When Will The Sun Rise Over North Korea?

19 Dec

The internet has reached a point of baseless speculation and self-aggrandizement it always exhibited in the sort of crises like that caused by the demise of North Korea’s Kim Jong-il. Suddenly everyone is a punter and everyone has a friend with a tip. I share this this Korean-American’s attitude: “I don’t know if this will be a turning point,” he said. “But I hope so.”

I’m also determined to enjoy this episode, because I still, deep-down, resent this country for ruining my military career. I keep a tight hold on what I believe, it’s for certain I don’t care about “Korea”, except as the playground of what real people struggle to do and how ideas manifest themselves on the human stage. So, something Christopher Hitchens said in his final interview struck a resonant chord.

I have one consistency, which is [being] against the totalitarian – on the left and on the right. The totalitarian, to me, is the enemy – the one that’s absolute, the one that wants control over the inside of your head, not just your actions and your taxes. And the origins of that are theocratic, obviously. The beginning of that is the idea that there is a supreme leader, or infallible pope, or a chief rabbi, or whatever, who can ventriloquise the divine and tell us what to do.

I hope we’ve seen the last of puppet-masters on the Korean peninsula.

But, there might be even more sinister forces stalking the land.

[W]hat are the investment implications of North Korean uncertainty?

It was Goldman Sachs back in 2009 that said GDP of a united Korea could exceed that of France, Germany and possibly Japan in 30-40 years, should the growth potential of North Korea — notably its rich mineral wealth — be realised. (Link here, courtesy of the North Korean Economy Watch)

While the report is slightly over two years old, the economic state of the Stalinist state is considered to have progressed little since. And its rich human capital, as well as abundant mineral resources (which Goldman valued at the time at around 140 times 2008 GDP) remain untapped.

There have been some investment funds looking at this very mineral resources potential — one of which is a London-based fund Chosun Development Fund. Set up in 2009 to invest $50 million in North Korea, little is known of this privately held fund — its website says “This site is currently being improved and updated!”.

But its fund presentation outlines the country’s potential: “(The fund focuses on) the regeneration of the DPRK’s extractive industries and targeted investment to get product to export markets. The country has large deposits of gold, coal, zinc, magnesite, iron ore, copper, cobalt, nickel, uranium, fluorspar, tungsten and other minerals. Mining industries performed reasonably well before the DPRK’s economic contraction of the 1990s.”

Investors may finally be witnessing a new frontier market being born.

There might be greater threats to North Korean liberty than totalitarian rulers, left or right.

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