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Kim Jong-il Dies

Aired December 19, 2011 - 04:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KRISTIE LU STOUT, CNN INTERNATIONAL ANCHOR: And welcome back to CNN's continuing coverage of the death of North Korean leader Kim Jong-il.

North Korean media say that Kim passed away on Saturday but it's only been in the past few hours that they have been reporting his death. He was 69 years old. And as reported to have died of a heart attack.

Kim led the Democratic People's Republic of Korea, often referred to as the hermit kingdom, for 17 years. And he stepped into power following the death of his father, Kim Il-Sung who founded the reclusive state in 1948.

And North Korea state news agency says his funeral will be held on December 28th, a day before a period of official mourning comes to an end.

And this is how the news of his death was reported on television in North Korea.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm announcing in the most woeful mind that our great leader Kim Jong-il passed away due to a sudden illness on his way to a field guidance on December 17, 2011.

(END VIDEO CLIP)

STOUT: Plenty of emotion on display there. And that is hardly surprising considering the cult of personality fostered by the deceased dictator and his followers.

Whatever you might think of Kim Jong-il, there was no denying that he was an out-of-the-ordinary head of state.

Let's take a look now at the man and his life with Dan Rivers.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Kim Jong-il always cut a slightly bizarre figure. His diminutive stature and characteristic hair were parodied by some in the West, but for the citizens of the Democratic People's Republic of Korea, Kim was the embodiment of this reclusive state. Feared, loved, worshipped, obeyed, his cult of personality was deeply entrenched. His father was Kim Il-Sung who founded North Korea with Soviet backing after World War II. Kim Jong-il was just a little boy when the Korean War broke out in 1950, with the Soviet-backed North invading the American-backed South. After fighting ended, Kim Jong-il became steeped in his father's philosophy of juche or self-reliance, and the North became ever more reclusive.

The North and South never formally signed a peace treaty and remained technically at war separated by a tense demilitarized zone. Gradually, Kim Jong-il was groomed for the top, making public appearances in front of cheering crowds. When Kim Il-Sung died in 1994, he was declared eternal president. So his son instead became general secretary of the Ruling Worker's Party of Korea. And by 1998, as head of the army, he consolidated his position of absolute power.

ANDRE LARKOV, NORTH KOREA ANALYST: He will be remembered as a person who was responsible for awful things, for the existence of one of the worst dictatorships in probably not only Korean history, but in the world history. At least in the 21st century. Yes, he did not create this dictatorship, it was his father's, but he took responsibility and he made sure that it continued for many more years.

RIVERS: He was known for his love of fine wines, at odds in a country where food shortages and privation were common. While the dear leader, as he became known, is said to have indulged in his appetite for the finer things, his people were literally starving to death. The collapse of the Soviet Union hit North Korea hard. Suddenly ending guaranteed trade deals.

And then devastating floods compounded the famine. Estimates vary for the number that died. But even the regime itself admitted that almost a quarter of a million perished between 1995 and 1998. Some say it was more like 10 times that figure.

But in the capital, Pyongyang, the artifice of a successful state was maintained. An opulence subway, proof, the dear leader would say, of the DPRK's progress under his and his father's leadership.

Kim Jong-il was well known as a film buff. Here, visiting the set of a North Korean production. His personal video library was said to include 20,000 titles with "Rambo" and "Friday the 13th" supposedly topping the dear leader's favorite flicks.

In 2000, there appeared to be a thaw in North-South relations, the first-ever summit meeting between Kim Jong-il and his then counterpart from the South, President Kim Dae-Jung. The South's so- called "Sunshine Policy of Engagement" seemed to be bearing fruit.

But Kim Jong-il pressed ahead with his nuclear weapons program. The U.S. labeled it part of the Axis of Evil in 2002. A year later North Korea withdrew from the Nuclear Nonproliferation Treaty. In 2006, the North conducted a nuclear test and test fired missiles. It added extra urgency to the six-party talks designed to deal with North Korea's nuclear program.

A breakthrough came in 2007 when Kim Jong-il finally agreed to disable the nuclear reactor at Yongbyon in return for fuel and better relations with the U.S. But despite dramatically blowing up the cooling tower, North Korea seemed to back track afterwards. The deal appeared to be in jeopardy.

