 I'm Karina Lyons, Vice President and Director of Research at the East West Center. The Center is a cutting-edge research and capacity-building institution. We're based here in Hawaii and we have an office in Washington, and our mission is to forge a deeper understanding and greater connection between the East and the West. So every two weeks here on this show, which is Tuesdays, today is Tuesday, at 2 p.m. Hawaii time, I'll have a conversation with someone super interesting, the East West Center expert or a guest. From our global network about critical issues here in the Asia-Pacific region. And today I'm really excited to introduce you to Dr Marcus Knowland. He's a senior fellow at the East West Center, but his day job is Executive Vice President and Director of Studies at the Peterson Institute for International Economics in DC. Dr Knowland is an economist with expertise on North Korea and Korean Unification, among many, many other topics. And today we'll be talking about Instability and Resilience in North Korea, including the impact of COVID-19. So Dr Knowland, Marcus, welcome. My pleasure. Hey, so what time is it in Washington right now? It's eight in the evening. I will thank you again for joining us, and we want to ask you what you're drinking. So, right to it. A couple of weeks ago, the world was captivated by the drama North Korea because Kim Jong-un, its leader, disappeared for about 20 days or so or something like that. And then he reappeared. So we will be talking about the, we're going to be getting Marcus to walk us through that and talking about the increase in missile tests that happened over the next month and getting the details. And I'm a little distracted because I see we have two really good questions right up, Marcus. So I'm going to get straight into it because I've got a couple of good questions from some high school students here in Hawaii. But just before I do that, I have a note which says, please do submit your questions to Think Tech on Facebook. You can actually watch this whole thing on Facebook. But if you're not watching on Facebook, please go there and submit a question and a couple of people already have. So Marcus, you cool? Should we get straight into it? Okay, I'm going to say yes. So our first question is from Maggie and she's a 16 year old who is living here in Hawaii on an ever beach. Oh, this is a good one. I'm just going to read it out. Maggie asks, the young people only hear about Kim Jong-un and sometimes they see big military parades and stuff like that. But they have no idea what life is really like for ordinary people in North Korea. So what are their realities, Marcus? No, that's a great question. And the realities for ordinary people really depend a lot on who you are. If we step back, I don't know, 50 years ago or so, North Korea was founded in 1948. It was set up with tutelage from the Soviet Union. And it was a society that was straight out of sort of Stalinist Russia. It had a centrally planned economy. It had a Communist Party. Everything was very regimented. That system began breaking down in the late 1980s. And in the 1990s, the country experienced a famine that killed perhaps 600,000 to a million people. Now, the result of that was that old system of centrally planned economy broke down and a market kind of developed. And money became much more important in North Korea. So nowadays, if you're well off in North Korea, you're actually better off than you were 10 or 20 years ago. There are more goods and there are more services you can purchase. But if you're the bulk of the people, life is really pretty grim. The old system in which they provided a pretty good education, pretty good health care and so on, that's all fallen apart. People are really on the hustle to get food. And it's interesting, the women now, for most of these families, they're the primary bread earners in North Korea. And that's caused all sorts of turmoil within the family. Some men have a hard time making that. So if you're up at the top in North Korea, life's pretty good. But if you're among most people, life is actually pretty tough. Marcus actually sounds pretty grim. And that leads straight into another question from an inquiring high school student. He asks, this is Noah from his 14 year old, 14 years old, and he's from Wannalua. And he's asking if people are telling the truth about how good life is in North Korea. And just answered that it sounds pretty grim for most people. But the second part of his question is interesting, he says, or are people just trying to avoid being targeted by the government? And why is North Korea a security threat? That's another great question. So the question is kind of about how does North Korean society work internally? And it's a society, as I said, that's characterized by increasing inequality, where people at the top do pretty well. Most of the people really have to struggle. The second question from Noah is sort of the external side of that. The Korean Peninsula is divided into two halves, North Korea and South Korea. That was a product of the way the Second World War ended. And there was no ability to come together and have a single country. So South Korea kind of grew up under the United States. And North Korea sort of grew up under the Soviet Union. 