military issues of nuclear and missile development and improving relations with the US.

(2) The Wassenaar Arrangement

Another important element that limits the North's capacity in foreign cooperation in the IT field is the multi-lateral strategic material export control regime. This international export control regime system was arranged by the United States and other advanced Western countries to effectively prevent the leaking to the four "countries of concern for terrorism and strife" – Iran, Iraq, Libya, and North Korea -- of any technology or core components that may be directly used for enemy countries' military capacity. Currently the lists in the export control regime for strategic materials (Table 4-10) include weapons of mass destruction such as nuclear, biological and chemical weapons, and delivery systems such as missiles for those weapons, and also the international non-proliferation export control system (non-proliferation regime) for conventional weapons and dual-use materials. These multilateral export control measures are aimed at maintaining international peace and security and enforced not as international treaties but based on mutual cooperation under an international agreement. So this kind of informal international consultative body, rather than using forced application, relies on the member nations to reflect the decisions of the council of members on export control guides, control items, and technology in their own regulations and to implement them at their discretion (Kim Myo'ng-chin et al., 2001, page 20; Kim Yo'n-ch'o'l, page 2000, page 73).

(Table 4-10) Multi-lateral Strategic Material Export Control Regimes

Category Export Control Regime System Subjects for Control Weapons Nuclear Zanger Committee (ZC) Components directly used in nuclear weapons of Mass Weapons Nuclear Supplier Group (NSG) (NSG-Part 1) Destruction Components that can be used in nuclear development/ manufacturing (NSG-Part 2) Chemical Australia Group (AG) Chemicals used as ingredients for chemical Weapons weapons Devices that can be used in manufacturing chemical weapons Biological Australia Group (AG) Biological organisms (66 types) Weapons Biological weapons (seven items of general-use manufacturing equipment) Missiles Missile Technology Control Components used to develop/ manufacture Regime (MTCR) missiles Conventional Weapons Wassenaar Arrangement Dual use products, radiation-producing materials Source: Kim Myo'ng-chin et al. (2001, page 19).

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Among the multi-lateral export control measures, the Wassenaar Arrangement is the one that is directly engaged with North Korea's successful pursuit of its IT industry growth plan. This arrangement, the founding conference of which was held on April 1996 in Vienna, Austria, currently has 33 member nations. This arrangement was the successor to COCOM (Coordinating Committee for Multilateral Export Controls to the Communist Bloc), which expired in 1994 after having served as an export control system against communist countries. The Wassenaar Arrangement then succeeded it to control exports to the so-called "rogue states," such as Iran, Iraq, Libya, and North Korea.

(Table 4-11) Scope and Contents of Lists of Dual-Use Items in the Wassernaar Arrangement

Scope Sensitive List (SL) Very Sensitive List (VSL) Advanced Ceramic complex materials Molding products using fibers materials Fibers and molding products using fibers Material Numerically controlled milling machines processing Milling machines using variable difference controls Electronics Atomic frequency standard machines Radio* wave absorbing materials, Semiconductor manufacturing equipment conductive polymers Nuclear thermal source materials Computers Electronic computers Electronic computers Communication Transmitting communication equipment Super digital transmitting communication Equipment Communication-related design, manufacturing, equipment with more than 1,000 channels measuring, testing, and repairing devices Encryption devices ,Devices for preventing signal exposure in information transmission Devices with multi-step secret protection functions Communication cable systems with eavesdropping detection capability Devices for the design, manufacturing, measuring, testing, and repair of encryption equipment Lasers, Sensors Underwater detection devices using sonar Optical samplers Cameras Optical components Magnetism meters Radars Navigation Not applicable Not applicable Devices Oceanic Small submarines, surface ships Small submarines that can navigate Technology Ship parts and components independently Underwater robots Motive power equipment Propulsion Testing, measuring, inspection, and Devices manufacturing devices for propulsion devices Source: Kim Myo'ng-chin et al. (2001, page 33).

The part where the arrangement directly affects North Korea's IT-related foreign cooperation is its export control list. Particularly, the arrangement's "List of Dual-Use Goods and Technology" that can be applied against dual-use products for both civilian and military

125 purposes limits the export of IT-related goods and technology. Control of dual-use goods is categorized by the level of sensitivity into the Basic List, Sensitive List, and Very Sensitive List. The goods subject to dual-use purposes, which comprise nine categories according to the functions of the products, are shown in Table 4-11, which gives the main contents of the sensitive and very sensitive lists. North Korea is still struggling with its hardware and IT infrastructure. The hardware field is still going through a rough period, and even though they made some progress with establishing fiber optic cables for the IT infrastructure, problems have persisted, due to the lack of capital and technology issues. One of the reasons for such poor conditions has to do with the strategic material export control system that effectively blocks any import or adoption of designs and technology related to electronics, computers, and communication equipment, which are considered to be essential in developing computers and hardware. In contrast to this situation, in the software field which does not require same the capital investment as does technology, the North has reached a somewhat commendable level so far.94 However it should be noted that a sizable component of software also consists of strategic materials.95 The North definitely needs foreign cooperation in order to adopt the core technology of electronics, computers, and communication equipment that are essential to growing its IT industry over the mid- to long-term. The North also needs to seek ways to escape from the restrictions of the Wassenaar Arrangement and the other multilateral strategic material export control regulations, so that their foreign cooperation efforts can result in real help to North Korea's industrial development strategy. The United States leads or sponsors all of the international export control measures. The US's main policy goal in enforcing the Wassenaar Arrangement is preventing sales of weapons and sensitive technology to the "countries of concern for terrorism and strife."96 This is just another indication that a better relationship between the North and the US is really the key to a program of successful foreign technology cooperation for the North for successful implementation of its IT industry development strategy. Considering the status and influence of the United States in the operations of such international multilateral arrangements, future American sanctions against North Korea are highly likely to influence the extent of restrictions by the Wassenaar Arrangement against North Korea (Hwang Tong-o'n, 2000, page 73). The immediate need for the North is to be delisted from the list of export banned countries in the Wassenaar Arrangement. A way to approach that would be first, as mentioned earlier, efforts to wipe out its image as a terrorist or rogue state so that it can improve relations with the US as well, which then may lead to a permanent solution to the problem. Another important role of the Wassenaar Arrangement is controlling the level of North- South economic cooperation. Even the South Korean government depends on the Arrangement to run its export authorization system for strategic materials. The South Korean government currently lists the strategic materials of advanced materials, electronic equipment, information,

94 Pak Ch’an-mo (2002, page 5) argues that the reason why [North Korea] is concentrating on software rather than on hardware is because of the strategic material export control regulations of the Wassenaar Arrangement. 95 Common software components that can be openly purchased are not subject to the controls, but the import and export notification for strategic materials stipulates controls broadly across sectors in the field of electronics, including software related to equipment for the control of installed programs, intelligence and security related software, and GPS-related software in the field of aeronautical electronics (Kim Yo’n-ch’o’l, 2001, 157). 96 The US is currently showing willingness to withdraw controls on some dual-use technology that is is considered to be inefficient or antiquated. It is now calling for strengthening export controls on the so-called "checkhold" technology (technology that is central to the importing nation’s capabilities in manufacturing or launching weapons of mass destruction), while loosening the those on items that are already widely available in international markets (Kim Myo’ng-chin et al., 2001, page 137). 126 and communication security items as banned export items. Such banning of these items is acting as a critical stumbling block to the South Korean manufacturing industries' expansion of their advance into North Korea because at the level of S&T today most measurement control devices are operated by computers. The purposes of the Wassenaar Arrangement or the strategic material control system are to prevent sensitive technology from being used for military purposes, rather than blocking peaceful industrial transfers. Therefore, the South Korean government, while still respecting the guidelines and controlled items and technology stipulated by the Wassenaar Arrangement, needs to exert multifaceted efforts such as expanding its scope of discretion on enforcement methods and procedures of the control system or proposing guidelines stating detailed measures for the export of strategic materials and controls on their final uses, or establishing a monitoring system for the final uses, much like the food aid system for the North.

2) Domestic Factors

(1) [North Korea's] Intentions for Foreign Cooperation to Introduce Technology and Capital

There have been many indications that the North's foreign relations started to change around the time of the North-South summit meeting. The most prominent change so far has been the North's expanding foreign relations.97 Most of the new formally signed nations have been European nations.98 It seems the North is trying to use the newly signed European nations as a set of stepping stones for its intention to normalize relations with the West. North Korea's new expansive omni-directional diplomatic policy is also seen as a move to erase the so-called "rogue state" image that is prevalent in the international community. Such diplomatic moves by the North to widen its economic ties with Western countries are interpreted as a positive sign of change in its economic foreign policy in the future. However, to date substance is lacking and the level attained ends at just the formal stages (Ch'oe Sin-rim, 2002, page 8). There are in general two ways that North Korea can adopt technology and capital from foreign countries. One method would be to improve relations with the United States and subsequently alleviate or stop the West's sanctions against them, and the other method of attracting Western capital would be to create an environment in which profits could be earned, which would attract direct or joint investment from foreign countries (Unification Policy Research Institute, 2001, page 226). The first method has already been discussed before, so only the second method is discussed here now. The North already had tried to attract foreign capital by designating the Najin, So'nbong areas as free economic trade zones back in the early 1990's. However that effort to create special economic zones and attract foreign capital failed miserably due to no effective policy backing, ending abruptly after a cursory examination of the possibilities, most analysts say. In 2002, however, the North is now pursuing change in economic policy. On 1 July, the government implemented sweeping "Economic Management Improvement Policies" which aimed to raise sharply both the distorted nationally set prices of everyday basic goods such as

97 North Korea formally forged a diplomatic relationship with Italy in January 2000, and by end of the year, it had signed formal diplomatic relation agreements with Australia, the Philippines, and Britain. In 2001, it formalized relations with 11 nations, including the Netherlands, Belgium, Canada, Spain, Germany, Luxembourg, Greece, Brazil, New Zealand, Kuwait, and Bahrain, and it also signed formal diplomatic relations with the EU as well. 98 Politically, North Korea’s expansion of formal diplomatic ties with the European nations is also seen as one in a series of steps -- a "detour" policy to solve its disputes with the US over military and security issues, because the Bush Administration has a negative view of and is adopting a hawkish policy toward them. (Cho’n Hyo’n-chun, 2001, page 91). 127 rice and wages, as well. Then, on 12 September, it passed the "Sinu'iju Special Administrative District Law" which called for a one-country, two-system method, much like the relationship of China and Hong Kong, and was also notable in calling Sinu'iju a "special administrative district," rather than a "special economic district." Then in November, after a long series of discussions with the South, the "Ku'mgang Mountain Tourist Zone Law" and "Kaeso'ng Industrial Zone Law" were proclaimed, which were designed to open the zones to an influx of South Korean capital. The reform-minded economic policies that the North took in 2002 show the new directions of domestic economic reforms and openness to foreign cooperation. In other words, non-opened zones are operated for the purpose of normalizing their planned economy and achieving a stable economy through the 1 July Economic Management Improvement Policies, while the four opened zones (Sinu'iju, Kaeso'ng, the Ku'mgang Mountains, and the city of Naso'n) are run in pursuit of economic benefits, selecting methods of opening appropriate for each zone, based on the characteristics of each (Tong Yong-su'ng, 2003, page 10). Currently, however, these efforts by the North Korean regime are not reaping fruitful successes, due to the continuing problems of nuclear development, but they are clear indications that the regime is highly motivated for economic recovery and foreign economic cooperation. Especially their new openness policy of focusing on Sinu'iju, Ku'mgang Mountain, and Kaeso'ng are completely different from the earlier failed cases of Najin and So'nbong in the 1990's. The core difference is that this time the North Korean government is not the sole sponsor of such special districts. Although the government may have opened the districts, it is not developing them directly but in fact has entrusted that work to South Korean and foreign capital (Tong Yong-su'ng, 2003, page 9). There can be two reasons why foreign investors would be attracted to North Korea. One reason would be the incentive of having the "first-to-market benefit," since the country has not yet been penetrated by any other Western capital on a large scale, and the other reason would be the "low wage benefit," since the country has the potential of having skilled workers at low wages once they are trained. However unless the regime implements detailed, systematic policies to attract foreign capital, adopting technology and capital through foreign investments has almost no chance in the short term. What's more, foreign capitalists know very well that there is a much more attractive and larger market in China right next to it, so it would be terribly hard for them to devote serious thought to investing in North Korea, where instabilities abound. There is yet another way that North Korea could attract large-scale funding for economic development however, and that is aid funds from international financial organizations. Such international aid programs in technology and capital are essential for North Korea with its situation of needing large-scale recovery efforts in industrial production facilities and expansion of social infrastructure. Considering the regime's low credit rating and high investment risk, injections of international civilian capital in the form of commercial loans are actually impossible, so the North should do all it can to be provided with available international funds for much needed capital.99 Examples of such international aid are funds from the International Monetary Fund (IMF), the World Bank, and the Asian Development Bank (ADB), which can distribute funds on very generous terms of a maximum 40-year repayment period at no or low interest, all of which will be very helpful to economic recovery and development in North Korea. Then again, the stumbling block that still exists is the United States' continuing designation of North Korea as a terrorist state. Unless the US delists the North from the terrorist state list, such financial aid from

99 See the work by Yi Chong-un (2003) for discussion of the benefits and future tasks of international financial organizations’ economic aid to North Korea. 128 international organizations is impossible. However that is not to say that North Korea is anywhere close to being delisted. The regime still has the world's worst credibility and its image of being a "rogue state" among the international community is not going away any time soon. So even though North Korea has been active in expanding diplomatic efforts with European and Southeast Asian countries tied with possible technology cooperation or other economic exchanges, from the position of those countries those exchanges must be undertaken only as short-term investments or to confirm the possibility of investment. Therefore, the only way the North can solve all these problems would be to go for their root, which is the military issues involving their nuclear program and missiles, the real cause of their clash with the United States and the international community in the first place. Only then could they start to have some serious advances in getting foreign technology and capital. The military issues need to be solved to have a stable Korean peninsula and an improved relationship with the US. Unless they do that, no foreign capital will likely come their way. The regime will have to show the world they are changing from the existing image of being a war-mongering, rogue nation, so that they can build for themselves a new, international image and show a clear will for change and policies for reform and openness for all the world to see.

(2) Reorganization of the IT R&D System

The key to a successful high-tech industry such as IT is investment in research and development (R&D). For North Korea, where there is no functioning free-market economy, the sector in charge of R&D is "obviously" none other than the regime itself. For the North Korean authorities to establish an IT system where more efficient and effective R&D is performed and a better talent pool is trained, they need either to set up a system that can develop IT industry in a concentrated way or to reorganize the existing system. Efficient operation of an S&T R&D system is essential, since the IT industry grows through adopting new technology and developing innovative technology. Under the current North Korean R&D system, however, the routes for adopting foreign technology are strictly controlled, and a domestic incentive system for technology innovation is lacking. The system for domestic technology innovation has resulted in the following four inefficiencies for IT industry development (see Yi Ch'un-ku'n; Kim Kye-su, 2001). First of all, there is too much focus on technology upgrading, so the more important current economic problems are not getting their due share of attention and too many R&D organizations are excessively mobilized to work on current economic issues. In industries such as IT where being technologically up to date is so crucial, the industries themselves should lead the R&D apparatus, but the current North Korean case operates in the directly opposite fashion, with the R&D apparatus leading the industries instead. When R&D is subordinated to current economic issues, it will be difficult for the R&D system to succeed in research for future, technical leaps for traditional industry, or in generating new industries. Second, North Korea's most prominent national research center, the Academy of Sciences, also tends to place emphasis more on immediate field problems, rather than on conducting research for the future. This seems to be due in part to North Korea's movements for technology innovation by the masses. Historically, North Korea has put more priority on efforts for innovation by groups of field technicians at the production site, rather than concentrating on a few excellent researchers, and even the university professors and the Academy of Sciences researchers have highly valued doing research jointly with production technicians. Because of this factor, acting in synergy with the first issue, their will for more innovative technology has been weakened and their successes reduced to insignificance.

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Third, because the R&D apparatus is so closely associated with production, the North's problems in the economic system transfer directly to the R&D apparatus. For example, when the policy of preferring heavy industry resulted in an unbalanced industrial structure and subsequent decreased efficiency, the same unbalanced structure appeared in the R&D apparatus. Preferential distribution of R&D resources to heavy industry results in an R&D apparatus that is centered on technological science. The same scenario will also result if an unbalanced economic policy is undertaken in agricultural or other sectors: an unbalanced structure will result. As a result, research that concentrates on low-level technology R&D immediately needed on the factory floor, rather than research on the latest high technology, has wasted research resources. Last, there is the problem of inefficiency at the Academy of Sciences. In 1999, China had 115 different research centers under its Academy of Sciences. Currently, North Korea is known to have about 120 research centers under its own Academy of Sciences. That is an indication of much inefficiency in the North Korean academic research system because, while the economic scale of China is far larger than that of North Korea, the latter still has about the same number of research centers, a fine division which, even though it may be advantageous in terms of the variety of fields of research, when the importance of linking technologies or of efficiency in managing the research centers as a whole is considered, such numbers can only be called excessive. Considering North Korea's insistence on developing science and technology through open-minded self-reliance, the importance of its R&D system is magnified to the point that the success or failure of the leap strategy based on IT technology development may be said to depend upon it.

(3) Developing the IT Cluster/ Industrial Complex

For North Korea to revitalize its economy by developing the IT industry in a mid- to long-term view and grow it one step further, it needs to consider the experiences of clusters in foreign countries and grow its own IT clusters by benchmarking such experiences. Clusters are integrated zones where corporations, universities, and research centers are grouped together to form networks so that synergy effects are generated through their interactive business projects, technology developments, supplying parts, and exchanges of personnel and information (Pok Tu'k-kyu et al., 2002; 2003). Even for the new economy, represented by the progress in IT, the people who generate, transfer, and use S&T knowledge need to be grouped together in integrated zones in close proximity for "efficiency." Clusters do not mean just physical geographical integration of related organizations such as related corporations within a certain sector, professional suppliers, service providers, and universities. Clusters require internal linkage of all these components in multilateral ways too, so that they all play important interactive roles, both officially and unofficially. The most prominent example of such physical and knowledge-based integration would be Silicon Valley (Hong So'ng-po'm et al., 2002). These innovative cluster complexes linked together physically and knowledge-based as if organic bodies lead the innovation systems in each country, and show the way where science and technology in the new digital era are heading. Not only do they lead industrial progress in the advanced countries, but once they are established in developing countries, they too lead industrial development. Prominent IT clusters include the Hsinchu [Xinzhu] Scientific Industry District in Taiwan, Software Park in India, Zhongguancun in Beijing, Silicon Wadi in Israel, and Sista and Ulu in Sweden and Finland. North Korea needs to proceed with its IT industry growth plan by establishing IT clusters first to strengthen their weak indirect social capital and telecommunication infrastructure, for 130 such weak infrastructure can be a decisive stumbling block in promoting development of the IT industry. The North's relatively weak infrastructure status has been discussed earlier. The North also suffers from electrical power shortages. Based on the standards in 2000, the North's total installed electrical power capacity is only 1/6th of the South's, and its actual power generation volume is 1/13th of the South's. What's more, about 73% of existing power generation facilities need discarding or repair, so only 25% of actual power generation facilities are operating. Additionally, the North has very unstable voltage conditions, so equipment requiring precise control instrumentation is difficult to use at all. That is one reason why the government cannot invest in the hardware industry, which requires substantial electric power consumption and stable voltage supplies. Therefore under these circumstances, it is going to be a natural choice for the North to take on developing a system of IT clusters, which integrate space and networks, as an appropriate method to achieve "single leap" growth through IT industry development. India, which successfully established such IT cluster systems, can be an especially good bench-marking model for North Korea. India did not have a domestic market until the mid-1980's, when it first set IT industry development as a national strategic goal. It also had a low telephone propagation rate as well as frequent electrical power stoppages, making it impossible to establish a suitable information infrastructure in all regions. However, one thing India had going for it was its abundant supply of talented software developers, such as those located in the India Institute of Technology (IIT), in the capital city, Delhi, and the excellent military research personnel in Bangalore, centered on the India Institute of Sciences (IIS). India chose software as its core growth sector based on the reasons that it had the potential of generating high added value with only relatively small investment compared to hardware, which requires much electricity, or other projects based on nationwide telecommunication networks. Software had the advantage of lowering investment cost by creating specific zones for development and integrating the many development companies into zones. Accordingly, the Indian government created an innovative clustering system called the S/W Complex (STP) and started to develop the software industry as its strategic industry, utilizing the abundant talent pool while minimizing the information infrastructure investment cost and maximizing its efficiency (Yi In-ch'an et al., 1999, pages 154-171). India now boasts a very successful software industry which currently provides 8% of India's total exports and has emerged as a major strategic export industry. Moreover, India now enjoys an 18.5% share of the worldwide software market.100 As for North Korea, it has not revealed any plans about creating similar IT clusters but, based on recent North and South Korean media reports, one can speculate about two places for possible IT cluster or industrial complex locations: the "Taedong River Valley" and the "Sinu'iju Software Multimedia (SM) Valley." First for the "Taedong River Valley"101, if the North Korean government does proceed with such a plan, basic infrastructure already installed in the area can be used to establish a future

100 NASSCOM (India Software Industry Association). http://www.nasscom.org. 101 Discussion of the creation of the "Taedong River Valley" was first publicized in a paper at "The Internet and North Korea" symposium held in celebration of the North-South summit meeting on 23 June 2000, given by senior researcher No Su’ng-chun, of the Global Telecommunication Research Institute at International University in Japan. In it, No wrote, "Extremely recently, it has been reported that National Defense Chairman Kim Jong Il himself has decided to direct that the ‘Taedong River Valley’ be built." However, it has not been accurately confirmed whether Kim in fact really directed the building of the "Taedong River Valley," nor whether North Korea is currently building the complex. Also on 14 June 2001 (10:00 to 10:50 PM), KBS broadcast a program entitled "The Dream of 131

IT cluster with its physical integration advantage already in place, because the bases of core research centers and universities related to IT industry are all located there, north of the Taedong River, crossing Pyongyang from east to west.102 For instance, the Choso'n Computer Center (KCC) is located in the Man'gyo'ngdae district to the west of Pyongyang, and the Pyongyang Information Center (PIC) is located in the Pot'ong River district, in the heart of Pyongyang. Further, Kim Il Sung University is located in the Taeso'ng district, a bit east of the heart of Pyongyang, with Kim Ch'aek University of Technology located right in the heart of the city, in the Chung district. In addition, the Academy of Sciences, the mecca of the North Korean S&T research and training of talent pool, is located in the "U'njo'ng District" of Pyongyang, which is to the north of the city center. So these existing industrial bases already satisfy the appropriate geographical requirements for building a cluster of innovation. Second is the case of the "Sinu'iju SM Valley," which has some more advanced plans already in the works than the "Taedong River Valley," but there still has been no clear mention whether that plan is aimed at building a cluster. The plan for building the "Sinu'iju SM Valley" was first revealed on 12 September 2002, when the city of Sinu'iju was designated a special administrative district. The plan had first been discussed in August 2001, when the South Korean company Hana Biz met with the North's official agency responsible for trade with the South, the National Economic Cooperation Federation, and jointly established the first-ever IT joint venture company between the North and South, called the "Hana Programming Center," in the Dandong City development district in China. Figure 4-3 shows the details of their agreement at the time. However, an official named Yang Bin who was installed as the minister of the Sinu'iju Special Administrative District, later was fired, tarnishing the district's image badly and the subsequent emergence of the issue of North Korea's nuclear development has all but stalled the plan.

(Figure 4-3) Plans for Establishing Sinu'iju SM Valley

First Stage Second Stage Establish a development office and South Korean corporations based in training center in Dandong, China Dandong are admitted to the Sinu'iju area -- Full-scale start with establishment of -- Corporations hoping to participate establish the "Hana Programming Center" an investment consortium Conduct IT development services -- Start full-scale investment according to Start specialized IT training of North actual business benefits Korean specialized personnel at the Proactively attract foreign IT corporations attached education center from Japan, Taiwan, Europe, and the Establish an operational system for American region to Sinu'iju SM Valley cooperative work with Pyongyang Information Center Source: Electronic Newspaper 25 September 2002.

This plan, moreover, was not based on building from existing industrial bases, but instead aimed to build a complex in the future. It also does not seem to have good potential to be developed into a cluster, despite having some indications of developing it as a special IT district.

Taedong River Valley: IT as a Breakthrough for Economic Cooperation," based on on-the-spot coverage of North Korea’s IT industry. 102 For discussions of the possibility of creating a cluster of innovation in the Taedong River Valley, see Yi Yong-in (2002). 132

Other than its apparent advantages from being located only 10 minutes by vehicle from Dandong, China, a city that could serve as a background market, the possibility of foreign corporations coming in and doing custom-order processing work with its existing industrial bases centered around light industries, and the ease of controlling capitalistic elements penetrating into North Korea with its location in the far north of the country and very close proximity to China, it has almost no advantages for building a cluster at all. Therefore, if the North indeed goes ahead with implementing the "Sinu'iju SM Valley" plan, it will only be on the level of building an IT industrial complex. The recent undertaking by the North Korean regime in upgrading technology, training specialized IT personnel, and developing the software industry has been led by the research centers and universities mentioned above. However, it should be noted that it is too early to discuss the regime's actual IT cluster developments, based only on the current IT industry development plans that have been implemented up to the present. As a matter of fact, the "Taedong River Valley" is being discussed solely on the basis that some of the industrial bases mentioned are located in a physically integrated form, and even the "Sinu'iju SM Valley" is still at an initial plan level. Therefore to have an actual IT cluster implemented by the North Korean regime, spin-off corporations from the research centers and universities first need to be established and operated, and there is also another requirement: large-scale capital injection. Moreover, even excluding the weak domestic market, the North first needs to explore foreign markets for the final end products to be manufactured inside the clusters. The regime also needs to propose plans that would appeal to foreign corporations that can attract them to the clusters. So with all these elements considered, it is estimated that the North does not have any concrete consensus created inside their government to construct actual IT clusters. However, the fact still remains that developing the IT industry through building IT clusters or IT industrial complexes would most benefit the effort, whether it be the "Taedong River Valley" centered on the Taedong River in the city of Pyongyang or the "Sinu'iju SM Valley." They would give the most benefits because social infrastructure could be constructed in a concentrated way in these districts, a partial free market system could be applied, a support system for foreign corporations could be established, and outside ideology and elements that may threaten the regime could be effectively controlled. In the future, North Korea has the option to select and establish IT industrial complexes that can integrate IT industry-related facilities on a short-term basis and, on a long-term basis, it needs to develop them into IT clusters, so that true economic leapfrog growth can be realized.

3) The North-South Relationship Factors: IT Economic Cooperation

The most important factor for revitalized North-South economic cooperation would be increasing mutual economic or political benefits for both through such economic cooperation. Increasing interactive economic benefits for the two countries would mean linking each advantageous element from the two to increase "economic efficiency." Increasing interactive political benefits would mean solving the two countries' conflicting elements in the political and military fields through economic cooperation so that they could establish mutual trust and increase "political rationality." Therefore North-South economic cooperation is aimed not only to bring about economic results in the short term, but also to ease tension and conflicts and create the kind of environment that can foster subsequent reunification of the peninsula in a gradual mode, by expanding their scope of economic cooperation into non-political areas. However, the North-South's new chapter of eased tension after the first-ever North-South summit meeting has all but evaporated because of the inauguration of the Bush Administration, the sea 133 battle in the Yellow Sea, and the North Korean nuclear issue. Especially, the North Korean regime's overall crisis has worsened since the stalling of the North-Korea-US bilateral relationship after the inauguration of the Bush Administration, the North's deadlock with Japan and the stagnation in North-South relations. Moreover, North Korea's admission that it has been developing nuclear weapons made the situation far worse and, as it entered the 2000's, it is now facing the most serious crisis ever. So under these hardening circumstances, the most important and needed way, as well as the easiest, for both parties to approach each other is the field of economic cooperation. However despite the expanded volume of North-South trade, the overall economic cooperation projects have not seen such large-scale expansion and are still in a somewhat stalled state. One area of exception to this pathetic situation is IT cooperation, which is regarded as beneficial to both sides and in a relatively vitalized mode (Pae So'ng-in, 2001b; Kim Ku'n-sik, 2002; Bae, 2001). IT cooperation between the two has been going on very actively ever since the June 2000 North-South summit meeting (see Table 4-12). Such active and vital cooperation has been a result of its benefits to both countries. Through such IT cooperation, North Korea, which suffers difficulties in importing high technology because of US economic sanctions and the Wassenaar Arrangement, is able to obtain some technology and foreign currency through IT exchanges with the South that could be used to build a new basis for industry. The South, as well, can reap economic benefits by tapping some competitive North Korean IT technology immediately and low-wage IT specialists (Yu Su'ng-hun, 2001, pages 108-109; Pae So'ng-in, 2001b, pages 312-313).

