N. Korea pursues - and resists - some capitalist ways

Will it or won't it?

For weeks North Korea has kept its neighbors and the US guessing: Will it test a new long-range missile, and what should the appropriate response be?

If it does send a Taepodong 2 missile into the skies over Asia, one of the first losses could be South Korean President Kim Dae Jung's "sunshine policy." His aim is to let "sunshine" into North Korea by easing restrictions on business deals in the North.

The most visible element of that policy have been cruises to Mt. Keumgang, which began last November. The problems faced by this tourist operation hint at how conducting business with North Korea now has as much - if not more - to do with politics as with profits.

The tours are the dream of Hyundai's founder Chung Ju Young, a native North Korean.

In June, while warships from the two Koreas battled in the West Sea, Hyundai's inter-Korean tourist boats continued plying the East Sea. But those trips were halted in late June after Min Young Mi, a South Korean tourist and mother of two, was detained for six days, accused of trying to persuade a North Korean tour guide to defect. However, the Hyundai tours to North Korea resumed early this month, despite this summer's tensions.

"Keumgang Mountain is not a business. It's political propaganda," says a North Korea expert who requested anonymity.

Hyundai thinks otherwise. "We are just businesspeople. We are thinking of investment and return," says a company official.

The experience of others isn't any more encouraging. Daewoo made the first inter-Korean joint-venture in 1996 - a factory producing shirts, jackets, and bags for export - but hasn't made other plans and won't say if this one is profitable. Samsung Electronics executives visited Pyongyang this summer looking for opportunity, but came to the quick conclusion that North Korea is too risky.

"We're not like Hyundai, which does everything on its own patriotic feelings ... We have to protect the interests of our

stockholders," says a Samsung official.

About 90,000 South Koreans have taken the cruise since late last year for about $1,000 a head. But Hyundai has to pay $942 million to North Korea over the next few years just to use the mountain. "It won't be so profitable," admits a Hyundai official. But if Hyundai's plans for an industrial complex employing 200,000 North Koreans are realized, they can make money then, he says.

The big problem will be getting North Korea to go along. The regime insists on its model of "self-reliant" economics, resisting reforms pursued by Communist neighbors Russia and China. "They want to develop very slowly, but we want to expedite," complains a Hyundai official.

North Korean officials had planned to begin a crash course on international finance and economics sponsored by the United Nations Development Program this spring. But they changed their minds after extensive publicity in capitalist rival South Korea caused them to lose face.

Western economists who have met North Korean economic planners say they sometimes didn't know the difference between micro and macro economics, or what a bond was. Their dominant logic consists of a zero-sum "I win - you lose perspective," says one Westerner.

That makes for tough business dealing. Visiting Pyongyang for business can cost $30,000 to $50,000 in "arrangement fees," says Kwon Oh Hong, president of Changhan Information Ltd., a consulting firm in Seoul. "North Korean business is very hard. You really want to invest or trade, forget it. You want to give them your products or equipment, I can arrange that," says Kwon.

(c) Copyright 1999. The Christian Science Publishing Society