1950, North Korea attacked South Korea and tried to unify the country through force. That failed, but it did terrible damage to the country, killed many, many people. The United States got involved in that war. China got involved in that war. And so ever since it's been a very, very tense situation. There's not even any peace treaty to formally end that war. And so many people, many South Koreans, many Japanese, many Americans see North Korea as a threat. And in particular, since they've developed nuclear weapons and long range missiles, it's threatening to us. And Noah, I'm sure, remembers when we got that accidental warning that we were under attack. I was about to go out for a run around diamond head and it was a very scary moment. So many people fear North Korea because they're afraid North Korea will attack. At the same time, North Korea is pretty small and it's really pretty weak. And so many people believe that although they act kind of, they talk aggressively, they have nuclear weapons, they're developing missiles. It's really for their own protection because they're afraid of South Korea. They're afraid of the United States and other countries. And so they're more like a porcupine just developing very strong defenses, but not actually trying to attack others. And that's the basic problem we face today in the diplomacy of the region. They're afraid of us and they don't trust us and we're afraid of them and we don't trust them either. Thanks, Marcus. You don't actually hear much about the history of how we got to where we are today. I think a lot of people forget that the North and the South divide came about after World War II when the Allies sort of kind of did their best, so to speak. And I remember I was here in Hawaii during the false missile test and I was not preparing to go for a run. It was eight o'clock in the morning on Saturday, Marcus. You're just showing off. Hey, so the name of our show is Not Dead Yet. And that's a reference to the fact that the North Korean leader Kim Jong-un just peered for a while and people, there was a lot of speculation about whether or not he had the coronavirus. So here we are in the coronavirus and wanted to ask you a little bit about that, Marcus, and sort of talk us through. I think last time I checked it was last week, there were still no reported cases of COVID-19 in North Korea. Is that true? President Mondale once told me anybody who tells you that they're an expert on North Korea is a liar or a fool. And I try not to think of myself as either. So I never say I'm an expert on North Korea, but it highlights something very essential. We know a lot more about North Korea than we did 20 years ago, but there's still an awful lot we do not know. When it comes to the coronavirus, North Korea is kind of an extreme version of the United States. If you think about how the Trump administration responded to the coronavirus, it was kind of like it responded to a lot of threats. It saw it as something coming from outside the country and it should be blocked by building a wall against Mexico or canceling all the flights from China. Well, the North Koreans did the same thing, but even stronger. As soon as the World Health Organization announced that this was an international emergency back in late January, the North Koreans effectively sealed their border with China. Now, there wasn't anybody coming across the demilitarized zone with South Korea ever. And so almost everyone who goes in and out of North Korea goes via China and they cut off that border. Now, the North Koreans say that they have no cases of the coronavirus. They say there are no cases of coronavirus in North Korea. General Abrams, the head of U.S. Forces Korea says there's coronavirus in North Korea, but he won't say how he knows. You can see is that in the propaganda films the North Koreans put out, people are wearing masks. When they showed Kim Jong-un at a recent missile test, the soldiers around him were wearing masks. Is that out of an abundance of caution or is that because there's a pandemic inside the country? There are rumors that there have been big outbreaks in military barracks and in prison camps, but we have no way of proving it. It seems likely that there is coronavirus in North Korea, and in fact it could be quite devastating there. But again, the North Koreans are so insecure that they can't admit that they've got that problem because they fear that if they admit they've got a problem, it will be seen as weakness both to their own people, but also to outside people who could act aggressively against them. I also saw the, I'm so fascinated, I love this topic, and I saw those pictures of people wearing masks and did wonder if it was an actual policy. I mean, what about MERS and SARS? Did what happen then in North Korea? Did they wear masks or did they have a policy? Did we know anything more at that point? No, I don't recall them wearing masks at that time, but again, they tried to keep themselves isolated and they see this threat as coming from abroad. Now, you mentioned Kim Jong-un's disappearance. North Korean leaders, including Kim Jong-un, periodically have disappeared in the past. They usually was for one of two reasons. Either there was a security threat, so for example, at the time that the United States invaded Iraq, the North Korean leadership disappeared because they were afraid the United States might invade them as well. And there have been cases where people disappeared and we find out later was for medical reasons. And as you may recall, there was a lot of speculation that Kim Jong-un was very still or even dead. I don't know why he disappeared, but honestly, if I had to make a guess, he was doing exactly what rich Manhattanites did, which is they bought Manhattan for the Hamptons. He's got a palace outside of Wansan on the beach and that's apparently where he was. I think he probably, I mean, if I had to guess, I think he was probably just trying to ride out the coronavirus outbreak in an area that was far away from everyone else. Yeah, I mean, I might head away to my palace too if that was an option, but I mean, he doesn't look like a particularly healthy guy. I mean, there is a history of health issues in this family, right? His dad died of a heart attack, his grandfather died of a heart attack. I mean, there's been quite a lot written about the fact that maybe he did actually get sick and I think I saw a photo of