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Tue, Mar 26, 2002 - Page 19 News List

Proton, Pyongyang and a saga of Asian diplomacy

By Patrick Smith  /  BLOOMBERG , NEW YORK

I think of many things when I think of Proton, Malaysia's national car manufacturer. Shifts in global economic trends, business, or diplomacy are not, I confess, among them. But now I have to wonder.

You may not have even noticed the news. Kim Yong-nam, president of North Korea's Supreme People's Assembly and for many years Pyongyang's official shaker of foreign hands, toured the Proton production plant in Shah Alam, a provincial city south of Kuala Lumpur, and talked about the prospects for a joint venture manufacturing facility up where he lives.

With a retinue of 30 North Korean officials tailing him, Kim also visited Thailand, where he negotiated barter deals with Prime Minister Thaksin Shinawatra. Then it was on to Britain and various continental capitals.

Small beer, surely. Kim's Malaysian tour can't account for the extraordinary rise of late in the share price of Perusahaan Otomobil Nasional, as Proton is officially known. That must be attributed to favorable currency movements, a rosy earnings outlook, and talk of a foreign equity stake -- no, not North Korean. The stock closed Friday in Kuala Lumpur at 11 ringgit, unchanged on the day and up 42 percent this year.

"Building a car in North Korea -- they've been dreaming of that for a long time," says Bradley Martin, a correspondent colleague for many years and a North Korea specialist now at Dartmouth College. "But you put a car plant where people can buy cars, and there's no way North Koreans can buy cars in any number."

Fair enough, as things stand. Such initiatives as these have come to nothing before -- nothing except a US$12 billion foreign debt for Pyongyang.

But things change. Follow the recent travels of North Korean leader Kim Jong-il -- remember his visit to the Buick plant in Shanghai last year? -- and it seems evident that reforms of some kind, and at some point, are on his mind.

Malaysian officials are keen on the idea of a Proton plant in North Korea. In Thailand, a deal to exchange rice for North Korean minerals and machinery seems to be moving through the bureaucracies on both sides.

We will have to wait and see about all this, as Martin urges.

All the same, I see a larger dynamic at work here, and it has to do with the context of these contacts. It is a little more than a month since the Bush administration put North Korea on its "axis of evil" list. In a dramatic reversal of past policy, Bush is now preparing to confront North Korea over its refusal to let American inspectors see its nuclear facilities.

This tells us something -- and asks us something, too.

However strenuously Americans may now try to redefine the planet in with-us-or-with-them terms, regional cooperation and integration on the economic level is the more powerful impulse.

This is true whether or not a Proton ever rolls by a statue of Kim Il-sung on that eerie-looking main drag in Pyongyang.

Asian solutions to Asian problems. I approve, even as I wonder what they may be thinking at General Motors Corp -- which makes no secret of its interest in Korean consumers -- as to the peculiar nexus of politics and investment one finds in Asia.

The question Proton implicitly poses is this: What is the wise course with the North Koreans? On the one hand there is the "sunshine policy" of South Korean President Kim Dae-jung -- the use of commercial and diplomatic engagement to draw North Korea out of its isolation. Americans are no strangers to this strategy -- when it suits them.

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