The capture of two U.S. journalists, Laura Ling and Euna Lee, on the North Korean border, sparked another crisis in 2009. It ended when former president, Bill Clinton, flew in and successfully negotiated their release, prompting hopes there would be further engagement.

Observers say Kim Jong-il will be remembered as a nearly impossible man to bargain with. Stubborn and fickle in equal measure. A man who kept 23 million people in a totalitarian nightmare in one of the most repressive, reclusive regimes in the world.

Dan Rivers, CNN.

(END VIDEOTAPE)

STOUT: Let's take a closer look at the circumstances around Kim's death. Now state media say Kim died 8:30 a.m. on Saturday. But they did not report his death to the world for another 48 hours.

KCNA says that Kim suffered a heart attack due to the, quote, "Great mental and physical strain caused by his uninterrupted field guidance tour for the building of a thriving nation."

Now it's also worth noting that state media reported that Kim died on a train. Kim Jong-il famously refused to fly and often traveled by train.

Kim Jong-il has near god-like status in North Korea. Just look and listen to the reaction to his death on the streets of the capital, Pyongyang.

North Koreans there openly weeping, overwhelmed with emotion. And this is incredibly rare video out of North Korea. The outside world hardly ever gets a glimpse inside the reclusive nation. And it is another sign of what a momentous event Kim Jong-il's death is.

China is, of course, North Korea's closest ally and Beijing is paying its respects to Kim Jong-il. Earlier today, the flag at the North Korean embassy in Beijing was lowered to half-staff. A crowd of people gathered to watch the symbolic move in honor of Kim. And the China's state-run Xinhua News Agency reports Beijing expresses its deep condolences over the passing of Kim.

And other international reaction has been pouring in as well. In Washington, a U.S. official says North Korea now faces extraordinary change and uncertainty and that an insecure North Korea could be even more dangerous.

Now earlier, the White House press secretary issued a statement saying this, quote, "We are closely monitoring reports that Kim Jong- il is dead. The president has been notified. And we're in close touch with our allies in South Korea and Japan. We remain committed to stability on the Korean peninsula and to the freedom and security of our allies."

Meanwhile, South Korea's defense ministry has raised its national alert to the second of three levels and President Lee Myung-Bak asks that the people of South Korea, quote, "Concentrate on economic activities and remain calm."

And nearby, Japan called an emergency national security meeting upon learning of Kim's death. A statement has since been issued offering condolences and Japan's chief government spokesman says, quote, "We wish the sudden news would not affect North Korea negatively."

CNN's coverage of the death of Kim Jong-il continues after the break.

(COMMERCIAL BREAK)

STOUT: You're watching North Koreans reacting to the news that their dear leader, Kim Jong-il, is dead. State media say Kim died on Saturday of a heart attack but his death was not announced until just a few hours ago. Some hope, some fear and a lot of uncertainty after the death of the North Korean leader Kim Jong-il. His 17-year reign of total power over his people is now over.

And reaction to Kim's death has been flowing in from around the world. South Korea in particular is concerned about what might come next in North Korea's leadership ranks.

And for more, let's cross to the South Korean capital. Moon Chung-In is a professor of political science at Seoul's Yonsei University. He joins us now on the line.

And Professor, welcome to CNN. I understand that you have met Kim Jong-il twice in person. So now that he has passed away, can you tell us, what is your frank assessment of him?

MOON CHUNG-IN, PROFESSOR, YONSEI UNIVERSITY: I think he's very rationale and a leader with a lot of knowledge of world affairs. And initially I thought that he's a very irrational and unpredictable leader. But after I met him twice, I came to the conclusion he's a quite rationale guy to work with.

STOUT: It's incredible to hear that you describe him as a rationale person.

CHUNG-IN: Mm-hmm.

STOUT: I also want to ask about the cult of personality factor, I mean, a portrait of Kim Jong-il hangs in almost every household in North Korea. How is Kim Jong-il able to cultivate that same cult of personality that his father, Kim Il-Sung had?

CHUNG-IN: I think he simply inherited the cult of personality from his father. But I would say that he might have been a victim of structural validity which his father created. Whether he himself created that kind of another system of intimidation and control and absolute dictatorship.

STOUT: Does Kim Jong-il inherit the same cult of personality?

CHUNG-IN: I think so.

