North Korea and Iran are both highly centralized, authoritarian states with a powerful chief executive at the top. The Supreme Leader in Iran and the Marshal, in the latest iteration of the top leader’s title in North Korea, continue to wield more power and authority than any other single individual in their respective countries. This preeminent position has led some to simplify descriptions of politics in these countries as synonymous with the leader. However, recognizing the politics and attributes of people and institutions below this top level is meaningful both for a more sophisticated understanding of the operations of the state and finding leverage in those political systems to produce favorable policy decisions. As demonstrated later in this chapter, peering closer at these two political systems demonstrates that they are much more dissimilar than alike.
Authoritarian politics trumps economics in both countries, as explored in the previous chapter, and these highly centralized states produce some very basic similarities in the way their economies operate – at least at the commanding heights of the economy. Iran’s large economic conglomerates, the Bonyads, report directly to the Supreme Leader and are not even subject to law created by the Majles (parliament).1 Top levels of the North Korean regime likewise recognize the importance of controlling large enterprises, and North Korea’s state-owned enterprises control the extractive industries, transportation, and all commercial activity above the retail level for basic commodities. Even more than the comparative assessment of the domestic politics of these two states, however, this chapter ultimately concludes that the two economies are very different. The final chapter of this book will return to analyze whether policy approaches by foreign powers are likely to intersect with the domestic politics and economic realities of these two regimes in different ways. In other words, it will discuss the relevance of the findings presented here for foreign policy considerations.
Both Iran and North Korea have overarching ideologies as a basis of legitimacy and long-held nuclear ambitions that transcend leadership and, in the Iranian case, regimes. As previewed briefly in the previous chapter, Iran’s revolutionary theocracy is built upon an idea of rule by virtuous scholars (in this case, scholars of religious precepts). The founding ideology is a particular form of Shi‘i Islam with its traditions and ingrained justifications for the use of authority. The ideology of North Korea’s revolutionary polity lacks the theoretical and theological foundation of a world religion on which to stand. Instead, the state has sponsored efforts over the last six decades to enhance the Juche ideology’s foundation and in recent years has attempted to promulgate a “military-first” political ideology; however, these ideas remain highly fluid concepts that build on intense nationalism and anti-imperialism with socialist economics mixed in almost as an historical afterthought. As we will see in this chapter, both governments also show a degree of interest group participation. This is not a democratic concept, but a recognition of limited competition surrounding elite decision making in both authoritarian regimes.
These ideological similarities and differences are important, because states’ foundational ideals and domestic political realities, as well as the international dimension of economic, security, and international political concerns, form the structural backdrop upon which national leaders form strategy. The primary concerns about the development and proliferation of nuclear and missile technologies, conventional military behavior that undermines regional stability, issues of political freedom and human rights, and humanitarian challenges are outgrowths of a political process and political decisions in these countries. Substantive and peaceful tools of influence by outside powers are often economic in nature, and understanding the existing economic structure of both states is necessary for a robust assessment of the effectiveness of applying different types of economic tools to these two countries to exact desirable political decisions from both capitals.
Iran’s revolutionary government was and is made up of a variety of different interests and groups. Supreme Leader Khomeini managed to unite these interests during the revolution to overthrow the Shah and subsequently incorporated some of those interests and interested individuals into his ruling circle while removing others.2 Despite the “big tent” of Khomeini’s initial political campaign, his personal political goals were more limited and focused. Khomeini sought to bring about national rule by Islamic scholars in order to create the ideal political order. The Islamic Republic of Iran would express a distinctly anti-Shah and anti-American outlook and seek a “principled” foreign policy of exporting the Iranian revolution. The Supreme Leader’s first target for exporting the revolution was in his own backyard, which entailed removing the United States from the region and opposing the Mideast peace process. Khomeini’s goals were ambitious but rather focused for a revolutionary.
Revolutionary leaders often face difficulties when they are called to actually govern. Ideas and ideals do not always translate easily into practice and policy. The Iranian government’s multitudes of power centers meant that institutions opposed to certain policies often could block them and, on less central issues, manage to take unauthorized actions. The broad contours of such an arrangement are not novel to bureaucratic politics, but Iran’s specific political makeup and history of an active civil society made this issue more pronounced. Consequently, Khomeini tried to curb these tendencies, first by eliminating some institutions and later by creating an additional layer of bureaucracy above the institutions to mediate disputes. However, these councils created additional power centers with their own interests and simply complicated the political picture.
The Islamic Republic was born out of a revolution in 1979 with many power centers reflecting the diversity of interests – ethnic, economic, and ideological among others. With the fall of the Shah’s regime, the revolutionary movement would transition from a movement to a government. It would move from a negating force of an opposition to the governing force of the ruling group. This is not unique in world history, and Iran’s leaders did not have the luxury of crafting sensible government from scratch. Rather, they attempted to cobble together plural interests without succumbing to pluralism. Religious fundamentalists, both clerical and lay alike, sought a government guided by religious principles. Khomeini would sit atop the regime, and he would appoint leaders in the Judiciary, Guardian Council, Bonyads economic conglomerates, and coercive institutions, including the Pasdaran, Basij, armed forces, and, indirectly, Hezbollah. He would also have representatives in key social institutions like universities, industries, armed forces, and media institutions, including the national television, radio, and newspapers. The Iranian people would elect – within specific restraints – the members of the Majles parliament, a president with authority over cabinet ministries, and the Assembly of Experts.3 In this way, the Iranian revolution reserved the highest powers for a senior cleric and his appointees but carved out some space for a highly limited form of representative government.4
The least representative institutions in Iran are those appointed with no direct accountability to society, and they exercise real power. Beyond the Supreme Leader, the Judiciary can prosecute anyone, including members of the Majiles, and can conduct actions such as closing newspapers that publish critical accounts of the Supreme Leader. Half of the Guardian Council’s twelve members are clerics appointed directly by the Supreme Leader, and the other half are lay people nominated by the (appointed) Judiciary and confirmed by the (elected) Majiles parliament. The Guardian Council is a mainly, but not exclusively, nondemocratic institution on its face. It vets candidates for all of the elected bodies of government. This vetting is extensive and demonstrates real control over elections. The Guardian Council allowed only 4 candidates out of 402 approved by the Ministry of Interior to run for president in 1997, for example. The Guardian Council can also dismiss candidates after they have been elected and postpone elections, but controlling those who run in the first instance is the most critical power over electoral outcomes.
The Assembly of Experts similarly gives a formal nod to popular accountability but is overwhelmingly an authoritarian institution. Only high-ranking clerics have been allowed to join the Assembly. The members are elected, but the Guardian Council again determines who can run. They have traditionally only allowed one or two fundamentalist clerics to run for a seat. The body has few functions in any case and meets about one week per year. It chooses the Supreme Leader and can supervise and even remove the Supreme Leader in theory. In practice, it has selected a Supreme Leader only once in its history – after the death of Khomeini, and it has never removed a Supreme Leader.5
Though candidates are vetted by appointed regime officials, the Iranian presidency and Majles remain its most democratic institutions. However, beyond the roles of these political institutions and limitations on participating in the political process, the pathway to them is replete with additional authoritarian obstacles. For example, in 1981 the Islamic Republic banned all political parties except the ruling Islamic Republic Party. By 1987, the regime had banned this party too, noting the conclusion of the Iran-Iraq War removed some of the impetus for one party but also noting factionalism taking form inside the single party. The regime could not paper over Iran’s plural interests by fiat, liberal elements argued.
Conservative clerics also opposed the single party from the opposite end of the political spectrum, noting the party was not necessary. Clerical institutions could represent the relevant diversity in Iran, they reasoned. Khomeini also judged that he could pull the nation together under his own leadership, under his “altogether” slogan; he empowered a network a mosques and religious organizations to lead the people. Mosques became polling places; coordinated, trained, and raised money for militias during the war with Iraq; and admitted or rejected candidates for government jobs or applicants for ration books. Consequently, there was little space for political organization that could allow citizens to influence their government or organize to pursue their interests and advance the cause of their preferred candidates for president or parliament. From 1981 to 1997, Iran lacked competitive political parties.6
Iran in the 1980s experienced revolutionary fervor still, and the tremendously painful Iran-Iraq War further rallied the populace around these ideals; clerics dominated the politics of this decade. But following the death of Khomeini and the conclusion of the war at the end of the decade, the powerful and extra-legal Bonyad conglomerates took on substantial power. Intended to provide services to the Iranian population, the large conglomerates, which enjoyed resources confiscated during the revolution, among others, found themselves controlling lucrative business enterprises worth billions of dollars. Combined with a general lack of legal accountability, the Bonyads came to wield substantial power. The Revolutionary Guard likewise emerged from fighting the Iran-Iraq War and amassed profitable business ventures in the civilian economy. Senior officers grew rich as the Guard’s business enterprises expanded into substantial economic sectors, including oil, defense, agriculture, heavy industry, and others.7
Serving as the backdrop to the formal institutions, Iran faced multiple factions. Suppressed amid the long war with Iraq under the charismatic leadership of Supreme Leader Khomeini, factionalism reemerged in the last years of Khomeini’s life and took on new significance with his death. The Assembly of Experts appointed a midranking cleric in Ali Khamanei to the regime’s most important post to replace Khomeini. A former Iranian president, Khamanei initially was a weak Supreme Leader, and his relatively junior clerical status made it difficult for him to bring factions under his control.
