SEOUL, Sept 8: North Korean leaders hope they have discovered the key to economic greatness: a three million dollars fence around an isolated outpost that will bring Western cash in while keeping "bad" ideas out. reports AP.

The fence, in an area where North Korea, China, and Russia meet, would act like a filler around a "special* economic zone." letting in dollars, yen and deutschemarks but hailing the advance of democracy and free enterprise.

Some South Korean companies are interested in providing the materials for the 50-mlle fence that the North is trying to build with Chinese investment.

"In a sense we are selling them a cage they will use to confine us," said Kim Ick-Soo, a North Korean expert at Seoul's Korean Institute for International Economic Policy.

"But actually we will be sowing the first seed of economic openness in the North."

In December 1991, North Korean opened two obscure ports on the northeastern tip of the peninsula as its first free economic zone that it hopes will become a 21st century Singapore or Hong Kong.

Pyongyang sees the 300-square-mlle (745-square-kilo-meter) Rajin-Sonbong zone as a test case for its plan to rev up its sputtering economy without challenging the political status quo. a feat China has been trying to achieve, with mixed success.,

"Norfh Korean wants to do what China has done and much more." said Kim. "It wants to keep the region from becoming the spark that Ignites unrest nationwide."

"The North considers the idea of opening up so risky that they will keep foreign in-

vestment to the coastal frontier." the Korean Development Institute, a government think tank, said in a recent report.

Saving the decrepit econ omy is the biggest challenge confronting Kim Jong IL the North's heir to power. If he fails, analysts say. the 52-year old "Dear Leader'' will lose office. possibly forcing a hasty collapse of the Stalinist state his late father. Kim II Sung, founded 46 years ago.

Defectors from the North says many factories have virtually shut down for lack of fuel and spare parts.

"Kim has no option but to open up. A self-generated recovery is virtually impossible." said Pae Chong-nyol of Seoul's Export-import Bank of Korea.

The North's plan to lure foreign investors to its enter prise zone may be more self-delusion than a stroke of genius. Until Pyongyang proves to

the West that it has not been secretly building , nuclear weapons, few companies will risk Investjng in a nation that could end up under a UN economic embargo.

North Korean is also one of the world's worst credit risks. It borrowed heavily in the 1970s; then the Soviet bloc collapsed in the late 1980s. depriving it of its major trading partners. Pyongyang defaulted on some 6 billion dollars in debts to the West, owing Japan alone about 1 billion dollars.

Its previous attempts to set up Joint ventures involved'luring mostly Koreans living in Japan into partnerships, but these hav?"-almost all gone belly up.

Analysts In the South Expect the junior Kim to pur sue more joint ventures with the outside world and -veer away from his fathers strenu-

ous application of Juche, or self-reliance, that has isolated the countrys' economy.

But increasing contact with the outside world might lead North Koreans to realize how poor and repressed they are. increasing discontent.

North Korean official media said last week that former East block countries' experiment with a market economy "not only bankrupted the economy but ruined human spirits."

Jacob Guitj. a South Korea representative of the United Nations Development Programme, refused to discuss the fence project. But many say the fence is not outlandish and Idea as It appears. Long stretches of North Korea's beach are fenced off, and presumably mined, to keep out "invaders" and to keep In the masses.

Historically, the ‘Rajin-Sonbong area. 300 miles (480 kilometers) northeast of Pyon-

gyang. is where Communist authorities kept prisoners and social outcasts away from the rest of the country in labour camps, including the notorious Aoji mining camp.

"Fat away from Pyongyang, with fences around. Communist leaders might feel more comfortable to conduct bolder market experiments." said Noh Jun-yong. and executive at Seoul's Dongbu Industrial Co.

The North has also asked China to build a wall along the two countries" Border near the free trade zone. Japan s Jijl Press reported Thursday, quoting a Japanese legislator who recently traveled to the border area.

North Korea says it will turn its free economic zone Into a bastion of tolerance, where It will offer visa exemptions, preferential taxes and other incentives to lure fortune seekers from outside.