STOUT: Tell us about Jang Song-Thaek, Kim Jong-il's brother-in- law, who's believed to be the one wielding the power behind the scenes, the one who's truly in power, not Kim Jong-un, but Kim Jong- il's brother-in-law, is that right?

CHUNG-IN: I don't buy that argument. I know -- I met Jang Song- Thaek several times. He's the kind of guy who never comes to the phone. He would work behind, even under the current sitting when Kim Jong-un becomes leader, I really don think he will come forward. He'll be working behind Kim Jong-un to support Kim Jong-un.

STOUT: But he is the person working behind the scenes to support Kim Jong-un, the great successor?

CHUNG-IN: Yes.

STOUT: Just how influential will he be?

CHUNG-IN: He's very influential, particularly his wife, Kim Kyog-Hui, who's the sister of Kim Jong-il. But both of them working -- for him, not Kim Jong-un. They know that if there's any kind of power conflict between them and Kim Jong-un it could become the end the North Korean regime. They'll be very prudent and cautious.

STOUT: Have you met Kim Jong-un?

CHUNG-IN: No.

STOUT: Do you think -- how will the transfer of power fare with him, now the great successor?

CHUNG-IN: I don't see immediate, you know, chaos or internal struggle in North Korea. You know I think -- even though the duration of Kim Jong-il's succession has been rather short, I think Kim Jong-il has laid out a very good patronage system for him, first from his Kim family, personality cult, OK, and personality to cult, and second, Korea Worker's Party has been, you know, fully institutionalized, Korea Worker's Party was behind Kim Jong-un.

And last -- and the most importantly, North Korean military is unified and have shown unfailing loyalty to Kim Jong-un. Therefore I wouldn't see any kinds of immediate change, power struggle in North Korea.

STOUT: Kim Jong-un, he has the backing of the political elites and of the military. You do not see a political transition that will not be smooth. Tell us more about Kim Jong-un. We know that he is young, in his late 20s. Educated -- part of his life in the West. Will we see a different North Korea under him, a North Korea that is more modern. more form oriented? CHUNG-IN: Actually I do not. He's better than any other leaders in terms of exposure to international society. But I wouldn't say that he would have very much in a structurally constraint in his behavior, OK, therefore he should be balancing what he personally wanted to do and what are the structural mandate of North Korean society, particularly by the military. Therefore, he'll be, you know, he'll be working on tight loft.

STOUT: Now the funeral of Kim Jong-il, that will take place December 28th and it is expected that Kim Jong-un will be there and he will take power quite publicly. Can you give us a preview of what to expect?

CHUNG-IN: No, it will take some time. You know. The mourning period will be over on December 29th and then in February there'll be a 70th birthday of Kim Jong-il and then there will be -- you know in April there will be 100 anniversary of Kim Il-Sung's birthday in April.

But after those periods pass through then there might be some institutionalized in the way of, you know, anointing Kim Jong-un as the real successor. Right now Kim Jong-un has already the title of vice chair of Central (INAUDIBLE) Korea Workers Party. But his father Kim Jong-il used to have these three types. First type is he's chief secretary of Korea Workers Party, and another type is chairman of National Defense Commission, and third type, the Supreme Commander of People's Army.

Therefore, you know, Kim Jong-un has to take the procedure steps to get all those in a post. The process could be somewhat incremental rather than abrupt.

STOUT: Well, Professor Moon, thank you and giving us a fascinating glimpse inside the Kim dynasty and what to expect in the months and year ahead there in North Korea.

Moon Chung-In, professor, at Yonsei University who has met North Korean leader, the former leader who is now dead, Kim Jong-il twice and described him as rationale.

We'll be right back with an inside look at the North Korean capital. Don't go away.

(COMMERCIAL BREAK)

STOUT: Let's recap our top story for those of you just joining our continuing coverage.

North Korean leader Kim Jong-il is dead. State media reported his death at noon local time today, saying he died at 8:30 in the morning on Saturday.

And a tearful anchorwoman said Kim die due to overwork after dedicating his life to the people. North Korea's state-run KCNA news agency reports that Kim suffered, quote, "great mental and physical strain while on a train during a field guidance tour."

Now it says that Kim suffered a heart attack and couldn't be saved despite the use of every possible first-aid measure.

