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North Korea's tipping point

What do the sinking of a ship, stalled talks and Kim Jong Il's secretive son add up to? Trouble.

Late last year the regime was shaken by its disastrous handling of a currency revaluation designed to clamp down on free market activity. Instead, it rendered the savings of the country’s burgeoning middle class almost worthless, and fueled rampant inflation, food shortages and sporadic civil unrest.

The ban on private economic activity and foreign currency was duly lifted, but the damage — economic and to the regime’s reputation — had been done.

The loosening of market restrictions is set against a backdrop of political uncertainty that has dogged North Korea since Kim Jong-il suffered a stroke in 2008.

Speculation is mounting that his youngest son, Kim Jong-un, will be propelled to the upper echelons of the regime’s hierarchy when the Workers’ Party holds a rare conference to elect new leaders in
September.

Recently, the Dong-A Ilbo, a South Korean newspaper, quoted sources as saying the Swiss-educated Kim Jr. had been secretly elected to the supreme people’s assembly last year in preparation for the succession.

Ha Tae-keung, president of the Seoul-based Open Radio for North Korea, says Kim Sr.’s poor health and the protracted handover of power to Jong-un is creating anxiety among North Korean military elites.

“Kim Jong-il’s death would make the future very uncertain for them,” said Ha, whose station uses a network of informers in North Korea and broadcasts news, soap operas and other programs celebrating life in the capitalist South to a small but growing number of North Koreans who listen on modified, and undeclared, shortwave radios.

“They are not confident in the youngest son’s abilities as leader and are worried that there will be no role for them when he takes power. That’s why more of them are turning away from the regime and towards groups like ours.

“The regime is manufacturing tension to consolidate Kim’s grip on power. To say the U.S. is going to attack so they must be prepared for war is simple propaganda. This policy could last for at least another three years, until the son has established himself.”

However the rumored succession proceeds, North Korea watchers agree that the country is on the brink of a tumultuous phase to which the South and its allies should respond with vigilance, if not preparations for a conflict to rival that of six decades ago.

"Part of the skirmishes that are going on are in part related to trying to establish credibility for [Kim Jong-il’s] son," Leon Panetta, director of the CIA, said last week. "And that makes it a dangerous period."

http://www.globalpost.com/dispatch/south-korea/100709/north-korea-economy-cheonan-kim-jong-il