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Dprk Current Situation and Future Intentions Briefing & Analysis

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Dprk Current Situation and Future Intentions Briefing & Analysis Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis DPRK CURRENT SITUATION AND FUTURE INTENTIONS BRIEFING & ANALYSIS. Much of the research and contributions to this report have been provided by human sources within, connected to, or involved in the DPRK over many years. The subject matter is largely attained through discussions, dialogue and exchanges with the individuals over a number of years in some cases and their desire to remain unidentified and maintain their confidentiality will be respected. issrisk.com 1 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis ********************************* Disclaimer Reliance - This document (this Report) prepared by Intelligent Security Solutions Limited (ISS Ltd) is strictly private and confidential. ISS Ltd retains the exclusive ownership of the Report and of its content. This Report is addressed to the Addressee only and, therefore, is not to be relied upon by any other person and is not to be used for any other purpose without the express prior written consent of ISS Ltd. The Report shall not be reproduced or stored in an automatic storage and retrieval system, in part or in whole without the express written consent of ISS Ltd. ISS Ltd should be indemnified against any losses or damages suffered or incurred as a result of a breach of confidentiality herewith. Scope - This Report focuses on issues which arise from the documents and information provided to us in relation to investigation on the current situation and prospective future intentions of the Democratic People's Republic of Korea. ISS Ltd reserves the right to change, revise or amend the content of the Report at any time. Limitation - The contents of this Report have been limited to and derives entirely from our interpretation of the current political, military and economic situation of the Democratic People Republic of Korea and we do not intend to make any actual, past, future, direct or implied representation or warranty in relation to the Report herewith. Commercial acceptability - We are not in a position to assess the significance or acceptability to the Addressee of any of the information supplied from a commercial perspective. This Report should not be viewed as any form of recommendation as to whether the Addressee should proceed with its commercial plans in relation with the Democratic People's Republic of Korea. COPYRIGHT Copyright © Intelligent Security Solutions Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, photocopied, stored in a retrieval system, or transmitted without the express prior consent of Intelligent Security Solutions Limited. issrisk.com 2 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis ********************************* DPRK CURRENT SITUATION AND FUTURE INTENTIONS BRIEFING & ANALYSIS. TABLE OF CONTENTS: 1.1 EXECUTIVE SUMMARY 1.2 INTRODUCTION 1.3 HISTORICAL OVERVIEW 1.3.1 Ideology / Politics explained 1.3.2 Political structures and influence 1.3.3 Social Structure and Control 1.3.4 Economic Snap shot, infrastructure, resources and minerals 1.4 THE CURRENT NUCLEAR SITUATION – CONTEXTUALISATION – WHAT IS IT ALL ABOUT? 1.4.1 Contextualization 1.4.2 What is it all about? 1.4.3 The Role and Effect of Sanctions 1.5 POLITICAL INSECURITY and ISOLATIONISM issrisk.com 3 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis 1.6 POLITICAL and ECONOMIC REFORMS 1.7 THE NUCLEAR PROGRAM, SATELLITE LAUNCH AND POSTOURING Chronology of events from 1994 – June 2013 1.8 THE REAL RATIONALE FOR THE TIMING OF THE LATEST NUCLEAR TEST AND POSSIBLE INTENTIONS 1.8.1 Option A - From test capability to deliverable missile? 1.8.2 Option B - Sovereign Security 1.8.3 Option C - The historic claim - Life support for the Regime? 1.8.4 Option D - Paving the road to reform? 1.9 REGIONAL RAMIFICATIONS AND EXPLODING THE MISCONCEPTIONS AND THE MYTHS. 2.0 WHERE ARE WE NOW? 2.1 CONCLUSION: WHERE IS THE DPRK HEADED IN 3 – 5 YEARS? issrisk.com 4 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis 1.1 EXECUTIVE SUMMARY North Korea, or the official name of the country - The Democratic People’s Republic of Korea (DPRK), has been and remains an enigma and an unknown for many people across the world. When the DPRK is in the news it is so because most people assume normally it is for the wrong reasons, it evokes sentiments related to bellicose rhetoric and nuclear weapons and missile testing and threats of war and confrontation. This is the discourse, the same tired discourse, which is repeated throughout many media outlets across the world and is used by many observers, analysts and opinion and policy makers to guide their perception, analysis and interpretation of the DPRK. Why is so little known to the outside world about a country that they ‘hear and read’ so much about in the media? Why is North Korea so vilified in certain quarters and across the media generally? What, if