North Korean Policy Elites - Defense Technical Information Center

channeling all his decisions through the National Defense Commission, which is packed with
such long-time loyalists as Yon Hyong Muk, Cho Myong Rok, Kim Il Ch’ol, and Chon Byong
Ho.
It is interesting that the economic wing of the “1980 group” attempted to initiate some
cosmetic economic reforms in 1986-1989, responding to the growing domestic economic crisis
and echoing the general trends within the then-world socialist camp. At the 12 th Plenum of the 6 th
WPK Central Committee, devoted to the consideration of the control targets for the 3 rd Seven-
Year Plan (1987-1993), held on December 27, 1986, Hong Song Nam, 25 the then-Alternate
Member of the WPK CC Political Bureau and Vice Premier of the Administrative Council,
reported that “the 2 nd Seven-Year Plan (1978-1984) was a failure, that the national economy was
in stagnation, that the people were hungry and miserable.” No one expected such an honest
report. Before leaving home that day, Hong Song Nam allegedly told his wife: “If I do not return
home tonight, pack up our stuff and get ready to move to the countryside.” Hong was arrested
during the break, immediately following his provocative speech. However, after the break, Kim
Il Sung allegedly asked the chief of state security where Comrade Hong Song Nam was,
“without any suspicion,” and when told about the arrest, the Great Leader ordered Hong released
and, to the surprise of all, promoted him to be the First Deputy Premier in the Ri Gun Mo-run
Administrative Council, in order to “correct the economic situation.” 26
In 1988-1989, the then-Premier Yon Hyong Muk, who is known to be very intelligent
and well-versed in economic theory, and his first deputy, Hong Song Nam, a sophisticated
economist in his own right, attempted to boost labor motivation and productivity and improve
government finances through the introduction of the self-accounting system at the workplace,
concentration and centralization of ministerial functions under the newly established enlarged
state committees, and creation of a self-reliant infrastructure for foreign economic exchanges,
including specialized foreign trade banks, i.e., Taesong Bank and Kumgang Bank, foreign trade
houses, specialized supply and distribution networks for the export-oriented enterprises, and
special incentives for barter and intermediary transactions. However, their half-hearted efforts
largely failed to correct deepening structural imbalances in the economy exacerbated by the
25 Some insiders in the North still consider Hong Song Nam as a hero of sorts for his speech at the Plenum. Hong
Song Nam, born in Kangwon Province in 1929, began his party career in economic policy-making in the South
Pyongyan Provincial Economic Management Committee under the guidance of the then South Pyongyan
Provincial Administrative Committee Chairmen, first Ri Gun Mo and then Cho Se Ung. When Ri Gun Mo
became Alternate Member of the WPK CC Political Bureau in 1981, he supported Hong Song Nam’s transfer to
Pyongyang to become a Vice-Premier for Kang Song San, the then head of the Administrative Council. When Ri
Gun Mo was appointed the Premier, Hong Song Nam became his First Vice-Premier in early 1987. After the fall
of Ri Gun Mo in late 1987, Hong Song Nam was appointed as the Deputy Premier and Chairman of the State
Planning Commission for Yon Hyong Muk, the then Premier.
26 Materials of the Soviet Trade Mission in the DPRK, 1987.
IV-24