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(Table 4-12) Record of North-South IT Cooperation after the North-South Summit Meeting

Date Details of IT Exchanges and Cooperation 13-15 June 2000 North-South Summit meeting, June 15 North-South Joint Statement issued 18 July 2000 Joint North-South "Korea North-South Trade Center" established (Dandong, China) Sep 2000 Elcyber, Pyongyang Programming Training Center established (Pyongyang) 30 Jan 2001 Joint animation project contract signed between the South's Hanaro Communication and the North's Samch'o'lli Consolidated Company 30 Jan-3 Feb 2001 President of Byte Computer Cho Hyo'n-cho'ng delivered a lecture to the North's IT specialists (Pyongyang) 21-24 Feb 2001 Fifth Korean Information Processing International Academic Conference (Yanji, China) Mar 2001 The North and the South agreed to establish the Pyongyang College of Information S&T (Pyongyang) 7-11 Feb 2001 First visit to Pyongyang by the North-South IT exchange and cooperation business delegation 27-31 Mar 2001 Second visit to Pyongyang by the North-South IT exchange and cooperation business delegation 28 Mar 2001 North Korea invited donations of IT publications from Reunification IT Forum 21-25 Apr 2001 Third visit to Pyongyang by the North-South IT exchange and cooperation business delegation 2 May 2001 Ministry of Unification authorized Hana Biz and Entrack North-South joint project 9 May 2001 Pohang Technical College and Pyongyang Information Center signed agreement for S&T joint research projects (Dandong, China) 10 May 2001 First-ever North-South joint IT company "Hana Programming Center" established (Dandong, China) 24-28 Jul 2001 Fourth visit to Pyongyang by the North-South IT exchange and cooperation business delegation. Reunification IT Forum delivered first set of IT publications to North Korea 27 Jul 2001 The South's Dasan Internet established testing network in Pyongyang with the North's Samch'o'lli Consolidated Company 28-31 Jul 2001 Director of KAIST Hong Ch'ang-so'n, Director of KISTI Cho Yo'ng-hwa, former Minister of Industry and Natural Resources Kim Yo'ng-ho, and Chancellor of Yo'nbyo'n Science and Technology College Kim Chin-kyo'ng visited Pyongyang 1 Aug 2001 Minjok Network agreed on a joint animation project with Pyongyang Information Center 31 Jul-4 Aug 2001 First visit to the North by a delegation of IT corporation leaders planning to move into Pyongyang's "Koryo Information Technology Center" 2 Aug 2001 Hana Programming Center's "Hana Soft" and "Training Center" opened (Dandong, China) Oct 2001 Samsung Electronics launched a trial version of "Reunification Word," co-developed with the Choso'n Computer Center Nov 2001 PC monitors manufactured in the IMRI Pyongyang factory went on sale for North Korean domestic consumption (Pyongyang) Nov 2001 Reunification IT Forum delivered second set of publications to the North 24-27 Nov 2001 Second IT corporation delegation that planned to move into Pyongyang's "Koryo Information Technology Center" visited the North 20 Dec 2001 Hana Programming Center completed the first IT training course of North Korean personnel (Dandong, China) 29 Dec 2001 Ministry of Unification authorized HunNet North-South economic cooperation business participants and projects 31 Dec 2001 South Korea's HunNet and North Korea's Choso'n Jangsaeng Trading Company and Po'mt'ae jointly established the Internet Lottery Joint Company 8-12 Jan 2002 Fifth visit to Pyongyang by the North-South IT exchange and cooperation business delegation. Reunification IT Forum delivered a third set of IT publications to the North ; HunNet and Choso'n Jangsaeng Trading Company opened their Internet lottery site Apr 2002 P'apk'o'mNet and North Korea's Paeksan Computer Joint Company agreed to establish an Internet image meeting center for displaced family members May 2002 Hana Programming Center's second group of North Korean technology and education personnel arrived in Dandong, China, and started work 13 May 2002 HunNet and Choso'n Jaesaeng Trading Company opened the first PC café in Pyongyang May 2002 First North-South telecommunication conference held. Agreed to jointly pursue CDMA, international telephone projects (Pyongyang) 4-8 Jun 2002 Construction begun of the first North-South joint university, Pyongyang S&T College. Yi Yong-t'ae, Chairman of Sambo Computers, 12 Jun 2002 KT Vice President Cho'ng T'ae-wo'n, and others visited North Korea (Pyongyang) Source: Electronic Newspaper, 14 June 2002

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The IT cooperation field also has benefited from the North's positive attitude toward participation, another reason why IT has been going relatively well, compared to other fields. For the North, its IT cooperation with the South can be a true breakthrough in obtaining IT technology, in view of how bad the situation is because of all the sanctions from the US and the Wassenaar Arrangement. As Figure 4-4 illustrates, the North-South IT economic cooperation progresses gradually from the service sector through the production sector to the infrastructure sector (Yang Su'ng-wo'n, 2001; Ku Hae-u, Cho'n Pyo'ng-chun, 2002, page 13). The first stage, the service sector, will see information exchange and mediation and consist of sales of North Korean products through electronic transactions. In the second stage, cooperation in the production sector will consist of combining the South's technology and capital with the North's low-cost labor to launch custom-order production, with the North's own areas of competitive software becoming the subject of joint-development projects. The third stage – economic cooperation in the infrastructure sector -- will take place in the North's telephone and Internet networks.

(Figure 4-4) Developmental Stages of North-South IT Economic Cooperation

First Stage Second Stage Third Stage

Production Sector Infrastructure Sector Service Sector Provision of information and Custom-order Telecommunication mediation production networks Electronic transactions Joint development Internet networks

According to these stages of development, North-South IT economic cooperation currently is at the beginning of the second stage. Until recently joint IT economic cooperation has been centered on co-development of software, custom-order processing of hardware, and animation, which indicates that the current stage is in the initial custom-order production of the second stage. The fields in which the two sides have shown the most interest are co- development of software and animation. It was an obvious choice for the North since it has relatively high accumulated technology capabilities in the area and location selection has been also relatively easy. Although some IT infrastructure projects have been launched, they are still at the beginning custom-order processing level, including, among the most prominent, telephones (Samsung Electronics), printed circuit boards for computer monitors (IMRI), signal splitters, and Caller ID telephones (Hanaro Telecommunication). The North seems to be adopting a variety of mechanisms to accomplish its immediate goals of acquiring advanced foreign technology and training IT personnel as much as it can through its recent IT cooperation with the South (Kim Ku'n-sik, 2002, pages 46-47). With the highly-developed IT industry in the South, IT economic cooperation is very attractive for the North compared to Japan or Europe, excluding the US. It is also true that South Korean companies are still subject to the provisions of the Wassenaar Arrangement and the strategic material control system, limiting their entrance to the North, but they can still launch various joint investments and business projects utilizing such methods as establishing joint R&D projects or joint venture companies through a third country or establishing close cooperative relationships using cyberspace.

136

(Table 4-13) Details of North-South IT Economic Cooperation Projects

Sector Company Details of Project Implementation

Co-development Hana Jointly established in Dandong, China, in August, 2001, as the first North-South of software Programming joint IT company, by the South's HanaBiz.com and the North's Pyongyang Center Information Center. Eleven researchers sent from Pyongyang Information Center jointly developed network equipment, software, multilingual input programs, and animation with South Korean IT venture companies such as Dasan Internet. Plan to export products developed in future to both North and South Korean as well as Southeast Asian markets. South Korean specialists conducted specialized IT training for North Korean IT personnel at the attached training center in two sessions, in August 2001 and January 2002. Dasan Internet in July 2001 established and operated 2Mbps-class symmetric digital subscriber circuit networks at 20 agencies in Pyongyang with the North's Samch'o'lli Consolidated Company as a demonstration and agreed to co-develop related software. Currently that development is under way at the Hana Programming Center. Koryo The South's Entrack and the North's Kwangmyo'ngso'ng Consolidated Company Information agreed jointly to create in 2002 and operate Koryo Information Technology Technology Center, a North-South IT cooperative industrial complex of 26,000 p'yo'ng, near Center the Rangnang district in Pyongyang. Entrack visited North Korea twice in August and November 2001, leading a delegation of representatives of South Korean IT cooperative corporations consisting of corporations hoping to move into the complex, and exchanged agreements with the Northern side on co-developing games, animation, electronic transaction solutions, and 3-dimensional modeling. President of Entrack Im Wan-ku'n said that, as soon as all eight buildings for R&D in the complex were completed, the South Korean companies would move in and be able to start joint development with the North. Samsung- Samsung Electronics, which has been working on joint software development Choso'n projects since March 2000 at Choso'n Computer Center and in Beijing, so far has Computer invested $1.14 million in 20 on-going development tasks. Center In August 2002, it invested an additional $720,000 in 13 computer software development projects. Samsung Electronics has signed a yearly $700,000 joint software development contract with North Korea's Choso'n Computer Center and established and has been operating a joint software development center near Zhongguancun, Beijing. In 2000, they conducted five initial development tasks, including wireless terminal games, Chinese language text recognition and text summarization systems for cell phones, the results of which led to 16 more development tasks in 2001, which they have signed into contracts and are currently executing. In October 2001, after more than a year of development, a test version of "Reunification Word" based on the Korean phonetic alphabet was launched. Samsung Electronics,while jointly developing mobile solutions, is also trying to expand the scope of cooperation with embedded Linux, etc..

137

Sector Company Details of Project Implementation

Hardware IMRI IMRI, which has been operating a monitor manufacturing factory in custom-order Pyongyang since 1998, in November 2001, for the first time supplied its project North Korea-manufactured computer monitors directly to the North Korean domestic market Its president Yu Wan-yo'ng estimated that the North could save about 40% by getting the monitors directly from the Pyongyang factory instead of importing from foreign countries, as it used to do Hanaro In July, 2000, Hanaro Telecommunication, investing $14,000 in its ADSL Telecommunication signal splitter custom-order project, established a 1,000 p'yo'ng factory in Pyongyang (the Samch'o'lli Hanaro Center) which has been in operation since last year In 2001, annual production volume was 171,000 filters and 10,000 signal splitters. They have a new plan to expand the volume of custom-order filter production to more than 360,000 units per year and start follow-on three-dimensional animation projects as well Animation Hanaro Having finished co-producing 16 episodes of the second half of a 3D spot Telecommunication animation Dingga The Lazy Cat with the North's Samch'o'lli Consolidated Company begun in early 2001, Hanaro has just started North-South co- production of a second 3D animation, Ppyorong Ppyorong, Ppyororo Minjok Network In early August 2001, signed a contract to co-produce animation with Pyongyang Information Center, and produced a TV series of 104 episodes and one for movie theaters, utilizing the specialized personnel at the North's Choso'n 4/26 Children's Movie Production Company DayCom Production Currently shooting a feature-length original cartoon movie, Empress Simcho'ng, at the North's Choso'n 4/26 Children's Movie Production Company Source: So' Chae-chin (2003)

Looking at recent trends in North-South IT economic cooperation, the most appropriate business sector for both sides seems to be the co-development of software as described above. The fact that the North has selected the IT industry as its growth sector and is concentrating on developing it adds to its very positive prospect. In fact, out of five authorized business projects in 2001, four were IT industry-related, including co-development of software (Kim Sam-sik, 2002, page 35). A difference is that, in the past, economic cooperation was conducted in a way that the South provided most of the technology and the North provided most of the low-cost labor, leading to the North taking custom-order projects in most cases. However, with the current co-development of software, technology is now being provided by the North instead and the South is mostly now providing capital and marketing know-how, utilizing the North's own technology (Pak Ch'an-mo, 2002, page 7). North-South IT economic cooperation centered on the software industry is regarded as a potentially beneficial "win-win model" for both parties. For the South, it served as an excellent opportunity to participate in joint projects with relatively small investment since software programming development does not require large-scale investment, and with labor costs climbing more than ever before, the North's low-cost labor seemed to be a very tempting option that could also bring in some synergy benefits (Kim Yo'n-cho'l, 2001, page 158; Kim Sam-sik, 2002, pages 35-36).103 For the North as well, it presented them with a chance to acquire new

103According to a survey conducted by South Korean Democratic Party assemblywoman Ch’u Mi-ae of the seven South Korean IT companies that are engaged in North Korean projects, the most profitable fields were joint software development (43%), hardware custom-order production (14%), mobile telecommunication (14%), Internet (14%), and fiber optic cables and telephone lines (14%). Asked about the biggest roadblocks to such exchanges and cooperation, the IT companies responded with uncertainties in areas beyond the economy such as politics (43%), 138 technology from South Korea, which is considered to be an IT powerhouse, through their joint software cooperation projects, and to modernize and accelerate the information-orientation of their people's economy as well as to develop software programs for export that could bring in badly needed foreign currency in the long run. According to data submitted by the South Korean Ministry of Information and Telecommunication to the Science and Technology Information Telecommunication Committee of the South Korean National Assembly, there are a total of six such IT cooperation projects currently in progress and, as of the end of August, 2002, the total amount of South Korean corporations' investment in North Korea is about 10 billion wo'n ($8.73 million). One thing to note, however, is that the ministry cautiously stated that "Even though the software sector cooperation projects between the North and the South are proceeding very actively on the civilian level, especially after the summit meeting, they are still considered to be at a beginning stage" (Yonhap News, 15 September 2002). Therefore, for the IT economic cooperation between the North and South to generate more substantive benefits from synergy for both countries and to result in the "single leap" growth that the North expects from its IT industry development, for the long term, the North needs not only to express a positive stance toward IT cooperation, but also to concentrate on policy support. However, some analysts say that the North views economic cooperation fundamentally as support for their North Korean brothers on the part of successful South Korean corporations. They lack the business mindset of excluding government participation as much as possible that is adapted to a market economy. In addition, they need to understand clearly that conducting a "window-dressing" type of IT economic cooperation that is politically motivated, temporary, and for display effect will not help North Korea's economy at all. At a minimum, economic cooperation in IT must be based on trust between the two and acceptance of South Korea as a cooperative partner for the long term and, to develop "substantive" IT economic cooperation, the North clearly needs to pay fair economic returns to the South Korean investors, so that both sides can benefit.

high logistical expenditures (29%), systematic inadequacies (14%), and South-South conflicts (14%). Yonhap News, 30 September 2002). 139

Chapter 5.

The Current State and Evaluation of North Korea's Implementation of Electronic Government

With the remarkably fast rise of Internet use, it has become an accepted norm to publicly utilize the Internet's technological characteristics for all. One such prominent example is establishing e-government1 by opening "official" Internet Websites of governments and official agencies. The term "e-government" was first used in 1993 in the United States, which became a model for innovation in government that has spread to the rest of the world, with each government trying to establish its own e-government. Establishment of electronic government is intended to centralize previously disorganized and cluttered governmental tasks and affairs that are distributed to many individual agencies and departments into one unified mechanism by utilizing information technology, so that the tasks can be automated and simplified, enabling the government to be far more efficient and productive. Both governments and the general public therefore can enjoy better qualities and increased efficiency as a result. The socialist countries are no exception when it comes to efforts to establish e- government at a national level. In particular, the socialist countries try to strengthen their central control over the peripheral regions by utilizing IT to increase the transparency and efficiency of the centralized planned economy. They are also adopting e-governments in order to clear out the systematic waste and inefficiencies that have been accumulating for a long time as well as to reinforce the center's authority over the provincial governments (Hachigian, 2003; Kalathil, 2003). At this point, it is rather a questionable notion to talk about the possibility of the North Korean government's adopting such an ambitious plan of establishing an e-government. The North's current political and economic difficulties in both foreign and domestic arenas make it impossible to imagine it will be actualized in a positive way. Can North Korea, with its totally chaotic situation brought on by decreasing productivity due to chronic economic inefficiencies and people leaving their hometowns in droves for not having been provided either food or freedom in what one termed the "North Korean Exodus" as well as worsening foreign relations due to the nuclear problem, even think about starting to create a digital North Korea or an e- North Korea? However, that being said, North Korea is going forward with such a plan under its blueprint proposal of first strengthening national competitiveness by becoming an "economically powerful nation" and then reaching the status of a "powerful and flourishing nation," based on leapfrog growth of its IT industry. The North started on this path in 2001 after first showing interest in the sector and the information-orientation field in the late 1990's. The North has also established a somewhat limited intranet-based computer network system called Kwangmyo'ng that is not connected to the Internet but still is enabled to carry out information sharing duties through the homepages of each major governmental agency. The North also is starting to show interest in the Internet itself, a symbol of freedom. Currently, there is no Internet connection available for the general public in North Korea, but

1 The term "e-government" is used with other terms such as "digital government," "government-on-line," and "cyber government" synonymously, without any conceptual distinctions. In this book as well, I use those similar terms interchangeably. 140 some special privileged groups of people can connect to it,104 and the regime has also opened "directly operated" Internet Websites -- for purposes of regime propaganda, foreign economic cooperation, and attracting tourists -- by utilizing foreign servers in Japan, China, and the United States. According to a recent report prepared by the Self-Rule Administrative Committee of the South Korean National Assembly (17 June 2003), there are a total of eight such "directly operated" Internet Websites managed by the North Korean government and nine Websites operated from abroad, for a total of 17 Websites altogether (Electronic News, 18 June 2003).105 The regime has shown some signs that it is preparing to open up to the Internet, but considering that such an official opening has not taken place yet, it seems unlikely that an e- government will be established in the country anytime soon. One thing to note, however, is that, since the cyber world -- unlike the actual world -- is not wholly limited to geographic location, the location of an Internet server is not particularly important when it comes to establishing e- government. What's more, an e-government is not required to be based on the Internet either. It should be noted that the whole notion of e-government began as a benchmarking of the e- banking model of financial institutions. Electronic government got its start when governmental agencies established computerization and its network, which then developed into LAN and intranet, and further connected to the Internet finally, providing the foundation of Internet-based e-government. North Korea, as described already, is not totally ignorant of or not going forward with establishing such e-government. One clear indication of that is a study conducted by Brown University in the United States. The study was conducted on 1,197 Websites of 198 countries in the world in which the survey subjects were asked to evaluate the level of their e-government. The result showed that North Korea was ranked in 134th place overall (West, 2002).106 That was an improvement of eight notches from the previous year, when it had been ranked 142d (World Markets Research and Brown University, 2001). Considering the fact that this study did not include the North Korean Websites that were connected to domestic South Korean networks due to the North's unavailability of Internet connection, the actual level of the North's Internet connection is estimated to be higher than the study's actual findings. Taking all these facts and indications into account, the North Korean government is clearly aware of the role IT plays in economic development and its subsequent effects in establishing e-government and the central government's planning and control as well as its potential economic benefits. What's more, the government is not hiding at all its intention to fully utilize it. However, one should also take into account the fact that the government has not started to use the term "e-government" officially yet, and the Internet is still not operating, which is regarded as required software for establishing and operating an e-government, as well as its very low level of IT infrastructure such as a high-speed network, which is regarded as required basic hardware. In the five years since the North Korean government started to show real interest in the global Internet and the domestic intranet, it has opened some Internet Websites and built

104 The Internet connection that Chairman Kim Jong Il and some high ranking governmental agencies use is connected from Pyongyang to Sinu’iju to Dandong and Beijing in China, an unofficial Internet connection that is connected to China's domestic Internet network. 105 As of December 2001, the number of confirmed official Internet Websites operated by the North Korean government was six. Out of those six Websites, five were being operated from Japan and one was being operated from China (Yonhap News, 12 December 2001). 106 At the time of this study's release, some domestic South Korean newspapers reported findings on the level of North Korean e-government (Taehan Maeil, 2 October 2002; Hankyoreh, 1 November 2002), in which South Korea was ranked second, following Taiwan; national interest in the particular North Korean case was relatively low, due to the timing of the opening of the Republic of Korea’s e-government on 1 November 2002. 141 domestic computer networks. The North Korean Websites have gone through their own sort of evolution during this period, and now they are being utilized mostly for "regime propaganda" purposes in the cyber world and commercial purposes such as e-commerce transactions and tourism promotion. Some foreign and domestic observers predict that the North Korean regime will indeed fully open up to the Internet soon, now that they are strengthening their utilization of the Internet as a source for foreign relations and establishing domestic high-speed networks and nationwide computer networks. So it is high time to conduct more detailed studies about and to give attention to the North's establishment of e-government. To date, domestic South Korean interest in the North's establishing of e-government has been nearly non-existent.107 There have been some discussions of the subject of the North's information-orientation efforts with regards to its IT industry growth strategy, but those studies have not yet developed into discussions of the regime's e-government. Here, I shall attempt to analyze the North's e-government project strategy and method based on the regime's "own" concept of e-government, and discuss it by categorizing it into an "Internet-based" global computer network and an "intranet-based" domestic computer network. Finally, based on such analysis of the current situation, its potential and limits shall be also analyzed from technological, economic, political, and organizational points of view.

1. "North Korean-Style" Electronic Government

1) Conceptual Understanding of Electronic Government

Since "e-government" first emerged in the United States back in 1993, countries all over the world have been trying to establish their own e-government as a tool to innovate their societies through information-orientation. This new term and concept for governing first got its start when governments, having observed financial institutions' implementation of "e-banking such as ATMs (automatic teller machines), whereby the banks were able to catch the two rabbits of improving work efficiency and customer service, tried to introduce a similar concept in government services for the general public. However one notion required before the government adopted such similar concept was that an internal renovation suitable for the new civic administration paradigm had to precede, which in turn meant that the adoption of e-government fundamentally emerged as a way to improve governmental organization's competitiveness by utilizing IT as part of an overall strategy to innovate governing performance. So in this regard, the term "e-government" in a broad sense can be defined as "a government that has optimized civic administration performance by utilizing information technology to reform the government's administrative organization, tasks, and systems in efficient ways and to provide various information and services efficiently to all citizens from anywhere, anytime" (Kim Hyo'n-so'ng, 2002, page 149; Cho To'k-ho, Kwo'n Yun-hu'i, 2002, page 715). All e-government projects that are currently being undertaken aim to provide civic administrative services that are citizen-friendly by utilizing information technology and optimizing civic service tasks. These e-government projects have been greatly promoted by governments around the world as a part of their national innovation strategies to secure national

107 Discussion of e-government in North Korea has amounted to little more than the research by Ko Kyo’ng-min (2002b, 2003). 142 competitive advantage and maximize national interest to become first-class nations in the new 21st century (O Kang-t'ak, 2001, pages 119-120; Cho'ng Ch'ung-sik, 2002, page 219). Even though establishing e-government has become a generalized worldwide phenomenon despite differences in political ideology, governmental systems, and national competitiveness levels, because the general public and scholars have been defining the term differently and even according to time periods they have started accepting it; such "acceptance" of the concept of e-government has been very much overshadowed by its characteristic of "diversity" (Hwang So'ng-ton, Hwang Su'ng-hu'm, Kwo'n Ki-ho'n, 1999, page 21; Kim Hyo'n- so'ng, 2002, page 148; Cho To'k-ho, Kwo'n Yun-hu'i, 2002, page 715). The causes of such conceptual diversity taken by different governments are: the diverse socio-economic environments of each different government; the dynamics of information technology that are the core components for establishing e-government and the unpredictable speed of change; diverse demands by citizens on e-government services and the improved capacity of information utilization; and, continuing changes in the paradigm of government's role according to changes in e-government environments. However, despite all the different concepts accepted by various governments and citizens, there are central elements that are common to all, according to the studies previously conducted. Such common conceptual elements are: "Innovating the government and improving the efficiency of civic service tasks" by utilizing IT, "implementing fast and accurate service to citizens," and, "materializing the ideals of democracy," which are all prevalent as common conceptual elements (O Kang-t'ak, 2003, pages 325, 327). Then again, if the elements that are causes of conceptual diversity about e-government such as the ones mentioned above -- the dynamics of information technology and the unpredictable speed of change, diverse demands by citizens on e-government services and the improved capacity of information utilization, and continuing changes in the paradigm of government's role—are considered, its concept still cannot be said to have a set of specific meanings or be required to have a "closed" set of characteristics. Therefore the concept of e-government is still evolving, and it should be seen as having a set of "open" characteristics that may be further changed and developed (Korea Computerization Association, 2001, page 6). In the earlier stages of establishing e-government, the focus was on improving administrative productivity such as cutting costs by implementing IT as an extension of information-orientation and reducing administrative work processing time. Governments around the world ever since have been establishing their own e-government and information systems as they recognized that this was a new trend that could not be avoided, in addition to the significant benefits of improved organizational efficiency. So, by the end of the 1990's, due to the efforts made by many governments in implementing such tasks, information-orientation of civic service administrative work had made a great stride, reaching a good level, and overall, people's expectations and interests were all greatly heightened as well. With such gradual developments, by the 2000's, the advanced democratic countries have been proposing to change the paradigm of e-government in the direction of how e-government's relationship with the people it serves should be maintained by utilizing new information technology and how it should provide such services to the people. In other words, the basic direction of materializing e-government is changing from "establishing the infrastructure to actual utilization," from "centered around productivity of government civic service workers to actual improvement of citizens' convenience," and, from "limited availability to generalized service acceptance." Currently the advanced democratic nations' e-government strategy is focused mostly on the goal of "delivering services." In recent times in the United States, the accepted term of e- government is providing online information and services to citizens using the Internet or digital 143 tools (West, 2001; World Market Research Center, 2001), and the actual literal meaning of the term is defined as a government that utilizes information technology in improving government access and delivery of government services to increase convenience for citizens and corporations (Deloitte Consulting Co., 2001). Such a change of e-government's paradigm can be redefined as a change from "government-centered" to "citizen-centered" (HartTeeter, 2000; Mintzberg, 2000; Committee of Public Accounts, 2001; Korea Computerization Association, 2001; Ho' Hun, 2002; Electronic Government Research Center, 2002; Kim Hyo'n-so'ng 2002; OMB, 2002). In the earlier stage of e-government where it is centered on government itself, citizens are provided with administrative services, such as administrative information, promotional contents, and administrative tasks, that are converted to electronic documents, so there are not many differences from the actual manual disclosures of administrative information. The delivery direction of administrative information and service is really a unilateral delivery format from the government's Website containing information to citizens, as in government e-government Website citizens. Additionally most of these administrative information and civic services are structured in a way that they are either government-centered or favor the service providers, with the administrative organizations and task chains still following the old governmental mechanisms. Such a government-centered e-government system is really nothing more than delivering existing paper documents in the form of electronically converted documents, with low online administrative services and off-line services making up most of the services provided. So such an arrangement requires citizens to actually visit administrative agencies and they have almost no chance of participating in the policy decision making or enforcement process, all of which makes it impossible, or limited only to certain groups, to have sufficient interaction between the citizens and the government or to have citizens' demands reflected in administrative policies. In contrast, citizen-centered e-government provides more opportunities for citizens to participate in public administration as areas of interaction between the government and citizens through Websites increase and become more dynamic. At this stage, particularly, citizens get more involved and offer their opinions and suggestions and even demand to have civic services organized to the way they want, far advanced from the primitive stage of just utilizing or participating in the information provided by government. Accordingly, by this stage, the flow of administrative information also changes to the way citizens demand as they ask the government for needed civic services through Websites, and the government is left to just provide the needed civic services and administrative tasks, in which case the direction of service delivery changes to citizens e-government Website government. So if government-centered e-government is a model for the initial stage of e-government, then citizen-centered e-government can be called a model for mature or complete e- government.108 From the point of view of the administrative paradigm, the initial stage is characterized by its government-centered and bureaucratic nature, but as it gradually progresses, the e-information, e-civil affairs, and e-participation areas become more vitalized, and finally evolve into a cyber governance stage in which partnership with civilian arenas in cyber space is given more emphasis. Based on all these, the orientation of e-government in democratic countries is very clear. That is, if an information society is defined as a society wherein information is at the center of "power," then the final goal of e-government in democratic countries can be defined as serving

108 According to Cho To’k Ho and Kw’on Yun-hu’i (2002), the developmental stages of e-government are defined as the initial stage with a government-centered model, the full-scale implementation stage with an equilibrium model, and the completed stage with a citizen-centered model, and the authors see a truly full-scale e-government emerging in a form of "integrated government" when all three models are developed at the same time. 144 the citizens, and they are being implemented with that purpose as the final goal. If the orientation of implementing e-government is aimed merely to solve a backlog of administrative affairs and just to increase work efficiency only, then there is a great possibility that the government will have monopolistic control over information, and that is the reason why e- government in democratic countries is implemented to transfer control over information to the hands of the citizens.

2) Conceptualizing "North-Korean-Style" Electronic Government

It should be noted that it is only natural to have various concepts about e-government if such a new concept of governmental form is seen as still being in an "evolving stage. One should be aware of the fact that many countries have different concepts, governances, functions, and structures, even when they all function under same political ideologies and systems. So it is not totally exceptional to have the kind of variations in the form of e-government as well. If e-government is seen as a form of government for the future, its concept and characteristics will be fundamentally dependent first on political ideologies and systems. For instance, China, with its most prominent showcase of successful operation of e-government while still keeping a socialist system intact, was ranked 7th overall in the study of e-government level conducted by Brown University's Public Policy Research Center in the US. This clearly indicates that the Chinese government is proactively and dynamically managing its e- government operations. However the Chinese government is also strengthening its control over the Internet as it is regarded as a main promotional mechanism for the Communist Party's activities and a tool for economic growth.109 This fact duly demonstrates the clear need to look at the North Korean case of e-government based on an understanding of the North's ideology and special circumstances. North Korea has not yet opened the Internet to its general public, and it is utilizing an Internet-based e-government Website system through foreign servers; domestically, it has opened up intranet-based e-government Websites, which are cut off from the Internet. Therefore this special case of North Korean e-government is fundamentally different from those being utilized in Western countries. The concept used in North Korea has far different meanings in its "purpose" or "utilization" from the concept accepted in the West. So we need to have a conceptualization of this "North-Korean-style e-government." "Electronic government" is, as described already, a form of government that processes and handles the majority of information tasks by utilizing information technology and devices such as computers, the Internet, database, and networks, exactly as the words mean. The most important conceptual element that is different from the existing off-line governmental form is the utilization of information technology and devices, so it can be defined as government-centered technology. However, if all the existing concepts of e-government are comprehensively analyzed, those technology-oriented concepts are distinguished from value-oriented concepts.

109 Since the opening of the Internet in 1995, the Chinese government has instituted some 60 cyberspace censorship laws. All Websites created within China are subject to pre-authorization requirements, and Internet connections are fundamentally blocked to press and media in Hong Kong and Britain, etc., reflecting judgment that they are likely to spread anti-state, anti-social news and opinions. According to a study conducted by the US's Harvard University Berkman Center for Internet and Society (December 2002), out of a total of 200,000 Chinese Websites, more than 50,000 were blocked for access "at least one time," leading to the new phrase, "The Netizens’ Great Wall" (Yu Ji- yo’n, 2002, pages 54-55). 145

(Figure 5 – 1) Conceptual Forms of Electronic Government

Level For whose benefit? State Citizens What will Productivity I. Technocratic Government II. Customer-oriented Government increase? Transparency III. Society-Monitoring Government IV. Transparent, Open Government Power V. Absolutist Government VI. Direct-Democratic Government Sources: Hwang So'ng-ton, Hwang Su'ng-hu'm, Kwo'n Ki-ho'n (1999, page 23); Hwang So'ng-ton (2001, page 173).

