Economic Boycott Impels Concessions in North Korea

THIS giant port and steel complex on North Korea's east coast, where industrial fumes paint the sky in hues of pink, black, white, and orange, is looking less and less like the "worker's paradise" it was supposed to be.

The harbor has become nearly empty of ships and the steel plants are short on fuel. And despite propaganda posters that try to persuade people they have "nothing to envy," food is scarcer than in the past and workers are told to put in extra time because the economy has hit the skids.

"North Koreans are physically tired," says a Western diplomat in Pyongyang. "An economic decline is forcing the regime to make the people work harder."

The decline, estimated at more than 3 percent last year, also helps account for the fast-changing attitude of North Korea toward rival South Korea, the West, and its own nuclear program.

"The changes are for our own survival and to keep up with the world trend," says Kim Dal Hyun, North Korean deputy premier for external economic cooperation. "We plan to deal with capitalist countries and to internationalize our economy."

Since being cut off from the economic succor of the Soviet empire last year, the communist government in Pyongyang has tried to win aid and investment from free-market nations but has been stymied by a boycott led by the United States, South Korea, and Japan.

"Such pressure goes against the new way of thinking in the world, and it is like the cold-war domination," says Song Rak Un, head of the North American department in North Korea's Foreign Ministry.

The US and its allies are withholding economic help in order to halt the North's alleged nuclear weapons project, which threatens stability in northeast Asia. Having learned lessons from Iraq's evasions of nuclear inspections, South Korea and the US are demanding that the North follow a two-track inspection of nuclear sites.

The primary inspections would be conducted by the Vienna-based International Atomic Energy Agency (IAEA). As a back-up, the two Koreas would hold mutual inspections of each other's nuclear sites, whether civilian or military. North Korean officials say they do not believe statements that the US withdrew nuclear weapons from South Korea last year.

Both the economic boycott and the loss of barter trade with socialist states have forced North Korea to give in to demands for inspections as well as on other issues, such as signing a nonaggression pact with the South and promising to allow cross-border visits of families separated by the 1950-53 war that divided the peninsula.

On May 4, the North provided the IAEA with a 100-page description of its nuclear plants at Yongbyon, about 60 miles north of Pyongyang, opening the way for inspections within a few weeks. And in high-level meetings with South Korea May 6-8, the North made a verbal promise to agree on mutual inspections by mid-June. Further talks were held May 12 between the two rivals in a new body, the Joint Nuclear Control Commission. Keep them guessing

The North also admitted it had produced a small amount of plutonium, raising questions on whether it has enough material to make a bomb. "They will keep the outside world guessing," says Han Sung Joo, a politics professor at Seoul-based Korea University.

In the meantime, North Korea has tried to break the economic boycott in order to earn much needed cash for its dwindling oil imports. Last December, it declared the port city of Chongjin as a special economic zone for foreign investors. It also declared the nearby port of Najin as a free port. Both have been off-limits to noncommunist visitors in the past.

Few foreign investors have looked at the ports or shown much interest so far. The government has yet to draw up laws providing investment incentives. The cost of renovating Chongjin for foreign factories is estimated at more than $66 million, a cost that would be borne by foreign firms.

Another turnoff to investors is North Korea's refusal to pay off long-overdue foreign debt, which Mr. Kim claims is $1 billion but foreign observers say is closer to $6 billion.

"There is no reason for us to pay this debt at this time," Kim says. "We will never beg for money, but we are waiting for nations to be generous toward us." Ideological training

Some Japanese and South Korean investors, on a tour of Chongjin and Najin last month, remained wary of investing in North Korea, partly because workers would still be daily subjected to ideological education in factories. Such "social" education of workers, Kim says, is more important than improving the economy.

"We will educate young people to work as hard as possible so that they won't be thieves, punks, and pimps in the free-trade zones," he says.

In the past, North Korea has prided itself on being independent of the "whims" of a global capitalist marketplace by practicing juche, or self-reliance. It is known here as the "immortal" philosophy of the "Great Leader," Kim Il Sung, who has wielded a unique brand of communism for 44 years in this closed society.

Two large South Korean conglomerates, Hyundai and Daewoo, have negotiated with the North to make major investments, but South Korean President Roh Tae Woo firmly put such plans on hold this spring when North Korea stalled on allowing nuclear inspections.

"A boycott will have a serious impact on the North," says former South Korean Premier Kang Young Hoon.

Kim, the North's deputy premier, says there is no shortage of clothing or housing. Economic difficulties were bad last year, he admits, but the situation is improving. "We will do without luxuries," he adds.