that was focusing on his wrist. I don't know what sort of walk us through what might happen if he did, you know, carpet, if he could die, what would happen to the regime? That's a great question. So the country was founded in 1948 and the leader at that time was Kim Jong-un's grandfather, Kim Il-sung. And he was the founding leader of the country and he raised Kim Jong-un's father, Kim Jong-il, to become his successor. And so for about the last 10 years of Kim Il-sung's life, Kim Jong-il was effectively acting as prime minister of the country, running the country on the day-to-day basis. His father was kind of not retired, but he was presiding over the country while his son kind of did the day-to-day hands-on stuff. When Kim Jong-il got sick, he had a stroke. They realized that the same long preparation that he had had to assume power had not occurred with his son Kim Jong-un. So they kind of rushed Kim Jong-un through a variety of positions in the Communist Party and in the government in order to prepare him to lead, and then his father died and he took power. Now the advantage of that kind of almost hereditary system is that when someone dies or is incapacitated, that hereditary system provides a rallying point for the rest of the elite because as long as the elite holds together, they can all maintain their privileged position in the society. So it's interesting that when Kim Jong-il disappeared, or Kim Jong-un disappeared, excuse me, recently, he missed his grandfather's anniversary. Interestingly enough, his sister appeared in public and were speculating that if anything was ever to happen to Kim Jong-un, his sister would be put forward as the leader, whether she was really leading the country or not, at least symbolically there would be a Kim in charge and that would provide continuity. Now in the long run, such systems fail. As the early questions from Maggie and Noah suggest, there's a lot of discontent and so it could be that if one of them died and there was kind of a discontent that someone might try to seize power or there could even be a revolution. So in the long run, that system may fail, but in the short run it appears that they are going to try to provide continuity via the Kim family. Right, and most bets are on the sister Kim Jong-un, right? Yes. Yeah, so just reading an article about her written by Danny Roy, another North Korea expert, although like you who would never describe himself as a North Korea expert. And I was fascinated because he made the point that he discussed whether or not she may or may not be accepted and what is sort of traditionally known as a patriarchal kind of Confucius society. So given that you are also a Dender expert, I'd love your views on that. Would she be accepted even though she's got the advantage of the hereditary bloodline? You know, that's an interesting question. A number of people made that argument a few weeks ago when it seemed to be a live issue. I would simply observe that the last monarch of Korea was a queen. I think, you know, if you need to pull together, you know, to preserve yourself, I'm sure they could figure out a way to follow Kim Jong-un. Great, thanks Marcus. And I think we have to cut away to a break, but I love that you, I'm just going to reiterate that everybody needs a queen now and again. And I, are we going to break now? I'm asking somebody who knows. And yes, break. Aloha, I'm Kilii Akeena, the host of Hawaii Together on the ThinkTech Hawaii broadcast network. Hawaii Together deals with the problems we face in paradise and looks for solutions, whether it's with the economy, the government or society. We're streamed live on ThinkTech bi-weekly at 2 p.m. on Mondays. I want to thank you so much for watching. We look forward to seeing you again. I'm Kilii Akeena. Aloha. And you're back with East-West Center Insights. And today we're talking to Dr. Marcus Nolan about North Korea and pretty interesting stuff about what may or may not be happening there, and particularly during this time when we're all living in the coronavirus. So Marcus, we just ended up by talking about the likely succession. And I just wanted to round that off because I've always wondered this, and I've never looked it up myself. Is there a plan? Is this written in the Constitution that there will be a Kim in charge? No, this is something they just make it up as they go along. But that is, it is interesting political culture. It combines Stalinism with, you know, Korean Confucian dynasty kind of governance. And indeed, the internal practices reflect practices inherited from the Korean dynasties, from the Japanese colonial period, and from the Soviet Union. That's a fascinating place and filled with contradictions. And just sticking with the sort of COVID time, a lot of people are interested in the potential possible knock-on effect of COVID-19 on the economy given the UN sections that were placed. So I'd love for you to just walk us through. I'm really glad you asked that question because something really interesting is going on. And it's very North Korean in the sense that we've seen a news report, we see some data, but we don't quite understand what's going on. So here's the thing. I said that they went from a kind of classic communist centrally planned economy to this highly distorted market economy. But without any of the institutions of a modern economy, there's no protected property rights. There's no way to ensure or to resolve commercial disputes. One of the things they don't really have is a tax system. They have taxes, but they don't have any kind of broad-based tax like we have in the United States, like a sales tax or an income tax, or some countries call it a value-added tax. And so their ability to raise money has been kind of haphazard. One of the problems they've encountered now that they've closed, largely closed that border