Informal, personality-based politics is particularly important in Iran. Though elements of personality politics and connections are a constant in any political system, the varying policy positions of these personality-driven, not institutional-driven, groupings or factions, takes on a pronounced role. Factions work within the system, and the personalities in question are regime elites, not dissidents. Factions are part of the political system, not something opposed to it. Networks are based on family and school ties, clerical or military background, ethnicity, and economic interests.
The end of the war with Iraq, demise of Khomeini and his charismatic leadership, and rise in prominence of economic and basic “bread and butter” issues in the 1990s opened space for some political competition between factions on a limited issue set in Iran. Political parties were allowed to form to address some of these political debates starting in 1997. The Iranian regime effectively sought to co-opt groups and individuals critical of the regime and bring them, especially Iran’s youth, into a legal process.8
These individuals could enjoy some political representation and try to advance a reformist agenda, but they had difficulty forming political parties as understood in most democracies. Iranian conservatives, including Supreme Leader Khamenei, were openly hostile to liberalism generally and forming political parties specifically. Clerics should rule, Iranian conservatives argued, and secular political institutions were at best superfluous and more likely subversive. Beyond this generic objection, budding parties faced legal restrictions and basic organizational challenges to recruit and organize party members. Iran has failed to build meaningful political parties that can form political platforms, gain popular support, gain seats in elected bodies through elections, and influence the government on behalf of its constituents.9
North Korea and Iran are both states with a powerful leader at the top and politics below that top leader. The relative transparency of the Iranian regime allows one to conclude more confidently and with less controversy that Iran has a variety of interests represented in some way below the Supreme Leader level. Indeed, studies of Iranian electoral outcomes that show conservatives weak in big cities and among non-Persian ethnic minorities10 are unfathomable in the case of North Korea where a single party predominates and elections are celebrations but not in any respect a means to convert popular views into political representation. The opacity of the North Korean regime requires more indirect means of observation and study to come to the basic conclusion that there are different views within government that conflict with one another, even if these do not connect to social groups. Diverse political views in Iran and even in Iranian political institutions are plain to see, but this basic tenet is still controversial in studies of North Korean politics.
In contrast to Iran, North Korean society and politics are premised on unity. The homogenous society finds unity, not diversity, as its strength. In face of external threats, nations often put aside internal differences to deal with an external problem. North Korean political leaders, especially the Kim family, have utilized and advanced this Korean proclivity toward unity and combined it with an engineered sense of constant external security threats to bolster the value of a singular political leader and system. Since Kim Il Sung consolidated his power in the 1950s, North Korea has had only one top leader at a time. It is a single-party state. It professes “single-hearted unity” and direction from the “nerve center” (Kim), naturally leading many to conclude that the Kim family cult of personality and personal leadership is the defining characteristic of the regime.11
In contrast to the Islamic Republic’s complex political system and institutions to accommodate Iran’s diverse interest groups at the founding and subsequently, Kim Il Sung began his military-political career as the leader of an anti-Japanese guerrilla group in the 1930s and 1940s that peaked with about 300 fighters. Military leadership is premised on hierarchy, and one can readily understand how a charismatic leader who recruited and led a small group of partisans could personally lead this band of soldiers. Kim Il Sung did not lead an institutionalized state at the time, but he later would call this small group of guerillas the first instance of the Korean People’s Army. Consequently, the army was North Korea’s first institution, followed by the Korean Workers Party. Following Japan’s defeat in World War II in 1945, the Allies liberated Korea, among other places. The Korean Workers Party filled the political void after Japan’s defeat, although not without competitors. It would take another three years before Kim Il Sung would declare the establishment of the Democratic People’s Republic of Korea – the state. Both the army and the party preceded the state as North Korea’s main institutions, but all three were inherently wrapped in the person of Kim Il Sung.12
Kim Il Sung ruled through the Korean Workers Party, and state ministries served as implementation bodies – mere “functionaries” – to carry out the party’s decisions. The army always held a more sacred place in North Korea’s ideology and history, and the families of the original 300 guerrilla fighters became North Korea’s elite. At the top, party and military roles often overlapped and still do today, but the two organizations maintained separate institutions, prompting an analytical industry outside North Korea dedicated to determining whether the party or the military rules supreme at any given time. Both the party and military were important entities in the 1950s and 1960s, in particular.
The highest formal organ in the DPRK was the Supreme People’s Assembly (SPA). The rubber-stamp parliament’s leader served as nominal head of state, and the elected body served the DPRK fiction of being a “democratic” state. SPA elections are not competitive events. Citizens vote in order that their name appears on local polling station lists and under supervision. They have one candidate to endorse or reject, with a rejection both lacking meaning and likely subjecting the voter to disciplinary action. In short, the most representative body in North Korea never had the slightest modicum of genuine representative functions.
The Korean Workers Party held regular party conferences until the 1960s, but these started to grow more infrequent in the 1970s as Kim Il Sung formally codified his supreme role in the DPRK system as president in the 1972 constitution. This was an important year in modern Korean and world history with the first inter-Korean joint communique, President Nixon’s historic visit to China, and U.S.-Soviet detente all taking shape. The new DPRK constitution was largely overshadowed by world events but not least among the developments on the Korean Peninsula for our purposes. Kim Il Sung would claim for himself a level of authority that neither Mao Zedong nor Joseph Stalin claimed in China or the Soviet Union at the zenith of their power. In creating the presidency, Kim Il Sung the individual formally became a North Korean institution, and he intended it to remain the most powerful one. Kim formally reigned over the Supreme People’s Assembly, the Korean Workers Party, the Korean People’s Army, the State Administration Council, and judiciary and local political organizations.
Policy decisions to attract foreign investment and make technocratic advances in the 1970s gave more roles to the line ministries, but the Koreans Workers Party and Korean People’s Army still held superior positions in the system. The Sixth Party Conference in 1980 ushered in Kim Jong Il, and discussions of generational change and emerging tensions between “red (ideologues) and expert” became more apparent. But Kim Il Sung’s basic ruling institutions remained intact until his death in 1994.
The tremendous shocks of the 1990s and North Korea’s unmistakable decline eventually led to some shifts in ruling structure. Kim Jong Il emerged from the traditional three-year mourning period for his father and codified yet another new constitution. The “Kim Il Sung” constitution in 1998 allowed Kim Jong Il to take a new position as chairman of the National Defense Commission and raise the role of the military. Kim Jong Il enhanced the idea of “military-first politics” not merely as a pledge to prioritize resources for the military, but also increasingly used the institution to rule. The army no longer reported to the party but directly to Kim. Likewise, the constitution created the Cabinet as an institution directly responsible to Kim for the first time, again bypassing the Korean Workers Party. The technocrats in the cabinet ministries, who never have gained the same recognition or prestige as their party or senior military compatriots, took on greater roles in policy formulation and execution.
Whereas Kim Il Sung heralded and implemented national unity through his personal leadership, Kim Jong Il established a system of “divide and rule” to check powerful interests within his regime. Kim Il Sung’s North Korea was a simpler entity, and, after the essentially military challenges both outside and inside the regime in the 1950s, Kim Il Sung’s North Korea enjoyed positive momentum amid economic reconstruction and military supremacy over the South Korean rival until his codification of personal power in 1972. North Korea’s decline in the 1970s and 1980s intersected Kim Jong Il’s rise to power. In short, Kim Jong Il inherited a difficult political situation, and he lacked his father’s revolutionary credentials and personal leadership skills. However, Kim Jong Il was more cunning than his father and was a micro-manager. He recognized at least some of his political weaknesses and pitted powerful institutions against one another while preserving for himself the role as the final arbiter above them all. Kim Jong Il could not simply release the inherited and deeply engrained ideology of unity, but he sought to transfer that unity embodied in a single individual in Kim Il Sung to himself while altering the mechanics of the system below him to meet crisis needs.13
The North Korean and Iranian revolutionary governments began with charismatic leaders, Kim Il Sung and Ayatollah Khomeini, respectively. Their immediate successors lacked this personal attribute and had to replace leadership charisma with management skill. Both successors had their own shortcomings, with questionable decision making, but both Kim Jong Il and Khamenei ruled by sitting above competing interests below them and within their systems. Though arguing that factional politics are a fluid set of political arrangements, individuals tend to coalesce around individuals and ideas they seek to support. In this regard, one can identify periods of time when one group wins out more than others within certain structural constraints.