Now, North Korea has a very interesting relationship with its neighbors. It's situated on a peninsula. It's bordered on either side by China and South Korea, and relations with its northern neighbor described as warm and collaborative. But to the south, tensions remain high, after several military skirmishes and nuclear missile tests along the border with South Korea.

North Korea is notoriously reclusive nation and CNN's Wolf Blitzer travelled to Pyongyang last year with former ambassador, Bill Richardson, and here is what he saw.

(BEGIN VIDEOTAPE)

WOLF BLAZER, ANCHOR, THE SITUATION ROOM (voice-over): The North Korean capital is a lot different than I thought. Take, for example, the subway system. It takes forever to get to the underground station. I never saw such long escalators, even longer than the ones at the Washington, D.C. metro, so deep that it could and does double as an underground bunker.

(On camera): We're here at the Prosperity Subway Station, it's deep underground. You saw how long it takes to get through that -- those escalators. We're really, really deep underground. And patriotic pictures all over the place.

As we're speaking right now, also very patriotic music going on. It's the nature of Pyongyang and North Korea. A lot of patriotism, a lot of propaganda music and a lot of propaganda pictures all the time.

(Voice-over): New Mexico Governor Bill Richardson's senior adviser is Tony Nam-Kung. He's been to Korea 40 times going back to 1990.

(On camera): We're here on a subway train. It's still on the station. We're about to take off. We'll see where it goes. I have no idea where it goes. So far, so good.

Tony, what do you think about this subway?

TONY NAM-KUNG, GOV. BILL RICHARDSON'S SENIOR ADVISER: It reminds me of an underground bomb shelter, it's so deep.

BLITZER: That's what I thought. Yes.

NAM-KUNG: It's a very colorful station with all the paintings and the color. And it's very crowded midday. A lot of people moving forward and moving backwards.

BLITZER: Do people pay for this?

NAM-KUNG: Yes. They pay. BLITZER: How are they -- because I didn't see --

NAM-KUNG: Five won, five won per ride.

BLITZER: How much is that, like, per U.S.?

NAM-KUNG: It's very little. It's about 100 won to the dollar now so.

BLITZER: So like five cents.

NAM-KUNG: Five cents.

BLITZER: So it's a nickel.

NAM-KUNG: But most people use six-month passes which they buy for about 100 won.

BLITZER: So that's a dollar.

NAM-KUNG: Just a dollar.

BLITZER: Yes.

NAM-KUNG: Very cheap.

BLITZER: So a dollar they can basically ride for six months?

NAM-KUNG: That's right. As much as they want.

BLITZER: That's a pretty good deal. We're moving now, it's pretty smooth.

(Voice-over): But sometimes it goes dark. Electricity shortages are always a problem in North Korea. We went to this high school where the students were in cold classrooms, with overcoats, so cold you could see their breaths. The rooms were not well lit.

(On camera): Here we are. This is Kim Il-Sung Square. As you can see it's really huge, it's magnificent. And they often have events here which is totally understandable. These are all government buildings over here and this is a magnificent palace right in front of me over here, if you want to just flip over, you can see the Foreign Ministry and then you see this marvelous structure over here.

This is a brisk cold day on this Friday here in Pyongyang. But it's nice. There's not a whole lot of traffic here. It's icy, the streets are icy. It's snowy. You see a lot of people shoveling. And there you see the hammer and sickle of this communist government. You see Lenin, you see Marx. Manifestations of the communist philosophy.

And then you see a lot of young people and not -- some not-so young just shoveling snows, which is totally understandable given what's going on. But it's brisk, it's lovely. It's a nice day here in Pyongyang. (Voice-over): We drove all over the North Korean capital, saw lots and lots of buildings, some looked impressive from a far but I couldn't help but wonder if they were just for show. Were there really people living inside? I couldn't get access to find out.

We also went to the national library where they have lots of less than state-of-the-art computers. They also have a music room with old school boom boxes and headsets. Folks could listen to their favorites. I was surprised by some of them.

(On camera): Who would have thought, Governor? We're here in the library in North Korea, Pyongyang, and we're listening on this big box over here to Kenny Rogers. How are you?

(Voice-over): I had some fun when I saw the North Korean girls national ice hockey team jogging outside the National Ice Rink.

(On camera): We're running. We're running. Everybody is looking good.

(Voice-over): I couldn't help but join them. With my handheld camera shooting away.

