한국어 | January 16, 2017
January 16, 2017
Why N. Korea won’t be worried by its recent reputational disasters
Why N. Korea won’t be worried by its recent reputational disasters
Debacles of recent Orascom investment and Morangbong visit to China will have little impact
December 17th, 2015

The end of 2015 was marked by two events which, at the first glance, would be likely to damage the international standing of North Korea.

In late November the Egyptian building and telecom company Orascom finally admitted what had been known in narrow circles for two years: that its North Korean state partners had taken over the joint Koryolink cellphone network, and that Orascom had been unable to reap any profit from its seemingly successful investment in North Korea.

And in mid-December a much trumpeted Beijing tour by the Moranbong band – Kim Jong Un’s favorite girl group – was cancelled just a few hours before the first scheduled performance, for unknown reasons. The Pyongyang beauties were rushed to the airport and went home, leaving a number of high-level Chinese visitors perplexed and uncertain.

When these two events were reported in international media, claims quickly emerged suggesting that future investors would be discouraged and that damage would be inflicted upon the China – North Korea relationship, which had just began to show signs of recovery.

But while there is little doubt that both decisions will inflict some damage on North Korea’s reputation in international business circles and among the Chinese political elite, let’s be realistic: the impact of both these events is likely to be rather small. Indeed, we have seen similar developments before, and we are likely to see them again.

Let’s start with the Orascom affair. It confirms what experienced watchers of the North Korean economy have known for ages: that the Pyongyang government perceives international economic cooperation as a zero sum game, and does not care much – if at all – about its international standing. This means that foreign partners are cheated as soon as they outlive their usefulness, which in most cases means as soon as goods and services are delivered. As Aidan Foster-Carter once remarked, these are people who would never do anything as vulgar as paying their bills, and this is not going to change any time soon.

Foreign partners are cheated as soon as they outlive their usefulness, which in most cases means as soon as goods and services are delivered

Yet this long history of cheating has done little historically to stop over-optimistic, over-adventurous or misinformed business types from falling into the same trap, again and again.

When Orascom representatives came to North Korea to discuss their entry into the country’s cellphone market in 2008, they might have been driven around the capital city in old but reliable Volvo cars which the North Korean government appropriated from the Swedes in the 1970s. The history of that particular incident can be found by any literate person with access to Google, but the Orascom people obviously did not bother to look at precedent, or, more likely, believed that in their case things would somehow be different.

The incident of the Chinese Xiyang Group, which in 2012 was cheated of $40 million worth of investment, arguably happened too late to influence Orascom’s decision-making, but even this sad experience had no impact on the decision making of Russia’s Mostovik company, which itself rushed into a much more dubious deal in 2014. Mostovik will probably withdraw from its initial ambitious plans due to serious trouble currently afflicting its headquarters in Russia, but had its CEO not got himself in hot water domestically, Mostovik would probably find itself in the company of Orascom and Xiyang in just a few years’ time.

Investment catastrophes like these are not going to stop. However, it’s certain that businesspeople will continue to come, lured by what they perceive as special government support, apparently unique connections with top North Korean cadres, or even a vane trust in their own business acumen. In each case, there will be something which will make them believe that their case is special and different. Sometimes these risks might even pay off, admittedly, but usually they will not.

It’s certain that businesspeople will continue to come, lured by what they perceive as special government support, apparently unique connections with top North Korean cadres, or even a vane trust in their own business acumen

And what about the near comical disappearance of the Moranbong band? It will surely deliver a blow to North Korea’ relations with China, will it not? Well, once again, do not hold you breath.

Whatever led to the spectacular events in Beijing on December 12, the Moranbong incident will strengthen perceptions of North Korea as a country being ruined by an unreliable, unpredictable and impulsive regime. This perception, admittedly, is already dominant among China’s political elite, so one should not see it as a dramatic change. However, the North Koreans have lived with this image for decades, and it has evidently bothered them very little. In some cases, North Korea has even utilized this image for diplomatic advantage.

Broadly, the decision to improve relations with North Korea was most likely made by top Chinese leaders, the result of a careful consideration of Beijing’s long-term geopolitical interests – and certainly not stemming from any abstract desire for world peace. Such long-term regional interests do indeed require better relations with North Korea, which is both useful as a buffer zone and diplomatic tool.

But while the December 12 incident was likely perceived by Xi Jinping and other senior Chinese elites as an offense, the impact will be short-lived. Indeed, those elites who have managed to reach such political heights against immensely tough competition are seldom prone to act on their emotions. So, new ‘proof’ of North Korea’s well-known irrationality is not likely to change much. The Chinese leaders do not need to feel sympathy towards their North Korean peers in order to provide the eastern neighbor with subsidized oil and food. They are free to see them as ‘useful wackos’. This incident thus changes little.

New ‘proof’ of North Korea’s well-known irrationality is not likely to change much

And in fact, we have already seen signs that the Chinese authorities are trying to limit the damage. Official Chinese statements about the incident were nebulous to the point of being completely incomprehensible, and the Chinese internet censors have been working hard to delete any references to the incident from the Chinese net. The latter action is especially important, since it indicates that the Chinese elite wants to control and suppress possible public outrage.

It makes sense: the public tends to be far more sentimental, moralistic and – at the end of the day – irrational than are professional decision-makers, so Beijing does not want to deal with the consequences of damaged nationalist feelings among the common public. Such anti-Pyongyang public outcry would make further reconciliation difficult, and the fact that Chinese censors were working round the clock to prevent it means, above all, that the decision-makers still want to continue with the their new policy of friendship, no matter what those Pyongyang cuties were instructed to do.

So, one should not be too phased by what would otherwise appear to be two big news stories. Neither the Orascom debacle nor the Moranbong escape are likely to have much long-term impact. And in all probability, both events will remain footnotes in North Korean history which, one should admit, is unusually rich with such curious and often darkly comical footnotes.

Picture: Pixsearching.com / NK News edit

Get North Korea headlines delivered to your inbox daily

Subscribe to the NK News 'Daily Update' and get links to must-read stories each morning

Skip to toolbar