The importance of value-oriented concepts is found in the fact that information technology is only one of the elements among others such as people, law, system, and culture which comprise e-government. Therefore it is necessary to have an understanding about why e- government is needed, how and where it should contribute, and what is needed to practice e- government, and only then, can its purpose, vision, and strategy be adequately established for its more effective implementation. In Western societies, e-governments are generally oriented toward forming intelligent government, innovative government, strengthening international competitiveness, and electronic democracy (Hwang So'ng-ton, Hwang Su'ng-hu'm, Kwo'n Ki-ho'n, 1999, pages 11-20). However it would be a mistake to regard the e-government being utilized in North Korea as at the same level as those in Western societies. So, to observe and study the North Korean brand of e-government, which has far different and limited characteristics, it is more important to look at first the central components that comprise e-government. As Figure 5-1 illustrates, there can be six models of e-government generated when it is understood by cross-cutting the two dimensions of whose benefit it is intended for with what it is aimed to increase (Hwang So'ng-ton, Hwang Su'ng-hu'm, Kwo'n Ki-ho'n 1999, pages 21-22; Hwang So'ng-ton, 2001, page 173). From this model generation, it can be concluded that the North is trying to increase the state's benefits rather than the citizens', based on the fact that it has not opened its domestic society to the Internet and only opened Websites for foreign audiences. Yet, it has an intranet-based e-government established that connects each major governmental organization, so it can be seen that the North intends to seek the benefits of e-government for governance, factories and business facilities. Conclusively, the "North Korean brand" of e- government is oriented toward a technocratic e-government, society-monitoring government, and absolutist e-government. First, a "technocratic e-government" is geared towards increased efficiency in work processing and productivity within a government, utilizing IT to quickly and accurately deliver directives from the upper echelons of government to subordinate units. Second, a "society-monitoring e-government" means an e-government that has a full grasp of information about its people to monitor the lives of its people. It also refers to an e- government with its upper echelon of government knowing all the information on the subordinate units. Third, an "absolutist e-government" is a form of e-government in which its government exercises power monopolistically by utilizing IT with very few people or a group ruling the government with absolute power. This form of government, from even greater strengthening of the privileged positions of those who work in government agencies, exhibits strong centralization of power and power flowing upwards. Based on the current economic situation that North Korea is faced with, it is estimated with a very high probability that it is oriented toward a "technocratic e-government" type of e- government. The North has insisted that to implement "information-orientation," they first need

146 to "implement information-orientation in the planning stages, which is the first step in information-orientation of all industrial activities," and they also need to "proactively adopt modern information technology facilities such as computers and the latest ‘information technology mechanisms' for that purpose" (Kim Kyo'ng-ryo'l, 2002, pages 29-31). This indicates that the North seeks to have a kind of information-orientation that is aimed at increasing their planned economy's efficiency and strengthening the centralized power basis by automating their organization and management of a planned economy that is mainly focused on the information-orientation of economy. Therefore it is clear that the central focus of the North's implementation of e-government is actualizing a "technocratic e-government" aimed at increasing the productivity of the government, factories, and business facilities from a national interest perspective. As its level of e-government improves over time and considering the nature of the regime, the regime will likely add "society-monitoring and "absolutist" modes. It is estimated that the reason the regime has not decided on the matter of fully opening up to the Internet is because they do not know yet what the political impact might be. Based on other cases of socialist countries that have opened up to the Internet, most of them have successfully blocked potential political impact by utilizing various censorship mechanisms.110 Especially for North Korea, since it has a relatively weak Internet infrastructure, its Internet control may be far more effective (Hachigian, 2002, page 44). There is also evidence that the North is currently accelerating the development of a set of Internet security systems, so once the issue is resolved, some observers are predicting that a full opening to the Internet will soon follow (Pak Ch'an-mo, 2002). If indeed the North opens up to the Internet, it is more likely to follow a path in which it strengthens control over the Internet to block any possible political damage to the regime and monitors its citizens, essentially adopting a "society-monitoring e-government." Considering the fact that a perfect society monitoring system can be realized by utilizing the effectiveness of e- government, the North may consider adopting an "absolutist e-government" as its ultimate goal as well. Once the function of "technocratic e-government" is electronically systemized in a mid- to long-term view as in control of subordinate units by the upper echelon of the government, the government's control over society will likely increase, and an e-government led by the government or centered on the government can be greatly secured. In sum, the e-government being promoted in North Korea has as its goal increasing the national interest, and the concept of e-government also has as its goal promoting the national interest by increasing the productivity, transparency, and power of North Korea's politics and economy.

2. Information Systems, the Internet, and Electronic Government in North Korea

1) The Meaning of Information-Orientation and its Direction of Development

Information-orientation refers to the entire intentional activities of production, processing, delivery, and utilization of information while recognizing that it is an important economic resource. It is indeed a driving force behind today's world, and a concentrated symbol that represents modern society's characteristics and changes. When a society is becoming

110 Based on current empirical studies, the view is becoming persuasive that no research provides proof of the common concept that the Internet poses fatal dangers to socialist regimes. For analyses of this topic, see Kedzie (1996; 1997), Boas (2000); Norris (2001); Kalathil and Boas (2001); and Hachigian (2002; 2003). 147 information-oriented, it means that information has emerged as a prevailing resource because the role of information is greatly increasing in all areas of society, including politics, economy, society, culture, and education, and accordingly the capacity to produce and distribute information or knowledge becomes the new barometer of determining an individual or group's power and ability. As the speed of information-orientation becomes faster and faster, all nations regard it as a central element that can be used for national competitiveness and respond to it in nationally strategic ways, because they came to understand that it increases society's overall efficiency, strengthens the competitiveness of the existing industrial base, and improves people's quality of life as an essential tool for national progress. Therefore, the differences in how each nation responds to information-orientation are found only in their different displays: ultimately their core intentions in accepting it differ little. Not just the advanced Western countries, but developing countries know the importance of it and adopting it competitively. Thus national promotion of information orientation is becoming a generalized phenomenon for all countries, regardless of governmental system, level of national strength, territorial size, or geographic location. It should be noted that, in North Korea, until only recently the term "information- orientation" was actually an unfamiliar phrase. That is because until the term was introduced, telecommunication, which is the foundation of information-orientation, had been conceptualized in North Korea to mean "socialist communication," and put under strict monopolistic control by the state111 to be utilized as a tool to guarantee the Party and the national economic institutions' rule and for propaganda purposes. Du to the nature of "socialist communication," there had been no public recognition that telecommunication could be used for public information exchange, improving quality of life or the people's welfare, and the government had been operating it just to deliver information to the people in a unilateral way (Kim Yu-hyang, 2000, pages 125-126). It was unthinkable even to imagine that information-orientation, by increasing the efficiency of the people's economy, could be utilized as a tool to strengthen national competitiveness or as a strategy for national development, let alone increase the quality of life for people in North Korea. The North Korean regime, as expected with its absolutist nature, had strictly believed that total control of information was necessary to prevent any laxness in its system. Therefore, even while the central government maintained huge amounts of information, the North had adopted a centralized, "monarchical" mode of information control (Davenport, 1997, page 69). However, beginning in 2001, the regime began to use different approaches on how it views information-orientation.112 Such significant changes began with the changes in the thoughts and recognition held by the supreme leader, NDC Chairman Kim Jong Il himself. Chairman Kim visited the Pudong district of Shanghai, China in January 2001, and after looking at and inspecting the latest industrial bases there, he began his adamant insistence on developing the information technology industry for his own country and urged quick information-orientation through IT industry growth, backing up his new stance with his argument that the new 21st century is an era for information technology industry. The North Korean media then followed up, emphasizing the importance of developing IT industry and promoting information- orientation whenever they had the chance.

111 For about a century, from the late 19th century when telecommunication was first massively introduced through the early 1980's, telecommunication had been developed as a public monopoly in almost all countries, whether advanced or developing. (Ko Kyo’ng-min, 2001). 112 In an interview with Electronic News on September 18, 2002, chairman Ri Sang-ch’un of the Computer Experts’ Committee of the KAST of GAKRJ said the North Korean government had been "clearly proposing information- orientation policies since 2001." 148

With such a transformative change of views by the country's supreme leader himself, the North started to assert that "it is impossible to build a powerful and flourishing nation without information-orientation in all sectors of the people's economy," (Korea [Choso'n] Central Broadcasting Company, 3 March 2001), showing its intention to get on the Knowledge-and- information-orientation" bandwagon of the new era. The North Korean regime's new recognition of the new era is clearly indicated in the following article that was published in Rodong Sinmun on 21 June 2001.

Knowledge is power and national pride derives from knowledge. Although in the past we may have led our lives with a slogan of only struggle as the way of survival, in the new information era of the 21st century, we must struggle under the slogan that knowledge as the only way to live. Poverty in knowledge will lead to nihilism and reliance on others. A person without knowledge cannot have self-esteem at all.

From this, it is clear that the North Koreans are aware of the necessity, unlike any other era in the past, to catch up with the new era of knowledge-information, lest they forever be left behind economically. In addition to "modernization," they have proposed "information-orientation" as a necessary condition by which to strengthen national competitiveness, emphasizing that, "modernization and information-orientation of the people's economy are requirements in order to build a powerful and flourishing nation and significantly improve our people's quality of life by establishing a high level of production based on the results of the latest technology," and further asserted, "as a strategic line for constructing socialism, modernization of the people's economy will establish information technology as the foundation for all sectors of the economy." Interestingly enough, the North has categorized information-orientation of the people's economy as among the high level echelon in modernization efforts, explaining that when "modernization" is consolidated into "information-orientation," its potential power can be more heightened to where it can serve as a physical and technological foundation. The regime went on to argue that in the new information age of the 21st century, "the important step in the information-orientation of all sectors of the people's economy is developing information science and technology," and "the Korean brand of socialism in developing its information industries has great potential to rise to a world-class level in a short period" (Rodong Sinmun, 17 May 2001). The regime further explained that it would precede establishing information-orientation of the people's economy with "production and operational activities of all sectors of the people's economy based on information technology." What they mean by information-orientation of production here is "consolidating all production processes with information facilities." As for information-orientation of managerial activities, they emphasize the importance of "establishing a nationwide computer network system for general operational and managerial activities" and insist that it is important to "develop both the computer industry as well as the programming industry." The regime also urged that "every Party member and worker arm himself with the new innovative idea and ideological points of view to continue to fight for information- orientation of the people's economy" (Rodong Sinmun, 17 May 2001). In other words, the North Korean concept of "information-orientation" of the people's economy means "automation of production" and "computerization of management" in which the introduction of information technology in production and management to increase productivity are undertaken for these purposes. So it can be concluded that the central focus of the North's information-orientation is the overall economy, and its final goal is improving the efficiency of

149 the people's economy through automation of production and computerization of management that will result in the strengthening of national economic power. To implement such production automation, the regime has undertaken proactive "technology update" projects.113 The regime's leadership, through the 2001 New Year's common editorial, has defined the main focus of economy building as "refurbishing the existing economic bases, increasing their potential as much as possible and working diligently to update the overall people's economy with modern technology." The leadership further emphasized that such technology updating projects are "the central link in our current economic projects" and "an urgent task that we cannot afford to put off any more," emphasizing that the projects are an absolute prerequisite for recovery of North Korea's economy. The regime is also urging each economic governmental agency and business facility to adopt information-orientation in all their economic planning tasks as quickly as possible, arguing that their socialist economy's success in computerization of management depends on such "information-orientation." The argument is based on their insistence that, since entire sectors of a socialist economy operate based on pre-planning, "the first stage of planning tasks must be implemented with information technology in order to have all the economic sectors equipped with such technology" and to do that they need to "proactively adopt modern information technology facilities such as computers and the latest ‘information technology techniques" (Kim Kyo'ng-ryo'l, 2002, pages 29-31). Once modern information technology facilities such as computers and the latest "information technology techniques" are adopted for the planning tasks, various data and information can be quickly and accurately received by national economic organizations such as labor administration agencies, procurement agencies, and financial institutions from all sectors of the economy and regional business facilities, so that current demand trends and their origins for labor, material, and funds can be tracked in a timely way, strengthening uniform leadership over the economy. Moreover, such adoption of the newest technology can increase the economy's overall efficiency in the long term, reinforcing as well the centralizing power of the planned economy. That is the primary reason why the North is adopting information-orientation: "To guarantee actual benefits from economic management." The regime is reasoning that only through information-orientation of the economy, can "science-orientation of economic management be increased to a higher level and the swiftness and accuracy of this increase, as well as flexibility, be secured" (Rim Yo'ng-hwa, 2002, pages 14-17). More than any other economic system, a centralized planned economic system can increase efficiency through information-orientation. For socialist countries, as the size of their economy grows and economic development proceeds, the amount of data that central governments have to process grows geometrically, but if the central governments do not have the ability to process such huge amounts of data efficiently and effectively, the governments' decision making will be inaccurate and incomplete, contributing to waste and inefficiency in their planned economies (Yang Mun-su, 2001a, page 196). Therefore, for these reasons, that information-orientation represented by automation of production and computerization of managerial activities can increase efficiency in production and management seem to be the factors why the North Korean regime is also promoting adoption of the technology, thinking that such actions would make or break their centralized planned economic system. That is also why the information-orientation of the North is primarily focused on the economic arena, by automating arrangement and management of their planned economy to increase its efficiency.

113 Refer to chapter 4-4 for more details on the technology update projects. 150

From the experience of South Korea in adopting information technology, the early stages of information-orientation in the public sector generally consisted of administrative computerization work for each governmental agency's units and establishing administrative computer networks that connect various information resources such as administrative databases based on the earlier computerization. It is same process in North Korea, too, where each Cabinet ministry as well as all of the other governmental agencies, factories, and business facilities are adopting computerization processes. Notably, their Kwangmyo'ng system, the network that has begun connecting them all together, provides yet another clear indication of the authorities' new recognition of information- orientation and their positive will to promote it.

2) Recognition of the Internet

Currently, there are no internet service providers (ISPs) or internet servers in North Korea (RSF, 2001; Hachigian, 2002). According to the Internet country code top-level domain (ccTLD) database of the Internet Corporation for Assigned Names and Numbers (ICANN), as of September 2002, there were a total of 244 ccTLDs in the world, of which 54 do not operate domain registration processes. Particularly, North Korea ".kp," along with Western Sahara's ".eh," currently does not have any agency that is authorized to grant domain names.114 As Figure 5-2 shows, North Korea's ccTLD code was registered as ".kp" back on September 27, 1999, but it is believed that it was not registered by the North Korean government itself, but by a non-profit agency composed of Asian Pacific countries called the Asia Pacific Network Information Center (APNIC), which registered it on behalf of North Korea. This shows that the North has not yet opened up domestic access to the Internet.

(Figure 5-2) Detailed Information about North Korea Found in the IANA ccTLD Database

114 http://www.iana.org/cctld/cctld-whois.htm. (Search date: 5 January 2003). 151

However, that does not mean that North Korea has walled itself off from any Internet activities whatsoever in the country. In the mid 1990's when the Internet was first introduced, North Korea's understanding of it was that they needed to know about it for military purposes and, by extension would have to use it for that purpose (Yi Yo'ng-hwan, 2000). For example, according to an American researcher working at a national security organization who visited Seoul in 1999, North Korea was found to have connected the most to the American military when the US Department of Defense tracked which countries had connected to American military Internet sites (JoongAng Ilbo, 19 June 2000). Until 1997 when North Korea first appeared in cyber space with the opening of the Internet Website for "Korea Central News" (www.kcna.co.jp) in Japan, the North had primarily been using the Internet for "regime propaganda" purposes only. These were the reasons why domestic South Korean observers of North Korea had mostly been making statements like "the North is the country that visits the American defense department-related sites the most, but they are very stingy about opening up themselves," or "the North's Internet sites are for regime propaganda purposes only." What's more, the South Korean public was generally ignorant even of the existence of North Korean Websites. However, it is not true that the North is completely ignorant of the usefulness of the Internet for political and economic purposes. The regime has recently been showing some changes with respect to their perception of the Internet. The regime had been relatively passive, defensive, and primarily used it for purposes of military and propaganda only until 1997 but, beginning in 1998, it started to take further steps, utilizing the Internet as a tool to attract foreign investment, sell its products, and bring in foreign tourists so as to expand its economic benefits, showing a change of perception. Also, just because the regime has not opened up to the Internet does not mean that it is unaware of the importance of the Internet. The North Korean media and official documents are showing greater interest on the subject than ever, and their zeal in studying and learning about it shows they are considering fully opening up to it in the near future. The Internet was first introduced to the North Korean general public with the February, 1996 issue of a magazine called "World of Science" in which two articles, entitled, "Scientific Research and the International Information Network: the Internet" and "The Information Superhighway"; then in the March issue, "What are the Main Functions that can be Utilized on the Internet?" appeared that explained in detail the functions of the Internet. Early in the year 2000, in addition to the science magazine articles, the official political magazine for the North Korean Cabinet, Minju Joson [Democratic Korea] (21 January 2000), also mentioned the Internet, stating, "with the Internet, one can receive many services from the network that connects the entire world as one. To use the Internet, one must have a computer that is connected to the Internet" (Yi Yo'ng-hwan, 2000). Another example mentioning the Internet was the monthly magazine, Ch'o'llima, which in its July 2001 issue introduced the Internet in greater detail for the general public in a regular column called, "Ask about Anything," encouraging people to learn how to use the Internet. The magazine wrote that "computer communication" was started in the 1960's and "computer networks" became widely available in the mid-1980's, developing into the "Internet" as an

152 international information system that is connected to countries all over the world.115 The magazine went on to state that, because the Internet can provide almost limitless information in a wide array of services, the world's interest in the Internet is growing every day, and about 150 countries are connected to it, with about 13,000 computer networks connected to each other. It also added that such a "computer network" has become the second largest network next to the telephone network. The magazine further explained, "services that can be provided through the computer network include computer access, library information, free computer access, network information centers, open information systems, and other services," noting, "this new computer network can be applied to many fields, such as sharing device resources and program resources and providing places where information can be exchanged, which all have helped to popularize it all over the world" (Yonhap News, 19 August 2001). Particularly noticeable are the North's recent studies on utilizing the Internet for strategic purposes while eliminating its reverse-functions that may negatively impact its socialist system. This shows that the regime is about to complete their studies on intranets and firewalls, and moreover, with some limited capabilities, it is now possible for foreigners outside of North Korea to exchange electronic mail with people residing inside the country. Furthermore, the number of users who connect to Websites located in South Korea is increasing at a greater pace. These are all clearly indicative of how the North Korean regime is at a stage preparing to open up to the Internet in a limited way, ultimately to use it for strategic purposes, while blocking any potential negative impact it might have on its political system. To explain it in more detail, to the North Korean leadership, the Internet is like a "poisoned apple." If the apple is eaten without removing the poison, it may lead to unintentional results such as regime insecurity or even collapse, which makes the North Korean regime very cautious about approaching it. So before they fully open up to the Internet, they first want to remove that "poison" inside the "apple," lest such unintentional consequences follow, which is why they are concentrating on preparing security or buffering devices. Such attempts by the North Korean regime represent rather typical Internet policy for socialist countries, wherein social monitoring is the basis of their political rule. Socialist countries generally strictly control any attempt by the public to approach or access the Internet. However, they still recognize in positive ways the potential of utilizing the Internet. This two- faced perception of the Internet by socialist countries is at the root of their dilemma over how to utilize it -- controlling it politically while still extracting its economic usefulness. If the Internet is controlled too excessively, its potential usefulness will be reduced, so maximizing its potential economic benefits will have to be compromised; if, in contrast, such control is exercised with a light hand, the economic benefits may rise, but then important social controls will be loosened and the possibility will be much higher of anti-regime elements infiltrating and threatening their society. However, the North's current views of the Internet are actually more rigid than those of any other socialist country. The North is practically cutting off the Internet for domestic general public use. Just about the only way it is used inside North Korea is by the international Internet network via Sinu'iju, North Korea, and Dandong and Beijing, China, which Chairman Kim and a limited number of his subordinate officials within the regime use unofficially. However, as

115 The magazine used the term "computer network" to mean computer communication and computer communication network as it became highly developed with information processing technology and electronic telecommunication technology. The magazine defined computer communication network as a "group of computer systems connected together for the purpose of information (data) communication," and explained that the current world is formed with an international computer communication network that is connected by computer communications between countries in the world as the earlier "computer network" subsequently developed, defining the Internet an "international computer communication network." 153 mentioned earlier, the regime is not totally against adopting it whatsoever. Domestic usage may be prohibited by the regime, but they are showing a practical side by utilizing the Internet for foreign contact purposes. Some Internet Websites have been launched using foreign servers which are being used for regime propaganda and for economic benefit. Conclusively speaking, the North's Internet policy is divided into domestic and foreign arenas, whereas its domestic policy continues a closed off stance while its foreign policy is being changed to positively utilizing the Internet in tune with the worldwide trend of its popularization. All indications are that lately, rather than their previous stance of utilizing it simply for propaganda purposes they are further developing it into a practical economic tool that may generate actual commercial benefits.

3) Strategy and Method to Implement Electronic Government

North Korea first experienced the Internet back in 1993 when it connected to the Internet with Australia as an experiment. The North also had another experience with the Internet in October 1995, when the United Nations Development Program's Pyongyang office connected to the Internet, using a server in New York (Yonhap News, 30 November 1995). The first time the North officially appeared in cyberspace was in January 1997, when its "Korea News Agency Company," which is regarded as the Tokyo branch office of the Korea Central New Agency," began to provide the government's official news.116 The Website of the Korea News Agency (www.kcna.co.jp) primarily quotes and delivers news from the North Korean Workers' Party's official newspaper Rodong Sinmun. The Website's URL indicates that its server is located in Japan. However it is not important where a server is located for the North Korea's Internet-based e-government establishment, nor meaningful to categorize its Websites as official or unofficial ones (Akutsu, 1999). That's because in cyberspace, unlike in actual physical space, geography and boundaries are not very significant. So for North Korea, with its policy of blocking off Internet connections, its Internet-based e- government Websites have all been established using servers based in foreign countries,117 and even the unofficial Websites that provide North-Korea-related information have been established mostly with North Korea's direct or indirect support.118 Just before the launching of North Korea's official Website in December 1996, an unofficial North Korean-related Website appeared in cyberspace, attracting worldwide interest. The site was launched by a Japanese national named Tasuo Sakai under the title of "The Democratic People's Republic of Korea (DPRK) Welcomes You! (www.dpr-korea.com)."119 The Website was created very dynamically with many beautiful visual effects, written in both English and Japanese versions, and mainly introduced North Korea's tourist information, popular music, and short video clips; apparently a Website created for regime propaganda purposes and attracting foreign tourists. Some 67,000 Internet users visited the site within four months of launching, indicating a wide interest in North Korea in cyberspace (Petrov, 1999). It was

116 Prior to that, Kimsoft's "Korea WebWeekly" had been providing North Korea's official news on the Internet for a period of about one year, until December 1996 (Petrov 1999). 117 There are 12 foreign Internet Websites supported by North Korea in Japan, six in the United States, two in China, and one in Australia. (Yonhap News, 22 June 2003). 118 Another similar case is Cuba. Due to US sanctions, Cuba's international Internet links are mostly established via Canada. Cuba's "cu" domain-registered Websites in actuality are mostly hosted by Canadian Web servers. (Williamson, 2000). 119 Despite Sakai himself clearly indicating on the front page that it was not an official North Korean Website, Petrov (Petrov, 1999) argued that it was very likely that the Website was supported directly by the North Korean government or by a North Korean supporter in Japan. 154 thought to be an example of an unofficial North Korean site that was created a lot better than the actual official North Korean site (Akutsu, 1999). Encouraged by the success of its first Website, North Korea then began to launch a series of many foreign Websites designed for purposes of regime propaganda and attracting tourists. However all these sites were not launched for propaganda purposes only, and the launchings of these Websites actually became a catalyst for the North Koreans to change their view and perception about the potential of the Internet, opening their eyes to the opportunity of doing business in cyberspace (Petrov, 1999). Through its opening of Internet-based e-government Websites, North Korea is trying to form a close economic relationship with potential foreign investors while also attempting to hide information about its domestic political situation and suppressing normal communication with the outside world as much as they can, essentially taking a dual policy path. Accordingly, North Korean Websites can be divided into two groups, one of which mainly provides information on North Korea for "regime propaganda," while the other is for commercial purposes such as economic and technical cooperation, as well as introducing the North's tourist attractions for "revitalization of its economy." However, the emergence of official North Korean Websites in cyberspace does not mean that they have become a society more transparent or more open to the outside. Fundamentally, North Korea's Internet strategy is to enjoy the benefits politically through external regime propaganda and economically of the Internet within a scope and methods that do not threaten the regime in any way, while maintaining a strict blockade on internal conditions and information. Therefore the North has a pressing need to establish Internet-based e-government to improve internally the productivity and efficiency of its centralized planned economy, while promoting externally regime propaganda and economic cooperation and exchanges. However, if the shock to the system that introduction of the Internet, which symbolizes openness and freedom, is considered, promotion of e-government has to be displaced by the issues of development of a security and control system for the technical aspects that can block such shocks and by the issues arising after the establishment of a system to control the Internet from the political aspects. While it is a fact that Internet-based e-government would have the potential to be utilized as a major tool for the efficiency of their planned economy as well as for reinforcing social control, whether because a system of security and control of the Internet that is both stable and trustworthy has not yet been developed, or because of worries about Internet hacking by Western nations and cyber terror, they are delaying a decision about importing the Internet. These special considerations have led to the strategy of dividing the building and operation of their e-government into two layers of operation: by Internet and intranet.120 To summarize, to North Korea the Internet is an "externally-oriented" resource, which is utilized for regime propaganda and earning commercial benefits from the outside world without opening up the Internet, using servers located in foreign countries to power its Internet Websites. In contrast, a closed computer system conceptualized as an intranet based on Internet technology that communicates only within North Korea and is used only for internal purposes, with homepages established and operated for governmental agencies, can be categorized as an "internally-oriented" resource. Upon this basic understanding, North Korea's e-government is

120 However, details of North Korea's intranet-based e-government have not become known in detail domestically, due to limited availability of related data and information. According to what has become known through domestic and foreign media reports, in June 1997, a beginning-level computer network based on the concept of an intranet was built and started operation in North Korea, and by October 2000, a computer network was established using fiber optic cables which then led to trial service by the end of 2001. Full-scale service began in November 2002, when a nationwide network was established, connecting networks that had been operating regionally. Refer to chapter 3 for this subject. 155 operated dualistically, adopting a policy of separating the Internet-based e-government for "external use" that is geared toward propagandizing for the regime and promoting foreign economic exchanges and cooperation, from an intranet-based e-government for "domestic use" that is aimed to improve the efficiency of the planned economy through information-orientation of production and managerial activities.

3. Internet-based Electronic Government Websites

1) Websites for Regime Propaganda

(1) Korea News Agency [Choso'n T'ongsin]

The first time North Korea emerged in cyberspace was January 1997. It was when Korea News Agency", of the Korea Central News Agency, North Korea's official news agency and the only international news agency of that country, launched a site (www.kcna.co.jp). The site was not launched by North Korea directly but by the Korea News Agency, which can be called the Tokyo branch of the Korea Central News Agency, using a server located in Japan, but all of the main contents including news articles and pictures are provided by North Korea's Korea Central News Agency.

(Figure 5-3) Starting Page of the Website, Korea News Agency"

156

As introduced on the Website, "The Korea Central News Agency, the communications agency of the Democratic People's Republic of Korea, plays the role of a diplomatic tool, clarifying North Korea's official positions. The site also clarifies that the Korea News Agency, as the news agency for the General Association of Korean Residents in Japan (GAKRJ), "Performs its main mission of delivering news about the Korean Workers' Party and the Republic's lines and policies as well as the accomplishments of socialist construction by the Korean people to countries all over the world, and news about the struggle and the patriotic tasks performed by the GAKRJ and the Koreans living in Japan to the people of the fatherland." So from these points one can call this site a de facto North Korean regime propaganda Website operated using material from the North's official news media as its source, even though its server is located in Japan and it is operated by GAKRJ. The site's menu includes the "past news section" where news articles from North Korea's Korean Central News Agency are introduced, and the "Rodong Sinmun" section, where that newspaper's recent articles are introduced. In recent years, it has had a section devoted to introducing Chairman Kim Jong Il's writings that have been published in the Rodong Sinmun called "the Works of General Secretary Kim Jong Il," and in the "Official Texts and Material" section are displayed the joint editorials, joint commentaries, and major legislation of the Korea Workers' Party and the government, as well as texts related to the United States, Japan, China, and Russia. Additionally, on the "Fatherland Unification and North-South Relations" menu, there are the Three Great Charters for Fatherland Unification, major agreements and related texts between the governments of the North and the South, and various other materials regarding South-North meetings. There are also texts introducing the North Korean constitution and the news agency.121 As Figure 5-3 shows, the site's Web design is structured in a rather simplistic way, consisting mainly of text rather than graphics. The site however was able to attract tens of thousands of visitors within only three months of its launch, and after delivering the news in English for a year, it then started to supply the contents in Korean too, beginning in March, 1998 (Yonhap News, 3 March 1998). The site has mainly delivered simple news stories from 1 January 1998, to the present about North Korea, basically relaying articles from the Korean Central News Agency as its main contents. The news stories are not provided in real time but with a one-day delay and only major news stories are relayed, with no database search engine available, which is a downside for this site.

(2) Korea News Post

The Korea News Post" Website (www.korea-np.co.jp) was launched in February 1997, using a Japanese server. This site is the official Website of the daily newspaper Korea News Post, published by the GAKRJ." Again, since this site predominantly publishes the works of Chairman Kim Il Sung and NDC Chairman Kim Jong Il and represents the North Korean views, it is, in fact the same as a site operated by the North Korean government. The Korea News Post company is headquartered in Shinjuku, Tokyo, and provides service in three languages -- Korean, Japanese, and English. The English service, especially, is offered as a site for the semi- monthly magazine published by GAKRJ, "The People's Korea."

121 With regards to the launching of the North's Korea News Agency site, the Pyongyang Broadcasting Company (16 January 1997), through a commentary, reported that the Website had portraits of Kim Il Sung and Kim Jong Il, and various scholarly papers and educational and cultural contents centered on Juch’e ideology, commenting that "it is very fortunate from a national or reconciliation and unification perspective that, at least through a limited channel such as this site, young students in the South are now able to see and admire the reality of the Northern half, with its full blossoming of Juch’e ideology," hinting that the site is for regime propaganda (Yonhap News, 17 January 1997). 157

The main contents of this site include news about Korea, activities of Ch'ongryo'n, events in the Japanese-Korean community, external relations, cultural events, sports events, national pride education, commentaries, community posts, and video reports, as well as "article service" and "DPRK news" for article search purposes. Past articles of Korea News Post since 2001 can be searched by date, with the "video report" site offering video services and a special section reporting about the "Chejudo National Unification Festival."

(Figure 5-4) Starting Page of the Website for the Korea News Post Korean Edition

Additionally, the site has banners to GAKRJ and its affiliate organizations so that visitors can easily connect to those sites, and in its "Links" section, the homepages of Choch'ongnyo'n, its affiliate organizations and national schools are carefully categorized for easy linking. There is also a mail order banner in the center of the site, offering some simple information on how to purchase North and South Korean special items, consumer goods, and home electronic products when clicked. However this is not a typical e-commerce transaction link, but rather a lower level offering that sells only by orders placed through e-mail or telephone. Recently, the Korea News Post Internet edition has been reporting about the major decisions and demands with regards to the North Korean government's foreign relations, attracting some interest. For example, the site has been playing the role of a spokesman for Chairman Kim Jong Il with regards to the North-South issues, and the North's measures related to economic reform, which were one of the major issues in 2002, were reported through this site (Song Su'ng-so'p, 2003, page 107). However this site is also very similar to the "Korea News Agency" site in terms of how it relays and provides news stories for North Korea. The site's only difference would be how the stories about North Korea are repackaged to suit GAKRJ; otherwise, the site basically is nothing more than a mouthpiece for the official positions of the North Korean government. Yet, it does offer some focused North Korean-related news stories for the Koreans resident in Japan, and in

158 its "national education" menu, one can confirm the intention to educate them. With its detailed Internet links section, their intention to reinforce ties between GAKRJ-affiliated organizations and other related organizations is evident. This site's English version, entitled "The People's Korea" (www.korea-np.co.jp/pk), offers the same contents in English; other than that, it has no particular difference from the Korea News Post site. The most striking features of this site are the ability to do keyword searches, as seen in Figure 5-5, in the upper left-hand corner of the Website, and the access to reading news stories in PDF documents. In the "PK ARCHIVES" menu, one can find a collection of English-language news articles from 1997 to the most recent (2003), and in the "Inter-Korean Summit" menu, a list of major dates and related data can be found on the "July Fourth South-North Joint Statement" of 1972 and the "June Fifteenth Joint Statement" of 2000.

