North Korean Policy Elites - Defense Technical Information Center

state-owned enterprises (SOEs), (7) advancement of plans for the securitization of assets
(“chaebolization”) of large state-owned combines, (8) termination of the bulk of state subsidies
to the SOEs, introduction of a self-accounting and profit-based system at SOEs, and movement
from mandatory to indicative central planning at SOEs, (9) contracting an overseas investment
bank to draw up plans for national banking reform, and (10) innovative government debt
financing through T-bond issuance, and others.
Overall, Kim Jong Il attempted to re-build the North Korean state and implement a
relatively ambitious domestic modernization agenda, using the military as the primary driving
force in restructuring and modernizing the North Korean economy on the basis of the marketbased
approach, re-energizing the North Korean society, and consolidating the ruling elites under
the slogans of the army-first policy with the goal of building a “prosperous powerful great
nation” (kangsong taeguk). He clearly was driven by the self-preservation instinct, not Marxist-
Leninist or Juch’e ideology. His “new thinking” (saesago pangsik) developed within the
normative, organizational, and personnel constraints imposed by his father’s legacy against the
background of the worsening domestic legitimacy and performance crises during the trial years
of the “arduous march” (konanui haenggun). It is very important that the strategic decision to
initiate the modernization reforms was a military-backed decision. Without the support of the top
military leaders, Kim Jong Il alone could not have made a strategic decision to launch economic
reforms. He needed the military support for his catch-up modernization drive, and he got it.
Moreover, it is noteworthy that in 2003, the socio-economic reforms and political
decompression were not reversed but further advanced, despite an increasingly hostile
international environment and the nuclear stalemate with the United States. Such policy
continuity can be construed either as a sign that the reforms are generating positive feedback and
may be approaching the point of no return, or that the national leadership may not necessarily
have complete control over and cannot help but swim along with the new social and macroeconomic
processes and micro-economic behaviors originated in the late 1990s and formally
legalized in July 2002.
In the past five years, the overwhelming process of late modernization began to change
the substance of North Korean politics, create new social and political divisions in North Korean
society, expand the policy issue areas, and propel new social forces, corporate concerns, and
interest groups into the policy-making arena at the expense of the previously ubiquitous faceless
class struggle for the construction of socialism with Juch’e characteristics under the WPK party
leadership centered on the “party headquarters.” The issues that are the most important for the
increasingly pragmatic and nationalistic leadership in Pyongyang today are regime security and
power succession, economic reforms and defense modernization, national reconciliation and
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