Why North Korean prosperity would be the ruin of Kim Jong Un

Vietnam seemed like the perfect place for Donald Trump and North Korean dictator Kim Jong Un to meet in late February for their latest summit on denuclearization. At Hanoi’s posh Metropole Hotel, Trump hoped to convince Kim to abandon nuclear weapons in exchange for lifting U.S. sanctions against North Korea, which would spur needed economic development in that country.

North Korea’s economy has been in dire straits since the Soviet Union – which had propped up its communist regime – collapsed in the early 1990s. Starvation remains common in North Korea, where 10.5 of its 25 million people are undernourished.

Meanwhile, Vietnam – once one of the world’s poorest countries – has prospered. Its communist government introduced free-market reforms in the late 1980s after the failure of its Soviet-style planned economy, permitting the private ownership of businesses and farms after years of controlling all markets.

Referencing Vietnam’s economic success story, President Trump wrote on Twitter on February 8: “With complete Denuclearization, North Korea will rapidly become an Economic Powerhouse” too.

The communist divide

As a historian, I disagree with Trump’s view that Vietnam is the blueprint for North Korea.

I am currently writing a college textbook on the history of Germany, my country of birth. The Vietnam summit came while I was focused on the chapter about East Germany’s transition, in the 1990s, from a Soviet-style socialist economy to a more free-market economy.

In my assessment, North Korea is much more similar to Cold War-era East Germany than it is to modern Vietnam.

Both North Korea and East Germany were separated by communism from the other half of their once-unified nation. They are countries founded entirely on the rejection of their capitalist brothers.

The Korean peninsula has been split in two since 1945, when Soviet and American troops liberated it from Japan at the end of World War II. The Allies divided the peninsula along the 38th parallel, with the Soviets occupying the North and the Americans occupying the South.

This split deepened in June 1950, when the communist North tried to unify the country under its rule, invading the South. Korea’s civil war turned into a proxy Cold War as communist China aided North Korea and the U.S. sent troops to defend the South Koreans. A 1953 armistice has divided the Korean peninsula ever since.

A South Korean army soldier stands guard at the South’s dismantled guard post inside the Demilitarized Zone in the central section of the inter-Korean border in Cheorwon, Dec. 12, 2018. Reuters/Ahn Young-joon
Like Korea, Germany was also split into two competing states. Capitalist West Germany and communist East Germany existed side by side, divided by the Berlin Wall, from 1945 to 1990.

Initially, East Germany’s centralized, planned economy was quite successful in rebuilding the country after the war. But by the mid-1960s, economic growth had slowed, resulting in a shortage of consumer and industrial products.

To reinvigorate the economy, East German leader Walter Ulbricht began relaxing the government’s grip on the economy. Managers of state-run enterprises were given decision-making power over what goods to produce, a role previously retained by the government, and allowed to keep some of their profits. Banks got permission to extend loans to the businesses of their choice, helping them grow and invest.

Even though productivity, wages and availability of consumer goods all increased, East Germany abruptly abandoned these reforms in the early 1970s.

It was not because they did not work. Rather, according to my research and the historian Joerg Roesler, East Germany began to fear that its liberal economy was starting to make it look dangerously similar to West Germany.