Kim Jong Il Takes Back Wealth Limits, Copes with Cell Phones

In a rare case of taking its cues from the public, the regime has agreed to ease exchange constraints for its 23.5 million people. The proliferation of private marketplaces, a necessary outcome of the food shortages, is credited with contributing to the power of the citizenry.

The fight may not be over, and there have been signs that Kim Jong Il isn't afraid to use deadly force. Border guards have received reinforcements to prevent mass defections, and there have been public executions. But, these demonstrations of might may only work temporarily, since the private markets have created a new elite class – one with the power to bribe. Where everything is in short supply, access to a solution makes it easy to win friends.

As usual in North Korea, the timing could have been better. Kim Jong Il suffered a stroke last year, and at 67, he isn't getting any younger. He seems to have recovered sufficiently to maintain his increasingly rusty iron grip on the country and is in the process of handing control over to his youngest son, the 26-year-old Kimg Jong Eun. This comes 15 years after Kimg Jong Il assumed the top spot in North Korea upon his father's death.

If you think the currency/wealth limitation debacle – even on top of all the other disasters in the country – is sure to derail the transition, consult history. When Kim Jong Il ascended in 1994, he took the corner office without having his father's revolutionary chops and dogged by a reputation as a typical spoiled rich kid. The difficulty was compounded by the implosion of the state-run economy, a famine said to have killed millions and the spread of private markets across the country.

This time around, analysts in the U.S. and South Korea say there isn't much proof that the leader's youngest son has been prepared for what must be the best job in the country (especially if the rumors of cigars, cognac and "pleasure brigades" are true). And, he's facing a daunting situation, one which may require even more grooming than Kim Jong Il received.

Kim Jong Il is no fan of the private markets, which he views as a threat to his regime and has closed some of the bigger ones over the past two years. He's also limited who can sell goods in these markets, specifically middle-aged and older women. In addition to keeping a check on the markets, the measure is intended to keep people from fleeing their government positions.

To make matters worse for the regime, uncontrolled consumer electronics have found their way into the country, which will facilitate the flow of information – long something the country's leaders have sought to prevent. Radios, televisions, MP3 players and cell phones are starting to pop up around North Korea. Even though cell phones have been made accessible to the country's elite classes over the past year, the number of them on the market is expected to hit 120,000 next year. Illegal phones are increasingly pressed to ears in the border regions, prompting Chinese telecom companies to put up relay towers in the area – something of a deviation from China's traditional "set and forget" policy when it comes to its neighbor.

But, we're stuck looking at signals, indicators and suggestions right now.

The one thing you can count on with North Korea is that change won't come overnight. It's taken years for the open-air markets to gain traction, and a few more cell phones will not topple the regime. Loosening the rules on currency limits isn't going to lead to free elections – at least not yet. The good news is that the country's political infrastructure is in trouble. What comes next? Nobody's got that crystal ball.