Both also have a strong position at the very top of the political system – the Supreme Leader in Iran’s case and the reigning Kim, who has taken various equivalent titles over the decades, in North Korea’s case. Complex political systems must be simplified to explain and try to understand them, but both systems get oversimplified on many occasions as simply equating this final arbiter with the politics of the state. In this context, questions of succession become revolutionary. New leadership at the top could change the country’s orientation, or at least policies most objectionable or concerning to outside analysts. However, states have both structure and agency. Succession of the top leader is important for questions of agency, but it does not immediately or automatically change structure. Whoever sits atop the Iranian or North Korean political system will face similar constraints from domestic demands and external concerns and opportunities. Visionary and radically different leadership is possible but rare. Structure tends to limit leaders’ desirable policy tools and choices that make the likely window of change with a new top leader fairly narrow.
North Korea and Iran are both revolutionary regimes that emerged out of a political movement. Charismatic founding leaders had organizational structure in the form of the Iranian clerical structure or Korean Workers Party and Korean Workers Army before the respective leaders founded the state. They enshrined revolutionary principles into the organs of power of the regime. These revolutionaries fighting against the domestic order they faced effectively became the system. They would attempt to maintain the revolutionary ideals while shifting from an opposition force to a ruling one. There would be much to distinguish the two regimes, and this attribute would not make them uniquely paired among the world’s authoritarian regimes, but this general thread would connect them.
Formal institutions are important in a political system, but different political views and policy trade-offs on strategic issues facing a regime also help explain a system’s functions in practice. A similar gap between conservatives and reformers arose in both Iran and North Korea that reflected an important ideational divide.14 Iran’s reformers presented the value of foreign aid and investment, whereas the conservatives advocated a self-help approach to solving the nation’s economic problems. Beyond (but related to) economic matters, Iran’s pragmatists argued for easing tensions with the United States, whereas conservatives like Ayatollah Khomeini, who defined the core principles of the revolution as anti-Shah and anti-American, found this unpalatable.15 North Korea’s version of “reformers and conservatives,” more often characterized as “pragmatists and ideologues,” carry out the same debate on the relative value of international opening and trade liberalization. North Korea’s reformers seem to value the benefits that can accompany a less hostile and more pragmatic international relationship with the United States, whereas North Korea’s ideologues urge against “selling out the nation” to accommodate the hated and untrustworthy American imperialists.16 This section outlines how different policy approaches to some of the most important political issues facing Tehran and Pyongyang require trade-offs, and behind those competing priorities and values lay distinct political actors that help shape the domestic politics of both regimes.
Even before Khomeini died in 1989, the rise and fall of revolutionary and pragmatic elements in Tehran on specific policy matters produced swings in policy choices.17 The clerical establishment proved to have differences of opinion of issues of the greatest importance to the regime.18 For example, Iranian pragmatic mullahs favored ending the Iran-Iraq War, whereas conservative mullahs, especially the leaders of elite Pasdaran units, argued that the conflict was a holy war that could not be abandoned. When the Saudis offered to broker a peace deal in 1982, Iraq’s leader Saddam Hussein said he would accept. Iraq would pay $70 billion in reparations, which Iran’s pragmatists argued could be used to repair the colossal damages from the revolution and the first two years of the war. But Khomeini sided with the conservatives and refused, noting that Iran’s goals included liberating Karbala, Baghdad, and Jerusalem. Khomeini and the conservatives sought to export the Iranian revolution. The war dragged on for another six years, during which time Khomeini continued to purge internal opponents as Kim Il Sung had done during the Korean War.
Khomeini relied on the radical loyalty of the Pasdaran units as well as Hezbollah to suppress street protests in Iran after Iraq started bombing Iranian cities. A similar pattern of debate would emerge with Iran’s pragmatists arguing that Iran should export the revolution by inspiration and example and repair relations with the United States to fix Iran’s economy, whereas the conservatives stressed the need to export the revolution immediately to develop a more powerful bloc of countries able to resist American pressure. Debate would even emerge on important tactical decisions like whether to attack Basra or engage in risky naval clashes in the Persian Gulf.19
Revolutionary Iran faced its first leadership succession when Khomeini died in 1989. His successor, Ayatollah Ali Khamenei, voiced his early support for limited reform, but Khamenei was not a committed reformer. He moved to the conservative camp after assuming his duties as the Supreme Leader. Khamenei lacked strong clerical bona fides. Left to moderate between conservatives and pragmatists, Khamenei signaled his general preference for Iran’s conservative camp.20 The revolutionaries opposing the Shah in 1979 had become the establishment and acted to channel and protect the interests of those with power.
Kim Jong Il and Kim Jong Un enjoyed a different type of succession. They did not gain legitimacy from clerical rank or good political connections, but inherited the throne and cult of personality built around their family. Hereditary successions are rare in authoritarian regimes but enjoy stability from conservativism. Other elite families can be relatively assured that the Kim family would continue to protect their privilege compared to a power struggle.21 The leadership successions in Iran and North Korea both showed regimes shedding some of their revolutionary character for a conservatism of protecting establishment interests.
In both states, allegiance with the conservative faction offers a clearer ideological justification for the leader’s rule as well as the backing of those with the zeal and weaponry that could cause trouble in the short term. Pragmatic policy experts may be able to help the state address some of its problems, but such people do not pose a threat to the leader’s position. And one must first be able to rule before selecting a policy platform. In essence, the leader at the top may in theory have the freedom to select the nation’s fundamental direction, but the structural characteristics of the political systems they inherit point them in one direction, at least until they are able to secure their power. If Khamenei’s experience is a solid precedent, then Kim Jong Un should also be expected to reside in the conservative camp – at least until he can establish his rule and gain confidence in his consolidated power.
Indeed, the logic of the Iranian conservatives is the same argument put forth in North Korean publications. As one Iran expert put it well,
Iran’s supreme leader appreciates that engagement with the United States is subversive and could undermine the pillars of the Islamic state. Dialogue, trade and cultural exchanges could, he understands, expose Iran to the unrelenting pressures of modernization and transform the revolutionary republic into another state that sacrificed its ideological heritage for the sake of profits and commerce. The politics of resistance and nuclear empowerment, on the other hand, affirm Iran’s identity as a Muslim nation struggling against American encroachment. Economic sanctions can hardly disabuse Khamenei of such well-entrenched animosities … In the end, the only path out of this paradox is to invest in an Iranian political class that is inclined to displace dogma with pragmatism. And that still remains the indomitable Green movement.22
The role of Iran’s Green movement in the 2000s and wider history of social mobilization distinguishes it from North Korea. Iranian citizens upset over the Supreme Leader’s interference in the 2009 presidential elections protested in the streets and got the attention of regime leadership. Although the protests did not unalterably shift Iranian politics and the movement has largely petered out, the memory remains, and Iranian rulers cannot be completely impervious to popular demands.23 Supreme Leader Khamenei still serves as the final arbiter over competing political interests, even if his image is tarnished among some Iranians for entering the fray and supporting presidential candidate Ahmadinejad. There is certainly nothing identifiable in North Korea as a social movement like in Iran despite limited protests in North Korea the same year after the regime’s currency revaluation erased many North Koreans’ life savings.24 Iran’s more active civil society provides greater hope for internally led change from below than North Korea.
In the same year that Ayatollah Khomeini died and Ayatollah Khamenei took the position of Supreme Leader, Iran elected a moderate, Hashemi Rafsanjani, to the presidency. Whereas Khamenei would continue to support many of the revolutionary policies of his predecessor in a bid to enhance his legitimacy, Rafsanjani would embark upon a moderate reform plan. Iran’s president is subordinate to the Supreme Leader but has some real authority. Even more important than formal authority, though, the Iranian president enjoys popular legitimacy and can channel Iranian popular views into policy priorities within bounds acceptable to the Supreme Leader. Reformers advanced an agenda of domestic-oriented cultural and political reforms with some lasting elements, as well as advocating for a more moderate engagement orientation with the outside the world and especially in relations with the United States. President Rafsanjani also pursued some economic liberalization efforts.25 The reformers would fail to meet their ideals, and devout laymen, especially those in the Islamic Revolutionary Guard Corps (IRGC), played a larger role in the 2000s.26 But the reform period is important as it provides a window not only on what Iran’s most Western-friendly political leaders advocate, but what they can advance within the Iranian political system when elected.
