North Korea plays nice - for now

SOUTH KOREA - Just in time for the 68th Liberation Day celebrations, North and South shook hands last Wednesday, agreeing to end a 133-day suspension of the joint Kaesong Industrial Complex.

The North's promise of unfettered business operations at Kaesong was an indirect acknowledgement of its responsibility for the park's initial closure, according to sources.

The North also agreed to discuss South Korean President Park Geun Hye's proposal to resume family reunions for those separated during the 1950-53 Korean War, providing further hints of a thaw in inter-Korean relations after months of sky-high military tensions triggered by the North's nuclear test in April.

But, hopeful reports aside, whether these landmark compromises mean the coming of a North Korea that is more trustworthy and open to economic development remains unclear.

Hints that Pyongyang's ruling elites were vying for more butter and fewer guns surfaced sporadically in the months prior to the Kaesong deal.

On Saturday, North Korean leader Kim Jong Un visited - for the first time since May - a ski resort being built in the Masik mountain pass, located near the highway linking Pyongyang and Wonsan.

North Korean officials claimed the resort could raise up to US$62.5 million (S$80 million) annually by attracting more foreign tourists and holding international competitions.

Reports of a behind-the-scenes meeting between North Korean officials and United States academics, including former US State Department official Joel Wit, in Geneva earlier this month; the wide use of foreign currencies such as US dollars and Chinese yuan within North Korea; and the release of an indigenous smartphone called the "Arirang" reinforced the notion that the North was hungry for foreign investment and eager to open up.

"Market socialism is the key (concept) for Kim Jong Un. His grandfather's ruling system was that of industrial socialism, whereas his father's was military socialism. Kim Jong Un is a guy who is trying to bring more money into his country," said Dr An Chan Il, a North Korea expert at Seoul's Chung-Ang University.

But some observers insist there has been no sign of fundamental change in North Korea's external policies.

The "fundamental strategic dynamics of the Korean Peninsula, in which North Korea is able to successfully bring tensions to the brink of crisis, secure in the belief that Seoul is less willing to accept significant physical or economic damage", remains unchanged, said Mr Ken Gause, of the CNA Strategic Studies Division think-tank, in a paper last month.

Before the North pursues any meaningful economic reforms, it wants to gain a true nuclear deterrent against the US, he added.

"This, of course, will require additional nuclear (and missile) tests to ensure the future deterrent."

North Korea has had a history, in recent decades, of raising hopes for a new era of peace and economic reform, before scrapping agreements through military provocations or nuclear tests.

Still, there may be hope for the unforeseeable future.

"The North already knows war is not an option," said Dr An. "They understand they cannot win a conventional, protracted war against the combined forces of the South and the United States."

What they do know is that, whatever lies ahead, they need money, he added.

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