Wolf Blitzer, CNN, Pyongyang, North Korea.

(END VIDEOTAPE)

STOUT: CNN's coverage of death of the Kim Jong-il continues after a break. With a look at who is next in line to lead North Korea. Don't go anywhere.

(COMMERCIAL BREAK)

STOUT: Welcome back. And let's recap our main story this hour, the death of North Korean leader Kim Jong-il.

A state media reported that Kim's death at noon, local time today, some two days after they say he suffered a heart attack and passed away. The news has prompted an outpouring of grief in North Korea which began with the announcement of his death on state TV.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm announcing in the most woeful mind that our great leader Kim Jong-il passed away due to a sudden illness on his way to a field guidance on December 17, 2011.

(END VIDEO CLIP)

STOUT: A tearful and dramatic moment there on Korean -- North Korea state TV. Let's take a closer look at the mysterious young man who apparently will succeed Kim Jong-il. That's his third and youngest son, Kim Jong-un.

North Korea's ruling Worker's Party is already calling the younger Kim, quote, "the Great Successor" to the revolutionary cause. It's believed he was born in 1983 or 1984. He went to school in Switzerland and then attended a military university in North Korea.

And to date, he's had no direct contact with world leaders. But in a hugely symbolic sign that his father was grooming him for power, Kim Jong-un was made a four-star general just last year. Still it's unclear if he has any real decision-making authority.

We've been canvassing reaction across the region, including China where Stan Grant joins us now from the Chinese capital, in Beijing.

And Stan, how is Beijing, Pyongyang's closest ally, reacting to the news of the death of Kim Jong-il?

STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT: An official statement has been released, Kristie. This coming from the Ministry of Foreign Affairs. And it says basically that they are sending their condolences to North Korea saying that the North Korean people will call on this as an opportunity for unity, also praising Kim Jong-il as a great leader of socialism.

But also, and this is most importantly, urging stability in the region and pledging China's efforts to try to maintain that stability.

Now this relationship between China and North Korea has a very, very close one. In the past it's being described as like lips and teeth. It dates back of course to the North -- to the Korean War when Chinese volunteers, as they were known, fought alongside North Koreans against the United States, South Korea and others.

So this is a relationship that's really steeped in history, that's forged on the battlefield. China has a big economic stake in the country. In fact, it is the greatest benefactor to North Korea. North Korea relies on China for the bulk of its trade and most importantly has willed most of its fuel supplies as well.

Now what's going to be really intriguing here is the relationship between the United States and China. And we know that this is an emerging super power rivalry. That this is going to now be the critical link in this chain. Do they adopt Cold War positions?

Does the United States side with the South Korea and China side with North Korea, or are they able to find a way through this and try to bring about stability, ensure there is a stable process within North Korea, that there isn't an implosion. More importantly, there's no misunderstanding that can so quickly escalate -- so quickly escalate into conflict -- Kristie.

STOUT: I also wanted to get your thoughts on Kim Jong-un, he is a four-stall general, he is the great successor. And we hear that he has the backing of the political elite and the military, and yet, Stan, he's, what, 28 years old, 29? And he's in charge of a nuclear- armed country?

So, Stan, does he really have the know-how to navigate politics and to lead?

GRANT: Certainly very young. And right there you've hit on something. We don't even know how old he is. Some say 27, 28, 29. He lived a life outside of the spotlight growing up. There have been pictures of him apparently attending boarding school in Switzerland. We understand that he has interest in the West, likes basketball, likes Hollywood films as his father does.

In the last couple of years he has emerged as the successor. He's been brought to China by his father to meet with the Chinese leadership to get their stamp of approval if you like. So certainly there was a transition process in place.

You touch on something really interesting there, and that is last year. He was made a four-star general. Some see his fingerprints on the attack on the U.S. naval -- I'm sorry, the South Korean naval ship last year and also the North Korean shelling of Yongbyon Island, being interpreted in some quarters as an attempt by Kim Jong-un to show his credentials, to show that he can be the hardliner that North Korea is used to in its leadership.

Real question here is his relationship with the military generals. These are the old men with the medals that you've always seen standing beside Kim Jong-il. How is he going to establish his authority there and most crucially his relationship with his own uncle, that is the husband of Kim Jong-il's sister. He's also seen as a power broker behind the scenes. It's going to be critical going forward -- Kristie.

