North Korea is denying that the recent removal of several senior officials, including the head of the armed forces, had anything to do with disagreements over economic reforms. But there appears to be a power struggle between the civilian leadership and the generals. For a long time the military has, as is often the case in communist countries, its own economy. The military owns and operates farms, factories, transportation firms and so on. These operations are run for the benefit of the military and its senior commanders. Increasingly, money meant for purely military needs is diverted to the economic activities. The civilian leadership wants to get control of the military farms and factories so that they can be made more productive and less likely to lose money. The generals are against this, and are still smarting after the removal of their leader (vice marshal Ri Yong Ho) on July 15th. China has longed urged North Korea to adopt market reforms, and has, over the last decade, persuaded (with cash, favors and logic) more and more North Korean leaders to favor the economic reforms. The Chinese believe they have the votes now, but Kim Jong Un does not want to risk an open split in the leadership over this issue. It’s a little late for that, because lower ranking (and more communicative) officials are seeing the tensions and quietly talking about it. That news is seeping out of North Korea. Inside North Korea the rumors are causing food prices to increase as traders hoard rice in the event that major economic reforms result in work on more economic projects. The workers would need more food, and the semi-legal traders sense an opportunity.
All is proceeding exactly as I have foreseen.
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