Dr Benjamin Habib
First published in The Age on 20 December, 2011.
North Korea's elite will resist reform in the wake of Kim Jong-il's death, but without it the country faces economic collapse - a frightening prospect for the region.
The death of North Korea's ''Dear Leader'', Kim Jong-il, casts a cloud over the future of the already weak North Korean state and the stability of the north-east Asian security environment.
Speculation about the future of North Korea after Kim has been mounting since reports on his ill health surfaced in 2008, raising questions about leadership succession, the viability of North Korea's unique political system and political stability on the Korean peninsula. With Kim's passing, those questions will be answered in short order.
The heir apparent to the regime leadership is Kim Jong-un, the Dear Leader's youngest son. Given that Kim Jong-un is younger than 30, a question mark hangs over his ability to seize the reins of power.
For a smooth transition to occur, he needs to have established a network of institutional attachments and personal loyalties as the foundation of his claim to the leadership.
Whether he has established a strong patronage network is unclear. Kim Jong-il had a 20-year apprenticeship to secure his support base before he assumed the leadership in 1994. Kim Jong-un has had only three years to do so, leading to the suspicion that his claim to the throne may be weak.
An alternative possibility is a military dictatorship in the mould of Burma's junta, where a group of top generals rule by committee.
This outcome is possible because the military has assumed control over the command heights of the North Korean economy.
The question here is whether the interests of the institutions that control these key economic sectors, and of the generals that oversee them, are best served within the existing political arrangements.
If the answer is yes, Kim Jong-un is likely to survive the leadership transition. If the answer is no, he may be preserved as a figurehead leader or discarded altogether, with real power vested in the military elite.
Questions about the leadership transition inevitably lead us to consider the viability of the North Korean state itself. North Korea has been a borderline failed state since 1991, when the collapse of the Soviet Union and a series of natural disasters combined with long-term decay of the country's command economy and totalitarian political architecture to bring the Kim regime to the brink of collapse.
Kim Jong-il was able to preserve the regime through this difficult period on the back of international aid and a series of ad hoc economic adjustments.
However, the regime was unable to combat the growth of black-market entrepreneurialism as people looked to survive the economic disaster through grassroots market trading that developed as a coping mechanism to the collapse of the command economy.
While the regime has been able to muddle through until now, it is unlikely that such an inherently unstable system can be maintained indefinitely.
The leadership transition may present an opportunity for economic and political reform.
As any visitor to North Korea can attest, the country is in desperate need of investment in 21st-century production facilities and the infrastructure to support them.
Until now, the Kim regime has been caught in a no man's land where further reforms will necessitate measures that will undermine the political and economic basis of its rule.
A radical break with the past would be extremely difficult to justify ideologically in official propaganda.
In addition, elites may fear losing their privileged positions if reforms bring about wide systemic change. These pressures have in turn created great resistance to economic and political reform among the regime elite.
Reform is a difficult proposition that carries dangers for the elite either way.
A poorly managed reform agenda could lead to a runaway collapse of the regime's political control, much as perestroika and glasnost contributed to the hollowing out of the Communist Party in the Soviet Union.
On the other hand, stubborn perseverance with the current system may lead to economic collapse as the evolution of markets at the grassroots causes the official economy to implode. Whoever ultimately assumes power in North Korea faces a difficult choice.
The collapse scenario is by far the most frightening for the country's neighbours. The security of the materiel and technology of North Korea's nuclear weapons program is of paramount concern, with the danger that fissile material, technological know-how or even a complete weapon could find its way into the hands of other states or terrorist groups.
China, South Korea and Russia fear the potentially destabilising effects of a mass refugee exodus in the event of state failure in the North.
Finally, a collapsed North Korea would raise awkward questions about the relative influence of China and the United States in any post-collapse political arrangements, at a time when tension between the two great powers is on the rise.
For two decades North Korea has balanced precariously on a precipice. One gets the feeling that one way or another, the ledge is about to break.
Dr Benjamin Habib is a lecturer in politics and international relations at La Trobe University.