Who Will Control N. Korea`s Wealth After Kim Jong Il?

North Korean leader Kim Jong Il has ruled his communist country with guns and dollars, experts say.

Kim has controlled the military through a “military-first” policy. Aside from the people’s economy run by his cabinet, he has run a “Great Leader economy” referring to the economies of the Workers` Party and military, as the economic basis for maintaining power.

For that reason, who will control the economy in Kim`s absence is attracting attention.

Kim Gwang-jin, a senior researcher at the Institute for National Security Strategy in Seoul, said yesterday, “The operation of the Workers` Party economy and the military economy will be taken up by the deputy chief of departments in the party, Jang Song Taek, and Kim’s personal funds will be taken care of by his wife and secretary Kim Ok.”

The researcher had worked at the international insurance bureau of the Workers` Party before he defected to South Korea in 2004. He also said high-ranking and working-level North Korean officials in charge of the economy will embezzle funds if the reclusive leader’s health continues to deteriorate.

Experts say Kim Jong Il exclusively possesses and uses scarce national resources like kings of the Joseon Dynasty did.

Kim established economic organizations such as “Party Room No. 39” and the second economic committee of the military, in the party and the military, both of which are the core of the Stalinist country. Those organizations develop gold mines and grow button mushrooms. Financial and trading firms are also run by the party and the military earn dollars by exporting products from the organizations.

A large portion of the profits go to Kim Jong Il under the name “revolution funds.” Kim earmarks a sum as secret funds to take care of his family and close confidants. The rest is used for public purposes such as developing nuclear weapons and renovating downtown Pyongyang.

“If Kim Jong Il, the only one who knows the overall money flow of the Great Leader economy, falls ill, the economy will grind to a halt due to difficulties in budget planning, decision-making and fund circulation,” researcher Kim said.

For the impoverished country, which has suffered extreme economic difficulty since 1990, dollars mean power. So chances are that competition for economic power will be fiercer than that for political power.

Jang, Kim’s brother-in-law, has worked for the party`s organization and guidance department since 1995 and served as a de facto leader of party organization. From the 2000s, he has overseen the distribution of funds for modernization of poultry farms, construction of a beer factory, and modernization of Pyongyang’s streets.

Kim Ok has reportedly taken part in managing Kim’s secret funds. A researcher in charge of foreign leadership study at the Center for Naval Analyses told Radio Free Asia last week that Kim Ok is deeply involved in the operation of the Party Room No. 39.

Given her position as a personal secretary to the North Korean leader, she is highly likely to manage funds for Kim Jong Il, Kim’s relatives and his close aides.

For North Korean officials involved in the operation of the funds, which are nothing less than Kim’s personal money, the funds are up for grabs. For this reason, corruption is rampant among those officials.

A North Korean defector who fled the destitute country in 2006 after working for a trading firm controlled by the Workers` Party said, “The president of an overseas trading company under the party economy took bribes worth 12 million dollars and returned home with the money. But he was caught and sentenced to death with his whole family.”

According to the Japanese daily Mainichi Shimbun, a high-ranking official at the Party Room No. 39 was dismissed in February for embezzling 1.4 million dollars.

“Power elites who feel uncertain about their future in the wake of Kim’s illness could scramble to line up their pockets,” researcher Kim said. “They will manipulate accounts, receive commissions, and illegally transfer money to overseas bank accounts.”

Officials are increasingly turning a blind eye to each other`s actions, with regulation and monitoring of financial improprieties expected to weaken.

Kim Jong Il is said to have created the Great Leader economy in the early 1970s to secure funds required to boost military capability and idolize his late father Kim Il Sung.

The junior Kim’s private economy backed by his formidable power has devoured national resources and left the people’s economy run by the cabinet in tatters. It led to hundreds of thousands of people starving to death amid the famine in the 1990s and undermining the foreign currency management system.

Most defectors say the genuine reason for Kim Jong Il to hand down power to his son lies in his desire to give his children his vast fortune rather than political power.

If North Korea wants to receive funds from international financial institutions such as the World Bank in return for nuclear dismantlement and economic development, it must abandon the feudalistic and outrageous Great Leader economy, many experts say.

kyle@donga.com