In life, Chung Mong-hun was this capitalist nation's economic ambassador to the Communist North, negotiating for South Korean tour buses to drive across the demilitarized zone, setting off fireworks to inaugurate North Korea's first industrial park, and posing for photos with the North's reclusive leader, Kim Jong-il.
All that abruptly ended when Chung's body was found Monday morning below an open window of his 12th-story office at the headquarters of his troubled company, Hyundai Asan. Since then, Koreans have watched every turn of the case, fascinated by a prominent clan that is sometimes called the Korean Kennedys.
Their business fortune once made people call this country the Republic of Hyundai. Their political fortune was less favorable; two members failed as presidential candidates. And on a personal level, the Chung clan's happiness has been marred by suicides and untimely deaths.
But for North Korea, an isolated nation deeply suspicious of foreign investors, the loss of Chung may further slow its already slow emergence from nearly 60 years of Communism. Although Hyundai hemorrhages millions of dollars annually on the cross-border tourism project, largely because North Korea dragged its feet for five years on allowing buses to cross the border, North Korea responded on Tuesday to Chung's death by suspending traffic to the Hyundai-run resort.
New projects?
"His death, in fact, cannot be regarded as a suicide," North Korea's Asia-Pacific Peace Committee, the state agency that was Hyundai's economic partner, said on Tuesday. "It was murder committed by the sword called `special inspection' illegally engineered" by South Korean political conservatives. The remark referred to a special prosecutor who interrogated Chung for several hours on Saturday.
While the suicide notes, the family history and Chung's exhaustion from repeated interrogations by prosecutors in a bribery case left little doubt here about his death, question marks do hang over the future of inter-Korean economic cooperation.
"Knowing how personalistic all these inter-Korean exchanges are, I can only be guardedly pessimistic," Alexander Mansourov, a North Korea expert in Hawaii who was an economic officer at the Soviet Embassy in Pyongyang in the late 1980s, said on Tuesday.
Others say projects already established in North Korea will sputter along, but new ones will falter. "For the projects already settled by the North and South Korean governments, I see no change, no problem," Dong Yong-seung, head of the North Korea team at the Samsung Economic Research Institute in Seoul, said in an interview on Tuesday. "But I think there will be some problems for projects in the pipeline."
South Korean officials are tumbling over one another to assure that there will be continuity for the cross-border investments, which are rare market-economy islands in what until recently had been the world's most statist sea.
"The government will make positive efforts so the inter-Korean economic projects proceed as intended by the deceased," said President Roh Moo-hyun of South Korea, who interrupted his vacation to issue a statement. He cited the Kumgang tourism project, in which Hyundai is thought to have invested nearly US$1 billion since it opened in 1998, and the Kaesong industrial park, which Chung inaugurated on June 30.
Virtually all of Seoul's newspapers editorialized on Tuesday in favor of continued economic exchanges with the North. JoonAng Daily wrote: "Economic projects between the two Koreas should continue systemically, rather than rely on Hyundai Asan."
Jeong Se-hyun, South Korea's unification minister and point man for North-South contacts, said in a radio interview that Chung's death "will not specifically affect Hyundai Asan's joint inter-Korean projects because they are being carried out on a systematic basis, not on a personal basis."
But in North Korea's system of one-man rule, where economic profit and legal contracts are alien concepts, Hyundai was able to make deals based on a personal bond forged between Chung Ju-yung, the clan patriarch, and Kim, North Korea's absolute leader. A peasant refugee from northern Korea, Chung caught Kim's fancy in 1998 when he herded a total of 1,001 cows across a land bridge at the demilitarized zone. Chung, who died two years ago, said he was repaying North Korea 1,000 times over for the loan of a cow he had borrowed when he fled south during the Korean War.
Despite this bond, Chung and his son paid steep bribes -- US$400 million by the son's admission - for approval of seven projects by North Korea. Even then, progress was slow. Last week, Chung won permission for tour buses to cross the demilitarized zone, nearly five years after the tourism project opened and one month after South Korea's conservative-controlled National Assembly voted to cut off further government subsidies to the project.
Room for optimism
The industrial park at Kaesong, also a Hyundai Asan venture, seems to make more economic sense and could be a model for inter-Korean development. Located 42 miles north of Seoul, just over the demilitarized zone, the park is designed to wed North Korea's cheap labor with South Korean technology and capital. Designed to hold dozens of South Korean factories, the park is expected to employ 22,000 workers by 2007. The average wage is to be US$95 a month.
With South Korea embarking on an effort to double its own per capita income to US$20,000 by the end of this decade, this and other industrial parks could divert to North Korea some of South Korea's investment in low-wage factories that now goes to China. Even though North Korea stands to benefit by taxing worker salaries in Kaesong, it took the government four years to approve the project, and work has yet to begin.
"I was in Kaesong a week ago; there were a lot of South Koreans there, still talking about details," said Tony Michell, president of a British company that does business in North Korea. "They are checking the soils and surveying. Work is continuing on the road and railroad."
North Korea, which long enjoyed bottling up South Korea for strategic reasons, now spies lucrative opportunities as gatekeeper for rail, gas and oil connections between South Korea and Russia. If North Korea's nuclear program can be put back under international controls and peace is fully established on the peninsula, Russia wants to lead a $3.3 billion investment to link the Trans-Siberian and Trans-Korean railroads, allowing cargo to travel from Pusan, on South Korea's southern tip, to markets in Western Europe.
While progress is slow, foreign visitors to North Korea report a gradual acceptance of markets and foreigners. Last summer, price controls and rationing were dropped, moves that set off triple-digit price inflation. Two months ago, a directive went out to all towns to build district markets, where food, clothes and other goods are to be sold.
"The government simply could not deliver the goods and services it used to deliver," Marcus Noland, North Korea expert for the Institute for International Economics and author of a new economic study of the North, said from Washington. "Instead of eradicating markets, they are trying to control them, to regularize them. I don't get the impression that this is because they have seen the light and they want to have a market economy."
But through the cracks of the ailing state economy, new businesses are sprouting: private restaurants, hairdressers, kitchen gardens, smuggling people to China. Residential real estate is increasingly in private hands.
"There is much more openness to foreigners," said Kathi Zellweger, a frequent visitor as part of her job overseeing food aid for Caritas, the Christian charity. "The fear is gone. We can ask questions and discuss things. People are much more forthcoming."
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