(Figure 5-5) Starting page of the Website of the English edition of the Korea News Post

The site's main menus and sections include a wide array of North Korea-related political and economic information such as "Foreign Relations," "DPRK Leadership," "Inter-Korean Relations," "Economy," and "Information Technology," as well as various other topics, including international agreements and law, military, and history and culture, essentially acting as a window for North Korea's promotion and regime propaganda to the Western world.

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(Figure 5-6) Starting Page of "The Pyongyang Times" Website

(3) The Pyongyang Times

The Pyongyang Times' Website (www.times.dprkorea.com) is the only official English weekly newspaper published in North Korea. It is one of the two media Websites that transmit official North Korea-related information to the world via Internet along with the Korea News Post's English Website, "The People's Korea." The site was launched on 8 July 2000 by the Pan- Pacific Economic Development Association of Korean Nationals, a very active North Korean organization responsible for developing foreign Internet projects and doing businesses with South Korea, using a server located in Japan jointly with the English edition Website for "DPRKorea InfoBank" (Song Su'ng-so'p, 2003, page 115). The site has been providing major news stories related to North Korea since 1 January 2000, and consists of the "Economic Development," "Local News," "Public Opinion & Community," "Sports & Culture," and "Science & Technology" sections. The site also features a search engine capability, enabling users to search news information according to category, title, date of publication, or number of paper. Considering the limitations on sites from which Internet users in the English-speaking world can obtain first-hand resources on North Korea in the English language, these North Korean English Websites, the Pyongyang Times and the People's Korea site by the Korea News Post, play a pivotal role in providing information in English on all aspects of North Korea's society, as well as in external promotion of and propaganda for the regime.

(4) Among Ourselves

The "Among Ourselves" Website, www.uriminzokkiri.com, an official North Korean portal site that was launched on 1 April 2003, appears to be a typical site developed to promote and provide information about North Korea in cyberspace by providing broad and varied content, 160 very much a model for such propaganda purposes. A previously launched Website, called "Korea InfoBank" has been garnering attention for its seemingly better overall design, contents, size, and details. The "DPRKorea InfoBank site was developed primarily for foreign economic cooperation and exchange purposes, while the new "Among Ourselves" site was launched for all purposes other than that, such as politics, society, culture, history, and tourism in promoting North Korea. On 8 November 2002, while the South Korean delegation was visiting North Korea for conferences of the Third South-North Economic Cooperation Promotion Association, the North disclosed, as they were introducing the Choso'n Computer Center, that they were developing an Internet home page called "My Country (www.naenara.com)," which was slated to open on Chairman Kim Jong Il's birthday. According to media reports at the time, the computer center engineers were developing the Website using software developed by a South Korean company called "Nemo Web Editor," and its contents would include a section entitled "Books I Would Like to Read," movies, music, and VOD service in real time, provided directly by Korea Central Broadcasting (Yonhap News, 8 November 2002).

(Figure 5-7) Starting Page of the Website, "Among Ourselves"

However, the proposed Website did not get launched, and instead the "Among Ourselves" site was opened on April 1st. It is not clear whether the opened site replaced the proposed "My Country" site (Song Su'ng-so'p, 2003, page 120), but, considering its size, contents, and the timing of the launching, it appears indeed to have replaced "My Country," The header of the "Among Ourselves" site on the home page starts with the motto: "Let Us Achieve a, Self-Reliant and Peacefully United Fatherland Through a Great National Unity, Overcoming Differences of Thought, Ideology, or System!" Unlike other sites that provide

161 foreign language editions, this Website is available only in Korean. As the name of the Website, meaning "just among ourselves (our nation)," suggests, this site seems to have been founded chiefly for regime purposes of propaganda to the South, based on the undercurrent of the North Korean regime's theory of ousting foreign influences through grand cooperation between the North and South of Korea (Song Su'ng-so'p, 2003, page 122). The Website's contents and how they are structured make it perfectly clear that it is indeed intended for regime propaganda purposes. The site almost never mentions anything about the poor economic situation in North Korea, instead focusing on regime propaganda, with its contents structured to represent that purpose. On the home page, the Website first describes what they call the "Three Great Generals of Mount Paektu" -- Kim Il Sung, Kim Jong Il, and Kim Jung Sook, followed by video (photo data), biography, revolutionary legends, anecdotes, and folklore for each of them. The next menu shows a section about "Timeless Works" containing the father and the son's revolutionary stories and published books, followed by "Lectures on Juch'e Ideology" and "Recommended Books," introducing mostly political and literature books. The next menu shows unification-related documents and national unification events in videos. There is also a section in the menu entitled "National Unification Policy" in which the North's principles, proposals, platform, and policies regarding unification are introduced, along with the June Fifteenth North-South Joint Statement. A section entitled "100 Questions and their Answers on National Unification Issues" contains the North's unification policies in detail, in a question and answer format. Another corner of this site, containing "A Letter to the Elementary and Middle School Students in the South" by elementary and middle students in North Korea strongly suggests that this site is definitely a propaganda site aimed against South Korea. The Website additionally introduces the history, culture, and customs of North Korea, a wide array of content. The site features edited photo albums depicting the Mountains Paektu, Ku'mgang, and Myohyang, which are famous tourist attractions in North Korea, along with the country's historical sites and remains, historical figures, and folk games. Related materials on these are also featured in more detail in the "multimedia" section, where zoos, botanic gardens, culinary dishes, fashion, and additional tourist destinations are introduced. Additional sections of the Website include "Newspapers and Magazines," where the main articles of Rodong Sinmun and Democratic Korea as well as six magazines can be accessed, "Fatherland News" about news stories on North Korea, "Correspondence Classes," where one can listen to broadcast lecture classes from Kim Il Sung Broadcast University, and Ku'msu Mountain Memorial Palace" and "International Friendship Display Hall," where visitors can see these places both inside and outside in 360-degree rotation. Some of the site menus are still under construction, and they say some videos did not operate properly, so it seems that the site has not been fully maintained and operated as originally planned.

2) E-Government Websites for Commercial Benefit

(1) DPRKorea InfoBank

The "DPRKorea InfoBank" Website (www.dprkorea.com), launched in Beijing, China, in commemoration of the North Korean Workers' Party Founding Day (10 October) in 1999, can be regarded as the first official Website launched by the North and its e-government Website in cyberspace. The main operator of this site is the "Pan-Pacific Economic Development

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Association of Korean Nationals (Pan-Pac for short)"122, which was established in April 1999 by the North Korean government for foreign Internet business purposes. This site, for "economic cooperation and attracting investment," is mainly geared toward promoting foreign economic cooperation while providing varied and comprehensive information on North Korea on the Internet. This Website describes its mission as managing a home page to "Provide an Internet window for information regarding cooperation and trade efforts with Korea for Korean people living all over the world." In addition, the Website was also established to conduct such businesses as publishing The Pacific Ocean -- a guidebook on North Korea's economy, society, culture, sports, and tourism, arranging international conferences including North Korean export product exhibitions, introductory seminars on the investment environment, and academic conferences in specific fields, as well as cooperative projects on international trade, investment, culture, arts, sports, and tourism, and regarding publications for foreign audiences. A visitor can connect from the home page of DPRKorea InfoBank to the version desired, as shown in Figure 5-8. When one connects thus to the Korean version of that site, the start-up page appears, as shown in Figure 5-9. At the center of the site, there is a box menu which features, on the left, membership registration, introduction to the association, news reports, and the Pyongyang Times and, on the right, information about Kim Jong Il, Kim Il Sung and Kim Jung Sook, as well as North Korean magazines. Right underneath that are displayed, in order, the video viewing section, recent North Korean news, official documents, and public notices. On the right side of the home page, visitors will see menus on the North Korean economy, law, culture, books, tourist destinations, medical sciences, and stamps with detailed and broadly categorized "infobank" sites regarding the subjects inside these menus. For example, in the North Korean economy menu, major news stories regarding the North Korean economy as well as rare data such as detailed introductory information on North Korean companies, industries, international trading channels, science and technology, and the investment environment can be seen. In the North Korean law menu, detailed and categorized data on the general laws and regulations, economic regulations for foreigners, and official documents related to North-South relations are laid out clearly, in addition to a functional legal search engine.123

122 This organization, Pan-Pac, has become known for engaging in more South Korea-oriented business projects recently than the other two similar formal North Korean organizations, "Korea Asia Pacific Peace Committee" and "National Economic Association." The organization was responsible for attracting tourists to the Arirang Festival held in North Korea in 2002, and has been deeply involved in North-South economic cooperation projects and inviting South Korean VIPs to North Korea, establishing the "Korea Lottery Joint Venture Company" with the South's venture company "Hoonnet" to develop, for example, the first inter-Korea Internet lottery business project. The current leadership of this organization consists of its chairman, Yi To-kyo’ng, who is based in Beijing, and president Yi Po’m-chin in Pyongyang (Song Su’ng-so’p, 2003, page 112). 123 One noticeable thing that distinguishes this from other North Korean sites is that it offers a search engine function. It was disclosed that the search engine was supplied by a South Korean company named "Namo Interactive" with the company's "Namo Turebak [Well Bucket] 3.0," attracting wide interest. 163

(Figure 5-8) Front Page of the "DPRKorea InfoBank" Website

(Figure 5-9) Start-up Page of the "DPRKorea InfoBank" Website, Korean Edition

The "DPRKorea InfoBank" site offers independent foreign language editions. Figure 5- 10 shows the English edition site, Figure 5-11 is the Chinese edition, and Figure 5-12 shows the Japanese edition site, which have been launched and operated separately.

164

(Figure 5-10) Start-up Page of the English Edition Website of "DPRKorea InfoBank"

(Figure 5-11) Start-up Page of the Chinese Edition Website of "DPRKorea InfoBank"

165

(Figure 5-12) Start-up Page of the Japanese Edition Website of "DPRKorea InfoBank"

This site is operated on a paid membership basis, and membership requirement is defined as "any individual or organization interested in the Korean national economy culture." Once a prospective member completes the ID registration request, the prospective member is asked to deposit a membership registration fee to a designated account at the Bank of America (Asia) Ltd. The membership is divided into general members and gold key members (VIP). According to the Website, only existing general members can apply for the gold key membership, and they must sign a consultation service agreement with the InfoBank. The general membership fee was $2,000 a year (including the registration fee) when the Website first opened, which was a fairly high amount, but it was lowered to $1,200 a year in July 2000, and it was again lowered to just $300 recently. With a paid membership, a member can expect to receive detailed information and international trade leads regarding possible North Korean goods for exporting and importing, various information and data, consulting service, product exhibition information, invitations to investment seminars, academic seminars, and cultural arts conferences as well as a 15% discount on publications There are some interesting facts regarding this site. One of them involves a "Visitors' Register" similar to a free discussion forum which was offered when the site first opened, but the netizens were blocked and the site then closed down in just 15 days, because of the heavy criticism, ridicule, and mocking directed against the North Korean regime and Chairman Kim Jong Il (Yonhap News, 25 October 1999). The other one is the advertisements that appear on the site, including an ad for Koryo Airlines" in the lower right hand corner of the Korean edition, in a section entitled "InfoBank Advertisement Corner," and, right underneath that, a recommended sites corner, linked to such sections as Korean Tourism, Law, International Trade, Movies, Cooking, Literature, Publications, and Medical Sciences, promoting ads for North Korean commercial products and information.

166

These facts indicate that North Korea initially intended to launch a Website that was very much in tune with the Websites generally offered on most of the sites of Western countries, including a menu and visitors' log, even though it was ultimately closed down due to the side effects described above. Also it is clear that the North intended to add a commercial aspect to the site, from its utilization of advertisements, links to North Korea's major commercial products and resources, and a fee-basis membership. In addition, the "DPRKorea InfoBank" site is far more sophisticated in terms of design than any other North Korean Website, and moreover, it also boasts a search engine function, as well as foreign language editions in English, Japanese, and Chinese. The Website definitely can be regarded as the best North Korean site in terms of the variety of menus offered, quality of information, and convenience of use. The site is also much more sensible in the functions offered to users than typical North Korean Websites, which primarily were launched for regime propaganda purposes, for it provides the information needed to engage in economic cooperation and exchanges with the North Korean government. The site's offering of a paid membership system and advertisements adds more practicality and functionality in attracting foreign investment, in addition to economic cooperation and exchanges. As National Intelligence Service has pointed out, this Website's significance lies not just in the fact that it was the first official site launched by the North, but in its far more sophisticated interface and abundant contents, unlike the previous sites that were mostly designed with text-based outlines, makes it truly an e-government Website for North Korea that lives up to its name.

(2) Silli Bank

The "Silli Bank" Website (www.silibank.com), launched on 8 October 2001, is an electronic mail relay site that makes it possible to communicate with North Korea through the Internet where otherwise the Internet itself is completely blocked off. This site is operated by electronic mail servers installed in Pyongyang and Shenyang, China that enable e-mail communications between North Korea and third countries. The interval between relays of e-mail between the Pyongyang and the Shenyang mail servers recently has been reduced from the previous 30 minutes to ten minutes, and they have stated that a 24-hour continuous connection is being planned. To use this e-mail service, one must register as a member on the Silli Bank site and disclose his or her own e-mail address as well as a "major contact person" residing in North Korea. For the actual exchange of e-mail, a general Mailer, that is accepted e-mail clients such as Outlook Express, are used. However unlike the other regular e-mail services that are provided free of charge, the North's Silli Bank service actually charges fees, scaled according to e-mail volume. In addition, once registered with Silli Bank, an advance payment for three months of use is required, based on a "service fee calculation method" according to the volume of e-mail anticipated to be sent. If the estimated communication fee has no balance remaining after the actual fee is calculated, further service usage is blocked. These regulations are still in effect today. However, the previous requirement of a registration fee of $150 was abolished on 21 March 2002, "in order to provide faster service and be more convenient to the users." As Table 5-1 shows, the Silli Bank Website's "e-mail fee calculation" method has been changed twice since the site's opening. It was initially calculated based on e-mail usage volume, but it was changed twice, on 1 October 2002, and 10 May 2003. The Silli Bank stated that, with the new calculation method, fees for less than 300 KB rose a bit, from $5.00 previously to six dollars, while those above 300 KB went down a lot, from $11.00 previously to ten dollars (Yonhap News, 10 July 2003). 167

(Figure 5-13) Start-up Page of the "Silli Bank" Website

The Website is actually relatively simple, consisting of only four menus. The "Electronic Mail" menu contains brief information on times allowed to transmit e-mail and how to use it. In the "Members' Information" menu, information is provided on how to apply for membership and regulations on how to pay the transmission fee, rather than what the menu name suggests. There are also the "Notices" and "Company Introduction" menus that announce information on regulation changes related to the site operation and provide linkage to the front page.

(Table 5-1) Changes in Silli Bank's "E-Mail Fee Calculation Method"

Period E-mail Volume Fee Calculation Method At the time 10 KB $2.00 of site's 10-50 KB $3.00 launching 50-100 KB $3.50 100-500 KB $3.50 + (E-mail volume-100 KB) x $0.030/KB 500-800 KB $15.50 + (E-mail volume-500 KB) x $0.040/KB 800-1600 KB $27.50 + (E-mail volume-800 KB) x $0.050/KB Above 1600 KB $52.50 + (E-mail volume-1600 KB) x $0.055/KB After Under 20 KB $2.00 October 1, 20-25 KB $2.00 + (E-mail volume-20 KB) x $0.100/KB 2002 25-1200 KB $2.50 + (E-mail volume-25 KB) x $0.030/KB 1200-2000 KB $37.75 + (E-mail volume-1200 KB) x $0.027/KB Above 2000 KB $59.35 + (E-mail volume-2000 KB) x $0.025/KB After May Under 10 KB 1 EURO 10, 2003 10-40 KB E-mail volume x 0.1 EURO / KB Above 40 KB 4 Euros + (E-mail volume-40 KB) x 0.02 Euros/ KB

168

The Website's start-up page consists mostly of necessary text with no graphics, and there is only one banner, "Among Ourselves (www.uriminzokkiri.com)." In addition to Korean, the site is offered in English, Chinese, and Japanese versions. As the Website's name (Silli – meaning practicality) suggests, the site contains only necessary, practical menus required for the site's operation. However, rather than an Internet home page intended for the users, this site may be seen as one revealing North Korea's commercial strategy of using the North's peculiar characteristic of limited accessibility to earn foreign currency. (North Korean Economy Team, Korea Development Institute, 2002, page 57). As for South Koreans wanting to communicate with the North through e-mail, Clause 3, Article 9 (Communication between North and South), of the current North-South Exchanges and Cooperation Law states that "if any South Korean resident wishes to contact North Korean residents through mass communication or other methods, prior authorization from the Minister of Unification is required." So, just simple reading of the North Korean Internet sites is possible without first obtaining permission to contact North Korean residents, but such permission is required when wanting to register as a member on the North Korean Websites, use e-mail or place orders, which are regarded as forms of communication.

(3) Commercial Websites of the Korea Lottery Joint Venture Company

Some North-South joint Websites accessible on the Internet have been launched and operated recently using the server located in Munsu-dong, Pyongyang. These sites were launched after April 2002, and the main operator of these sites is the Korea Lottery Joint Venture Company, established jointly by the South Korean venture company Hoonnet (www.hoonnet.com; www.hoonnet.co.kr), North Korea's Jangsaeng Consolidated Trading Company and Pan-Pacific Economic Development Association of Korean Nationals (Pan-Pac). This site is really the first joint Internet company invested in and operated by North and South Korea. This Korea Lottery Joint Venture Company was established jointly by the South's Internet venture company Hoonnet Ltd., Jangsaeng Consolidated Trading Company, which is known as the largest civilian company in North Korea, and Pan-Pac. The company, of which the formal name is Korea Internet Lottery Program Development Joint Venture Company, has set up Internet Websites including an Internet lottery site (www.dklotto.com), an Internet casino site (jupae.com), and an Internet go (paduk) site (www.mybaduk.com). The company's ownership shares consist of 51% for Jangsaeng, 30% for Hoonnet, and 19% for Pan-Pac and other investors. It is a joint venture company by the North and the South, but its headquarters is located in Pyongyang and as the ownership share indicates, actual managerial rights belong to the North's Jangsaeng Consolidated Trading Company.124 Since South Korea's Hoonnet contributed to designing the Websites developed by the Korea Lottery Joint Venture Company, they are not much different from what South Koreans are accustomed to seeing in terms of structure, menus, membership registration, and general usage features. These sites are also purely for commercial purposes and have no regime propaganda related contents whatever. Therefore, rather than examining the characteristics of the individual sites or offering an overall explanation, these sites will be studied herein for the special aspects

124 Related data on Hoonnet's homepage. http://hoonnet.co.kr/korean/nk_report.php3?nk_id=nk2 (search date: 26 August 2003) 169 of their promotion, as instances of the feasibility of North-South exchanges and cooperation through the Internet. North Korea, with the Internet still closed off and deficient in high-speed broadband networks as an Internet base, signed a contract with China's China TeleCom in February 2002 and connected to China via fiber optic cables. The route of the fiber-optic cable is known to run through Beijing, Dandong, Sinu'iju, and Pyongyang. By installing an Internet server in Pyongyang, the North Korea, while delaying using its country code Top-Level Domain (ccTLD) Kp," is able to connect to the Internet, exchange e- mail, transmit Internet broadcasting, and perform e-commerce more smoothly. Also, looked at for the long term, it has given them a chance to test and apply such technology as Internet firewalls and control systems. The Korea Lottery Joint Venture Company located in Munsu- dong, Pyongyang is now connected to the Internet and has the capability to access the high-speed Internet network and use Internet services such as Internet phone and real-time messaging. The Websites developed by the company are purely for commercial purposes, so they needed to have online payment functions, and for this, they have signed contracts with companies located in Canada and the United States to utilize their online credit-card processing services. For Japan, deposits are made through accounts in Japanese banks.125 All these sites also offer many general feature functions used in other countries, such as e-commerce, Q&A section, and open questions, in addition to the electronic payment processing system that may contribute to more profits and an increased IT utilization level within North Korea. In May 2002, a month after the sites' launching, a PC café about 20 p'yo'ng in size was opened inside the headquarters building of the Korea Lottery Joint Venture Company, a first in North Korea. Ten Pentium-IV-class computers were installed in the PC café, with 256 MB RAM and 20-GB hard disk space. Fees for using the computers are $50 for a minimum of 30 minutes and $10 for each additional ten minutes. Even though this PC café is open to all North Korean residents and foreigners alike, considering that the monthly salary for an average North Korean resident is $28 to $46, it does not seem likely that the place will be easily used by North Korean citizens (Ministry of Information and Telecommunication, 2002, page 367).126

125 Above data. 126 Some other socialist countries such as Cuba and Myanmar that have similar PC cafes also have set the fees for using the Internet very high as a strategy to limit access severely so, while in form the Internet appears to be open to everyone, actually it has effectively worked to block Internet access. 170

(Figure 5-14) Start-up Page of the Website for the Internet Lottery, "DKLotto"

During the process of going forward with this project, there have been some clashes between the Ministry of Unification and Hoonnet, resulting in a assertions by the government that the Internet lottery joint venture was in violation of the positive law or that the stays in North Korea by Hoonnet president Kim Po'm-hun were illegal. The project was also sharply criticized by some for promoting an atmosphere of speculation with the lottery and casino businesses. Despite all the controversies surrounding these joint-venture Websites, they are significant for representing successful economic cooperation via the medium of the Internet between the two Koreas. Moreover, by giving the North a chance to install and experience the high-speed Internet network as well as a PC café, they may play a significant role by providing attractive elements to induce change in the regime's Internet policies.

171

(Figure 5-15) Start-up Page of the Website of the Internet Casino "Jupae"

(Figure 5-16) Start-up Page of the Internet Paduk (Go) Website, "My Baduk"

172

(4) Korean (Choso'n) Tourist Attractions

In an August 2002 article, the North Korean monthly magazine Ch'o'llima reported that the worldwide trend of "information-orientation of the economy" that began in the 1980's was becoming more and more important and necessary in service industries such as advertising and tourism industries. This article was clearly indicative of how the North is also taking very seriously the service industries, which they somehow had neglected until then. The Internet was then adopted by the North as a new tool to revitalize their tourism sector. The Website (www.dprknta.com) of the Korea National Tourism Agency" was launched as part of the new effort by the regime. The Website was developed by the Foreign News Gathering PR Center Ltd. located in Tokyo under the direction of the North Korean National Tourism Agency with assistance from the Japanese Department of Tourism.127 This site, which was the second official North Korean Website following the "DPRKorea InfoBank" Website, was opened on 25 January 2002. It was reported that the tourism site was developed for the purpose of attracting Japanese and other foreign tourists to the planned mass calisthenics (collective gymnastics) event and a performance arts program called "Arirang," which was to be held from the end of April to the end of June 2002, to commemorate the 60th birthday of Military Committee Chairman Kim Jong Il (16 February) and the 90th birthday of his late father, Chairman Kim Il Sung (15 April) (Yonhap News, 25 January 2002).

(Figure 5-17) Start-up Page of Korean Tourism" Website

127 According to an official at the Japanese Department of Tourism, around the end of 2001, the North Korean government, citing technical difficulties, asked for assistance in developing their tourism agency Website, which then was accepted by Japan. (Yonhap News, 5 January 2002). 173

On the home page of the Website, with a map of North Korea in the background, the ten most prominent North Korean tourist attractions, including Mount Paektu, Tuman River, Naso'n, Ch'ilbo Mountain, Myohyang Mountain, Namp'o, Pyongyang, Kuwo'l Mountain, Sariwo'n, and Kaeso'ng, are featured; visitors to the site can click on each of them to get more detailed information. The remaining 15 sections provide information on general facts about North Korea, other North Korean tourist destinations, and how to request more North Korean travel information, as well as information on Japanese and Chinese tourist agencies that offer North Korean tourism products and how to apply to become a foreign agency for North Korean tourism. In addition to the Website, a "Special Arirang Site (www.arirang.dprkorea.com)" Website was opened to attract South Koreans and Koreans living abroad to the mass calisthenics event planned for two months in Pyongyang, beginning at the end of April 2002, using the "DPRKorea InfoBank" Website (Yonhap News, 30 January 2002). The North Korean government basically launched these Korean and Japanese-version sites to attract Korean and Japanese tourists to their Arirang performance event in hopes of earning tourist dollars.

(5) Other Websites for Commercial Purposes

Fully aware that the Internet can be a very useful mechanism to earn foreign currency, the North has showcased various products through these e-commerce Websites with its direct and indirect support. Of course such e-commerce Websites have not fully taken off in terms of the volume of transactions, but it is undoubtedly clear that they have a strong desire to further utilize their usefulness. North Korea seems to be particularly attracted to these Internet Websites for they offer chances to earn foreign currency at a reduced cost as well as ways to detour around or even vault over any possible international friction or trade barriers. Accordingly from 2002 to 2003, such Websites that are purely for commercial purposes have been on the rise. One example is the "Ch'o'llima Group (www.chollima-group.com)" Website which was launched on 25 March 2003 as an English language e-commerce site. Typical North Korean Websites are written in Japanese, Chinese, and English in addition to default Korean versions, but this Website is offered in English only, indicating that it is intended only for English speaking users. Under its name "chollima-group.com," a sub-header of "North Korean Authentic Products and Tourist Destinations" is shown, letting the users know that this site is an e- commerce site selling authentic products from North Korea and tourism packages. North Korea's attempt to earn foreign currency is also conducted by its foreign consulates and embassies. For example, the North Korean embassy in Austria has been operating an e- commerce site called "dprkorea-trade.com (www.dprkorea-trade.com)" since the end of 2002 that sells North Korean products. At the bottom of this site there is a clear statement, "Commercial Section, Embassy of the DPR, Korea in Austria."

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(Figure 5-18) Start-up Page of the "Chollima Group" Website

(Figure 5-19) Start-up Page of the "dprkorea-trade.com" Website

This Website is an official North Korean site, but it does not contain any related information on Austria, and clearly indicates that it is for promoting trade with North Korea to the world audience (Yonhap News, 18 June 2003). Products that are offered on the site are mostly processed agricultural products, including oil of Korean big-cone pine needles, processed

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Sanghwang mushroom products, and fragrances for soap manufacturing, but some mechanical and industrial part products are also offered.

4. Intranet-based Electronic Government "Website Kwangmyo'ng"

1) Understanding the Technical Characteristics of Intranets

Today's successful fast expansion of the Internet and its improvement in quantity and quality derive from the invention of Web browsers with uniform interfaces regardless of technically varied platforms (IBM PC, Mac, Workstations) and operating systems (Windows, MacOS, UNIX). This standardized Internet technology characterized by openness has been widely adopted by unit organizations such as public agencies and corporations that require efficient data processing. Utilizing IT by the organizations is nowadays accepted as a necessity, because it can reduce overall operational costs and improve productivity (Koch and Godden, 1996, page 96). Such utilization of Internet technology by unit organizations is called "intranet." The word "intranet," a combination of "intra (meaning internal)" and the word "Internet," can be understood as an Internet used within an organization. It is a new concept of a network environment wherein all the tasks of an organization are processed using Internet-related technology, and used in the HTML (hypertext markup language) format. It is a data processing system for an organization established in the World-Wide Web's standardized environment on a network based on the standardized Internet protocols, TCP/IP (transmission control protocol/ Internet protocol) or SMTP (simple mail transport protocol) (Government Executive, 1997). An Intranet is structured with Web servers and client computers that can exchange data through servers using TCP/IP or SMTP. Intranet is standardized by Internet technology, but it is a system that can be separated from the Internet for security purposes (Gregory and Reingruber, 1996). It enables an organization's tasks to be processed quickly and easily by establishing a computer network within the organization without external connection and installing an information server using the World Wide Web. Therefore an intranet can provide various services utilizing the same Web browser as the Internet within an organization, enabling the members of an organization to use e- mail or electronic payment processing within an integrated Web environment (Cho'n Kil-nam, 1997; So' Chin-wan, 1999). So from this perspective, if the Internet is for the majority of general users with different characteristics, then an intranet is a type of Internet that is limited to the members of the organization it serves. In other words, it is a Website that is not open to everyone, but to its organization's members only. Therefore, an intranet's usefulness is maximized when there is a need to block any potential infiltration of unnecessary or unsuitable information from outside and unauthorized approach to the organization's inside information when it is connected to the Internet. So from this perspective, the most noticeable difference between the Internet and intranet is the installation of a firewall system for security. An intranet is generally open to its user members only and not connected to the Internet. Accordingly, an intranet's Internet part is designed openly for smooth information exchange with the outside world, but with the Internet being connected to a world-wide network for open and free exchange of information, any information on the Web is a possible target for security compromises, since any Web user can access it freely. Particularly, management information systems (MIS) and databases (DB) connected to the Internet and containing confidential

176 information require a special and effective information security policy that can selectively isolate the intranet from the Internet (Yun Chun-su, Ch'oe So'n-hu'i, 1997, page 30). Such cases would include public agencies or corporations, for which any infiltration into their information or information systems could result in damaging the interests of the organization. If a corporation with valuable data was infiltrated and the latter modified or compromised, the targeted corporation would be greatly damaged, since valuable data constitute significant assets. Even worse, if a public agency with all its nationally important and confidential information, policy-related data or individual information on its citizens were accessed, destroyed, or compromised, it would not only lead to significant damage to the people's lives and properties, but its social order could be shaken up and even the nation's foundations threatened. For these potential dangers, firewalls are installed to guarantee security, monitoring and limiting the kinds of data transferred between the computer network within an organization and the Internet. Because system-wide security is guaranteed, so doing is more beneficial than installing individual security systems for each computer. Additionally, a firewall system can be installed on various levels according to the individual users' security requirements. It is hard to explain the system in general terms, but the most standard type is an access control firewall system. However if security be installed too excessively, it may result in a significant reduction of the intranet's overall functional efficiency (Yun Chun-su, Ch'oe So'n-hu'i, 1997, pages 30-31). With an intranet, all computers within organization are expressed in the same method so it has the benefit of being integrated into one single system with a specific standardized format. Once such a standardized intranet is implemented, it can generate various effects (So' Chin-wan, 1999). First of all, a paperless office where all kinds of paper documents are converted to Web formats with electronic standardization can be realized, and those Web formats can also use multimedia data such as voice, image, and videos, resulting in a broader work environment. Second, an intranet enables workers to access a variety of information by connecting to the global Internet information infrastructure as well as establish networks within the organization in a broader area, so that the workload can be processed more quickly, regardless of physical distance. Third, online administrative information systems can be established along with Websites, so that not only can the time required for file transfer and distribution be significantly reduced by utilizing such methods as e-mail and electronic payment processing, but also data storage, search, and utilization can be maximized by linking with the databases stored in each administrative agency, creating a better environment for sharing administrative information. An Intranet can be utilized by any organization that uses a computer network; however governmental agencies and corporations particularly use intranets the most. Corporations elect to use an intranet to integrate and use the Internet and their internal networks as the Internet has emerged as an infrastructure for e-commerce. Governmental agencies are using intranets to establish e-government and perform work more efficiently.