STOUT: And so you're referring to Chang Sung Taek there. I also wanted to ask you, Stan, about the relationship between China and North Korea. As you mentioned, it is very close, it dates back six decades. But why are these two countries such close allies? And despite the smiles and the hugs for the camera, is there suspicion and concern on both sides?

GRANT: You know this relationship, of course, is very close. And China played a key role in getting North Korea to the table for the six-party talks, China being instrumental in bringing those parties together. As they say it's a relationship that's been described as close as lips and teeth. But it's not a relationship that hasn't had its problems.

At various times, China has pulled back on the level of aid to North Korea. There are reports that when North Korea carried out its nuclear test, that took China by surprise and created some consternation here.

China I think also knows that North Korea is an independent country. It's very proud, of course, of its history. It's not a country that China or anyone else has been able to go in and push around and lectured to. But having said, China is the king relationship in the equation.

Interestingly, more spotlight fell on this relationship with the collapse of other communist regimes during the '80s and '90s, particularly that relationship between North Korea and the Soviet Union, a key relationship for North Korea's trade. When it lost that, it had to rely even more on China and that is going to be the key to maintaining stability here.

Just what pressure China can bring to bear and how China can keep any accident, any misunderstanding from occurring -- Kristie.

STOUT: Stan Grant, live in Beijing for us. Thank you very much, Stan.

Mike Chinoy has reported extensively from the region. And he told us how on a recent visit he was struck by the stability of the regime.

(BEGIN VIDEO CLIP)

MIKE CHINOY, CNN SENIOR ASIA CORRESPONDENT: Been in Pyongyang in six years and I went back in August. And I was struck by the sense of political stability across the board. The diplomats, the aid workers, people I spoke with seemed very convinced that the secession was on track. That there was not a lot of internal discord about it. Moreover there was some very intriguing signs in Pyongyang of sort of inklings of movement towards opening up a little bit.

North Korea now has over half a million people using cell phones with an internal cell phone system that was set up by an Egyptian company. There are more private restaurants than I had seen before. There was even -- the first joint venture pizza parlor in Pyongyang. They were moving ahead with economic zones with the Chinese.

While I was there Kim Jong-il went to Russia and talked with Vladimir Putin about North Korea and Russia and South Korea jointly setting up a gas pipeline to send natural gas from the Russian far east through North Korea to South Korea.

And at the same time, North Korea's First Vice Foreign Minister Kim Kye-Gwan was in Washington meeting with the United States. So I came away, not with the sense that the North Koreans were embracing Chinese-style market reforms, but that the focus was on securing a more tranquil external atmosphere and trying to crank up the economy. And that fits into the critical importance of the year 2012 and the North Korean calendar.

The North Koreans call it Juche 100. Juche is the national ideology of self-reliance invented by Kim Il-Sung. And April of 2012 is his 100th birthday and the North Korean official mantra has been that the country should be a powerful and prosperous country, and the powerful they've got because they've got nukes. And so the emphasis was on the prosperous. And so you had these indications of focusing on the economy.

So I actually came away with a sense that it was a little bit more relaxed and a little bit more open to being open than it had been before. And I -- it's very hard to interpret what that means, and it may well be in this period of, you know, national tragedy and crisis that the North Koreans will tighten things up again which is a natural response.

But there were these very interesting vibes that were significantly different from the conventional picture of North Korea that a lot of people have.

(END VIDEO CLIP)

STOUT: North Korea watcher Mike Chinoy there.

Now CNN's coverage of the death of Kim Jong-il continues with a look at the legacy he leaves behind. Stay with us.

(COMMERCIAL BREAK)

STOUT: Now welcome to our continuing coverage of the death of North Korean leader Kim Jong-il.

A tearful broadcaster reported that Kim died due to overwork after dedicating his life to the people. North Korea's state-run KCNA news agency reports that the 69-year-old died as a result of great mental and physical strain while on a train trip on Saturday.

There were more tears on the streets of Pyongyang earlier today. His funeral is planned for December 28th.

On the Korean peninsula, it's long been a hot bed of tension and conflict. And the Korean War, it was sparked in 1950 when the North attacked the South. U.N. troops helped defend the South while Chinese forces backed the North. The South Korean capital of Seoul changed hands three times in three years. And almost three million people lost their lives.

