The U.S. has indicated it is prepared to open the North Korean economy to significant private investment, if a nuclear deal can be reached. But even if economic restrictions were lifted, the restrictive and repressive state would likely still present a challenging environment for foreign investment.
Secretary of State Mike Pompeo said on Sunday that if North Korean leader Kim Jong Un complies with what President Donald Trump has demanded, the complete, verifiable, and irreversible denuclearization of North Korea, the United States would offer foreign investment “in spades” to build up the country’s infrastructure and develop its economy.
“This will be Americans coming in, private sector Americans, not the U.S. taxpayer, private sector Americans coming in to help build out the energy grid. They need enormous amounts of electricity in North Korea; to work with them to develop infrastructure, all the things that the North Korean people need, the capacity for American agriculture to support North Korea, so they can eat meat and have healthy lives,” said Pompeo during an interview on the Fox News Sunday program.
The Secretary of State recently returned from a trip to Pyongyang, where he meet with the North Korean leader to prepare for the upcoming Trump-Kim summit that will be held in Singapore on June 12. North Korea also released three American prisoners to Pompeo as a humanitarian gesture in advance of the summit.
The Trump administration is increasingly optimistic it can work out an agreement to dismantle the North’s nuclear program, its advanced ballistic missile arsenal, and chemical weapons capabilities, so as to no longer threaten the U.S. or it is allies.
During the recent North-South summit, Kim committed to the denuclearization of the Korean Peninsula, and indicated that he seeks an end to the severe U.S.-led sanctions banning 90 percent of North Korean trade that were imposed for his country’s repeated nuclear and missile tests.
“They obviously want to make concessions, a lot of concessions, but not as much as the American side hopes for,” said Professor Andrei Lankov, a North Korea economic analyst with Kookmin University in Seoul.
Pyongyang recently announced it would dismantle its nuclear bomb test site between May 23 and 25. However North Korea has argued for a more incremental denuclearization process that would provide immediate concessions for each denuclearization measure undertaken. It is not clear how Pyongyang and Washington can bridge the differences over their positions.
It is also unclear if the U.S. private sector, or foreign investors in general, would be prepared to inject millions of dollars of investment into North Korea, once a nuclear deal is implemented and international sanctions are lifted.
“The administration is perhaps inflating expectations of what the North Koreans can expect in terms of private investment. Because banks, any financial institution, will still be long, long wary of the place,” said Andray Abrahamian, who was formally involved in developing business training programs for North Koreans, and is the author of the book, “North Korea and Myanmar: Divergent Paths”.
Under Kim Jong Un, the communist state has implemented a number of market reforms that allow farmers to keep a portion of their crops and production, that permit state-owned enterprises to function as profit-oriented companies, and that overlook the growth of “grey market” traders of foreign and domestic goods.
By: Brian Padden