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(Table 5-2) Stages of Establishing an Intranet on a National Basis

Unit Stage Check Points Central Stage 1 Establish departmental homepages Administrative (Base) Link with existing DB Agencies Add bulletin board, data sections Issue e-mail IDs to all employees Stage 2 Secure homepage maintenance personnel / agencies (Application) Add online registration of document forms, requested documents Directions, transmissions through e-mail Stage 3 Establish intranet between departments (Synergy) Add e-authorization, e-conference functions Strengthen security Regional Stage 1 Establish homepages for each city and district Administrative (Base) Add bulletin board function Agencies Link with existing public service DB Issue e-mail IDs to all employees Stage 2 Personnel in charge of computerized public service (Application) Process online public service documents (receive and issue) Work communications, document exchanges are performed by e-mail Stage 3 Link to other public DB via the Internet (Synergy) Link with higher regional administrative agencies and build the intranet Add e-authorization, e-conference functions National unit Stage 1 Connect central administrative agencies' intranet and regional administrative intranet (Base) agencies' intranet with "extranet" Establish core structures of intranet national units Stage 2 Establish intranet for regional police agencies, public corporations, government (Application) related agencies Link with national unit intranet core structures Stage 3 Link schools, libraries, hospitals and private companies with national unit (Synergy) intranet, complete national unit intranet Source: Yun So'k-min, Kang So'ng-ho, Kim Yu-sin (1997)

In particular, intranets for governments can play a core infrastructure role when one is established in each unit of a national government that will result in more efficient organizational operation. To establish an intranet in each unit of a national government, first, the intranet is connected between central administrative agencies, followed by establishment of a central server for the national unit intranet, and connected to regional medium to small cities to establish an intranet for regional administrative agencies. Once the central administrative agency intranet and the regional administrative agency intranet are connected to the intranet's central server, the national unit intranet network is complete (Yun So'k-min, Kang So'ng-ho, Kim Yu-sin, 1997). As Table 5-2 shows, a gradual, stage-by-stage implementation method is required in order to establish a national basis intranet. Initially, a central administrative agency intranet is established, and then a regional administrative agency intranet is established, whereupon those two intranets are connected, making them the basis for establishing a national intranet. One of the most successful cases of such a national basis intranet for purposes of controlling the Internet is found in Saudi Arabia. After adopting the Internet in February 1999, Saudi Arabia required all Internet connections, whether they be to a domestic or foreign Website, to go through an internet control center, the proxy server at KACST (King Abdulaziz City for Science and Technology) (Gullon, 2001; Altintas, Aydin, and Akman, 2002; Burkhart and Older, 2003, page 44). In other words, Saudi Arabia has established a huge national intranet and an Internet control center to manage it, completely blocking access to or usage of Websites and information regarded as unsuitable for its citizens.

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2) "Website Kwangmyo'ng"

The North Korean government first began establishing its national basis intranet regionally in June 1996 and, by November 2002, a nationwide network was completed which has been in operation ever since. Establishment and operation of the intranet has been led by [North Korea's] Central Information Agency for Science and Technology (CIAST). So, CIAST was not only responsible for establishing the national computer network, Kwangmyo'ng, but, with its subsidiary "Computer Center" taking the lead, as in Figure 5-20, also set up the "Website Kwangmyo'ng".

(Figure 5-20) Start-up Page of the "Website Kwangmyo'ng

The Kwangmyo'ng Website is not connected to the Internet, but it is an intranet-based Website that is "the opening site of the national computer network, and the most popular site among the network's users for its database search function, e-news, entertainment section, chat rooms, and page searches."128 According to the Website, it basically "considers the detailed conditions of North Korea and the characteristics of the Korean language," and is based on "the WWW technology and our own database engineering technology, which is also completely compatible with the Internet." The current OS environment for establishing the Website is Windows 2000, and about 20 exclusive servers and network communication facilities are in operation 24 hours a day. Major

128 The introduction of the contents of the "Website Kwangmyo’ng" presented here is based on a summary of the presentation made by Vice Director Kwo’n Chae-cho’ng (2002) of CIAST at the two-day "Unification S&T Symposium," including the "42nd Academic Conference of the Korean Association of Science and Technology in Japan) (KAST)," sponsored by the Korean Association of Science and Technology in Japan, which was held at the Choso’n (Korea) University in Japan on 5-6 October 2002, and attended by North and South Korean scientists and engineers as well as KAST-affiliated persons in Japan.

179 information services provided by Kwangmyo'ng include e-mail, e-news, Website searches, e- library, real time chat, e-market (e-commerce), and entertainment services.

(Figure 5-21) Screen of the "Terminal Program Exclusively for Database Searches" of the Website Kwangmyo'ng

(Figure 5-22) Screen of the "Database Search" of the Website Kwangmyo'ng

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(Figure 5-23) Screen of the "Terminal Program Exclusively for E-mail" of the Website Kwangmyo'ng

The Website's "database search" service has been in operation for a long time and it is the most important service provided. The search service uses a search engine developed by CIAST and can be used through an exclusive program in addition to the Website. Kwangmyo'ng's databases are stored on a number of servers and can be searched according to a user's requirements. The database searches feature, first, searches based on a logical search inquiry method that reflects the user's wishes, such as matching searches, letter sequence searches, conceptual searches, question list searches according to the varied characteristics of the databases, searches by natural language questions, or reasonable relevance of the search result documents. Second, it offers a flexible multi-lingual search environment. For example, multi-lingual searches (in English, Chinese, or Russian, for example) by a specific Korean search question method are possible. Additionally, it has a literal word translation function which provides a translation when the mouse is placed over individual words in the resulting documents. It also has a semi- translation function that substitutes phonetic Korean for all the words in the foreign-language documents found.

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(Figure 5-24) Screen of "Web-Based Electronic Mail" of the Website Kwangmyo'ng

Through this Kwangmyo'ng Website, HTML documents in all the Websites connected to the domestic network Kwangmyo'ng can be searched, and the method of use is similar to regular Internet search engines, such as Yahoo. "E-mail," another important service provided by Kwangmyo'ng, can also be used, either on the Web or through specialized programs, and is compatible with Internet e-mail. Kwangmyo'ng's "e-news" service, one of the most popular, lets users registered on the Website write articles themselves and post them on the site for others to read, similar to an electronic bulletin board.

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(Figure 5-25) Screen of the "E-News" of the Website Kwangmyo'ng

(Figure 5-26) Screen of the "Website Search" of the Website Kwangmyo'ng

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(Figure 5-27) Screen of the "E-Library" of the Website Kwangmyo'ng

(Figure 5-28) Screen for "Real Time Chat" of the Website Kwangmyo'ng

There are currently 120 topics in the e-news section, and 200-300 posts a day are made on such subjects as S&T data, computer network technology information, commonsense health information, and creative literary works written by the users. On national holidays, some fun activities take place on the Website, such as a home page design competition among the users and computer arts competition. This service also accepts users' suggestions on how to improve

184 the Kwangmyo'ng Website and advertises and distributes domestically developed programs as well. Other noticeable services include "real time chat" and "e-market." "Real time chat" is a very popular service among users, and it offers not only a chat service in real time similar to a Windows Net Meeting, but also information exchange in various formats as well. The "e- market" offers manufacturing, ordering, and sales service for a variety of products such as computers and peripherals. Also, beginning level e-commerce activities are conducted through this service such as accessing product information from domestic trading companies and businesses, and ordering various products. North Korea's Central Broadcasting Company reported on 10 May 2001 that CIAST had started to post the "Today's News and Practical Knowledge" program in electronic news format. It reported that this electronic news format would be further developed as a multimedia electronic publication comprising text, models, pictures, voice, and moving images, as a computer network publication in tune with today's information age. Such publication of electronic news means that the intranet, which had been limited to certain agencies until then, in North Korea is now being popularized to the general public as well.129 Also, it has been reported that a Website providing information in the fields of electronics to North Korean businesses and research centers was launched in early 2002, attracting a wide positive reaction. Developed by the Namch'o'n'gang High-Tech Engineering Company in Pyongyang, this "Electronic Commerce Center (E-Business Center)" Website is attracting tens of thousands of visitors, mostly scientists, engineers, and students, each day. This Website, which links all regions of North Korea by computer networks, provides information on electronic products and technology so they can also be sold directly. The company was also known to provide information technology exchanges such as various film developing and copy services, as well as jointly developing programs with foreign enterprises and even accepting orders (Yonhap News, 15 May 2002). There is also a high-tech information center called the "High-Tech Service Center" located in the So'so'ng District of Pyongyang, which provides transactions among businesses and import and export agency operations through computer networks. A homepage named "Ch'o'mdan (High-tech)," opened on the computer network by the Center, provides various services, including nationwide e-commerce, information services, and import and export consignment work. The Center also offers customized search and ordering services for the latest cutting-edge electronic components and products. Additional available services include factory and business facility automation for modernizing production processing conducted on a contract basis, as well as program ordering and joint development for customers all around the world (Korea Central News Agency, 7 August 2002).

129 "Weekly North Korean Trends," No. 538 (Ministry of Unification, 2001), page 19. 185

(Figure 5-29) Screen of the "E-Market" of the Website Kwangmyo'ng

(Figure 5-30) Screen of Korean Changgi (chess) in the Entertainment Section of the Website Kwangmyo'ng

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Recently, the North Korea media reported that the country was starting to launch Websites using its country code Top-Level Domain (ccTLD) ".kp." According to a report by the Korea Central News Agency, the North Korean Academy of Sciences has opened a Website providing the latest S&T information on the Pyongyang Telephone Office's e-mail computer network called "Science and Technology Exhibition Center" (www.stic.ac.kp) on the 23rd. Before that, another such Website using the ".kp" domain was launched, the "Medical Sciences Information Center" (www.icms.he.kp), providing medical information services to doctors, medical students, and researchers (Yonhap News, 23 July 2003). Based on those reports alone, without factual confirmation, it would appear that the North had opened up to the Internet. However the actual reality is that the North has not, so such usage of the ".kp" domain is impossible. That is because, in order to open a Website using the ".kp" domain, the latter must be registered with the 13 Internet root servers managed by the United States Department of Commerce. Therefore the recent North Korean sites that were said to have opened using the ".kp" domain are actually sites running on an intranet, but they seem to represent the opening of experimental sites in preparation for opening to the Internet.

5. Possibilities and Limitations in Implementing Electronic Government

Generally speaking, success or failure in establishing e-government depends on a number of factors such as the hardware related to information and telecommunication technology, economic factors including required financial resources and the efficiency level of e-government service utilization, methods by which to solve various political issues arising during the process of establishing e-government, and resolution of conflicts of interest that may arise between governmental agencies or officials (Korea Computerization Institute, 1997, pages 89-92). Analysis of North Korea's possibilities and limitations for implementing e-government can also be attempted by extending these four factors. First, for North Korea to establish an e-government, there are many indispensable "technical aspect" factors, such as building a super-high-speed information communication network and expanding the computer propagation rate, digitization of government information, development of security systems, and development of standardized utilization programs for information sharing. Second, "economic aspects" must be considered, such as how to provide the expected huge amount of financial resources to build an e-government, especially in light of North Korea's current economic difficulties, and how and how much such e-government could contribute to improving the efficiency of the planned economy. Third, "political aspects" must be considered, such as strong leadership by a supreme leader who can firmly establish political order within the government and information control methods using security systems and censorship to maintain and strengthen the socialist system. Finally, "organizational aspects" also must be considered, such as possible resistance against establishing e-government from within the government, information-orientation training for such personnel, and establishing effective and efficient plans while overcoming departmental self-centeredness.

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1) Technical Aspects

Basically, e-governments are possible only when they are supported by information technology. Implementing e-government requires not only an infrastructure consisting of a super-high-speed information network, but also the latest high technology, such as digitization of information owned by the government, development of standardized applications programs for information sharing, and development of security systems. In addition, mass production and propagation of computers are also very important by developing technology for terminals or computer hardware that can use e-government services. First for e-government infrastructure, or a super-high-speed network, the North has continued to work on proceeding with telecommunication modernization projects for that purpose, and it has been reported that Pyongyang and some 100 cities and counties (kun) are connected by fiber optic cables. It is true that the North's telecommunication infrastructure is not systematically and evenly developed, but that cannot be seen as a "stumbling block" for the government to implement a "North Korean brand" of e-government. Because the North, which has adopted a policy of separating domestic and foreign operations, rather than using the domestic intranet-based e-government for public service, is using it as a tool to increase efficiency and strengthen control within the government. Accordingly, the North's e-government is being implemented in a "G2G (Government to Government)" or "G2B (Government to Business)" way, in which the main focus is on improving factories' and business facilities' productivity through information-orientation of governmental tasks and the planned economy system for the goal of increasing the centralized ruling system's efficiency, unlike the "G2C (Government to Citizen)" or "G4C (Government for Citizen)" methods utilized in the democratic countries, where public service to citizens comes first. That is the reason why the North's telecommunication infrastructure investment is concentrated on public arenas rather than the private sector. The next elements important in establishing e-government are digitization of government information and standardization of information systems for sharing information and compatibility between governmental agencies. This issue, however does not seem to be a formidable obstacle in building an e-government in North Korea, considering the nature of the country's centralized political system and the current developmental level of the software industry. A highly centrally-structured government can produce a positive impact in building an efficient e-government and standardization of information systems. Another helping factor is the North Korean software industry, which is regarded as at the world level in several specific fields, not to mention the fact that the government has chosen the software industry as a strategic industry for export and growth, actively developing specialized personnel and taking other measures for that industry's vigorous growth. So it appears that the highly centralized political system of North Korea and its high- level abilities in software development will accelerate the pace of implementing e-government. The most worrisome field for the North Koreans in their implementation of Internet- based e-government looking toward opening to the Internet may be the issue of information security systems. The North has recently shown keen interest in "cyber terror" such as computer hacking and virus infiltration. It has stated that highly developed science and technology from the capitalist countries can be a source of devastating side effects, citing cyber terrorism through computers as the prime example. The country also sees cyber terrorism as acts of violence, destroying computer networks by infiltrating into other countries' national agencies or major infrastructure (Rodong Sinmun, 12 April 2003). In South Korea too, side effects such as information leaking, hacking, and financial crimes have become more frequent as PCs and the Internet have become more popularized. 188

Such cyber crime is an especially pressing problem for closed countries like North Korea, where the intent to maintain and reinforce their closed-off political system is fundamental. Security issues on information systems are directly related to regime maintenance, and that is why it is the most prominent issue among the technical aspects. Without the reliability of a thoroughly guaranteed security system, illegal infiltration into the networks and information leakage as well as its modification or even destruction could occur. So, it appears that the North is still adjusting the speed at which to open up to the Internet because of problems with the reliability of its security system. The security system issue actually merits further observations. It is the most sensitive issue to the North Koreans, for any infiltration by anti-North elements from either foreign or domestic sources that seek to uproot or destroy their existing socialist system is undoubtedly a subject they cannot ignore. They are also aware that, even if security reinforcement technology were invented, other technology to compromise the latter surely would follow shortly. So the North Korean regime is thought to be concentrating all its efforts in establishing e-government on developing and researching "firewall" and "encryption" technology, which are the central core of computer network security. It is predicted that, once the North completes its development of security systems, they will gradually proceed with opening up to the Internet (Pak Ch'an-mo, 2002). So taking of all these facts into consideration, excluding the security system issue, there is no fundamental problem for North Korea to establish an e-government at least in the technical aspects. Still, there are some variables related to IT development that may still impact the North's efforts in building e-government, leading to the reality of both possibilities and limitations existing together. First of all, what increases the possibilities of improving the technological aspects related to establishing an e-government is the North's IT industry development strategy which has been going on for some time now as a national strategy. If you look at the case of China, their Internet craze is a result of the combination of the demand from Internet users who wanted their services according to the changing environment and the Chinese government's proactive Internet growth strategy, essentially a product of a dual-natured policy. The direct cause that ignited the Internet craze was none other than the Chinese government's series of IT industry support policies (Cho Chi-wo'n, 2002, page 64).130 As mentioned before, North Korea's IT industry development strategy is not limited to growing their IT industry only, but it is aimed to achieve "single leap" growth as a national strategy, utilizing the high "spill-over" effects of IT. That is why North Korean officials, mobilizing all the nation's forces, are concentrating on growing that sector more than any other. Of course, whether they will be successful in their IT strategy or not and how much in spill-over effects the establishment of e-government will produce is not clear as yet, but at least the regime's strong intention to go forward with IT and e-government is indirectly clearly seen. IT is characterized by dynamics and uncertainty. Because its life cycles are very short -- only two to three years -- the scope of change is undoubtedly dynamic and the possibilities of change are also unpredictable, making it a highly uncertain industry. Therefore for the North to secure the technology basis needed to establish an e-government and increase that possibility, they need to operate their technology development and management system rationally, so that

130 According to the Chinese Ministry of New Industries (CCID), the Chinese government has a plan to double their information telecommunication industries in the Tenth Five-Year Plan from 2000, and by 2010, they plan to make the information telecommunication industries their largest economic sector. For this purpose, a total $200 billion is planned to be invested -- $150 billion for the telecommunication industry and $50 billion for the IT manufacturing industry. Because their domestic capital is not adequate to meet the gradually increasing scale of the IT market, the government is also encouraging direct foreign investment in their IT market. (Yi U’n-min, 2002, page 9). 189 dynamic changes in the information environment can be actively absorbed. Then, when actual beneficial outcomes result, they can increase the possibility of establishing an e-government.

2) Economic Aspects

A country's overall e-government level is closely related to its social, political, and economic competitiveness (UN & ASPA, 2002, page 3). This fact is confirmed by the high level of e-government in advanced countries with highly developed IT industry. However, that cannot be totally applied to North Korea, which is in a very serious economic crisis, and of which it is not an exaggeration to say that continuation of their whole regime is dependent on the possibility of economic recovery. Normalization of industrial production is undoubtedly the number one issue in a country where the government is no longer trusted and the people are fleeing across the borders to avoid starvation. In the final analysis, the drive for the establishment of e- government, arises from confidence in maintaining the regime, not only politically but economically as well. Therefore North Korea's chances of building an e-government are inescapably related to their economic recovery. In fact, the North's "information-orientation" of its economy is basically aimed at achieving improved industrial productivity by increasing the efficiency of the planned economy. Currently about 1,300 business facilities and agencies are connected to the intranet Kwangmyo'ng, conducting such businesses as exchanging a variety of information quickly and accurately so that demand trends such as for manpower, materials, and funds and their sources can be easily known at the right time, resulting in the benefit of strengthening uniform leadership of the economy. However, the chronically poor condition of the North Korean economy is hindering the attempt to establish e-government on one hand, while, on the other, the government still feels pressure to build one for economic development, leaving them in a dilemma. However, the benefits of e-government for North Korea do not stop at efficiency of economic planning tasks. Its sub-benefits would include strengthening the political chain of command within the government, leading to reduction in the corruption rampant among officials. Also, the upper governmental agencies responsible for planning and managing could collect more information on the lower agencies quickly and process the information efficiently, so that they can strengthen control over them. In other words, e-government's economic benefits could extend to political efficiency, by strengthening the central government's power. Here is one prominent example of that. In February 1991, the North Korean government started to implement a program to computerize citizen registration papers, similar to South Korea's Citizen Registration, with a budget about $3 million (USD). Led by the Ministry of Security, a project to create a nationwide database was undertaken with the goal of completion by 1995. However, this project came to a standstill when not even 50% completed, due to insufficient budget and technology. The government is still holding onto the computerization project despite all the financial problems, because they want to transfer to production units the excess manpower that has accumulated in citizen registration work down to the lowest administrative levels, and to control all administrative tasks at the center so that a more systematic and scientific citizen management system can be put in place (Yonhap News, 18 July 2000; 12 July 2002). So to North Korean government officials, building an e-government would be a great solution that could result in improved economic efficiency, a major attraction. However, in view of the difficulty of acquiring sufficient resources because of the dire economic conditions, one can see both possibilities and limitations at work in the economic aspects of creating e- government in North Korea. 190

3) Political Aspects

It is clear that information and telecommunication technology and financial resources are absolute requirements in establishing e-government, but they are not the only requirements. In most cases, the technological elements are highly recognized as necessary in information- orientation or establishing an e-government , and also, it is generally accepted that hardware's simple superiority is a key to the success of such policies. Financial resources too are recognized as a very important element in building e-government. However, to forge ahead with the establishment of e-government efficiently and effectively, even on the basis of information and telecommunication technology and sufficient financial resources, several political aspects need to come into play effectively. The most prominent condition in establishing an e-government from a political perspective is the issue of leadership. In most countries with highly developed e-governments, any such e-government-related strategy or project is strongly backed by the nation's supreme leader, such as the prime minister or president. They are greatly interested in such projects and usually show strong intent to implement them fully with abundant support. For an e- government-related project to succeed, throughout the process of project implementation strong leadership must provide clear vision and goals, which are the central driving engine of effective implementation. Many obstacles and hardships, such as clashes between the affected agencies and internal organizational resistance, may occur occasionally during such e-government projects, which is when the supreme leader needs to step in to resolve matters by providing priority in financial operations, so that the huge amounts of budget can be committed (Korea Computerization Institute, 2000b, page 143). As for NDC Chairman Kim Jong Il, he has yet to officially mention establishing an e- government. However, Chairman Kim has shown great interest in IT, and it has evolved into a very active national IT industry growth strategy with strong national interest, which currently is being undertaken. As an extension of this strategy, the regime is emphasizing "automation of production" and "computerization of management," which are basically implementation of information technology in production and managerial activities so that "information-orientation" of the people's economy can increase productivity. Such emphasis on "information-orientation" began with a change in the thought of Chairman Kim, the paramount ruler. In January 2001, after Chairman Kim visited the Pudong District of Shanghai, China, he started to assert the importance and even necessity of growing information technology for economic development in the new 21st century information age and encouraged information-orientation through growing the IT industry. Accordingly, the North Korean media began to emphasize the importance of IT industry development and to promote information-orientation whenever they had the chance. With these developments, it is worthy of notice that, as has been pointed out, a "digitally oriented leadership" that understands the importance of information-orientation and reflects it in the relevant policies has been formed in North Korea.131 It is evident that the North's supreme leader Chairman Kim Jong Il and his technocrat advisers are very sensitive to a digital economy. That trend is closely related to the fact that the North's IT depends on their "S&T policy" and the

131 "Digitally oriented leadership" can be defined as a "leadership group" that has above average technical understanding of the current telecommunication paradigm centered on the growing Internet and a recognition of the latter’s vital importance, reflecting or having the intention to reflect it in managing the national economy. Such digitally oriented leadership tends to reject in part or to set aside the prevalent philosophy of political realism, which regards economic issues as secondary to political issues, and it also relaxes or at least recognizes the need to moderate to a degree clinging to regime ideology or doctrinal loyalty to internal relations within the ruling class (No Su’ng-chun, Pak Chong-pong, 2000, pages 7& 9). 191 person who directly controls that policy is none other than Chairman Kim Jong Il himself (No Su'ng-chun, Pak Chong-pong, 2000, page 8). Implementation of e-government is the kind of project that cannot be undertaken by a sole governmental agency. It must be promoted nation- and government-wide. Clear and strong interest and steadfast policy intention on the part of a supreme national leader are also needed in such a momentous undertaking. Since e-government can lead to ambiguity in the functional areas of the agencies in a "moored" type of governmental structure, those specific agencies or officials who may be disadvantagednegatively by the introduction of e-government will surely resist or be uncooperative with its implementation.132 Such reality requires, therefore, strong leadership that coordinates tasks among governmental agencies (Korea Computerization Institute, 1997, page 92; Cho'ng Ch'ung-sik, 1997, page 76). In sum, that is because establishing e-government is a political process. Moreover, a possible political stumbling block that can actually stop the government from establishing an e-government may be the accompanying potential problem of political resistance. In fact, the central problem as to why the Internet has not been opened in North Korea is not related to technical problems at all. Rather, for North Korea, what is of more concern to the regime is its worry that the benefits resulting from e-government will be offset by possible political side-effects, which might act as a poison damaging the regime's stability. In other words, the Internet and the openness, the rapid transmission of information unlimited by either space or time, and the anonymity that it makes possible have inherent characteristics that cause one to worry about collapse of the regime. However, none of the recent studies has actually proven that such suspicions came true -- that the Internet indeed can be a source of a fatal danger to socialist countries, where it is now being strongly accepted.133 This new finding is backed up by the fact that, when the socialist countries open up to the Internet, they already have planned in advance for and applied various Internet control measures, according to their own political situation, so as either completely to block any possibility of political impact the Internet may possess or to filter it out afterwards. Indeed, the Internet is still being maintained, operated, and even expanded, even in socialist countries, despite its global impact, because socialist governments have been able to implement various effective Internet censorship measures against their people's Internet access and use (Kalathil, 2003). So considering these findings from the prior studies, if the North does open up to the Internet by copying the control measures that have been proven to be effective by the other socialist countries, it may not have many obstacles internally in opening up to the Internet after all. Except for the issue of security, the North already has no significant technological deficiency when it comes to fully launching the Internet, and since its general Internet infrastructure is relatively weak, internal Internet control mechanisms may be implemented and conducted effectively. Under these assumptions, news media reports from China and Japan have been surfacing since the beginning 2000's that North Korea will soon let the Internet fully open in the country. However, the real factor why the North has not launched the Internet yet and what it worries about the most could be the possibility of South Korea's Internet policy against it, rather than worries about its own potential impact internally. The North, which well knows that South Korea is a world-class Internet power, may be worrying that South Korea may launch

132 One example, as pointed out by the Nautilus Institute's Director Peter Hayes, would be the case of North Korea, where in 1986 the government, as a part of its modernization of industry, established the Pyongyang Information Center (PIC) and began ambitious computerization, but failed in conversion to computerization because of internal resistance by administrative officials. 133 Analyses related to this topic are further examined in Chapter 6. 192 some kind of cyber terror against them, and this may be one of the real reasons why it is delaying launch of the Internet.

4) Organizational Aspects

E-government is generally established on the basis of reasonable and efficient implementation procedures internal to the government structure. Such procedural systems naturally vary, according to the different visions and policies of the implementing countries. The countries' political power structures, historical background, special circumstances, and the level of information-orientation all contribute to how each country's electronic government is designed and operated (Korea Computerization Institute, 2000b, pages 7 & 140). According to benchmarking studies of the implementation procedures of the leading e-government countries, some general characteristics may be observed, in addition to the specific and unique circumstances each country displays. The first characteristic of such implementation is that e-government be approached during the initial stages by way of a centralized and top-down approach, under the strong guidance of the supreme leader of the country. Implementing e-government allows each individual governmental agency to work with its unique and optional aspects while still requiring the agencies to follow uniform and centralized policies and guidelines for the shared course of action of the entire government (Korea Computerization Institute, 2000b, page 143). However, in the initial stages of implementing information-orientation prior to establishing an e- government, each governmental agency shows a strong tendency to implement the whole work process individually, causing numerous problems between agencies, such as duplicate investment, difficulties adjusting policy priorities, and limitations in sharing information (Cho'ng Ch'ung-sik, 1997, page 85). Therefore, in the stages of establishing an e-government, centrally coordinated nationwide policy implementation must take precedence over the interests of individual agencies. Considering these points, it may well be that the North has already taken steps to centralize its political structure and economic system. They have been implementing economic information-orientation policy to increase the efficiency of their centralized planned economy, which is indicative of their belief that establishing an e-government can strengthen the direct and authoritative system and control mechanism over the public agencies. The second general characteristic is that there tends to be a newly established exclusive governmental entity responsible for the work associated with implementing e-government. Generally, national organizations responsible for implementing e-government have a strong basis on which to conduct policy development and coordination at a nation-wide level, whether it be a multi-member committee or a singularly directed administrative agency (Korea Computerization Institute, 2000b, page 142). There are several reasons why many countries establish new organizations for these tasks. First of all, e-government spans all governmental and public agencies in a country, requiring all of them to be closely connected to the new policy implementation, so it is necessary that there be a new governmental entity to take the lead in promoting local rationality and effectively solving conflicts of interest among the various agencies. Second, since sharing and utilizing information is a most important purpose in establishing e-government, an individualistic approach to implementing e-government will not only bring about decreased efficiency of utilizing information resources, but also will lead to duplicative investment and delays in information- and telecommunication-related technological standardization efforts. All these reasons strongly support the assumption that e-government implementation must be conducted jointly, based on a comprehensive, national plan. Thus a leading entity that effectively implements information-orientation and e-government forms a new 193 organization that takes the initiative to wield coordinating authority. (Korea Computerization Institute, 2000b, page 144). So far, however, North Korea has not established any such new entity to take charge of implementing information-orientation or e-government. Rather, the North's agencies in charge of information and telecommunication are characterized by "dispersion," rather than "centralization." There are actually numerous agencies doing the work for information and telecommunication, one of which is the Cabinet-level Ministry of Information and Telecommunication, which handles electrical communication, postal communication, and television broadcasting, by separate departments. Another Cabinet-level agency, the Ministry of Electronic Industry, is in charge of information technology, under which operate the Electronic Product Development Company, which produces computer products, and the Pyongyang Integrated Circuit Factory, which produces semiconductors. The Cabinet-level ministry in charge of overall science and technology development and research is the Academy of Sciences, which has its own information technology agencies, the Consolidated Programming Research Center and the Computer Sciences Research Center. As for education and training for information technology, the Cabinet-level Ministry of Education is the main body responsible, under which the Bureau of Programming Education and Training is responsible for producing computer education materials and retraining teachers. However since the adoption in 2001 of the IT industry as the new major task, the Workers' Party has been in the forefront directing the new growth strategy (Ku Hae-u, Cho'n Pyo'ng-chun, 2002). Thus in order to grow IT as the national strategic industry, North Korea recently has greatly expanded the related organizations, starting with a new agency under the Workers' Party called "Bureau 21," to oversee all of the national efforts (JoongAng Ilbo, 7 March 2003). It reflects the level of importance of the IT industry as a strategic industry and how strongly involved the Party is. This could very well serve as the foundation for forming an effective and comprehensive system to promote e-government full-bore. The third general characteristic is education for information-orientation, by which the speed and scope of implementing e-government are decided. E-government services can only be implemented through new information technology, and personnel who can handle such new information technology efficiently and provide smooth services are of course undoubtedly needed. The important element is that such able manpower cannot be developed overnight with just one session of training; rather, they require continuous retraining whenever new technology is applied in administrative operations. The most actively pursued objectives with regard to implementing information- orientation and e-government in North Korea are concentrated education and reorganization of the education system for the purpose of training specialized IT personnel and expanding society- wide the mindset of information orientation. Such efforts to expand information awareness are promoted as a part of the "technology update" projects, and teaching the importance of S&T and IT are accomplished by society-wide propaganda and education. The North Korean regime also has recently started to teach computer skills to general laborers in each factory and business facility through organized computer classes. This effort was made possible by direct instruction from the Party Chairman Kim Jong Il himself, who insisted on increasing computer skill levels to meet the demands of the new information era. The goal of the computer classes is turning laborers into highly skilled computer workers in a short period of time (Rodong Shinmun, 10 June). The regime also has strengthened its general education on specialized IT personnel after recognizing the necessity to improve the education and general education level of such specialized personnel for the computer, information and telecommunication, and information processing programming industries, which are all knowledge-based, especially after Chairman 194

Kim visited the National Programming Contest held in December 1997, where he directly ordered strengthening the development of programming technology and computer training. In addition, it also is actively pursuing reorganizing the education system, to center on information technology training. In line with these efforts, the regime has been emphasizing the importance of developing science and technology through the New Year's common editorial each year, and has been concentrating on creating a general foundation for training specialized personnel, reorganizing the education system, and establishing new universities and laboratories. Moreover, the North Korean media boast almost daily about the importance of training specialized IT personnel, and the regime is shifting the existing education system to be directly or indirectly related to IT in general by reorganization, new establishments, and strengthening (Ko Kyo'ng-min, 2002a, page 30). Such efforts by the North Korean regime to expand the information mind-set, train specialized IT personnel, and reorganize the system are aimed at recovering from a backward situation and improving the general information-related skill level through society-wide education from the ground up, and surely will form a positive foundation for establishing e- government and subsequently expanding it.