After his 1989 election and 1993 reelection, President Rafsanjani attempted to address Iran’s economic decline and repair the damage that had been done to the country by the disastrous 1980–1988 war with Iraq. Like North Korea’s reformers, Rafsanjani advocated a mix of economic reform through marketization and a less confrontational approach to the outside world, especially the United States. Iran sought greater trade liberalization, requiring an ideologically difficult trade-off to achieve a less hostile relationship with the United States. And although Rafsanjani’s policies produced some benefits in the agricultural sector, the improvements ultimately did not satisfy popular demands.27 Furthermore, Rafsanjani was not a pure reformer, but rather a moderate who increasingly relied on the conservatives for political support, and during the latter part of his presidency, Iran became more aggressive outside its borders.28
U.S.–Iran relations continued to be beset with difficulties throughout this period. The U.S. Congress in 1995 publicly pushed for a ten-fold increase in funding for covert action against Iran by the United States Central Intelligence Agency, and the Clinton administration initiated new sanctions.29 Tehran demonstrated that it had coercive options of its own beyond the development and proliferation of nuclear and missile technologies. Iran enhanced its support for Hamas, Hezbollah, and Palestinian Islamic Jihad to target Israel with terrorist attacks, and it created trouble for Arab nations friendly to the United States. Bahrain, which had just accepted a newly upgraded U.S. Fifth Fleet headquartered in its country, announced the discovery of an Iranian conspiracy to overthrow its government. Iran also seems to have created the Saudi Hezbollah terrorist organization that detonated a bomb outside the Khobar Towers in Saudi Arabia, which housed American military personnel; the explosion killed 19 Americans and wounded 372. A bomb manufactured in and shipped from Iran with specifications to target civilians was even intercepted on its way to Germany.30 All of these actions demonstrated the political will and capability of Iran’s leadership to create near-term havoc on Western interests.
Regime conservatives can pursue these provocations to the point that they fear real reprisal, overt or covert, from the United States and other powers but seem to want to avoid a large-scale international response. After the Khobar Towers bombing, Washington contemplated more robust countermeasures, and by 1997 the Iranians had reduced their heightened surveillance of American personnel, kept a greater distance from American naval vessels in the Persian Gulf, and pursued a rapprochement with the Saudis. Iran demonstrated again its ability to oscillate between different policies and different levels of aggression abroad.
In 1997, Iran elected a different type of pragmatist, Mohammad Khatami. President Khatami advocated greater political freedoms and less dogmatism and, most boldly, a rapprochement with the United States. He attempted to fulfill the promise of constitutionalism over autocracy in Iran.31 Iran had failed to diversify its economy beyond oil exports, and the United States sanctions made trade more expensive for the Iranians. Corruption remained a real challenge in Iran, and inflation and unemployment continued, seemingly contributing to social challenges like drug use and crime. Khatami’s pragmatic followers recognized these problems, but they proved less successful in actually solving them.32 North Korea, too, faced endemic corruption, inflation, and drug use problems amid pronounced economic crisis and famine in the late 1990s. The regime formally maintained full employment even as real payment for that employment nearly vanished and economic crime and acts of desperation like prostitution grew.33
Iran’s reformist experience went a good deal further than North Korea’s flirtation with economic reform in the early 2000s. Unlike Iran, North Korea lacks meaningful elections that can produce even limited policy changes. Nevertheless, the North Korean economic reformers managed to win limited acceptance of marketization ranging from the initiation of price and wage reforms in 2002. Some of those gains would be rolled with the reintroduction of the Public Distribution System in 2005, which reinjected the state into roles of providing basic commodities to workers, and the regime would settle into a new equilibrium of limited state acceptance of certain low-level market activity outside of direct state control. Neither country’s shifts were revolutionary but were notable and impactful for citizens’ daily lives.34
Iran’s experience provides a useful lesson on the downstream consequences of possible future economic reforms in North Korea. Iran’s experience shows that the initial political victory of establishing a reformist agenda is not enough. Technocrats living in a revolutionary country have relatively few opportunities to develop their skills, and these countries face very serious social and economic difficulties. It is important to remember that although a shift toward pragmatists is a notable advance, these individuals need to be armed with the knowledge and skills to actually address the many challenges in their countries. If they do not provide empirically demonstrable progress quickly, then the whole basis of their political argument – that they can deliver results – quickly fades. Conservative ideologues, by contrast, cite the morality of their policies on their face and do not have as much pressure to deliver concrete results.
North Korea and Iran share various groups who advocate at cross-purposes within the regime within strictly controlled limits, but that debate is more easily discernible and relatively transparent in Iran. Both states have voices presenting a view labeled “revolutionary” or “conservative”; despite the contradiction in terms, this is the first school of thought that at its core calls for adherence to the ideals of the regime’s founding. The contrasting school of thought, whose adherents are called “reformers” or “pragmatists,” focuses on results and basic competence in governance, most notably on economic affairs but also on foreign policy. Neither school of thought professes an anti-regime position and remains within the system, but they urge moderation on certain manifestations of revolutionary ideals in order to make gains on the livelihood of the people, including reaching accommodation with regional neighbors and those further afield. Security and economic objectives incur trade-offs, and different advocates of the divergent national strategies and parochial goals yield contradictory policies.35
Democracies are not immune from this type of plurality and actually champion it as a foundation of representative government, but more opaque decision making in Iran and North Korea make the variant policy outcomes more perplexing without this context. We should expect that different political actors in both regimes pursuing contradictory political objectives would undermine subtly with words or actions policies that they find objectionable. This includes diplomatic agreement with outside powers.
For example, Iranian President Khatami’s pragmatic government boldly pursued a “Dialogue Among Civilizations” to consider improved relations with the United States.36 To demonstrate its seriousness of purpose, Iran started keeping its warships at a distance from American naval vessels in the Persian Gulf and cut off the smuggling of Iraqi oil through its waters. The Clinton administration responded with a series of measures to demonstrate Washington’s interest in improving relations. It eased visa restrictions to allow some Iranians to visit the United States and promoted people-to-people exchanges, added an anti-Iranian terrorist organization to the terrorist list, promoted cultural exchanges, provided Iran-Libya Sanctions Act (ILSA) waivers to Europeans willing to cooperate on counterterrorism and nonproliferation, dispatched Secretary of State Madeleine Albright to deliver a speech that called on Iran to develop normal relations with the United States, removed Iran from the “Majors List” of states producing and allowing transit of narcotics, and President Clinton even remarked publicly that the West must recognize its historical role in Iran and “find some way to get dialogue.” Simply put, there was a flurry of activity, especially on Washington’s side, to get relations on a more productive track. But the response in Tehran was troubling and provides a cautionary lesson for engagement.
The Iranian reformists advanced an agenda of diplomatic accommodation in face of only temporarily quieted conservative opposition, but Iran’s conservatives did not sit by idly for long. Despite Khatami’s overwhelming election, they targeted the reformist government not only with bureaucratic opposition but with thuggish physical attacks in the streets. Hezbollah even joined in the fray, firebombing media outlets that supported the reformist agenda. An Iranian investigation revealed that Iran’s intelligence services had assassinated at least 50 Iranian dissidents.37
Despite its real setbacks amid limited aims, the Iranian reform movement advanced further than one can imagine North Korea moving in the near future. North Korean conservatives do not firebomb opposition media outlets in their country, because opposition media outlets do not exist. Also, North Korea lacks Iran’s civil society, and its elections are much less meaningful than those in Iran. Despite these differences, the events in Iran demonstrate that even if North Korea moves down the road toward greater openness and participatory government, entrenched conservative interests will likely at least attempt to repress even authoritative views that are different from their own as long as they remain powerful politically or militarily.
Different policy views are more challenging to discern in North Korea than in Iran given the former regime is even more opaque, so research tools are necessarily more indirect. However, one can identify policy goals that the regime has pursued throughout its history. Korean unification under the DPRK flag, military strength and national security, and, to a lesser extent, economic development have remained core regime goals since the founding of the regime. As noted in Chapter 2, Kim Il Sung sought unification through overt military invasion in 1950, an extensive military buildup and military incursions into South Korea to overthrow the Republic of Korea’s government and foment revolution in the 1960s, and even the use of terrorism in the 1980s to target South Korean leaders and civilians alike. The DPRK’s prioritization of the military sector is an integral part of its founding from a guerrilla movement to the present and remains a core element of its legitimacy. The Korean People’s Army not only serves as a vehicle to try to reunify the Korean Peninsula under Kim’s rule, but it deters foreign imperialists, particularly the United States, from attempting to topple the DPRK. Lastly, North Korea has consistently noted its desire for economic development and taken steps it judges will move the country toward that end.38
Strategies to pursue unification, military strength and national security, and economic development face trade-offs, and determining resource allocation and priorities is a core political decision. If one removes the unification element that is less common in other parts of the world, trade-offs between military strength and economic development regularly take form in debates in national capitals around the world about “guns versus butter.”39 These trade-offs became acute in the 1990s. North Korea lost its main security backer and economic prop with the Soviet collapse, South Korea surpassed North Korea on almost every conceivable measure, and poor policy choices put the country in a precarious food security situation that ultimately resulted in famine. Technocrats and technocratic solutions took on greater roles as the regime had to face its multiple crises. Unfortunately, the regime was slow to recognize its problems, especially on the food issue, and many North Koreans died in the process.