any, positive stories do people actually read of the political reforms and structural changes and economic reforms being tried and tested and taking place in the country? What about the attempts to negotiate a peace treaty or agreement and finally, after 60 years, put the Korean War to rest? Or, put another way, when was the last time you read something with even a remotely positive slant regarding North Korea? How has North Korea ended up with the pariah status it is universally awarded? Why have they pushed so hard and relentlessly to develop a nuclear capability - what do they fear so much that requires such a deterrent? What role does China play in issrisk.com 5 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis respect of North Korea? What is actually happening inside this country that we hear so much about, yet understand so little? What natural resources does North Korea have? Where are they? What about infrastructure – roads, rail, ports and shipping, power, airports? What legal structures exist, laws, government involvement in business? Unanswered questions and lots of them - that is what North Korea is about for most people when the country is mentioned in any respect. This report is an attempt to explain the reasoning for posturing and the logic behind certain actions by the government of the country generally, but over the last few years particularly. It will help to explain the internal dynamics of the relationships between key persons and agencies and ministries that are shaping the future direction of the country, it will address these fundamental questions and provoke more. However, to do so one must understand what has happened and is happening and why it is happening now. In reality the government in the DPRK is undergoing a transition and has been quietly for several years. The opacity of regime dynamics is one of the core challenges to understanding and anticipating the evolutionary trajectory of the regime. The demilitarization of the government, the strengthening of civilian institutions, the compliance of the party and the military in facilitating these changes, none of these should be underestimated. Previous attempts at reform have floundered for differing reasons; the preparations and rationale this time around are vastly different. This transition is about the future of the country, where it is now and where it is going. The changes taking place are, in fact, methodical, gradual, controlled and tightly managed yet transformational for issrisk.com 6 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis the future direction and growth of the country. The ground work for these changes and their stewardship rest in the hands of a vanguard of people, largely selected by Kim Jong Il prior to his death, or selected by several of these key people that he had anointed. The coterie of senior officials that surround Kim Jong Un are largely all loyalists of his father's and will continue to pursue policies of gradually opening up the country's economy. To understand this correctly the key individuals who are the drivers of policy development in the power structure must be identified. To help contextualize the political structures and influence at the moment it is important to understand that a lot of the “influence’ wielded at the moment in respect of economic and political changes in the country is concentrated in the hands of these particular men. Since assuming power in December 2011, Kim Jong Un has maintained continuity of his father Kim Jong Il's policies, and these key influencers and decision-makers around him are individuals who owe their loyalty to Kim Jong Il. The timing of the changes indicates that the decision to reduce the military's role in the economy probably dates back to the last years of Kim Jong Il's leadership. These moves are likely to have been initiated due to a growing realisation that the military's current pre-eminent position within the economy is largely unsustainable and has ultimately contributed to inhibiting meaningful economic growth. The DPRK’s evolutionary trajectory will be defined by their emergent Asian neighbour - China. While western influence in Asia wanes China will continue to practice statecraft honed by 20 centuries of experience. China’s economy will continue to grow, perhaps at a more moderate rate, but grow nonetheless. The DPRK will simply not be permitted to implode. The newest fashionable meme - “failed state” has no application to DPRK and will not stick. issrisk.com 7 Intelligent Security Solutions Limited Frontier & Emerging Markets Analysis Five years ago when one spoke of Burma, or Myanmar, the perception was starkly different then to what it is today. What changed for Myanmar? What is changing for North Korea? The DPRK will continue a staged evolution into an authoritarian mixed command / market economy. Therefore, in respect of North Korea over the next 3-5 years, contrary to the views that you sometimes simply don’t know what will happen, there exists a raft of significant opportunities and options.
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