6. Evaluation and Prediction for Implementation of Electronic Government

Electronic government, a new form of government for the information society of the 21st century, is a concept that is still "evolving." With such a nature, it may well be unavoidable that its concepts change and vary. Among the advanced Western capitalist nations, the concept of e- government has moved into a phase of common convergence on a few core elements. The most prominent element that has recently emerged is the concept of "citizen-centered e-government." In stark contrast, however, the socialist countries tend to have a totally different concept. They, too, recognize the economic value and potential commercial benefits of the Internet and Internet-based e-government. However, the main difference between them and the capitalist countries is that the socialist governments accept and open to the Internet and e-government only in a limited way, opening up to the Internet not fully, but within a scope wherein they think they will be able to block any possible ideological and political threats or damage to their authoritarian governments, while still tapping into the Internet's offering of economic and commercial values and benefits. Thus the socialist regimes let only certain public agencies use the Internet and strictly limit any other usage that might facilitate the infiltration of threatening elements into their political systems, or they first legalize official Internet control and inspection mechanisms and afterwards block infiltration of dangerous information via the Internet into their systems (Kalathil and Boas, 2001). A worthwhile point can be made about how premature it is to talk about the possibility of North Korea's establishing an e-government while it is still strictly controlling the Internet. It is a very persuasive counterargument, since the regime has yet to officially propose a specific national vision or strategy with regard to establishing an e-government and still does not allow access to the Internet.134 Additionally, the relative weakness of the North's e-government

134 Discussion of the North's possibilities and constraints in establishing e-government is indeed limited to the level of just commenting on current events, because of limited availability of North Korean information and data on the regime's current level of e-government. Nevertheless, in terms of forecasting, I think such discussions of the North's possibilities for and limits on e-government are meaningful, not only for research on North Korea’s e-government, 195 infrastructure, including the "office-backup" functions that support e-government's "front office" functions -- in other words, the required basic facilities and equipment, such as a super-high- speed telecommunication network -- strongly backs up the argument. Therefore, from the point of view of the status quo, the North faces more constraints than possibilities to establish e- government. Yet, despite all of this, North Korea continues to make proactive efforts to proceed with information-orientation, along with modernizing the people's economy. Despite their being a closed country, this new turn of direction seems to have derived from their feeling of crisis, lest their country be left alone and behind amidst the new worldwide transition toward information- orientation and a digitalized economy (Yang Mun-su, 2001a; Pak Ch'an-mo, 2002). Of course, such environmental factors cannot fully explain the North's potential establishment of e-government. The more pressing and direct factors behind the regime's recognition of the necessity to establish e-government have to do with their desire to improve economic efficiency and to strengthen political control. Basically, the North recognizes the immediate goals for their regime as increasing the transparency and efficiency of the centralized planned economy and strengthening the central government's control over the periphery, which is why the likelihood is high that a "North Korean kind" of e-government will eventually be established. The current level of North Korean e-government is characterized by a dual mode, in which Internet- and intranet-based e-governments have been established and operate separately. The Internet-based e-government mainly provides the regime's official information and other information related to foreign economic cooperation and domestic economic revitalization, as well as regime propaganda material. By contrast, the intranet-based e-government is mainly a tool for stimulating the efficiency of the planned economy; however it appears that in a limited way it has provided services to the general public through a few Websites such as Kwangmyo'ng. This kind of limited establishment and operation of e-government by the regime is really a desperate measure resulting from its dilemma over how to deal with the full nature of the Internet's political and economic potential. North Korean authorities recognize the economic value or benefits the Internet can bring to society; however, they are also aware that that the positive benefit will have to come at a price and are worried that such a price may be paid at the expense of damage to their political system, thus delaying their decision to open up to the Internet. That is the primary reason why the regime has adopted such a dual mode, whereby Internet usage is separated into Internet- and intranet-based e-governments for separate purposes. This clash of values, in which potentially increased economic productivity and efficiency collide with the possibility of a relaxed political system, has thus caused a dilemma for the regime and subsequently the adoption of the dual-natured Internet usage. However, amidst of all these complicated developments, one may see a glimpse of positive progress by North Korea on its way to adopting e-government in the new information age of the 21st century. The current stages are still at a beginning level, trying to cope with the initial implementation, and more confusion and obstacles may await them in the future. Examples of obstacles include the still backward infrastructure, a low computer propagation rate, cut-off information technology, constant fear of possible regime relaxation, and a relatively weak policy implementation system. These all paint a bleak future for the North in its attempt to establish and develop fully operating electronic government. As far as the technological aspects of actually establishing e-government are concerned, from the point of view of analyzing which factors would contribute to the success or failure of but also for basic research on its information-orientation and strategies for IT industry development, which are directly related. 196 such an endeavor, the North Korean regime would not seem to have any fundamental problems in building an e-government system, based on its experience in establishing and operating the existing Internet and the intranet Websites. However, considering the changes in technology resulting from the dynamics and uncertainties of information technology, the issue of whether they will succeed in implementing their IT industry growth strategy and their need to escape from the restrictions of the Wassenaar Arrangement, which still limits and impedes North Korea's foreign technological cooperation and support, may act as strong motives for the appearance in the North of a successful e-government. Second, there is also the issue of insufficient economic resources for North Korea. Economic necessity is the biggest reason why the North wants to adopt e-government: they want to improve the productivity and efficiency of their planned economy. However, since their economy has been in a perpetual state of near-collapse, not enough economic resources can be supplied, limiting their scope of implementing e-government efforts. Third, from a political perspective, North Korea does have advantages in already having a strong, centralized leadership in addition to its unique political nature and the already established "digital leadership" centered on the supreme leader, a positive atmosphere that can make it easier for them to go ahead with implementing e-government. However the problem arises from the possibility that, once Internet-based e-government is fully adopted along with full opening of the Internet, there is no guarantee that their political system would be immune to a possible slackening, which is why the regime has delayed a decision and instead has adopted intranet-based e-government. This issue of possible regime relaxation resulting from the opening of the Internet has stalled the regime at the level of strategic direction, rather than proceeding with strategic counter-measures. Fourth, from an organizational perspective, the reality for the current North Korean governmental structure and public officials is that they have yet to fully arm themselves with the new information-directed mindset. They still need to strengthen themselves with a mind for the new age and innovation. The essential tasks call for them to establish functional and efficient procedures for implementing e-government, as well as a new organization exclusively responsible for such policy, and to strengthen information training so officials will develop information awareness and utilize information devices and technology. North Korea does try to keep up with the worldwide trends of utilizing the Internet. However it is utilizing its own unique brand of Internet policy, in which an intranet-based domestic computer network is established, instead of the fully capable Internet for domestic use. It also has some Web pages for public agencies, trying to go with the flow of the rest of the world. Especially considering its own development of the intranet-based Kwangmyo'ng domestic network and the Kwangmyo'ng Website as well as the trend of newly establishing Websites, the North has reached a level of technological capacity adequate for a full launch of the Internet. Furthermore, from the many core services available on those Websites that are generally used in Western countries, too, it may be concluded that the North already has entered the stage of building e-government based on the current domestic network. However, it appears that the regime is hesitating about adopting the Internet out of concern about unlimited and indiscriminate circulation of information harmful to the North Korean political system. Therefore, if they can come up with a security solution that can inspect information and block the infiltration of any potentially dangerous elements, prevent hacking, and implement such an inspection system as well as a subsequent society-wide control mechanism of secured reliability over the Internet utilizing the security measures, it will probably only be a matter of time before the regime fully opens up to the Internet. Nevertheless, even according to this possible scenario, it is estimated that, rather than a full launch, the North

197 will open up at a selective and limited level, that is, in stages under the central government's control. Looking at their short history of Internet-based Website development, they have evolved from Websites strictly for regime propaganda to economic revitalization and, whereas, before the Silli Bank Website was launched, it was impossible to communicate with North Korea through the Internet, now it is possible to exchange e-mail, albeit in a limited mode. With the establishment and operation of intranet-based e-government that blocks the potential political effects of the Internet while maximizing its economic benefits, it appears that opening to the Internet will be achieved gradually in the future, through a set of stages.

198

Chapter 6

Control of the Internet in Socialist Countries and North Korea's Internet Strategy

In the information age, the socialist countries face a dilemma over how to accept the economic benefits of the Internet while still controlling it politically. The political necessity to continue their grip on social control is forcing the socialist countries to consider adopting a structural control mechanism with political aspects. The inherent qualities of the Internet as a globally connected network with the capability of free social space and interactive media functions can pose a direct threat to regime maintenance. However, they also must consider the many beneficial economic aspects of the Internet as well, which they think they should actively adopt, especially since these socialist countries are less developed economically than the capitalist countries. They are aware that the Internet has a huge economic potential that may bring benefits such as generating and distributing various knowledge and information via its global network as a central growth engine for the era of new economy. Not all socialist countries have reacted in the same ways in facing this dilemma, which means that not all of the socialist countries are employing a strengthened control method over the Internet. The fact is that various socialist countries are adopting various levels of opening to the Internet and control mechanisms, according to their priorities for regime maintenance and economic development. The core of theoretical discussion of the issue of varied policy reactions by the socialist countries to Internet control may be condensed into the issue of how the Internet impacts the regimes with its political and social spill-over effects. In other words, these questions may be asked: Is the Internet, with its inherent qualities of interaction, openness, and being public, exerting significant influence sufficient to erode the socialist countries' political foundation? If not, is the country effectively blocking the negative effects of the Internet while appropriately using it as a tool to achieve regime propaganda and economic benefit? The "conventional wisdom" paints a picture in which opening to the Internet is indeed politically a major factor for fatal threat to the socialist countries. However, the important fact is that not a single case of such a scenario has ever actually been reported. The Internet used in the socialist countries has so far not fatally damaged one of them. No such evidence has ever emerged. Rather, the argument is gaining force that these countries are utilizing the Internet as a central tool to achieve regime propaganda and economic benefits after implementing various sophisticated control systems on access to and use of the Internet. If that is the case, then why has North Korea not yet opened up to the Internet? There is no reason for the North Koreans not to open up to the Internet if there is in fact no viable threat to their regime. So then, perhaps is it a problem of technology issues? One thing to consider is the fact that North Korea is one of the most oppressive regimes in the world (Freedom House, 2003). This is true in the case of cyber space, as well (RSF, 2001; 2003). If viewed from this perspective, the reason why the North is not opening up to the Internet is quite simple: the North Koreans think that the Internet would bring more harm than benefit if the Internet were fully adopted in their country. However, just the regime's level of oppression still is not enough to explain why the North is closed off to the Internet. Because

199 many countries that have political systems similar to North Korea's are opening to the Internet, although with some difference in extent and level. So all in all, how can one understand the matter of whether North Korea and other socialist countries are opening their societies to the Internet and to what degree? In other words, how can we explain the different degrees of opening up to the Internet by various socialist countries, while they have similar degree of political oppression and closure? Starting from that basic question, this chapter then shall focus on typing and modeling -- by the degree of Internet control and use -- the Internet control strategies of the socialist countries that face political and economic dilemmas associated with the Internet. Then, based on analysis of such socialist countries' Internet strategies, we will cast light on North Korea's own Internet policies. This chapter shall present its theory based on the following basic hypothesis: Historically speaking, the socialist countries have maintained their power and stability by controlling information and telecommunication technology and mass media, a historic pattern of control that will not change, but will continue for some time into the future. As an extension of this basic premise, most of the socialist countries have adopted and maintained the policy pattern of minimizing the "politics" of the Internet and maximizing its "economics," and with that policy in place, they will seek to have various and highly developed control mechanisms to eliminate any potential political danger the Internet may bring. The late-starting Internet countries will either copy or learn from the already well-developed Internet countries' degrees of openness and effective control strategies, and they will keep evolving. However, I am not totally rejecting the idea that opening to the Internet and expansion of it will be a significant threat to a socialist system. In the case of China's Falun'gong incident, which subsequently became widely known to the international community, the Internet contributed significantly to expanded coverage. So this study's theory is that the Internet itself is not an independent threat to a regime, but rather a parameter, and if its potential political impact is maximized, then it will have an impact on the regime.

1. The Internet Dilemma and Control of the Internet

1) The Internet's Political Impact: Trends in Research

Does the Internet, with its inherent qualities of interaction, openness, and being open to public, really have influence significant enough to erode the political foundations of socialist countries? Or are the socialist countries are actually utilizing it as an effective tool to achieve their goals of regime propaganda and economic benefits, while blocking off its negative impact? The "conventional wisdom" holds that the Internet indeed can pose a fatal political threat to the socialist countries when they open to it. That belief arises from the libertarian culture such as optimistic trust in the democratic qualities of technology,135 the belief that the Internet is inherently democratic,136 and "the Declaration of the Independence of Cyberspace"137 which

135 Faith in technology's potential power to challenge authoritarian rule believes that the Soviet Union collapsed because it was not able to control the flow of electronic information, which then led to the collapse of Eastern bloc communism. 136 According to a report written by UN special secretary Abid Hussain and submitted to the UN Commission on Human Rights in 1998, "new technology and the Internet basically have democratic characteristics in special cases" (translated by Kim Myo’ng-chun, 2001, page 25). 137 This declaration first appeared online in 1996 by cyberspace activist John Perry Barlow. It was a declaration of rights for information libertarians, pointing out the unreasonableness of governments’ jurisdiction over the Internet, 200 garnered great interest among early users of the Internet. Therefore the general accepted notion of the Internet's political impact is "modernizing determinism," which maintains the argument that the Internet will weaken the political foundations of socialist countries and eventually destroy dictatorial systems. Such belief is shared by great numbers of heads of states, corporate executives, and journalists of countries around the world (Kalathil and Boas, 2001, page 1; Kahlathil and Boas, 2003, page 1). For instance, Ira Magaziner, who was the Chairman of the Internet Advisory Board under the Clinton administration in the US, has said that the Internet would set new milestones in spreading democracy and that it was fundamentally no longer possible to have a system where a single government could rule over all of its people (Kim Hyo'n-ho, 2000). Even US President Clinton himself said many times that the Internet would facilitate democratization, and his statements were further followed by his successor, George W. Bush, who has said that the Internet would bring freedom to China. Not to be left out, his Secretary of State, Colin Powell, also has stated that democracy and the information revolution leverage each other and stand together. In another similar instance, when former Singaporean Premier Lee Kwan Yu visited South Korean President Kim Dae Jung on 22 October 1999, while he was discussing North- South Korean issues and other international issues, he said that if the Internet got entrenched in North Korea, the North Korean people might change in how they thought and looked at things. In response, President Kim said that, once the full Internet age came to North Korea and information was freely exchanged, it would be most difficult for the North to keep their isolation and it was his opinion that the North was generally heading that way already (Kim Hyo'n-ho, 2000). Such optimistic views of the Internet facilitating democratization are widely shared by corporate executives and journalists.138 However, the political and social realities of the socialist countries do not indicate that any actual fatal damage has been caused by the Internet. This probably has to do with the fact that studies on the impact of the Internet have primarily been conducted on the United States and other advanced democratized countries. In contrast, not many studies have been conducted on whether the Internet would damage authoritarian rule. First of all, looking at the prominent research done on the subject of the Internet's impact on democratization, one macro study conducted on 144 countries about the relationship between expansion of the Internet and political freedom found that there is a statistically significant co- relation between network connectivity and political freedom, but it did not find any decisive cause-and-effect relationship (Kedzie, 1997). In other research conducted on the relationship between democratization and the number of Internet users, some significant co-relation was found; however more importantly, it also found that political changes were the decisive factor in expansion of the Internet, rather than the expansion of Internet itself causing the political changes (Norris, 2001). In yet another similar study, when the content of bulletin boards in the news groups of authoritarian countries was analyzed, no democratic effects made by the news groups could be found (Hill and Hughes, 1998). In the highly oppressive socialist countries too, they insist that the regimes are controlling the Internet so strictly as to prevent almost any political impact. In the case of Myanmar with its military rule, the regime strictly controls not only public access to the Internet, but modems, satellite antennas, and faxes as well, effectively cutting off any possible communication among a free space where online users interact. The original text can be viewed at http://www.eff.org/Publications /John_Perry_Barlow/barlow_0296/declaration. 138 See the work by Kalathil and Boas (2001; 2003) for background information on and issues regarding the formation of the commonly accepted notions on the Internet and democracy. 201 anti-regime organizations (Kalathil 2001; Krebs 2001; Gullon 2001). In the authoritarian Middle Eastern countries such as Saudi Arabia and the United Arab Emirates, the Internet is being effectively controlled for its possible political and social impact by the governments' ambitious inspection systems (Human Rights Watch, 1999; Mosaic Group, 1998; 1999; Gullon, 2001; Altinas et al., 2002). The journalists' and human rights organization "Reporters Without Borders," with its strong interest in Internet control, submitted reports on the status of Internet control in the countries of the world in 2001 and 2003. In the 2001 report, the organization reported on the status of Website inspection and attacks on Internet users by the countries controlling access to the Internet. In the report, the organization defined 45 countries as wholly or partially controlling the Internet, and selected 20 from that list as "enemies of the Internet".139 In the 2003 report, the organization released the results of their survey findings on the Internet situation in 60 countries, indicating how freedom of expression in cyberspace was being controlled by state authorities (RSF, 2003). This series of reports conducted by "Reporters Without Borders" was intended as a reminder to people about the importance of freedom of speech on the Internet by exposing the realities of Internet control by state authorities, so it lacks in-depth analysis of the Internet's political impact. However, it still did a good job of making the world aware of the severity of Internet control and arousing academic interest in the subject. Recently, studies on the subject of the Internet's political impact in socialist countries and their control of the Internet have been accelerated by major research institutions such as the Carnegie Foundation and Rand Corporation in the United States. Those institutions have mainly focused on studying the Internet in socialist countries like China or Cuba, and they also have shed light on the one-party states in East Asia through contributory academic papers written by their researchers but published in other academic journals. All this research comes to the same conclusion: the Internet in these states actually contributes to the stability of each regime in a very positive way because the regimes have employed effective mechanisms to control the Internet, blocking any possible negative political elements beforehand and at the same time, conduct various commercial activities on the Internet for economic benefits (Boas 2000; Kalathil and Boas 2001; Hachigian 2001; 2002; 2003; Chase and Mulvenon 2003; Kalathil 2003; Kalthil and Boas 2003). So, according to this research, most of the socialist countries are successful at controlling the Internet via many ways of censorship, including total blocking of Internet access, filtering and subsequent limitation of harmful content, jamming, and monitoring. In addition, some countries use the Internet as important means of regime propaganda and for achieving economic benefits. Such findings make "instrumentalist" arguments about the political impact of the Internet on the socialist countries very persuasive. Such instrumentalist argument is based on the view that technology is a political and cultural product that serves the interests of the ruling class as a political tool (Steinfield and Salvaggio, 1989). As control of information and telecommunication technology and mass media has been a foundation for regime maintenance and stability for socialist countries, the instrumentalist argument maintains the position that that history of control will not change, even in the age of Internet, but more than likely will continue. So the reason why the socialist

139 The report, entitled "The Enemies of the Internet," released by "Reporters Without Borders (RSF)" in October 2001 named countries that control and inspect Internet Website connections. There were 20 countries, including North Korea, Myanmar, China, Cuba, Vietnam, Iraq, Iran, Libya, Saudi Arabia, Syria, Sierra Leone, Sudan, Tunisia, Azerbaijan, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, and Belarus. The total number of countries that wholly or partially control the Internet was 45 (RSF, 2001). 202 countries still exist and are even thriving despite the global impact may come from the fact that those states have employed and effectively utilized various types and methods of control mechanisms against Internet access and use. As for North Korea, its total blocking of the Internet makes it impossible to find any previous study on the subject. There are only very limited and primitive studies done on the status of the North's foreign Websites (Akutsu, 1999; Petrov, 1999; Kim Yo'n-kak, 2000; Nam So'ng-uk, 2000; Ko Kyo'ng-min, 2003b; Song Su'ng-so'p, 2003), in addition to a study about the Internet's impact on the Chinese Falun'gong incident (Cho'ng Chae-ho, 2001). There are almost no studies done on the Internet's political influence or control, as is generally the case in other socialist countries. Most of these previous studies have focused on the Internet's political impact in socialist countries and on how the socialist countries control the Internet, but none of them has dealt with each socialist country's step-by-step opening to the Internet and control strategy according to their various degrees of opening to and their various economic uses of the Internet. Considering the fact that these socialist countries have different degrees of openness to the Internet , according to their own political and economic situations as well as how different their control strategies are, there is a clear need to conduct more systematic studies on the subject of Internet control by the countries and comparative studies among them, and such studies should be further evolved into modeling of and establishing theories for the general Internet control strategies of socialist countries.

2) Political and Economic Dilemmas Concerning the Internet

The debate on the Internet's impact on a regime wages on. That is because the socialist countries face a dilemma over how to effectively control potentially harmful content to protect their system from political dangers while still feeling the need to utilize the Internet as a tool to facilitate economic growth and acquire commercial benefits. Again, the socialist countries that are less developed than the advanced democratic countries especially feel the urge to adopt the Internet proactively for political and economic purposes. The Internet provides many benefits to the socialist countries, including responding to international criticism and improving their national image without changing the existing political system. They can also show an "official face" in cyberspace through foreign-oriented Internet resources such as official government Websites and transmit official positions on a variety of foreign and domestic events in real time without any limits. Additionally, regime propaganda may be successfully waged by providing various official publications online, including official governmental newspapers. Moreover, the socialist countries can also improve the transparency of internal administrative tasks within government through Internet-based e-government, which can then eliminate chronic corruption rampant inside the government, and, by providing electronic administrative services, they can additionally increase people's level of satisfaction, along with government operations' own efficiency and general support from the people. However, the more immediate benefit the Internet brings to the socialist countries may be economy-related. The Internet generates and distributes various knowledge and information via its global network as an essential "economic resource" and improves overall economic efficiency, including electronic commerce, tourism-related commerce, efficient management of trade by domestic and foreign joint-venture companies. To the socialist countries, therefore the Internet is particularly attractive from an economic perspective with its huge economic potential to become a central engine of growth for the "digital economy."

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However the Internet can also become a seriously dangerous factor to the socialist countries that want political stability and maintain their grips on power (Boas, 2000, pages 62- 63). The Internet essentially has the characteristics of a new media that can deliver messages as first intended to the Internet users without going through a gate keeping process for which the traditional media such as newspapers and broadcasting usually do. Considering these inherent qualities of the Internet, there can be great causes for concern among the socialist countries if full opening of the Internet is followed by rampant anti-regime ideas or anti-regime groups or NGOs that seek to change the regimes and use the Internet for organizational strategy, tactics, and supranational networking.140 Therefore, these socialist countries with a social control system as a foundation for maintaining their regime must consider a kind of structural control over the Internet with regard to this political aspect. The Internet is a global "open network" and it is also an "online community" where the users of the network congregate and meet. As a medium that enables the users to communicate interactively, such an unfiltered openness can be a potentially damaging element to the regimes' political stability. Thus, the socialist countries in this information age face a difficult dilemma over utilization and control of the Internet. To them, the Internet can be both a source for potential political and economic benefits and a source for possibly politically damaging elements, which in turn makes it a subject for proactive utilization as well as proactive control. That is the reason that the socialist countries have chosen to control access to and use of the Internet through systematic control mechanisms, rather than allowing an expansive and inclusive market-led approach to it. However, not all the socialist countries have reacted to their Internet dilemma in the same ways (Hachigian, 2002, page 41). They are actually adopting various levels and methods of strategy by which to control the Internet for regime maintenance and economic growth in the information era. Countries that highly prioritize regime maintenance strictly control Internet access and usage by the general public and let only a very few specific specialists and elite members within the government have access to the Internet. In contrast, countries that more prioritize economic growth strictly control only the Internet content they think poses a danger to their regime and have adopted somewhat relaxed Internet policies; some have even opened Internet cafes, letting and encouraging general public to access and use the Internet. However, they still opt to close it down completely if they judge that opening up to the Internet has led to more political threat than economic benefit. So most of the socialist countries facing the Internet dilemma have generally taken an instrumentalist path, under which "politicization" of the Internet is minimized, while its "commercialization" is maximized. They are developing various sophisticated Internet control mechanisms to stave off the political dangers it might pose, and the countries that have opened up to the Internet relatively late, , trying to further evolve their own control mechanisms, are either copying or learning from the efficient control strategies already used by the advanced countries that opened up to the Internet earlier. However, these discussions do not mean that they totally reject the idea that opening to the Internet and its expansion will be a significant threat to a socialist system. For instance, the Internet indeed contributed significantly to expanding the coverage of China's Falun'gong incident, which subsequently became widely known to the international community. So the

140 According to a report by "Reporters Without Borders (RSF, 2003)," which conducted a study of 60 countries from 2001 to 2003 on the subject of Internet status entitled, "The Internet under Surveillance," a total of 50 Internet users ("Netizens") worldwide have been imprisoned for Internet-related activities. 204

Internet itself is not an independent threat to a regime, but rather a parameter, and when its potential political impact is maximized, it will then induce impact on the regime. In other words, it is true that the Internet may serve more as an element facilitating regime maintenance and economic development than pose threats to a regime in the short term. However, from a long-term point of view, the Internet can become a parameter or a facilitator that expands and worsens political and economic crises when they occur, generating elements that threaten dictatorial systems.

3) Internet Control: Concept and Models

As a network, social space, medium, and resource, the Internet has the inherent combinational qualities of these media (Yi Chae-hyo'n, 2000, pages 20-21), so a nation is faced with a dutiful consideration as to how it can be structurally controlled. Even for democratic countries where full and free access to the Internet is allowed, there can be incidents where the right to access foreign and domestic news resources clashes with any of the interests coming from national sovereign rights, national security, public order, cultural identity, and economic benefit (Dijk, 1999, page 123), so structural control is placed on the expression and communication of Internet content.

(Figure 6-1) The Spectrum of Governmental Control

Source: Davenport (1997, page 69)

Internet control is not at all exercised exclusively in non-democratic countries like socialist or authoritarian regimes. In fact, to different degrees, control is exerted in Western democratic countries as well. The main difference would be that, while the goals of Internet control in socialist countries focus on eliminating direct criticism of the regime, the focus of Internet control in democratic countries falls on maintaining public order and defending basic ethical standards, such as in protecting young children and youth from harmful content on the Internet (translated by Kim Myo'ng-chun, 2001, page 93).141 According to Davenport (Davenport, 1997, pages 68-76), as shown in Figure 6-1, there are four models of the degree to which a central government controls information by national information management mechanisms. They are: "monarchy," which controls information in a centralized way; "federalism," which controls by self-regulation; "feudalism," which controls by

141 The methods by which to control the Internet in democratic countries can be categorized into two: one that is control by others, such as a government or public agency, and the other, which is control by self-imposed regulation by the industry, including the Internet users. In the US and some Western countries, self-regulation is emphasized. However in Germany and France, minimal governmental regulation is emphasized. In Asian countries, a combination of external and self-regulation is emphasized. Japan more emphasizes self-regulation, but Singapore has adopted stronger regulation by government. As for South Korea, it has maintained a self-regulation principle while minimizing interference from government. Most developing countries prefer external regulation. All these different levels of regulation stem from each country's different customs and political system (An Tong-ku’n, 1997). 205 organizational units; and "anarchy," which has no information control system within an entire unit at all. According to this categorization, except for the anarchy type, all models have premises of information control. The monarchy type, with its centralized methods of control, particularly represents a typical control system utilized by the socialist countries. The Internet evolved independently in cyberspace much like anarchy, so concepts of regulation and control of the Internet vary according to the characteristics of each different system. For example, democratic countries tend to approach regulating the Internet, which has developed freely without regulations, retroactively, while socialist countries conceive and develop effective systems for control even from before deciding to open up to the Internet or by the different stages of opening, as it grows and expands. The democratic countries impose almost no control on Internet access and usage of its content by general public users, focusing instead on regulating the architecture or content of Internet service providers. Notably, many countries have recently proposed censorship-related regulatory laws, and some countries are attempting to legalize monitoring systems for internal security purposes (Wolverton, 2001). In contrast, in socialist countries various control mechanisms for the Internet are employed, depending on level and type, from physical blocking of Internet access to limiting the usage of content. For instance, socialist countries that mainly rely on ideology and propaganda tend to give up economic benefits that come from the Internet and instead focus on strict control of Internet access and content. However, socialist countries that base the regime's justification and dynamics of survival on improving their people's quality of life and developing the national economy tend to allow Internet access to maximize its economic potential and enforce strict control of the Internet only for accessing harmful content (Hachigian, 2002, page 42). So, socialist countries exert their Internet control far more comprehensively than do the democratic countries. Thus, Internet control in the socialist countries can be conceptualized as control of access and censorship of use of content, according to the political and economic context in which those countries are situated. In other words, control over the Internet focuses on limiting either access to the Internet or use of Internet content. The former tends to exert stricter control than the latter. Also the degrees of limitation of Internet access or of censorship of content use can indicate the degree of Internet control. Some of the inappropriate information flowing in the Internet includes dangerous political statements, advocacy of racial hatred or content that promotes it, and indiscriminate pornography, all of which may pose threats to any government regardless of political orientation. Governmental censorship142 began on inappropriate information distributed on the Internet around 1995. According to EFA (Electronic Frontiers Australia), governmental censorship policies on the Internet (Table 6-1) can be categorized into four models (EFA, 2002). Model "I" is adopted by Britain, Canada, and many Western European countries. General laws are applied to illegal Internet content such as child pornography or promotion of racial hatred in these countries. It is not illegal to publish content that is "inappropriate to young people," and they may not be subject to forceful censorship by a controlling system. The majority of governments in this model tend to utilize technology whereby an Internet user

142 The term "censorship" generally does not pertain to regular civil laws, but rather points to cases where government regulates Internet content by adopting special regulations (EFA, 2002), and it is mostly accepted as an inclusive term to mean control of information and ideas distributed widely in society via the Internet. See GILC's "What is Censorship?" for further information. 206 voluntarily limits access to Internet content for that user and his children, while encouraging further development of such technology.