with China, China accounted for 90% of their trade. And so their trade has really gone down. And they're also under sanctions. What the government is now, and because of the way the economy has been mismanaged in the past, people don't like to use the North Korean money. North Koreans would rather have US dollars or Chinese rem in B. The government now needs to get a hold of that money. So what they're going to do is they're basically going to force people to buy bonds. They're talking about a new bond issuance. And they are confiscating foreign exchange. So as an economist, and I know this is getting a little obscure, but it's pretty easy to understand. Everything is going wrong in the country. So you would expect the exchange rate of that country to go down for that money to be worth less and less. But what we've seen in the last week or two is the black market exchange rate on the North Korean won is actually going up. The won is becoming more valuable. How is that possible? And the reason is the average person has tried to squirrel away $20, $50, $100, $1,000. And now they find out the government is coming and just seizing it. Well, what they're doing is they're spending that money. They're either trying to get North Korean won or in a lot of cases, they're simply trying to get goods, consumer electronics, clothing, cloth, non-perishable food items, trinkets, jewelry, anything that will preserve value so they can sell it or barter it further down the road. So the ironic thing is the government is trying to seize the foreign exchange and that is making the North Korean exchange rate on the black market go up in the middle of a pandemic in which prices are rising, food is getting short and so on. It's a very strange situation. But it's important because when you screw up the money system, as they did back in 2009 as well, it causes enormous discontent. And it goes back to the original question and then your question about political dynamics. This is the kind of thing that can actually turn people against the government because it's not about ideology. The average North Korean really doesn't care. But if you start taking people's money away from them, especially because the women control most of the money now and they use that money to put food on the table for their family, you start taking their money away from them. That's when you get pushed back. It's not about freedom. It's not about free speech. It's not about ideology. It's about you're taking food away from my kids. That's when you get pushed back. So what they're doing now is kind of dangerous and it's keeping an eye on. But what is the likelihood of a nut rising from the people? I mean, this has been bended around for some time, not this particular instance, but this is the argument for sanctions, right? That you'll motivate the people and generate an uprising. Love to hear your view on the likelihood of that. Well, I've been involved in a series of surveys of refugees in China and in South Korea. And it's a self-selected group. These are people who fled the country, but we've asked them all sorts of questions. And what we found over time was people got more and more comfortable listening to foreign news. They got more and more comfortable with starting to talk about things among themselves. Now, what we've never observed is any kind of organized opposition to the government. The only time we've had civil disobedience has been connected to these kind of pocketbook issues where market women pushed back or veterans who hadn't been paid their pensions pushed back. It's not been organized. So I don't want to exaggerate it. But what I think I can say is that there is, appears to be a high level of discontent. There's a lot of cynicism about the government, but there are no civil society organizations capable of channeling that mass discontent into effective political action. Thanks, Marcus. I have a zillion questions in two minutes to go. So I'm not going to ask you the China question this time. We're going to have to get you on again. It's been fascinating. And I'll be quizzing Noah and their name, Noah, and Maggie. Oh, you're better named than I am. But just to end, I really wanted to ask you about you. I've worked with a lot of North Korean experts and scholars over the years, but they've all been intel specialists or geopolitical scientists, not really economists. How did you, I mean, is that, is it normal? How did you end up becoming interested in North Korea as an economist? Well, I was in South Korea and I was writing a book on the Korean, the South Korean economy. And I realized I really couldn't talk about the future of the South Korean economy without talking about North Korea. That coincided with the period of German unification. And at the Institute where I was working, we were an isolated part of Seoul. There was no place to eat lunch. So we all had to eat lunch in the cafeteria. And then everybody would walk around and on the grounds afterwards. And the topic of conversation was German unification. And the attitude of my colleagues 25 years ago was that the Germans are now, gee, it's 30 years ago, the Germans had made a big mistake with the exchange rate, the monetary conversion rate. We won't make that mistake. It'll be a walk in the park. And obviously attitudes in South Korea about unification have changed dramatically since then. But that's how I got into it. Marcus, thank you so much for spending your evening with us here at the East by Center Insights show, but have to get you on again. I didn't ask you a single question about the four or five books that you've written on North Korea. So next time we'll talk about famine and fashion, just kidding. Thanks very much everybody for joining us here at East by Center Insights. Make sure you check us out on Facebook and Instagram. And we will see you next time. Mahalo.