Kim Il Sung allowed his country to enter into negotiations over its nuclear program near the end of his life. North Korea did not want to sacrifice part of a program deemed important for its national security and offering additional intangible benefits to those valuing a strong national defense. But it also did not want to deal with an attack on its nuclear facilities by the United States, and it sought both energy and humanitarian assistance from the international community. This trade-off created space for a diplomatic deal in the form of the 1994 Agreed Framework. Though the Agreed Framework did not end North Korea’s nuclear program, it verifiably froze the plutonium program for eight years and irreversibly ended two of North Korea’s three budding plutonium reactors. Only the smallest survived the neglect that the nuclear freeze imposed on the larger but less developed reactor projects.40 However, the DPRK embarked covertly on a separate uranium enrichment path to the bomb during the Agreed Framework’s implementation years, leading critics to note that the DPRK cheated on the agreement and should not be trusted.
Mutual mistrust is high for good reason, and North Korea has shown its preference for nuclear weapons over economic opportunities. But this central trade-off remains at the heart of diplomatic efforts to end North Korea’s nuclear weapons programs. Nuclear development means economic pressure and isolation, whereas denuclearization opens the door for integration into the world economy and alternative means of guaranteeing the regime’s security. Different individuals and institutions within North Korea favor varied approaches or prioritization schemes in relation to pursuing these three goals.41
Kim Jong Un’s rise to power in recent years provides little room for long-range assessments of his mode of rule, but he appears to have inherited his father’s style of utilizing various institutions to divide and rule. Kim Jong Un has utilized party institutions more so than his father, but he has also used consultative meetings by senior officials across institutions related to specific areas. For example, the North Korean official media showed in 2013 that Kim Jong Un chaired two weekly meetings – one focused on domestic and economic matters and another focused on national security and foreign affairs. The composition of the meetings shows that senior officials, but not necessarily the formally most senior official, of institutions in the party, military, and government literally have a seat at the table for major decision making.42
The unification, or inter-Korean, element of DPRK objectives has shifted the most over the decades. The DPRK’s weakness relative to the ROK and removed prospect for fomenting revolution in the economically developed and democratic South Korean society has caused the DPRK to shift away from this goal of forcing unification in the near term. The DPRK cannot let go of this goal officially, as it remains a part of the regime’s raison d’être, but the inter-Korean competition has become one pursued for internal political purposes more than to lay the groundwork for unification. Unfortunately, this has real consequences as demonstrated by North Korea’s 2010 sinking of a South Korean naval vessel, the Cheonan, which killed forty-six young sailors, and the DPRK’s shelling of a South Korean island in the northwest corner of the country near North Korea that killed two South Korean civilians and two South Korean military personnel.
The DPRK unification objective has shifted, but this inter-Korean issue set still intersects with the other two North Korean goals. Most clearly, DPRK provocations against the ROK impede efforts to address differences on the nuclear program and economic development. Put simply, no administration in Washington or Seoul can seek accommodation if North Koreans are killing South Koreans. On the other side of the coin, South Korea’s economy is over forty times larger than North Korea’s, and it is a highly interested party. It has shown itself a generous contributor to North Korea economically in the past, and it certainly has the capacity to assist North Korea’s development efforts in very substantial ways. However, South Korea, like the United States, demands North Korean concessions on the nuclear program if it wants to enjoy these economic rewards. The DPRK is well aware of these trade-offs and competing policy options and has invested in a rhetorical effort to wish them away.
The DPRK has rejected trade-offs between the security and economic development arenas, asserting that it can develop nuclear weapons and its economy simultaneously in its byungjin, or parallel development, policy.43 The DPRK has achieved anemic economic growth rates in the interim as it has made progress on its nuclear weapons program.44 If this is the extent of the DPRK ambition, then it can have its cake and eat it too.45 However, the history of the country’s ambitions, especially relative to South Korea, and the long-term security challenges that a poor economy presents for the military complex suggest that the regime will have to once again reengage on this fundamental trade-off at some point. Including nuclear weapons in the constitution and effectively declaring disinterest in denuclearization is a strong indication of current political will in Pyongyang, but it does not change the fundamental dynamics and challenges that the regime continues to face. Once the regime again recognizes this basic fact as it has in its past, we expect politics will reemerge on how to advance these three goals again.
Casual observers may note that Iran and North Korea’s economic structure and general economic outlook appear somewhat different; Iran is an oil-rich, exporting nation linked to the global economy, and North Korea espouses autarky. One may suspect Iran is a middle-range economic power, whereas North Korea faces greater poverty. Upon closer evaluation, we discover that the differences between these two economies are much more pronounced, and the scale of those differences is enormous. Not only are there few similarities between the two countries’ economies, but they are far apart on almost every meaningful economic indicator. Nevertheless, both encounter UN and national sanctions from a variety of governments; those sanctions have somewhat different emphases given the economic structure of the target states, but largely employ similar tools derived from the same international or national legal authorities. Despite the dramatic domestic political and economic differences between the two states, the international tool set on sanctions is largely the same.
The most basic measure of an economy’s size is gross domestic product (GDP) and GDP per capita. GDP should be a relatively straightforward and noncontroversial estimate, but the paucity of even the most basic data on North Korea has produced substantially divergent estimates. The South Korean Ministry of Unification estimates North Korea’s GDP is $22.4 billion, the Economist Intelligence Unit puts it at $36.2 billion, and the CIA’s unclassified estimate relies on an Organisation for Economic Co-operation and Development (OECD) assessment of $40 billion, rounded to the nearest $10 billion.46 In short, major institutional estimates of North Korea’s GDP diverge by a staggering factor. In the same year as estimated for the earlier figures, Iran’s GDP was $362 billion, and that year marked a low ebb for the Islamic Republic. Iran’s economy was nine to sixteen times larger than North Korea’s economy.
In relative regional terms, Iran and North Korea occupy very different economic spaces compared to their neighbors. In Northeast Asia, North Korea is the clear outlier as the poorest country, surrounded by four of the world’s twelve largest economies: China, Japan, South Korea, and Russia. The world’s largest economy, the United States, is forward-deployed in both regions and integrally integrated into both areas but serves as a constant. In the Middle East, Iran has the largest economy in its region after Saudi Arabia in absolute terms and even surpasses Saudi Arabia on some manipulations of the gross economic data, such as judging GDP by purchasing power parity.47 In sum, North Korea is orders of magnitude poorer than Iran, and its relative economic positioning in its respective region is precisely the opposite of Iran’s economic standing.
Larger populations allow for more economic activity and generally produce larger GDPs, so evaluating GDP per capita provides another tool to interpret the wealth of a nation. Iran is firmly in the middle among its Middle Eastern peers when it comes to GDP per capita, so controlling for population size is useful to provide a better picture of the economic comparison between Iran and North Korea. Iran has a much larger population than North Korea, so it has more people to contribute to economic activity and enlarge GDP. North Korea has a population of about 24 million, and Iran has 76 million.48 But per capita GDP also shows the wealth disparity between the two countries. North Korea’s per capita GDP is less than $1,000 per year, whereas Iran’s per capita GDP amounts to about $12,000.49 The average Iranian is not rich, but he or she is not poor like the average North Korean.
GDP figures only tell part of the story and obscure income inequality. As noted in the following chapter, the UN World Food Program (WFP) has a presence in North Korea to deal with chronic malnutrition. The UN cannot address the food shortage for the whole country and focuses only on feeding vulnerable groups like pregnant mothers and babies. Even with this limited subset, the WFP still has provided nutritional assistance to 2.4 million North Koreans, or 10 percent of the population.50 By contrast, the WFP program in Iran targets only specific refugee groups, especially Afghan and Iraqi refugees.51 The most vulnerable in North Korea are a much larger proportion of the country and face a direr situation. Anecdotal reports suggest North Korean elites in the capital are doing better economically and enjoying a higher standard of living than they did just a few years ago, but income inequality continues to rise between the Pyongyang-based elite and rural populations and especially the urban poor in provincial cities who lack access to both political privilege and land to farm.52 Iran likewise has regional income disparities that even affect voting behavior,53 but Iranians benefit from a piece of a larger economic base that precludes a large portion of the Iranian population requiring food assistance from the UN.