(Table 6-1) Internet Censorship Policies by Countries around the World (EFA)

Model Policy Details Model I Voluntary filtering of content by Internet users and the Internet industry, as well as promoting the use of blocking technology Model II Criminal prosecution of content providers that publish content "inappropriate to young people" online, by applying existing offline general laws Model III Allows limited Internet access by ISP through government-controlled Internet access points and the rest are blocked off Model IV Government prohibits any public access to the Internet

Model "II" is adopted by some states (territories) in Australia, and it has also been tried by the United States in the past too, but it is no longer practiced at the federal or state level. In this model, general laws are applied to the illegal Internet content, by which their illegality is determined. Model "III" is adopted in countries like China, Saudi Arabia, Singapore, the Arab Emirates, and Vietnam. Some of those countries allow only limited Internet access by Internet Service Providers (ISPs) through controlling Internet access points and demand that the rest be blocked off. Finally model "IV" blocks altogether any public access to the Internet by the general public, or some type of limited access is allowed as in model "III," only if Internet users first get permission by registering with or receive permission from the government. The above four models can be generally categorized into two types of Internet control mechanisms by combining Internet content, the main subject of control, and regime types. The first two models (I and II) are Internet control policies adopted by democratic countries that primarily aim to regulate Websites displaying sex, terrorism, and racism, without imposing heavy limitations on public Internet access. The latter two models (III and IV) are Internet control policies of socialist countries that impose comprehensive limitations on public Internet access and content use, chiefly to prevent the spread of ideas "unfriendly" to the system.

2. Examples of Internet Control in Socialist Countries and Their Typology

1) Examples of Internet Control

The Internet controls imposed by different countries around the world generally show similar instances and trends in both the actual world and cyber world. Generally, the more oppressive and authoritarian a government is, the higher and stricter the Internet control it imposes (refer to RSF, 2001). Based on the research that utilized (modeling) the Internet controls imposed by the one-party rule states, a similar modeling can be made, as shown in Figure 6-2. 207

In Figure 6-2, except for Singapore and Malaysia, which are categorized as authoritarian or semi-authoritarian states, the Internet control models of socialist countries for Internet access and use can be categorized into two types. In countries like China, Cuba, and Vietnam, a "significant restrictions" model is adopted, under which relatively strict control is exerted to block the free flow of liberal ideas (ITU, 2003, page 2). The other, "severe restrictions" model, which principally limits Internet access and usage to only a few elite members within the government or specialists and blocks any public access, is adopted in countries like North Korea and Myanmar (ITU, 2003, page 2). Now let's examine briefly the Internet control cases in the socialist countries like China, Cuba, Vietnam, and Myanmar, all of which have different degrees of Internet control and utilization.

(Figure 6-2) Internet Control Models of One-Party States

North Korea, Myanmar China, Vietnam, Cuba Singapore Malaysia

Source: Created based on information by Hachigian (2002, page 43) *Cuba was inserted by the author.

(1) China

Unlike the other socialist countries, China started relatively early in developing IT industries and public propagation of the Internet. The Internet in China got its start in September 1987, when Professor Qian Tianbai, who is known as "the Pioneer of the Chinese Internet," sent an e-mail containing a message entitled, "Over the Great Wall and into the World" (National Intelligence Service, 2002, p. 3) and use of the Internet started in 1995.143 China has shown remarkable progress since and it boasts faster Internet development than any other country in the world. It is due not only to the explosive growth in user demand,144 but to the Chinese government's proactive promotion in growing the Internet and related industries. The explosive growth of Chinese Internet industries was based on the adoption of the "National Information Infrastructure (NII)" plan led by the government in March 1993. Also known as the "Golden Project," the plan called for developing Internet industries as the growth engine for China's economy in the 21st century and for utilizing the Internet as a tool to strengthen the central government's control at the same time, reflecting the Chinese government's will. Simultaneously, the Chinese government is showing its positive intention to grow China's IT industries, represented by the "Zhongguancun" Science District.

143 See the National Intelligence Service (2002) for comprehensive analysis of trends in the Chinese Internet and Internet industries. 144 According to the Survey Report on China's Internet Development, a report on periodic statistical surveys of China’s Internet development written by the Chinese Internet Information Center (CNNIC), the number of Chinese Internet users as of July 2003 reached 68.8 million people, having nearly doubled every 6 months and increased by 50% each year since October 1997, when the first report was made, a trend of very rapid expansion. Their total Internet user population is second in the world, behind only the US. See http://www.cnnic.com for more on China’s Internet development. 208

Unlike most socialist countries, which focus on minimizing Internet access and usage, China is clear on how it wants to proactively utilize the Internet as a way of liberalizing the economy, based on a strategy for Internet industry growth (RSF, 2001). At the same time, the Chinese are also attempting, through effective and exclusive use of information available on the Internet, to strengthen the government's authority, which was weakened by reform and opening. However, China is no exception when it comes to the worries arising from the political influence of the Internet, a problem that the other socialist countries share. The flood of unfiltered information to the people via the Internet, a symbol of openness and freedom, may weaken the very foundation of the Chinese Communist Party. So the Chinese government still maintains its policy of restriction on free creation, movement, and sharing of Internet content. The government seems to have taken a dual mode policy, in which developing and restriction policies are imposed together at same time under their belief that the unfiltered Internet can be a symbol of openness and freedom but controlled Internet can be an effective tool for national political and economic purposes. Accordingly, the basic Chinese Internet strategy is aimed at promoting growth of the Internet for economic benefit while still strongly restricting political Internet content to resist weakening their political system, essentially a type of "balancing strategy" comprising development and restriction (Hachigian, 2002, page 49). One should know that the Chinese government's strong imposing of Internet control has earned it a worldwide reputation as being infamously oppressive (RSF, 2003). The Chinese Internet censorship stages have evolved from the first stage of ideological censorship to the second stage of selective registration by Internet service providers (ISPs) and monitoring the Internet users, the third stage of strong content inspection, and the fourth stage of suppression strategy (Lei, 1997). The Chinese government unified all Internet portals to the state-owned ChinaTelecom, arranged Internet connection service through only four state-owned telecommunications companies, and authorized the Ministry of Public Safety under the National Council to monitor information flow on the Internet. Not only that, by instituting a series of very strict Internet censorship laws145 and authorizing national security agencies to conduct security measures related to Internet connections by all network-linked computers all over the country, China controls circulation and use of illegal Internet content. Among the Internet control related laws that particularly need attention are the "Computer Information System Internet Connection Security Management Regulations," (imposed by National Security Department in January 2000) and "The Internet Information Service Regulations" enacted on 1 October 2001. Under the authority of those laws, all personal or Internet company's Websites are subject to prior authorization from the government; self- censorship is recommended for all Internet related individuals and organizations, including Internet service providers, Internet café owners, and general users; and strict punishment is imposed for all illegal information circulation and use.

145 Chinese laws related to the Internet include "Regulations for Safeguarding the Chinese Computer Information Systems" (enacted by the State Council in 1994), "Provisional Regulations on Chinese Computer Networks' Internet Connection Management," (State Council Decree No. 195, 1 February 1996, partially modified on 20 May 1997), "Enforcement Codes for Provisional Regulations on Chinese Computer Networks' Internet Connection Management," (evaluated and passed by the State Council Information-Orientation Task Team on 8 December 1997), "Management Regulations for Safeguarding the Computer Networks' Internet Connection," (imposed by the Ministry of Public Security in 1997), "Provisional Regulations for Chinese Internet Domain Registration," (enforced since the latter half of 1997), "Detailed Enforcement Codes for Chinese Internet Domain Registration," (enforced since late 1997, led by the Chinese Internet Information Center), "Computer Information System Internet Connection Security Management Regulations," (imposed by the National Security Department in January 2000), and "The Internet Information Service Regulations," (decreed and enforced since 1 October 2000). See National Intelligence Service (2002) for China’s Internet-related laws (original and translated texts). 209

For instance, any news or other content that has not been reported by state news media can be subject to complete removal by the government, and whenever foreign news materials are quoted, they need to have prior governmental authorization each time. In addition, businesses that operate or use bulletin boards or chat Websites are guided to perform managerial and supervisory functions so that the users handle only nationally recognized content. Here are some examples of the Chinese government's Internet censorship cases. In 2000, an individual named Huang Qi posted some writings about the June 1989 Tiananmen Square Massacre on his Website www.tianwang.com, and he was later convicted by the Chinese government for "attempting to overthrow the government" and is now serving a five-year sentence in jail (RSF, 2003, page 35). Also in just a one-month period in July 2002, more than 30 anti-government "netizens" (Internet users) were arrested and some 8,000 Internet cafés and about ten Websites and cyber discussion rooms were forced to close down as well due to censorship (RSF, 2003). Additionally in September 2002, even though there was no official statement made, the Chinese government blocked access to the "Google" Website, which, with its capability to search in the Chinese language, had been the most popular search engine in China. This was a noticeable event since, up to that point, the Chinese government has censored Internet Website content, but not access to search engines themselves.146 Another case of prominent Internet censorship involves a psychology major student at Beijing University named Liu Di who was arrested for criticizing the Chinese government in one of the Internet chat rooms, which has since garnered attention worldwide (RSF, 2003, page 35). The Chinese government has also strengthened Internet censorship and oppression of anti-government Netizens in the name of the upcoming Beijing Olympics. Accordingly, as the number of Internet users increases dramatically, the government seems to be increasing the level of quality of its Internet censoring and the harshness of its punishments as well. According to research conducted by the Chinese Academy of Social Sciences, Chinese Internet users see the Internet as a place for discussions to express their political opinions and as a source of political information (Hachigian, 2002, page 50, re-quoted). As long as such recognition by the Chinese Internet users continues and expands, it is likely that the government's Internet censorship strategies will become much more varied and sophisticated. The Chinese government sees the Internet as a "core growth engine for the new economy" and allows relatively extensive access. However, while the public can access the Internet freely, there are also many levels and tiers of regulations and control mechanisms at work too. Yet, the Chinese leaders recognize that development of IT and the Internet is an essential factor, in order for them to become a powerful nation. That is evidenced by an article in the official Chinese Communist Party's newspaper, People's Daily, which predicted that, "The degree of development of information networking technology will become the major yardstick for measuring a nation's level of modernization and strength." (Chase and Mulvenon, 2003, page 45). With this perspective, China can be described as a socialist country that utilizes the Internet mostly for economic purposes, while at the same time also imposing many levels and methods of Internet censorship.

(2) Vietnam

The Chinese Communist Party shifted its national stance dramatically toward reformation and openness since the 1978 decision made by Deng Xioping, transforming its political foundation from ideology to economic development, a shift of policy that has been directly

146 Refer to the Korea Computerization Institute's September 2002 foreign information-orientation data. 210 reflected in its Internet policies. Vietnam also has followed a policy shift very similar to China's, in both economic and Internet policies (Hachigian, 2002, page 47). The Vietnam's policies of reform and openness are prominently represented by the so-called "Doi Moi" policy, which means "transformation." It started in December 1986, as it witnessed the Soviet Union's own perestroika and other reform policies. In the Internet policies, the government has imposed relatively generous policies toward public access to the Internet. However in the beginning, the government imposed a policy of "architectural regulation" unlike the "content regulation" imposed by China, which focuses on illegal information distribution and usage. The Vietnamese government started to establish firewalls in 1998 and such efforts were successful in blocking about 3,000 pornography sites and a few thousand political Websites. Despite these control policies, individuals can relatively freely use Internet cafés and access the Internet in Vietnam. There are thousands of such Internet cafes in Vietnamese cities, with "chat sites" the most popular destinations among the teenagers. The government also proclaimed in March 2002 that it would allocate 10% of the budget for higher education toward increasing Internet access in universities (Dang, 1999). The country also has recently launched proactive efforts to link with advanced IT countries such as South Korea for technological cooperation and foreign investments for the purpose of growing its IT industry. So the Vietnamese government seems to have its own adequate plans to further develop IT industry with an eye to the potential benefits of the Internet. However, as Internet usage started to grow fast in Vietnam, in March 1999 the government decided on strict control, and further decided to let the government supervise all Internet content and limit domestic Internet usage. The government also decided to control international connections made by Vietnamese users to the World Wide Web. The government additionally is considering arresting any user who launches illegal Websites or posts anti- government messages, and issuing fines to Internet café owners who let the users visit anti- government or pornography Websites (Hachigian, 2003, page 64). Vietnam so far has not benefited much economically from the Internet and IT. Overall investment in IT fields is relatively small and network connection speed also is slow due to the firewalls installed. As for the volume of Internet usage, even if its low level of telecommunication infrastructure (three telephone lines per 1,000 people) is not counted, the high Internet fees are holding off possible increases in the number of online users. The total number of Internet users in Vietnam in 2002 was about 400,000 (CIA, 2002), or only about 0.5% of the total population of 77 million. It indicates that, in the case of Vietnam, its low level of infrastructure contributes more to limiting Internet access than the government censorship policies (Hachigian, 2002, pages 44 and 47). As a result, the government faces no threats of political challenge generated by the Internet.

(3) Cuba

Just as North Korea lies directly next to South Korea, Cuba also directly faces its enemy, the United States. One of the greatest reasons why Cuba and North Korea, unlike other socialist countries, are rather slower in reform and openness may be due to the strong influence of their external political environments. Of course, China and Myanmar too constantly face challenges from anti-government organizations and activists via the Internet but at least they are not situated right next to their enemy states. However, Cuba and North Korea stand in permanent confrontation with enemies on the national, rather than the group or organizational level, so free Internet use could become a major cause of threats to those regimes.

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After the Cold War was over, the United States tried to promote democracy in Cuba through technological means. The US attempted to change the minds of Cuban people by distributing more information to the nation, as in the form of information revolution, while strategically ending some sanctions. During this period, the Cuban government also gradually eased restrictions on the Internet, resulting in more and more Internet access. However, contrary to the expectations of policymakers in the United States and the Cuban exiles, the information revolution failed to bring down the Cuban government. The island country is still dominated by hawks and the Internet is still strictly controlled by the government (Boas, 2000, page 58). Cuba's Internet policy is one that restricts entrepreneurial spirit and competition. Internet utilization in Cuba is separated into domestic and foreign purposes, so most of the Internet is utilized by tourism and export-related industries (Kalathil, 2003). Under Cuban laws, the Internet can only be used for commercial purposes in a limited way. Therefore, the Internet has contributed to increased tourism, efficient management and transactions for Cuban companies or foreign joint-venture companies as well as increased science and technology and bio industries (Williams, 2000; Boas, 2000, page 62). In all, the Cuban government's position on the utilization of the Internet is that if direct benefit to the government is expected, it will allow it, but for all other areas, strict controls are imposed. So in Cuba, Internet usage is allowed in a much more limited way than in China and no members of the general public can freely access it. Nor is Cuba's Internet censorship limited to domestic control, either. Cuba once blocked all American Website access, but relented due to political pressure from the US. Due to American sanctions, Cuba's international Internet links now can be accessed only through Canada. The majority of Websites registered with Cuba's ".cu" domain use Web server hosts located in Canada (Williamson, 2000). As can be seen, the dynamic relationship Cuba has with the United States is the most important factor in how it responds to the Internet. The role of the United States as an enemy country actually has strengthened the Cuban hawks' argument about national security, and subsequently forced it to have centralized censorship of the Internet (Boas, 2000, pages 58-59). The only people who have been able to access the Internet in Cuba since the Internet was introduced domestically in October 1996 are a few public officials and scholars authorized by the government (Symmes, 1998; Boas, 2000, page 63). As of the year 2000, Cuba had five ISPs, but all were under governmental control, and the official Cuban ISP is CENIAI. There are almost no Internet cafes for public access or use and no libraries have any Internet connections. For the general public to use e-mail or access Web pages, they can do that only in their workplaces, and most of them share a single account (Boas, 2000, page 63). However, an even more problematic issue is the high price of Internet access, which is about $250 a month for individual use and double that amount for business use. Considering that the average Cuban makes about $10 a month, it is in fact impossible for regular individuals in Cuba to use the Internet (Williams, 2000). So the Cuban Internet control policy allows liberal Internet access and use to a few public officials, scholars, and some other specific persons working in economy-related fields. As for the general public, by setting very stiff fees for the general public to use the Internet, the Cuban government effectively makes Internet access almost impossible. The government also directly controls all ISPs to minimize the Internet's possible political influence.

(4) Myanmar

Myanmar's Newin regime, which began in 1962 under the banner of "Burmese Socialism," established a powerful authoritarian type of political system. In September 1988, after a successful military coup, the new Myanmar government formed the "State Law and Order 212

Restoration Council (SLORC)," effectively taking control of the legislative, executive, and judicial branches. In November 1997, SLORC was changed to the "State Peace and Development Council (SPDC)" for the purpose of improving its international image, promoting foreign investments, and ending the American-led sanctions. With such a long history of authoritarianism in place, Myanmar is one of the countries that impose the most severe censorship in the world. The main mechanism with which to wage this kind of severe inspection is the "Printers and Publishers Registration Law" of 1962, which was first implemented with the establishment of Newin's socialist government. According to this law, all books, magazines, periodicals, songs, and movies must be censored by the Press Security Board. Additionally, the Myanmar government places strict controls on all computer technology. Not only is computer networking with foreign countries prohibited, if you get caught owning just an unauthorized modem, a sentence of seven to 15 years' imprisonment will be imposed. In 1996, an American diplomat was arrested for illegally using a fax machine, sent to prison, and eventually died in the prison (Krebs, 2001, re-quoted). Also, even though there is only a handful of Internet users in Myanmar, the government proclaimed extensive Internet regulation laws, beginning in January 2000. These regulations not only strictly prohibit any kind of writing and online posting that may damage national interests or related to politics but any online posting related indirectly or directly to the government's current policies or national security as well. Recently an Internet café under government control was opened in a city named Yangon, but because it was imposing ridiculously high fees for Internet access, only about 600 citizens were able to open e-mail accounts. Additionally, Web surfing is possible only for pre-authorized Websites, and pre-authorization from the government is also required for creating a Website. Because of such strict internal control, anti-government organizations and the deported community are unable to utilize the Internet meaningfully. Based in Thailand or the United States, many of these communities rely on the Internet to spread their messages about the cruelty of the regime and to organize their campaigns against foreign investment in the country (Hachigian, 2002, pages 44-45; 2003, page 63). However, even though Myanmar with its authoritarian military rule basically views all types of IT with suspicion, it actually has shown some interest in the Internet for its potential to develop some main industries that can earn hard currency. Additionally, the current rulers of Myanmar SPDC's leadership actually understand the potential of IT. This has led to some new directions, with the government starting to liberalize its strict IT-related laws and asking for technological investment from some friendly neighboring nations (Kalathil, 2003). These are sure signs that in Myanmar, too, there is a new wind blowing in the field of the Internet. So it seems that North Korea stands as the last country in the world that has not opened up to the Internet even in a limited way.

2) Typing of Internet Control

Based on the above described examples, Internet control by socialist countries can be categorized as shown in the Figure 6-3, according to the level of control of Internet access and use of Internet content. First, there are the categories of B, C, and D, which allow public access to the Internet according to the levels of Internet openness but still restrict Internet usage according to each country's own political and economic level. Category A is for total blocking of public Internet access. The former methods (or categories) are a control method generally used by socialist countries, and the latter is an "exceptionally strict control method." So the countries imposing the latter method are the ones that have not opened up to the Internet. 213

As for countries that have opened to the Internet, their "general control" methods can be categorized into two models, according to the degree of censorship on limiting Internet access and Internet content. The countries in category D utilize the Internet proactively as a tool to develop their economy at the national level; while those in categories B and C utilize the Internet in relatively limited ways and for certain fields only because of the potential threat of the Internet to their political systems. Based on such Internet control methods, the socialist countries can be categorized as follows.147 First of all, China, a socialist country that has opened to the Internet and adopted a full economic growth mode based on some form of market economy system, has adopted a relatively loose Internet control and active utilization of it.148 Among them, Myanmar, with its authoritarian military rule, seems to be the country that imposes the most severe control and smallest Internet usage. Between China and Myanmar, there are Cuba and Vietnam, which have shown great interest in developing their economies using the Internet and IT. However, Cuba seems to have a more generous policy toward public Internet access.

(Figure 6-3) Types of Internet Access and Usage Control Imposed by Socialist Countries

Closed Internet Open Internet Strict Control Weak Control

A B C D North Korea Myanmar Cuba, Vietnam China

As for North Korea, it has shown some changes in its overall Internet policies by opening some official and unofficial Websites promoting the regime and primitive levels of tourism and e-commerce using servers located third countries such as China, Japan, and Switzerland, but has been imposing an extreme type of Internet control policy by not yet opening up domestically to the Internet. In conclusion, the main barometer for socialist countries to decide upon their degrees of Internet control policies is the degree of how the Internet may affect their political regime. Basically, if they see the Internet as source of possible benefits, then they will allow access and usage, but if the Internet's potential destructive power is detected, its access and usage are surely restricted. Therefore the issue of socialist countries' Internet control policies is an issue of prioritization, as in how to prioritize the two different areas of political control and economic benefits (Boas, 2000, page 59). This issue can be seen as one solved by the strategic choices made by the leadership of each country.

147 However this kind of categorization is not always correct and the degrees of control in certain areas may interactively change. 148 There can be an opposing argument made about China's "loose" control of the Internet. Generally it is a globally accepted notion that China is infamous for its strict control of the Internet. According to a report submitted by "Reporters Without Borders" in July 2003, out of the world's 50 imprisoned Internet users, 42 of them (more than 80%) were Chinese (RSF, 2003). However, if you look at it from the perspective of the degree of public Internet access and usage of Internet content limited only to socialist countries, China may be the country that has the lowest Internet control level. That's because other countries are imposing far stricter Internet access and usage limitations. 214

3. Models of Internet Control Strategy in Socialist Countries

1) Variables that May Affect Selecting the Internet Control Method

Table 6-2 shows a comparison of current political, economic, and the Internet fields between North Korea and other socialist countries that have been described so far. As the table shows, each country's Internet control method generally reflects its own unique politico- economic situation. All the countries show that they are at the very bottom in the categories of individual political rights, citizens' rights to freedom, per capita GDP, and economic liberalization. A meaningful point that can be found here is that generally the differences in the economic fields correspond with the differences in the Internet field. In the political field, there were only slight differences in the category of citizens' rights to freedom, and all countries were given the "not free" level for freedom.149 However, in the economic field, per capital GDP and the degree of economic liberalization do not exactly match with the numbers of Internet users, but they generally match.

(Table 6-2) Comparison of Politics, Economy, and Telecommunication for Each Example Country (2002)

Country Politics ¹ Economy Internet ³ Political Civil Per Capita Economic ISPs Number of Propagation Rights Liberties GDP ² Liberalization Users Ratio Rank China 7 6 $4,400 127th 3, Year 45.8 3.6% 2000 million Vietnam 7 6 $2,250 135th 5, Year 400,000 0.4% 2000 Cuba 7 7 $2,300 155th 5, Year 120,000 10.6% 2001 Myanmar 7 7 $1,660 148th 1 10,000 0.02% North 7 7 $1,000 156th Korea

Source: 1. Freedom House (2002). 2. CIA (2002). 3. O'Driscoll, Feulner, O'Grady (2002). Note: The ranking of political rights and civil liberties runs from 1 to 7, with 1 being the most free and 7 the least free.

Therefore, it is estimated that in the socialist countries, the level of Internet control and utilization is determined not by political factors but by economic factors. Such presumptive theory goes back to the discussion on the Internet's politico-economic dilemma. The socialist countries may have taken the strategy of minimizing the "politics" of the Internet while maximizing its "economic" aspects, but they still keep a tight rope on their state control so as to not let its economic benefits grow into a political threat. Accordingly, the level of Internet control and its usage generally exhibits an inverse proportion. In other words, the higher the level of Internet control, the more limited the scope of utilization and, conversely, the

149 According to Freedom House (2002), there are three levels to indicate a country or region's general status of freedom, which are Free, Partly Free, and Not Free, determined by combing political rights and citizens' freedoms. 215 lower the level of Internet control, the higher the level of utilization. Accordingly, we may conclude that the more excessive a socialist country's control over the Internet is, the wider the potential economic loss it will suffer. The common characteristic for these socialist countries is their strong interest in tight control over the Internet, and such controlling strategies ultimately focus on the Internet's economic utilization aspect. Subsequently, the socialist countries' varying levels of Internet control strategy also stem from each regime's different level of intention over economic utilization of the Internet and method. Therefore, the core argument on the different levels of socialist countries' Internet control strategy comes to this: "Why are some countries more active in utilizing the benefits of the Internet's economic aspect while others are less so?" If that is so, then this question can be answered by going back to the original classical theory on "political power." There are two governing principles and methods that can lead to seizing power and maintaining, expanding, and regenerating it; in other words, in order to stabilize ruling, one needs "persuasion" and "coercion," two principles which are actually totally different from each other. First, "persuasion" is a political method to earn support or loyalty by the ruler's appealing to reason or emotion toward the ruled, instead of relying on "force" such as violence or threat to deprive value. The "persuasion" methods utilized by socialist countries include persuasion through ideology and propaganda and providing physical incentives. Most countries generally use a combination of these two but, in certain countries, one method may be utilized far more than the other. That is to say, countries where levels of seclusion and oppression are higher tend to rely mostly on ideology and propaganda in persuading people, whereas, in contrast, countries where there are relatively lower levels of seclusion and oppression tend to rely on economic growth or quality of life to persuade people. Thus, the socialist countries that regard regime maintenance as top priority based on "ideology" are less likely to be insistent on utilizing the Internet's economic benefits, while countries that put more priority on economic growth and quality of life issues are more likely actively to utilize the Internet to generate economic benefits. So in socialist countries, the level of utilizing the Internet's economic aspects depends heavily on whether their governing method of "persuasion" is based on ideology or on economic prosperity. Therefore the countries that mostly rely on ideology and propaganda tend to give up the potential economic benefits the Internet can offer and subsequently take on a strong position of strict control over the Internet access and its contents. In contrast, the socialist countries whose national goals focus more on economic growth and on improving the people's quality of life tend to allow wider access to the Internet for the people, even while running some political risk, and to develop various technological and physical control mechanisms over Internet content to manage the political danger. In sum, each socialist country's choice of Internet control strategy reflects its choice between the political priorities of ideology and economic prosperity.