But the two nations remain technically at war. They've agreed to a truce but not a treaty. And the DMZ, the demilitarized zone, around border remains one of the most heavily guarded in the world.

South Korea and much of the region is concerned about what might come next in North Korea's leadership. And we asked former South Korean ambassador to the U.S. Hon Sung Joo, about that.

(BEGIN VIDEO CLIP)

HAN SUNG JOO, FORMER SOUTH KOREAN AMBASSADOR TO THE U.S.: I was the foreign minister when his father, Kim Il-Sung, died in 1994. And we had then, and I'm sure right now, we had plans to make our military and security ready for any unforeseen and untoward provocations or events, and also we have to see what's going on.

Another very important part of the preparation would be to have very close consultation with the other countries, particularly the allies, the United States, Japan, China, Russia and so on.

JOHN VAUSE, CNN SENIOR INTERNATIONAL CORRESPONDENT: And so what do you think is happening inside Pyongyang right now?

SUNG JOO: Well, Pyongyang took two days to announce the death of Kim Jong-il and also announce the makeup of the -- what they call the funeral committee, which consists of 232 members headed by Kim Jong- un, the third son. And so they are trying to put up a face that is both orderly and united. We are not sure whether that's what's natural or whether there was any foul play, but regardless, they are trying to put up the best face under the circumstances.

(END VIDEO CLIP)

STOUT: Now one of Kim Jong-il's lasting legacies will be the country's nuclear development. In 1994, the year he came to power, North Korea agreed to freeze and dismantle its nuclear weapons program. And four years later, the U.S. and North Korea held the first round of high-level talks about Pyongyang's suspected construction of an underground nuclear facility.

Negotiations with North Korea became a back and forth of broken promises with Pyongyang pledging to stop its weapons program in exchange for aid, only to later renege. In January of 2003, North Korea withdrew from the Nuclear Nonproliferation Treaty and that April Pyongyang declared its had nuclear weapons.

And three years later, North Korea claimed it successfully tested a nuclear weapon. But in 2007, Pyongyang agreed to disable its income weapons facilities and the next year, North Korea destroyed a water cooling tower, Yongbyon, a facility where it constructed plutonium for weapons.

Progress broke down after than. And in May of 2009, North Korea conducted its second nuclear test.

How is U.S. State Department dealing with the news? Well, our senior State Department producer Elise Labott spoke to us earlier from Washington.

(BEGIN VIDEO CLIP)

ELISE LABOTT, CNN SENIOR STATE DEPARTMENT PRODUCER: I think they're a little (INAUDIBLE) on it. I think it happened a little bit sooner than they thought it would. And they really don't know who is running (INAUDIBLE), as we've been saying. Is Kim Jong-un making decisions at this point? Or so-called regents, his aunt, his uncle, the sister of Kim Jong-il and her husband -- are they making the decisions? Is the military making decisions?

I think there's going to be a real period of uncertainty for the United States. They have seen some progress in engagement with the North over the last six months or so. I think they're going to put on the brakes a little bit, trying to decide what they want to do. Going to have to very carefully calibrate the messages over the next 24 to 48 hours.

Are they going to offer condolences? Are they going to anoint so to speak the so-called new leader that the -- that we all expect him to be. It hasn't been announced obviously yet. I think the U.S. is going to really tread very carefully. There's certainly not going to be a wholesale engagement.

Over night the U.S. isn't going to embrace this young, untested leader, but I don't think they want to close the door to the -- what we've been talking about all evening, that this could be an opportunity. Could he be a more benevolent leader than his father? It certainly is possible. But he could also be a much more unpredictable leader. And he's untested.

Obviously the North Koreans are going to want to portray him as in command. Could that -- could that mean an overture toward the West or could that mean some provocative behavior towards the South? They really don't know. I think they're going to be watching and waiting to see if Kim Jong-un as they closely, closely coordinate with South Korea.

(END VIDEO CLIP)

STOUT: Elise Labott reporting there. Our in-depth coverage of the death of Kim Jong-il continues after the break.

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STOUT: Kim Jong-il may be gone but his legacy is still very much present in North Korea and perhaps the most obvious part of that legacy is an economy that is in tatters. North Korea, it is one of the world's poorest countries. Its people get by on an average of less than US $5 a day. It's about $1800 a year.