An economy is never a static picture, and economic growth and contraction are important. Since the end of the Cold War, North Korea has seen more years of economic contraction than growth. Growth rates have varied from −7 percent (contraction) to 6 percent growth with oscillation in recent years between +/− 1 percent. North Korea’s economy is not in free fall or crisis. It is stuck in a chronically anemic growth at best with no near-term prospect for substantial improvement.54 Iran’s economy has also oscillated in recent years, with coordinated international sanctions producing economic contraction. Iran’s economic picture is far from ideal, but it has enjoyed more sustained growth over a much larger economic base for the last decade with the exception of the sizable dips from robust sanctions. Iran’s nuclear agreement with the P5+1 countries produced some sanctions relief and identified comprehensive sanctions relief related to Iran’s nuclear program as the expressed goal of more substantial limitations on Iran’s nuclear program. Unlike North Korea, Iran has a conceivable path to economic growth with sanctions relief.55 North Korea would require more dramatic changes to alter its economic course, especially because its economic woes extend well beyond sanctions and include weak transportation and communications infrastructure and absence of property rights.56
Price stability or predictability allows businesses – foreign and domestic – to invest rationally and consumers to buy rationally. Massive price changes and currency fluctuations inject new risks for investors and consumers alike. Although Iran has experienced substantial inflation, it simply is not on the same chart as North Korea in this vein that shows North Korea’s economy has many more structural flaws than Iran’s. Following Pyongyang’s November 30, 2009, surprise revaluation of the North Korean won, the North Korean government unwittingly collapsed the value of its currency overnight and triggered massive inflation. The price of rice and corn rose 6,000 and 8,000 percent, respectively.57 The regime attempted to ban foreign currencies but ultimately had to back off enforcing this provision as citizens fundamentally did not trust the North Korean won. Inflation continued even after the botched currency revaluation, with 5,200 North Korean won buying one U.S. dollar in December 2011 and requiring 9,100 North Korean won to buy the same dollar in January 2013.58 The collapsing value of the North Korean currency and its unpredictability provide the average North Korean a strong incentive to avoid the national currency. One does not need to have studied economics to understand that the same 5,000 North Korean won note that once purchased food now purchases nothing. Avoiding the national currency while the government officially prohibits the use of foreign currencies leads to basic and inefficient economic exchanges such as barter.
Iran faced substantial inflation problems as well, but they pale in comparison to North Korea’s. Iran’s inflation rate peaked in June 2013 at 45 percent (year on year) and averaged 39 percent that year.59 This is a high inflation rate when compared to the advanced economies in the world, but these are numbers that can be accommodated in markets and do not require a shift to premodern forms of exchange as in North Korea.
One of the most critical economic distinctions between Iran and North Korea is Iran remains a trading state, whereas North Korea largely is not. The extent of this disparity is large, and a country’s integration in the global economy is a necessary point of assessment to determine the effectiveness of international efforts to pressure a country by restricting that international trade via sanctions.
International trade as a proportion of GDP is one indicator of a country’s economic integration. Though small countries tend to have higher scores, this would also correlate with their greater dependence on trade. For example, Luxembourg is literally off the charts with its imports equating to 141 percent of GDP and exports 176 percent of GDP. The United States is an open economy but also the world’s largest market with many domestic consumers, so it is less dependent on foreign trade. Its imports accounted for only 14 percent of GDP and exports 11 percent. This provides a rough measure of the importance of foreign trade to a country.60 As a smaller state, North Korea would be expected to trade more internationally as it can rely less on its domestic consumers to buy the products it produces.
Table 3.1 shows the trade-to-GDP ratios for North Korea and Iran as well as two regional rivals. North Korea is the least reliant on foreign trade. Despite its small domestic market, North Korea had decided to pursue a policy that minimizes reliance on foreign trade partners for political reasons. Though it creates substantial economic inefficiency, North Korea does not export products in which it has a comparative advantage in order to import products that it is ill suited to produce. For example, the mountainous country attempts to grow most of its own food, but economic rationale alone would suggest it should instead focus on exporting industrial products and importing its food. While North Korea remains dependent on foreign assistance to feed its most vulnerable groups who cannot work, such as babies, the sick, and the elderly, the autarkic policy seeks to increase domestic food production primarily to feed populations that the regime prioritizes without risk of disruptions from foreign suppliers. Instead, North Korea primarily risks external disruptions from weather on top of internal challenges like food distribution and spoilage.61 By contrast, South Korea relies heavily on exports and is the textbook example of export-led industrialization. The two Koreas could not have more different approaches to trade policy.
|
Trade-to-GDP Ratio |
|
|---|---|
|
North Korea |
12.5 |
|
Iran |
49.6 |
|
South Korea |
110.9 |
|
Saudi Arabia |
81.3 |
Sources: Data derived from the World Trade Organization’s Trade Profiles available at http://stat.wto.org. North Korean data are based on 2008 imports estimated at $2 billion, exports $3 billion, and GDP $40 billion.
Iran is not as integrated into the global economy as South Korea or even its oil-exporting rival, Saudi Arabia. However, Iran’s approach to crude oil exports in relation to its own domestic need helps underscore the difference between North Korea and Iran when it comes to using or avoiding international trade on strategic products. Iran imports almost 30 percent of its gas used inside the country. Even though Iran is a tremendous crude oil net exporter, it simply lacks the capacity inside the country to refine its own crude into gas to meet this domestic need. Using foreign refiners can be economically efficient, but it creates a vulnerability for Iran. Foreign countries could attempt to target that gas to exert political pressure on Iran. Indeed, the United States’ open consideration of fuel sanctions prompted Iran to increase its own refining capacity. In essence, this makes Iran more autarkic without the economic benefits of utilizing refiners abroad, but it reduces its vulnerability to foreign actions.62 Nevertheless, Iran remains considerably more integrated into the global economy than North Korea; this helps its economic growth but also makes it more open to economic pressure from major trading powers like the United States and its partners.
The content of that trade is also different. Iran is a major oil exporter, accounting for as much as three-quarters of its exports. Oil is a widely sought commodity, and many countries purchase Iranian oil, providing a diversified set of customers. Iran has infrastructure to export crude oil, and one could reliably expect international customers’ interest in developing the Iranian oil market further with the removal of sanctions.63 North Korea once exported high-end fisheries products, especially to Japan where the demand for seafood is high, and continues to export coal and certain minerals despite UN Security Council–imposed limits, but North Korea’s political choices have prompted the Japanese government to require its consumers to find different seafood suppliers and made Chinese businesses less interested in partnering with the unpredictable North Koreans. Iran’s exports are in a different league in terms of value defined by the global marketplace than North Korea’s potential exports, and the domestic market and consideration of foreign investors’ property rights make Iran a more attractive potential investment market than North Korea.
Unlike in Iran, it remains an open question whether foreign investors would seek economic opportunities in North Korea in the absence of sanctions. Chinese traders have noted that a weak transportation infrastructure, basic restrictions on communications including cell phone usage, and a government that does not respect property rights remain impediments to investment, and investors from other parts of the world are likely to find these and other challenges in investing in North Korea.64 Although complete sanctions relief for both countries does not appear likely in the near future, North Korea faces much larger additional hurdles beyond externally imposed ones.
Whereas Iran has consistently run trade surpluses with recent exceptions, North Korea has consistently run substantial trade deficits.65 North Korea’s main import is crude oil, which feeds its industrial base and thus serves as a more strategic import than import values alone suggest. Consequently, oil is a financial asset for Iran, and it is a liability for North Korea. North Korea lacks oil, but it does have substantial minerals. Minerals and coal should have many buyers, but North Korea’s economic isolation leaves it only one major export market today for these commodities: China. Contrary to Iran’s diversified customer base, North Korea faces a single customer, which puts Pyongyang in a poor position to negotiate prices and vulnerable to possible Chinese political pressure.66
Further, Iran has lost business from various countries due to disputes over its nuclear program, but North Korea has seen more dramatic, 100 percent losses of some of its largest trading partners in recent years. International politics and disputes over North Korean behavior have affected North Korean trade tremendously. For example, in 1990 Japan was North Korea’s largest trading partner after China, accounting for 20.5 percent of North Korea’s total trade; Japan was also North Korea’s dominant export market, receiving 29 percent of North Korean exports. In 2000 Japan still took second place with 13 percent of total trade and North Korea’s top export market with 20.5 percent of North Korean exports, but it gradually declined with souring of bilateral relations and fell off both charts completely after 2006.67 Japan banned all imports from North Korea three days after North Korea’s first nuclear test in 2006 and banned all exports to North Korea after the North’s second nuclear test in 2009.68
Likewise, South Korea did not have any trade with North Korea until 1988, and it did not pick up in a substantial way until the Kim Dae-jung administration took office in Seoul ten years later. Concerns about North Korea’s nuclear developments that came to the fore in 1993 and North Korean commandos submarine incursion into South Korea in 1996 initially limited expansion of inter-Korean trade. However, South Korea rose to become North Korea’s second-largest trading partner by 2002, surpassing Japan and coming in behind only China.69 After North Korea sank a ROK naval vessel in 2010, which killed forty-six South Korean sailors, Seoul imposed new sanctions on North Korea that banned all trade, with the substantial exception of the Kaesong Industrial Complex (KIC) – a South Korean investment on North Korean soil. North Korea’s trading opportunities again contracted due to politics, though the KIC remained at the time a substantial source of hard currency for the DPRK. North Korea’s trade partners have shrunk so considerably that the KIC alone put South Korea as the North’s second-largest trading partner; South Korea’s market share was small compared to China’s trade, but it surpassed all of the North’s other trade partners put together until the KIC’s closure.