2) Models of Internet Control Strategies: the Cuban and the Chinese Models

Ideological control over the Internet in socialist countries is an inescapable political tool, because their Internet policies are formed not independently but by a comprehensive approach or from the policy restrictions of the higher echelons (Kalathil, 2003). Internet policy in socialist countries is formed based on the priority of national policies. If the common national goals for socialist countries are regime maintenance and economic development, the Internet control policy will be affected by which aspect the regime makes its priority. For instance, if a socialist country is in a permanent stance against enemy countries with national security as the one dominant issue for its existence, it will most likely not allow 216 indiscriminate, free access to the Internet and thereby incur possible threats. They will likely want to see guaranteed technology that can block off such dangers associated with the Internet and establish a systematic Internet control mechanism before possibly thinking about allowing access to the Internet. However, a socialist country that does not have such constant national security issues and has adopted economic growth as a top national priority most likely will pursue the development of technological and systematic control mechanisms while at the same time actively utilizing the Internet for its economic development. Therefore, the difference of where to focus national priorities determines the basic level of Internet control and utilization. The models of Internet control in socialist countries can largely be categorized into the "Cuban model" and the "Chinese model," as these two models represent the different mechanisms that countries utilize in managing the political impact stemming from the Internet. China is a country with huge territorial size and population that is experiencing rapid economic growth and gradually deepening relationships with other countries of the world. Cuba, however, is a country with a much smaller territorial size than China and relatively weaker economic dynamics. Partly by the regime's own choice and partly because of the US economic blockade, Cuba participates only weakly in the global economic system. These two countries share a similar communist history and background and maintain strictly authoritarian political regimes but, whereas China is exerting itself to improve its economic liberalization and market economy, Cuba still clings to the socialist economic system that China gave up long ago. China has adopted an Internet access method in which a quick market-led technology expansion is promoted while controlling the access implemented through a control system that includes filtering of content, monitoring, suppression, and self-censorship. In contrast, Cuba basically sees all technology as a limited resource that the central government distributes, and thus has adopted an Internet policy that mainly avoids a market-led model and attentively controls popular access (Kalathil and Boas, 2003, page 9). So, if the "Cuban model" is a control strategy that limits access to computers and the Internet, then the "Chinese model" is a control strategy that censors content and effectively controls any anti-regime organizations' activities or illegal flow of information (Kalathil and Boas, 2001; 2003). Other than the two models mentioned above, there are also the cases of Vietnam and Myanmar. Vietnam generally has taken a policy similar to the Chinese model and Myanmar seems to have taken a policy closer to the Cuban model. In Vietnam, an openness policy called "Doi Moi" has been adopted and with it, popular access to the Internet has been allowed, but a rather strict set of Internet-related regulations also has been implemented to limit access to content, while firewalls also have been systematically installed. In Myanmar with its strict military authoritarian rule, 100% blockage of popular access to the Internet is not in place, but a similar actual blockage is being implemented through methods such as limiting applications for opening e-mail accounts. The regime continues to impose very strong and strict control and censorship over the Internet and other IT mechanisms, as well. Both the Cuban and Chinese models of Internet policy are combinations of controlling the political and economic impacts of the Internet but with different levels and priorities. The two countries have adopted a "reactive strategy" and "proactive strategy" to effectively counter possible elements of threat coming from foreign and domestic individuals, organizations, and corporations as well as the international community (Kalathil and Boas, 2001, pages 2-3). A "reactive strategy" is an Internet control strategy that focuses on limiting access to networked computers, filtering contents, blocking Websites using software tools, monitoring users' online activities, and even totally blocking the Internet. A "proactive strategy" is a strategy that focuses on further developing the utilization of the Internet such as for political propaganda to foreign and domestic audiences, establishing state-controlled intranet in place of the global Internet, conducting an electronic government service to increase civic satisfaction toward the 217 government, and strengthening national readiness against international information war such as possible Website hacking or distribution of computer viruses, while also improving the economy and people's quality of life to expand and strengthen popular support. So if the reactive strategy is mainly associated with countermeasures to the existing or potential challenge of Internet usage, then the proactive strategy is associated with promoting Internet usage for the purposes of reinforcing and expanding the state's authority. Both the Cuban and Chinese models show similar characteristics when it comes to their proactive Internet control policies, but they are quite different in the aspect of their reactive strategies of Internet utilization. First of all, in the reactive strategy, Cuba selectively controls access to the Internet for the reason of the possible impact Internet usage might have on popular opinion. In contrast, China either allows wider access to the Internet or promotes it, but it also imposes strict regulation, censorship, monitoring, arrest, and other threatening regulations that determine the limit of allowable discourse under the regime, effectively suppressing potential challenges. China is known by the world as a regime that imposes the strictest censorship over Internet contents. It has implemented two wide countermeasures against the Internet's potential threats. One of them is the so-called "low-tech solution," so named because it uses an already proven traditional technique based on good old Leninism. The other one is the "high-tech solution," in which new information technologies are utilized to effectively implement the state's governing authority (Chase and Mulvenon, 2003, page 49). As the name suggests, the low-tech solution utilizes such traditional control methods as surveillance of information providers, arresting Internet anti-regime individuals, confiscating computer equipment, implementing and enforcing related regulations, and physical closure of network resources. The high-tech solution, by contrast, obviously, utilizes mainly high technology such as the blocking of Websites and e-mail, state-sponsored hacking, monitoring and filtering e-mail, online propaganda, disallowance, deception, and disinformation tactics. In the area of the proactive strategy for promoting the Internet, Cuba and China adopt similar approaches. Both countries use the Internet in a wide scope for propagandizing their regimes, and they already have opened electronic government Websites to promote official government policies. The two also are developing plans for national intranets that will allow access to officially recognized entities. In the economy arena, Cuba is promoting the Internet in fields where it could lead to earning hard currency and help normalize the regime economically. On the other hand, China recognizes the potential economic benefits of the Internet more widely, and, hoping to quicken economic development and secure the regime's political justification under that premise, is trying to establish an environment for an information economy boom. The two governments however share the same strategy of promoting the Internet usage within government and are trying to strengthen national justification and authority by improving bureaucratic efficiency and providing social services. Additionally, through the establishment of electronic government, China is trying to solve its problem of corruption and increase transparency, which is a more immediate and challenging issue to the regime than the potential benefit of the free flow of information. So in conclusion, both the Cuban and Chinese models share the same characteristics of countering potential problems stemming from Internet usage while maintaining a generally closed off socialist political system and also utilizing the Internet for their own purposes of expanding the regime's authority and centralized control at the same. However, in the area of Internet utilization, they show markedly different stances, which is really a reflection of their different levels of economic liberalization. In the Cuban model, economic reformation has been implemented only in absolutely necessary areas, mainly the dollar-dominated export sector. In contrast, China of course has adopted a wider and proactive market reformation across all 218 economic sectors. So China needed to promote wider Internet access to utilize quick development in the information sector and increased technological manpower for their potential economic power, but it still keeps strict Internet control via other mechanisms (Kalathil and Boas, 2001, pages 16-17). Therefore, the difference between the Cuban and Chinese models is a reflection of each regime's differences in appreciating the development of a market-oriented information economy. In other words, the lower the recognition of these views, the more likely that delay in the potential economic benefits from wide Internet access will result and the more defensive the control measures adopted; and, in contrast, the higher such views, the wider the Internet access and various policies activated for optimizing economic benefits and thus the more aggressive and dynamic the control mechanisms adopted. These conclusions also lead to a theory that the Chinese model is more indicative of greater interest in governmental Internet control mechanisms than the Cuban model, and indeed, various control mechanisms have been developed and adopted. Based on a report by "Reporters Without Borders" (RSF, 2003), there are 50 Internet users ("netizens") who have been imprisoned for Internet-related issues, among whom 42 have been imprisoned by the Chinese government, the most among the world's governments. The next in line is Vietnam, with five cases. This clearly indicates the fact that China is the world's worst country when it comes to censoring the Internet. Vietnam also has imprisoned five Internet users, and all these can be seen as a result of the regime's policy of paralleling both proactive utilization of the Internet and control at the same time. In contrast, even though North Korea and Myanmar both completely block off Internet access to the public and they are categorized as enemies of the Internet, they are not targets of attack by the global online human rights organizations for issues involving Internet censorship such as imprisoning Internet users.

4. North Korea's Internet Strategy

1) National Strategy and Internet Strategy

The socialist countries' Internet strategies generally reflect their similar societal orders in the actual and cyber worlds. Table 6-3 lists the 12 countries that are in the lists of both "The Enemies of the Internet" designated and released by "Reporters Without Borders" in October 2001 and "The World's Most Repressive Regimes" designated by Freedom House in 2003. Among the countries, North Korea is the socialist country regarded as the most isolated not only in its political aspects, but in its economic aspects, as well. It is only indicative of how heavy a burden the North Korean regime places on regime maintenance. Such a heavy burden then makes the regime unable to escape the general unverified belief regarding the political impact of the Internet and keep its stance on its policy of closing off the Internet. As Director Martinez of the Cuban Institute for Automated Exchange of Information, a Cuban governmental agency in charge of Internet management, once said, "The issue of the Internet in Cuba is never a problem associated with technological or economic aspects. Rather, it is a political issue 70% of the time, as in any other country (Symmes, 1998)." North Korea's Internet strategy can be analogized as a national strategy. Internet strategies do not get formed independently, but comprehensively or by effects from the upper echelon of the government. When considering the potential political impact the Internet may pose, it is almost an absolute necessity to factor in a wider national framework of Internet strategy analysis. 219

(Table 6-3) Comparison of Socialist Countries in both the Actual World and Cyberspace

Category The World's Most Repressive Regimes¹ The Enemies of the Internet² Common to Both Lists Country North Korea North Korea O Myanmar Myanmar O Cuba Cuba O Vietnam Vietnam O China China O Iraq Iraq O Libya Libya O Saudi Arabia Saudi Arabia O Syria Syria O Sudan Sudan O Turkmenistan Turkmenistan O Uzbekistan Uzbekistan O Equatorial Guinea Azerbaijan O Eritrea Kazakhstan X Laos Kyrgyzstan Somalia Tajikistan Chechen region Belarus Tibet region Iran Sierra Leone Tunisia 18 countries 20 countries 12 countries 1. Freedom House (2003) 2. RSF (2003) Note: The order of countries in both columns has been determined by the author.

At the time of the launch of the Kim Jong Il era, North Korea proclaimed its goal of building an economically powerful country with the motto of building a "powerful and flourishing country." In order to promote the strategy of an economically powerful country, it is pushing forward with national development of the IT industry on the basis of science- and technology-centered policies. Considering the potential economic impact the Internet possesses, the Internet is an absolute necessity in order to efficiently proceed with such a grand strategy. However, the level of North Korea's use of the Internet is only to use foreign servers to launch its Websites and as a window for its regime propaganda or economic revitalization. Despite a deep recognition of the necessary utilization of the Internet, the North still has not opened up the Internet to its domestic population and does not proactively utilize it abroad either. The reason is that the North has chosen the importance of "security guarantees" over the matter of "economic recovery" in prioritizing possible adoption of the Internet. These two aspects are the two axes of national strategy and the North Korean government so far has tilted toward the former. The North is clear in its intention to proactively develop IT industries based on the strategy of building an economically powerful country with a science- and technology- centered policy, but it gives the military security issues such as nuclear development more weight because again, the regime's overall national priority is on "security guarantees," rather than "economic recovery." Moreover, the principle reason could be found in the governing principle of the North Korean regime, which bases its political foundation and justification on persuading the people with ideology and propaganda rather than providing physical benefits. A contrasting example can be found in the case of China. Since the launch of Deng Xiaoping's 1978 open policy, the foundation of justification for the Chinese Communist Party

220 has shifted from ideology to economic growth. As the waves of Western influence descended upon China since then, the Chinese people started to recognize the high quality of life enjoyed by the Western countries, while the dominating power of communist doctrine became weaker. Thereupon, the authority of the Chinese Communist Party became focused on improving the people's quality of life by economic development. Such a macro shift in policy has concentrated national efforts on developing the IT industry and actively pursuing Internet industries since the 1990's. However, of course China is not indiscriminately developing IT and the Internet without any consideration to regime maintenance. Corresponding to the ever expanding Internet and its proactive utilization, the Chinese government is also strengthening its strategy of control over the Internet for purposes of regime maintenance. Such a need to understand Internet strategy from a macro, national strategic point of view applies to Vietnam, Cuba, and Myanmar as well. In Vietnam, the government is following the Chinese government's Internet strategy, a direct reflection of its recent significant reform and open policies. In contrast, the reason why Cuba and Myanmar are not maximizing their utilization of the Internet as much as their high interest in it is because they regard regime maintenance as more important than economic development. Cuba's situation is located right under the chin of America, which it considers an enemy country, and the Myanmar military junta is constantly exposed to the threat of overthrow by democratic and anti-regime forces. So in this regard, the case of North Korea too depends on where the regime's macro national strategic focus falls, determining the level and scope of Internet utilization—such as whether the Internet is closed off or opened up, or actively or passively used. Since the 2000 North-South summit meeting, the North Korean regime has shown an active interest in participating in economic cooperation projects with the South along with the new détente atmosphere. In 2002 as well, the regime proclaimed its "1 July Economic Management Improvement Policy," which was followed by the new policy of opening special economic zones in Sinu'iju150, the Ku'mgang Mountains, and Kaeso'ng. Of course such a series of policy proclamations does not mean that the regime has shifted its national strategy from regime maintenance to economic development for sure, but they are at least indicative of some significant changes going on in the North with regards to its Internet strategy. In early 1995, almost immediately after the death of Kim Il Sung, the North Korean regime proclaimed the so-called "harsh march" for the purpose of strengthening government unity, and by 1998, the national strategy for the new Kim Jong Il era, building a "powerful and flourishing nation" was proclaimed, followed by another proclamation in 2000 in which they stated that they already had achieved building a ideologically and militarily powerful nation, so only achieving an economically strong nation remained. These were all indicative of the regime's firm will to concentrate national strength on economic recovery. However, the more prominent and pressing international issue currently has become the North's sparring with the Americans over the issue of its admission of nuclear development. Since the regime admitted its long-range missile and nuclear weapon development programs, the United States has insisted that the North return to the NPT agreement and give up its nuclear weapons as well as weapons of mass destruction. The North in return has demanded that the United States sign a non- aggression pact for security of the regime, suspend economic sanctions against it, and normalize diplomatic relations. The scene between them is very much like two trains running toward each other, with neither showing any hint of yielding. For the North Korean authorities, the problem of economic recovery may be "a burning coal dropped on top of my foot," but the issue of

150 The North Korean government recently stated that it was delaying its Sinu’iju Special Economic Zone project until 2004 due to such reasons as the nuclear issue, the Kaeso’ng Industrial Zone project, and friction with China. 221 security guarantee is an even more pressing matter, like "a coal that is burning into my foot." To them, the issue of security guarantee remains far more important than economic recovery. North Korea's security guarantee is directly linked to the regime's life or death, the highest priority national goal. So when illuminating the North's Internet strategy from its macro national strategic point of view, the matter of the North's opening of the Internet can only become possible after the current clash between the North and the United States over the issue of nuclear development, including dismantlement and the United State's offer of guaranteeing security, is resolved somewhat. If the nuclear issue ends with the dismantling of nuclear development by the North and the US's subsequent offer of a security guarantee, there will be a greater chance that the North will implement an open Internet policy and utilize it as a tool to revitalize its economy. However, if the North's nuclear issue drags on without a clear end in sight and the US continues to be a threatening element to North Korea, it is more likely that the North will stick to its current Internet strategy, and turn to strengthening its regime propaganda.

2) Internet Control Strategy

Governmental control over telecommunication technologies and mass media has historically been the basis of continuation of dictatorial political regimes' grip on power and stabilization, and such a historical tradition does not seem likely to change any time soon in this era of the Internet. In an extension of this historical trend, most socialist countries are minimizing the "politics" of the Internet while maximizing the "economic" aspect, maintaining an instrumental point of view. They are also at the same time trying to develop various sophisticated Internet control mechanisms to prevent any political threats the Internet may bring with it. The late starting countries are also either copying or learning from the countries that opened earlier effective strategies for the level of Internet opening and control strategies and evolving their own Internet control mechanisms (Hachigian, 2003). North Korea is one of the few remaining countries in the world that has not opened up to the Internet yet. The reason is very clear: the regime sees the Internet as a threat to its grip on power. The regime has made it illegal for the general population to access the Internet, so since no one can access it, there is no need to even regulate Internet content. Also there is no need to monitor or close down any anti-regime Websites, since there are no Websites based on servers located inside North Korea for domestic users. Yet, it is not that the regime is totally ignorant of the potential economic benefit the Internet might bring. The regime has established a viable IT industry growth plan and intranet- based Internet technologies amid the more pressing need to solve the food shortage problem, all of which is indicative of the level of recognition it has of the value of the Internet. So even though they recognize the economic potential the Internet has, they still are not opening their domestic society to the Internet because of the possibility that the Internet's economic value may lead to an unknown political upheaval. In sum, to the North Koreans, the economic benefits resulting from opening of the Internet are not enough to override the potential political damage the latter might generate, so the Internet remains closed off. Thus the regime is using only foreign servers to allow limited Internet utilization, despite fully recognizing its potential economic benefits. The North Korean model of Internet control policy is a unique one that may not be compared to either the Cuban or the Chinese model. As Figure 6-3 shows, it can be categorized as yet a third, unique model -- not opening up to the Internet. The North, even while building a domestic intranet based on general Internet technology, has not connected to the global Internet network, but is using the Internet by utilizing servers located in Japan, China, and the United 222

States, to launch some limited Websites aimed at regime propaganda and commercial trade purposes. A similar case actually exists. Saudi Arabia too built a huge "national intranet" which makes connections to all domestic and foreign Websites through the proxy server of an Internet management agency, KACST (RSF, 2001). However, whereas Saudi Arabia has utilized this control method since opening to the Internet in February 1999, North Korea has built and is operating an intranet that the state controls, making it a unique case. Indeed the North Korean case of Internet control policy remains a unique, third model, not included in either the Cuban or the Chinese model. The "Cuban model" is a control policy that limits access to computers and the Internet, whereas the "Chinese model" follows a strategy of censoring the usage of content, which controls the activity of anti-regime organizations or the flow and use of illegal information. The "North Korean model" means a control policy that completely blocks the general public's access to the Internet, while utilizing separately the intranet as a domestic resource and the Internet for international purposes. Even though North Korea officially has not opened to the Internet, you still can get Internet access.151 According to a most recent verified report, the North Korean government signed an agreement with China's ChinaTelecom in February 2002 to install a fiber optical cable connecting Beijing-Dandong-Sinu'iju-Pyongyang for the purpose of opening Internet servers. It was followed by the opening of an Internet café inside the headquarters building of the Korea Lottery Joint Company in Munsu-dong, Pyongyang. Yet, Internet access is still limited to National Defense Commission Chairman Kim Jong Il himself and a few people of the privileged class for research purposes only. Even at the PC café which has just opened, high access fees are charged as in Cuba, so it is almost impossible for the general public in North Korea to use its services, even if the government proclaims that it allows such access. Most customers at the PC café are reported to be foreign embassy officials stationed in North Korea. Thus Internet access in North Korea, which has been made an illegal activity for the general populace, is thoroughly blocked internally, and only a few specially privileged people have access. Instead, there is the domestic intranet called Kwangmyo'ng with Websites for various official agencies such as research centers, educational agencies, mass media, factories, and business facilities, enabling the agencies to use its services. However, rather than for the benefit of the general public (G2C), it is utilized for improving productivity at factories and business facilities (G2B) or increasing work efficiency at governmental agencies and reinforcing the central government's control over regional entities for the purpose of increasing the efficiency of the planned economy (G2G).

151 North Korea tested an experimental Internet connection with Australia back in 1993 and, in 1995, it again experienced an Internet connection when the United National Development Program's (UNDP) Pyongyang office connected to the Internet, using a server located in New York. Also in October 2001, it launched the Silli Bank Website for relaying e-mail using servers located in Shenyang, China, and Pyongyang, making it possible to exchange e-mail. 223

(Table 6-4) North Korea's Internet Websites

Site Name Website Address Launch Date Notes Korea Telecommunication www.kcna.co.jp January 1997 Korea News Post www.korea-np.co.jp February 1997 Korea InfoBank www.dprkorea.com 10 October 1999 The Pyongyang Times www.times.dprkorea.com 8 July 2000 Silli Bank www.silibank.com 8 October 2001 Korea Tourism Agency www.dprknta.com 25 January 2002 The Internet Lottery Site www.dklotto.com April 2002 North-South joint venture The Internet Casino Site www.jupae.com April 2002 sites The Internet Baduk Site www.mybaduk.com April 2002 Electronic Commerce www.dprkorea-trade.com End of 2002 Ch'o'llima Group www.chollima-group.com 25 March 2003 Uriminjokkkiri www.uriminzokkiri.com 1 April 2003

The North's Internet-related activities outside their own country are quite different from what they are doing for the domestic audience, however. As Table 6-4 shows, the North has used foreign Internet servers to launch various Websites, including Websites of major news media companies that provide information related to North Korea, Websites exclusively for economic cooperation and attracting investment, Websites for electronic commerce selling products made in North Korea, and Websites launched for psychological warfare aimed at South Korea as well as regime propaganda purposes. Those Websites are going through a significant evolution from the initial purposes of providing simple information and regime propaganda to commercial benefits and propaganda primarily intended for waging psychological warfare against South Korea. As time goes by, North Korea is showing more and more active utilization of the Internet as a resource for foreign policy. However, one cannot expect to see North Korea dramatically change its passive and conservative Internet policy any time soon. Furthermore, even if it does open the Internet in the near future, it is most likely that a Cuban model of Internet access will be adopted, allowing only selective popular access. A fundamental change in the North Korean Internet policy would have to be preceded by structural change in its national strategy from regime maintenance to economic development. Such change can be possible only if the mid- to long-term elements threatening the regime are eliminated. In a word, North Korea's Internet policy has been evolving from minimizing the effects of "politics (political threats)" in the mid-1990's to maximizing its "commerce (commercial benefits)" in current times. Despite the recognition of the huge economic potential of IT and the Internet by North Korean officials, however, the speed of their evolution in Internet strategy has not caught up with the speed of Internet technology development or the increase in policy utility. For instance, considering that prohibiting popular access to the Internet is very much a disadvantage in attracting foreign investment, the regime should open up the Internet; however, it still has not done so, which means it still regards political dangers as factors far more important than the economic benefits stemming from the Internet. So as with any other socialist country, North Korea too is in a deep "IT dilemma," in which minimizing "politics" limits "commercialization" and maximizing "commercialization" promotes "politicization." That is the reason that the North's Internet strategy represents a strategic choice between the economic effectiveness and the political influence of the Internet.

224

5. Prospects of North Korea's Opening of the Internet and Its Political Influence

Our interest in North Korea's Internet is primarily concentrated on when it might open up to the Internet, and on what effects the Internet will have, despite the authorities' Internet controls, on the political system once the North does open its society to the Internet. Perhaps the common hidden wish in all of us may be that the simple acceptance of the Internet's unverified general political effects can someday make North Korea become a more open and democratic society. However, such wishful thinking about North Korea is just that, a naïve wish, considering the environment in which the North finds itself, both domestically and abroad. We need not intentionally avoid our native wish however, just because the facts do not point to its actualization. It would be appropriate neither to be overly optimistic that the regime will soon open up to the Internet because of its interest in the value of IT nor excessively pessimistic that it is not going to do that any time soon, considering how it thinks about potential political dangers. A better approach would be to take a more objective and neutral stance and, while facing the realities of the country, prepare for a North Korean opening to the Internet, whether it take place in the short or the long term.

1) Opening up to the Internet

When will the North open up to the Internet? To answer this question, the related technological aspects need to be considered first. The North does not seem to have any major technological obstacles to a possible opening of the Internet. It already has some basic telecommunication infrastructure installed and it building the domestic computer network "Kwangmyo'ng," which connects Pyongyang in the center with each region via fiber optic cables. Sinu'iju and Pyongyang are already linked, through Beijing and Dandong, to the global computer network. As for launching Internet Websites, the North has launched some Websites using servers located abroad, including the domestic computer network connected to about 1,300 official agencies including about 20 governmental agency Websites such as the Central Science and Technology Information Company's Website "Kwangmyo'ng" and the Website of the People's Great Hall of Learning. An interesting new development is the Websites being launched recently using the domain name "kp," even though they are actually intranet-based Websites. As such, it does not seem that the North has major technological problems in opening to the Internet. However, what North Korea is most worried about appears to be the technology problems related to the security system. It is estimated that what really is delaying the North Koreans' opening to the Internet, rather than worry about the impact the latter might have on its society in general, is actually the potential threat of cyber terror over the Internet by South Korea and the Western countries. To prepare themselves for this potential problem, the North will likely to have to learn how to protect its top secret information from highly sophisticated hacking attempts, installing firewall and encryption procedures to monitor the free flow of content by North Korean domestic Internet users, as well as dealing with proxy servers that control the Internet access points for the purpose of monitoring threatening information that may appear when the firewalls are overridden and direct connection to the Internet is allowed. Such security issues however seem likely be solved by its own technological abilities as well as with cooperation from the advanced Internet countries. For instance, China has officially provided technological advice to Cuba on its telecommunication technology policy. China even sent its minister of information industry to Cuba when it was promoting a joint venture project. 225

Even the strict Myanmar government has opted to learn from the ASEAN authoritarian countries for technological issues (Kalathil, 2003). So if the North is really serious about solving such technological problems, it will not have too many problems solving the security issues at all, once it starts to have close cooperative relationships by following the cases described above. The central issue however, in regards to opening the Internet for North Korea seems to be the external environment for military security. Of course, the issue of how it should effectively control domestic Internet access and utilization could also arise, but this problem would not be a big issue, considering the extremely low level of individual information-orientation knowledge or utilization by North Korean citizens, such that individual free access to the Internet can be effectively blocked using various mechanisms. Especially since the country has a weak Internet infrastructure, this can also work to make Internet access control easier (Hachigian, 2002, pages 44, 47). The problem is really the country's foreign relations. The country's recent admission of a nuclear development program led to heightened tensions with the neighboring countries -- the United States, China, Japan, and Russia. So the North's opening of the Internet depends on the international environment, which involves many issues of military security. Particularly, its disputes with the United States, which has a real chokehold on North Korea's economy, is throwing cold water on possible opening of the Internet. With the survival of the North Korean regime hanging on its current problems, who could have the leisure to consider subtle issues such as opening to the Internet?. In fine, North Korea's opening up to the Internet is an issue of neither technology nor domestic politics. Rather, it is a problem of foreign relations, particularly with the United States. The relationship with the United States influences North Korea's policy priorities, which in turn constricts its Internet strategy. If North Korea were able to escape from external security threats through a guarantee of regime security from the United States, North Korea would be more proactive toward opening up the Internet. Additionally, if North Korea could shift its priority from regime maintenance to economic development, based on confidence in the regime's security, stemming from a security guarantee coming from abroad, the prospects are that it might change its Internet utilization from the Cuban model to the Chinese model – and transition to more positive utilization of the Internet. However all those issues cannot be resolved in a short period of time. If sudden regime change can be avoided, it is more likely that North Korea would develop technological and systematic mechanisms that can alleviate the shock of the Internet and gradually, step by step heighten its level opening to the Internet.

2) The Internet's Political Influence

If North Korea opened to the Internet, then could the Internet change North Korea? Would that be a controlled change coming from the top, or a dynamic change arising from the bottom? With regards to those prospects, some domestic [South Korean –ed.] observers have advanced premature, optimistic views, For example, a media analysis pointed out that since the Internet was faster in delivering the information about the Tiananmen Square massacre and the 9/11 terrorist attacks than CNN, once the Internet is introduced in North Korea, it will lead to faster information transmission in the country too, which then will make a changed North Korea only a matter of time, forcing the country to deal with openness that cannot be reversed (Media Daum News, 7 March 2003). However, as explained earlier, research has not yet reached a clear conclusion about the political influence the Internet has on a regime. An argument is still going on between the deterministic view of the Internet's impact, based on commonly accepted concepts, and the 226 instrumentalist view that both Internet control and utilization run in parallel. However, the instrumentalist view so far seems to be the more persuasive. Looking at the history of opening of the Internet, China has the longest history -- dating back to the early 1990's, but other socialist countries have relatively short periods of four to five years. These various histories illustrate that it is hard to determine the political impact of the Internet precisely. Additionally, since the governments that fully understand the explosive nature of the Internet's impact already have implemented strict control policies to avoid the direct shock stemming from it, it would not be of great significant to reach a decisive conclusion at this stage. So from this perspective, it is a meaningless waste of time to discuss the political impact the Internet in the future will have on a North Korea that has not yet opened up to the Internet at all. However despite all these points and shortcomings, the provisional conclusion on political impact is that the Internet will be used as an effective tool for regime propaganda and economic growth purposes in socialist countries in the near term and subsequently contribute to the authoritarian regimes' national strategies. The factors backing up this view are the relative low propagation rate of the Internet and the systematic and strict control over Internet access and usage in these countries that effectively minimizes any possible political impact. However, in the long-term aspect of the subject, opposing opinions form the mainstream, focusing on the Internet's impact on a regime as a parameter, rather than an independent variable. To make such long-term views persuasive, they assume that the number of Internet users significantly rises in the future and Internet access and utilization are eased. Even when such conditions are fulfilled, the Internet will not likely play a role of inducing direct political change but rather become a stage and a tool to wage struggle. So its role is more in tune with the statement that "The Net itself cannot be sufficient to generate a social force capable of waging a rebellion; rather, it can only develop and contribute to the social forces for rebellion" (Hachigian, 2001, page 129). So in all, there are three factors that contribute to the Internet's possible political impact: political dynamics, the propagation rate of the Internet, and Internet control policy (Hachigian, 2003, pages 71-72). First, to have the Internet affect a regime politically, the regime's political foundation has to be somewhat dynamic. If you look at North Korea, it basically does not allow any political change at all, so even if the Internet is launched in the country, it is not likely that it will have a political impact. However, if the country starts to increase its level of reform and openness and further shifts its overall national strategy from regime maintenance to economic development, resulting in a cracked politico-economic foundation followed by a deepened crisis, the Internet then may collectively concentrate all the social forces developed and accumulated over time and effectively bring those forces into play. Secondly, as Table 6-2 showed earlier, the ratio of Internet users in proportion to the overall population in 2002 was 10.6% in Cuba, 3.6% in China, 0.4% in Vietnam, and 0.02% in Myanmar. So, only Cuba has more than 10% and other countries are in the band of less than 5%, a very low figure indeed. This means that even in China, where popular access to the Internet is allowed, fewer than four people out of 100 use the Internet, a ratio showing the severe limits on use of the Internet by the general population. Under those circumstances, it would be unreasonable to expect the Internet to have significant political impact.152

152 In the South Korean case, the country’s 2002 presidential election was the most prominent case proving the political impact the Internet has (Hachigan, 2002, page 71). Based on 2002 figures (CIA, 2002), the ratio of Internet users to the overall population in South Korea was 53%. One researcher predicts that the Internet’s potential in 227

The computer networks in North Korea were established not for the purpose of serving the people but as part of an effort to install a public information structure connecting Pyongyang with other regional centers. So even if the North opens up the Internet, there will still be a need for a huge amount of expenditure to establish further networks in order to bring about popular Internet access. They can cut down costs by utilizing Internet cafes for popular access, but this too would face limits as the number of Internet users rose. Even if they adopt a wireless Internet network technology, the low computer propagation ratio would not allow popular and general access to the Internet. All these facts lead to the conclusion that, even when North Korea decides to open up the Internet for domestic users, it will take a significant amount of time to see any kind of political impact on the regime, because of the relatively low level of Internet infrastructure in the country. Thirdly, when in fact the North Korean authorities launch the Internet, they most likely will adopt an Internet control policy similar to that of Myanmar. That is because to absorb the shock of the Internet opening, strict control is a necessary step. They are expected to allow Internet access selectively, such as by setting the usage fees high or limiting the e-mail accounts for Internet cafes. Additional strict control over access and content will be imposed, allowing use only at pre-authorized Websites using proxy servers; all other Websites are likely to be blocked. Once such strict Internet control policies are put in place, the Internet in North Korea will likely be used for purposes of economic exchange -- generating commercial benefits such as strengthening cooperation with foreign countries, developing the tourism business, or Internet joint venture companies based on new technology -- rather than serving the general population. However, such strict control may significantly decrease the Internet connection speed and strengthened control over Internet access and usage may reduce commercial benefits by half. Therefore, North Korea's initial Internet control strategy likely will be similar to the "Cuban model," but once it starts to grow Internet industries and use them as a core engine of economic growth, it will more likely change to the "Chinese model" in gradual steps. It is overly optimistic to think that, after the Internet is launched in North Korea, it will be only a matter of time until the North changes. If you think about the reasons behind the North's decision not to open up to the Internet so far, you can surely imagine the level of North Korea's controls after it opens up to the Internet.

China to change the regime will be seen once the ratio of Chinese who access the Internet exceeds 10% (Hachigian, 2001, page 132). 228

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Introduction of the Author

Ko Kyo'ng-min

Masters and Doctorate from the Department of Political Science, Graduate School, Ko'n'guk University (Ko'n'guktaehakkyo)

Permanent Researcher, Korean Studies Institute (Han'gungmunjeyo'n'guwo'n), Ko'n'guk University

Lecturer, Department of Political Science and Diplomacy, Ko'n'guk University

Senior Researcher and Director, Planning Department, E-Government Research Institute, Municipal University of Seoul (So'ulsiriptaehakkyo Cho'njajo'ngbuyo'n'guso)

Books and Papers

The Politico-Economics of Korea's Liberalization of Telecommunications (2001)

Theories of Leadership: Leaders and Leadership in South Korea (2002)

E-Governments of the World (2002)

Feasibility of and Limitations on North Korea's Building an E-Government (2002)

"Policy Changes in South Korea's IT Industry: The Politics of 'Liberalization' in the 1990's" (2001)

"Decisive Causes of Political Change in the New Liberalism: An Exploratory Investigation" (2002)

"A Study of North Korea's IT Industry Development Strategy as a 'One Leap' Strategic Industry." (2002)

"Current Status and Evaluation of North Korea's E-Government" (2003)

"North Korea's Internet Strategy and the Prospects of Opening Up" (2003)

Etc. [email protected]

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