This provides some empirical evidence on how North Korea responds to the loss of critical trading partners. Japan, formerly North Korea’s largest export market and second-largest trading partner, completely cut off trade with North Korea over nuclear disputes. Later that same decade, South Korea, which rose as North Korea’s second-largest trading partner and arguably most important trading partner given the generous nature of the concessionary trade and aid, completely cut off all trade except the substantial Kaesong Industrial Complex after North Korea sank a South Korean naval vessel. The Kaesong Industrial Complex later would close for five months in 2013 over another inter-Korean dispute. Some analysts expected dire economic consequences for North Korea, but they did not transpire. Indeed, there was no observable change in North Korea’s security orientation or behavior in response to these trade losses.
Foreign powers’ cutting off trade with North Korea over security-related concerns has left China as not only North Korea’s largest trade partner, but its dominant trade partner. North Korea, which has pursued a policy of economic self-reliance, has found itself ironically reliant on only one trading partner. As a result, China is often labeled as holding the keys to trade pressure on North Korea. Assuming North Korea is unable to find a replacement for the Chinese trade, Beijing’s cutting off trade with North Korea and ending its debt forgiveness would make Pyongyang unable to obtain many foreign goods. Lacking credit, the regime would be unable to borrow to import. Most importantly, the regime would not be able to import oil that fuels its industry, creating ripple effects throughout the North Korean economy.
As the previous discussion of trade-to-GDP ratios showed, this reliance is mitigated in theory by the basic fact that North Korea has insulated itself from this type of pressure by reducing the importance of trade to its economy. But the loss of oil in particular would be difficult to replace, especially because China provides oil to North Korea through a short, cross-border pipeline that assures a constant supply. Only Russia and South Korea have that same geographic possibility of providing cross-border energy supplies, but both pose larger political risks of cut-off than the Chinese pose. However, China has not shown itself willing to impose and sustain this type of crippling economic pain on North Korea.
If China did restrict trade, especially concessionary trade, with North Korea, how would North Korea respond? It could sue for peace with the Chinese, attempting to accommodate Beijing’s motivation for imposing this economic pain. This would be in line with the intended response from North Korea. Even if North Korea accommodated China, it is unclear if China could maintain its stance as North Korea would attempt to backslide on its commitments. Alternatively, Pyongyang could resort to belligerence to try to show Beijing the risks to peninsular stability posed by pushing North Korea too hard. Beijing consistently voices its desires for both denuclearization of the Korean Peninsula and the stability of the peninsula; Pyongyang could attempt to leverage the stability concern through military means to prompt Beijing to reestablish its economic support for the DPRK.
The DPRK also could attempt to absorb the loss. Given what we know about how North Korea prioritizes resources, we can expect the regime to continue to shift macro-economic burdens onto the most vulnerable and least politically significant groups. The type of Chinese economic pressure in this case would be critical to limit the regime’s ability to do this. Restricting military components, for example, does not pose a humanitarian concern. Blocking agricultural exports to North Korea such as fertilizer or food resources would likely mean less food for the most vulnerable, but would not have a substantial impact on the most privileged classes in Pyongyang. If past is prologue, the North would highlight the humanitarian emergency to try to undercut the move, both with the Chinese and the broader international community. Restricting energy imports would have the largest and fastest general economic impact. North Korea stands at a lower subsistence level than Iran. If the international community could impose a similar level of general economic impact on North Korea as it has with Iran, one must be cognizant of the reality that this could precede another humanitarian emergency as Pyongyang prioritizes economic resources according to its past practice.
Lastly, the DPRK could challenge the ceteris paribus assumption that underlies the idea that restricting North Korea’s last remaining major trading partner will pressure the regime. The North could attempt to change the situation by seeking out replacement trading partners for China. After the end of the Cold War, North Korea lost Soviet crude oil supplies at friendship prices. It found China to serve this role. We should not discount North Korean resilience to survive and surprise us with coping mechanisms. It is conceivable that it could seek a replacement for China. The DPRK has attempted to diversify its trade dependence for many years with little success, and no other country has a clear incentive to provide North Korea with critical inputs, such as crude oil at effectively below-world-market prices. It is conceivable, however, that the DPRK could take increasingly desperate actions and offer states like Iran a better deal on sensitive technology transfers, including ballistic missiles and even nuclear technology, to head off this threat to its existence. This latent fear is not new, but an increasingly desperate North Korea would likely look for means to survive with greater urgency. Sustained existential threats encourage states to contemplate and execute desperate strategies that can heighten dangers. If the strategy of restricting oil exports to North Korea seeks to change the regime, it is better pursued quickly, as North Korea will likely act desperately under such conditions given time to change the situation back in a favorable direction for itself.
Analysis of this sort is not applicable to Iran. Because Iran has a diversified set of trading partners and potential trading partners, its options are not as limited as North Korea’s. One country does not dominate Iranian trade.
The character of North Korean domestic politics and economic orientation is fundamentally different from those found in Iran. This is more easily quantified on the economic side, where Iran is wealthier and more open to international trade on every conceivable metric than North Korea. That openness creates many advantages for the Iranian people and government, but it also creates a strategic vulnerability to sanctions that do not affect the insular North Korean state in the same way. Like virtually every country in the world, both governments have politics that go beyond the top leader. Structural political constraints further narrow the range of likely political decisions any national leader is likely to advocate. But the ideologies, histories, domestic contexts, and regional environments facing the two states are very different and provide more variance than constancy in comparing the two states and their approaches to security, including in regard to their illicit nuclear aspirations.
1Masoud Kazemzadeh, “Intra-Elite Factionalism and the 2004 Majles Elections in Iran,” Middle Eastern Studies 44:2 (March 2008), p. 190.
2Maloney, pp. 6–7.
3Kazemzadeh, pp. 189–90.
4Cyrus Masroori, “The Conceptual Obstacles to Political Reform in Iran,” The Review of Politics 69 (2007), pp. 174–75.
5Kazemzadeh, pp. 189–91.
6Reza Razavi, “The Road to Party Politics in Iran (1979–2009),” Middle Eastern Studies 46:1 (January 2010), pp. 79–86.
7Thaler, pp. 54–64.
8For a theoretically informed view on how authoritarian regimes employ legislatures to co-opt opposition, see Jennifer Ghandi, Political Institutions Under Dictatorship (New York: Cambridge University Press, 2008).
9Razavi, pp. 87–90.
10Kazemzadeh, p. 209.
11See Kassig and Oh, North Korea Through the Looking Glass (Washington, DC: Brookings Institution Press, 2000).
12Dae-sook Suh, Kim Il Sung: North Korea Leader (New York: Columbia University Press, 1988). Adrian Buzo, The Guerrilla Dynasty: Politics and Leadership in North Korea (Boulder: Westview Press, 1999).
13McEachern, pp. 51–82.
14Conservatives are sometimes also referred to in this authoritarian context as “ideologues” and reformers as “pragmatists.”
15Takeyh, pp. 31–44. Pollack, pp. 238–40.
16Robert L. Carlin and Joel S. Wit, Adelphi Paper 382: North Korean Reform (London: International Institute for Strategic Studies, 2006).
17Takeyh, pp. 2–5, 31–35.
18McEachern, pp. 100–214.
19Pollack, pp. 193–225.
20Vali Nasr, Forces of Fortune: The Rise of the New Muslim Middle Class and What It Will Mean for Our World (New York: Free Press, 2009), pp. 66–75.
21Jason Brownlee, “Hereditary Succession in Modern Autocracies,” World Politics 59 (July 2007), pp. 595–628.
22Takeyh 2010.
23Alireza Nader, “Rouhani’s Election: Regime Retrenchment in the Face of Pressure,” Testimony before the House Sub-committee on Middle East and North Africa, June 18, 2013, p. 2.
24David McNeill, “North Koreans Dare to Protest as Devaluation Wipes Out Savings,” The Independent, December 3, 2009. Evan Ramstad, “North Korea Money Shift Sparks Violence,” The Wall Street Journal, December 9, 2009. Stephan Haggard and Marcus Noland, Witness to Transformation: Refugee Insights Into North Korea (Washington, DC: Peterson Institute for International Economics, 2011), pp. 10–11, 123.
25Mousavian, pp. 108–19.
26David Thaler et al., Mullahs, Guards, and Bonyads: An Exploration of Iranian Leadership Dynamics (Santa Monica, CA: RAND, 2010), pp. xiii–xvi.
27Nikki Keddie, Modern Iran: Roots and Results of Revolution (New Haven, CT: Yale University Press, 2003), pp. 263–68.
28Alan Cowell, “Ayatolla Ali Akbar Hashemi Rafsanjani, 82, Ex-President of Iran, Dies,” The New York Times, January 8, 2017.
29James Risen, “Congress Oks House Plan to Fund Covert Action in Iran,” Los Angeles Times, December 22, 1995.
30Pollack, pp. 278–86.
31Ansari, p. 292.
32Takeyh, pp. 44–5.
33Sandra Fahy, Marching Through Suffering: Loss and Survival in North Korea (New York: Columbia University Press, 2015). Jieun Baek, North Korea’s Hidden Revolution: How the Information Underground Is Transforming a Closed Society (New Haven: Yale University Press, 2016).
34Smith, pp. 209–93.
35Thaler, p. 91.
36Keddie, pp. 71–72. Takeyh, pp. 110–16.
37Pollack, pp. 303–31.
38It is easy to discount North Korean seriousness about economic development when one looks at political choices that do not prioritize this goal. North Korea is stunningly underdeveloped among Northeast Asian states today, so one can naturally understand a conclusion that the regime simply does not really care about economic development or its population’s welfare. The regime made this the first priority after the Korean War and saw real success in postwar economic reconstruction. This took a dramatic step backwards when the regime decided to massively shift government spending from butter to guns in the 1960s. The welfare of the North Korean people declined. The regime wanted economic development, but it wanted an outsized military more. The DPRK certainly favors a strong economy, but it is not a national priority like unification and military strength.
39For a distinct take on North Korea’s gun vs. butter trade-offs in contemporary context, see Bruce Klingner, “North Korea Heading for the Abyss,” The Washington Quarterly 37:3 (Fall 2014), pp. 169–82.
40Siegfried Hecker, “Lessons Learned from the North Korean Nuclear Crises,” Daedalus, Winter 2010, pp. 1–13.
41McEachern, pp. 37–42. For excellent contemporary articles on North Korean leadership and economic issues, see North Korea Economy Watch at nkeconwatch.com, North Korean Leadership Watch at nkleadershipwatch.wordpress.com, and SinoNK at sinonk.com.
42Cheong Seong-chang, “The Anatomy of Kim Jong Un’s Power,” Global Asia 9:1 (Spring 2014), pp. 8–13. Ken Gause, North Korean House of Cards: Leadership Dynamics Under Kim Jong-un (Washington, DC: Committee for Human Rights in North Korea, 2015).
43Byungjin has been interpreted with different meanings by analysts. For one accounting, see Global Security, “Byungjin (Parallel Development),” accessed January 27, 2017, www.globalsecurity.org/military/world/dprk/byungjin.htm.
44Bank of Korea, “Gross Domestic Product Estimates for North Korea,” available in annual reports at bok.or.kr. Sverre Lodgaard and Leon Sigal, “How to Deal with North Korea: Lessons from the Iran Agreement,” Asia Pacific Leadership Network for Nuclear Non-Proliferation and Disarmament Policy Brief No. 24, December 2016, pp. 4–5.
45Peter Hayes and Roger Cavazos, “Yes I Can!” Byungjin and Kim Jong Un’s Strategic Patience,” NAPSNet Special Reports, March 29, 2016, http://nautilus.org/napsnet/napsnet-special-reports/yes-i-can-byungjin-and-kim-jong-uns-strategic-patience/. Oliver Hotham, “North Korea’s ‘byungjin line’ Will Succeed: NK Pro Expert Poll,” NKNews, November 30, 2016, www.nknews.org/2016/11/north-koreas-byungjin-line-will-succeed-nk-pro-expert-poll/.
46The latest available data from the Ministry of Unification are from 2009. To aid comparison, all data are taken from that year. Ministry of Unification (ROK), North Korea Factbook, http://eng.unikorea.go.kr. Economist Intelligence Unit, Country Report: North Korea, Generated on March 25, 2014, p. 6. Central Intelligence Agency, “The World Factbook,” www.cia.gov/library/publications/the-world-factbook/geos/kn.html.
47According to the CIA World Factbook (2014), China, Japan, Russia, and South Korea ranked as the world’s second, fourth, sixth, and twelfth largest economies based on purchasing power parity. North Korea ranked 105th. Iran had the world’s 18th largest economy and Saudi Arabia the 19th.
48South Korea’s Central Bank, the Bank of Korea, estimates North Korea’s population in 2012 as 24,427,000. The Economist Intelligence Unit reports Iran’s population in the same year as 76,400,000.
49North Korea data are derived from the Bank of Korea, and Iran data are taken from the Economist Intelligence Unit.
50Jonathan Cheng, “United Nations’ Food Aid Program for North Korea Lacks Donors,” The Wall Street Journal, August 26, 2014. World Food Programme, “Countries: Korea, Democratic People’s Republic (DPRK),” 2017, accessed January 28, 2017, www.wfp.org/countries/korea-democratic-peoples-republic-dprk/overview.
51World Food Programme, “Countries: Iran,” 2017, accessed January 28, 2017, www.wfp.org/countries/iran/home. World Food Programme, WFP Iran Country Brief, May 2016.
52Tania Branigan, “Pyongyang Is Booming, But in North Korea All Is Not What It Seems,” The Guardian, January 15, 2015. “North Korea’s Economy: Spring Release,” The Economist, February 28, 2015. 38North, Internal Developments in North Korea: The Economy, Special Report 5 (Washington, DC: Johns Hopkins School of Advanced International Studies, August 10, 2010).
53Sara Beth Elson and Alireza Nader, What Do Iranians Think? A Survey of Attitudes on the United States, the Nuclear Program, and the Economy (Santa Monica, CA: RAND Corporation, 2011). Djavad Salehi-Isfahani, “Who Are Iran’s Voters?” Brookings Institution Article, May 20, 2013.
54For user-friendly access to North Korean GDP data over time, see Trading Economics, “North Korea GDP Annual Growth Rate,” accessed January 28, 2017, www.tradingeconomics.com/north-korea/gdp-annual-growth-rate. “N. Korea’s Per-capita GDP Tops US$1000 in 2015: Report,” Yonhap, September 29, 2016. North Korea’s GDP figures are most often derived from Bank of Korea data.
55International Monetary Fund, “Economic Implications of Agreement with the Islamic Republic of Iran,” in Regional Economic Outlook: Middle East and Central Asia (Washington, DC: IMF, 2015), pp. 81–88. Najmeh Bozorgmehr, “Iran Desperate for Nuclear Deal Dividend as Economy Stagnates,” The Financial Times, September 20, 2015.
56For an exceptional account of the barriers to trade and investment and contemporary coping mechanisms for Chinese traders in North Korea, see Stephan Haggard, Jennifer Lee, and Marcus Noland, “Integration in the Absence of Institutions: China-North Korea Cross-Border Exchange,” Peterson Institute for International Economics Working Paper 11–13, August 2011. Kang Park, “North Korea’s Trade and Foreign Direct Investment: Does North Korea Follow Vietnam’s Path?” North Korean Review 6:1 (Spring 2010), pp. 54–70.
57Haggard and Noland 2010, p. 549.
58EIU, “North Korea,” p. 11.
59EIU, “Iran,” p. 6.
60OECD (2011), “Trade share of international trade in GDP,” in OECD Factbook 2011–2012: Economic, Environmental and Social Statistics (OECD Publishing). http://dx.doi.org/10.1787/factbook-2011-33-en. Luxemburg’s representative figures are taken from 2010, while the United States’ data are from 2009.
61Smith, pp. 186–208, 260–78.
62Thomas Erdbrink and Colum Lynch, “Iran Is Ready for Planned U.S. Sanctions Targeting Fuel Imports, Analysts Say,” Washington Post, June 24, 2010.
63Matt Egan, “Iran’s Oil Exports Have Tripled Since Late 2015,” Money, June 16, 2016. Johannes Sobotzki and Pavel Sharma, “Iran After Sanctions: Oil and Gas Opportunities for Foreign Companies,” Forbes, February 29, 2016.
64Haggard and Noland 2010, p. 557.
65North Korea has recently moved into basic value-added production in the information technology field due to a government push, and exports have risen, but the country continues to accrue sizable trade deficits every year. North Korea must figure out a way to finance its deficits to continue access to foreign goods.
66Joon-woon Lee and Yi Kyung Hong, “Understanding China’s Economic Engagement with North Korea: Realities and Problems,” Pacific Focus 30:2 (August 2015), pp. 173–99. Dick Nanto, “Increasing Dependency: North Korea’s Economic Relations with China,” Korea’s Economy 2011 (Washington, DC: Korean Economic Institute of America), pp. 75–83. Jonathan Pollack, “Learning Its Lesson? What the Iran Deal Should Teaching China about Sanctioning North Korea,” Brookings Article, February 11, 2016.
67James Schoff, Political Fences & Bad Neighbors: North Korea Policy Making in Japan & Implications for the United States (Cambridge, MA: Institute for Foreign Policy Analysis, 2006), p. 18.
68Japan started to ease some trade restrictions in 2014 in exchange for North Korean concessions on the abduction issue. Finbarr Bermingham, “Japan Reaches Trade Sanctions Agreement with North Korea Pending Kidnapping Investigation,” International Business Times, June 2, 2014.
69Hyung-gon Jeong, “An Analysis of North Korea’s Principal Trade Relations,” Asie Visions 32 (Paris: IFRI Center for Asia Studies, July 2010). Young-hoon Lee, “An Analysis of the Effect of North Korea’s International and Inter-Korean Trade on Its Economic Growth,” Economic Papers 8:1 (Seoul: Bank of Korea, 2005).