Now South Koreans, by contrast, take home an average of $30,000 a year, 16 times what their northern counterparts do. And in recent years, North Korea may have avoided the famines that killed millions in the 1990s but many of its people are malnourished and food is in short supply.

The Central Bank of South Korea says GDP in the North contracted for five consecutive years up to 2010, the latest year for which data is available. And the economic picture is unlikely to have gotten any brighter since then.

Now South Korea cut off most aid, trade and cooperation with Pyongyang after the sinking of a South Korean warship and North Korean shelling of southern territory late last year.

And the contrast between North and South could hardly be more extreme. Figures from the central bank in Seoul showed that the North's trade was worth just 2 percent of the South's in 2010.

Want to take a look at how the markets reacted to today's big news. And to do that we're joined by "WORLD BUSINESS TODAY'S" Pauline Chiou -- Pauline.

PAULINE CHIOU, ANCHOR, "WORLD BUSINESS TODAY": Well, Kristie, it looks like the news of Kim Jong-il's death is not really affecting the European markets which are open right now.

Take a look. The FTSE is up by more than 0.3 percent, the Xetra DAX up by 0.75 and the Zurich SMI up by 0.5 percent. Perhaps there is some optimism about a finance minister's teleconference call later on today that there may be some sort of progress, maybe some sort of resolution.

But it was a different story here in the Asian markets. Take a look. The Seoul Kospi at one point was down almost 5 percent. It end the session down by 3.4 percent. The Nikkei also in negative territory and so was the Shanghai Composite and the Hang Seng.

I want to bring in Khiem Do who is the head of Multi-Asian Asset Management at Baring Asset Management to talk a little bit more about what happened with the Kospi.

Thank you very much, Khiem, for being with us. Let's take a look at the Seoul Kospi today during the trading session. When we see this dip, that's when the news really started to trickle out about the death of Kim Jong-il. But everyone knew that he was ill and this day would come. What do you make of the market reaction here today?

KHIEM DO, BARING ASSET MANAGEMENT: I think that the market -- I mean the market already fell by about 2 percent before the news came out. If you look at Australia and other Asian markets they already fell by 1.5 to 2 percent. So this accelerated the downtrend somewhat.

But as you said, we did have a slight recovery. I think that there's still uncertainty about the succession plan. Although we know that Kim Jong-un is going to be the one who's going to be promoted to be the leader in the -- in the nation. But there's still some suspicion, but perhaps there could be some contentious issues with him being the leader.

CHIOU: There could be a power vacuum?

DO: That is correct.

CHIOU: It could be the brother-in-law or maybe some of the older generals who have been in place for a while?

DO: Yes.

CHIOU: As a result of what happened today, there was also a lot of movement in the currency markets, especially with the Korean Won. There was a big sell-off today. And we're looking at pictures of currency traders looking pretty stressed out today in Seoul, as you can see.

Let's take a look at what happened with the won against the dollar here. There was a pretty big sell-off also at the same time, at around noontime local time when the news came out. And then we saw a big sell-off towards that time, if we can look at the graph. I don't know if we have that.

But there has been unwinding of Asian currencies recently. Were you surprised by this sell-off?

DO: I think that it's maybe the extent of it. Asian currencies have been weakening against the U.S. dollar over the past few weeks anyway because obviously all the carry trades are being unwound as you mentioned, with the risk aversion or with investors deciding to reduce risk. They tend to sell out of Asian currency, sell out of Asian equities, and return the money back to the U.S. -- and so that's why the U.S. dollar has been rising against the Asian currencies and Asian stock markets. But two days' move obviously is -- has been accelerated by the news, yes.

CHIOU: And we see that big sell-off here right there --

DO: Yes.

CHIOU: -- where the Won hit about 11.79 against the dollar.

Now with this news and with this uncertainly of might happen with this succession plan, that begs the question of what's going to happen to the neighbor, South Korea and South Korea's economy and its credit rating. And Fitch and S&P both said today that the news of Kim Jong- il's death is not going to affect the credit rating of South Korea.

But if the risks increase, it could change sort of the game plan there. As an investor, what will you be looking out for?

DO: Definitely we don't think that the news today is going to impact on the credit rating change at all. But I think that we have to keep an open mind about this change in succession, because Kim Jong-un is unknown to most of us. And we don't know what his policies are, really. And as a result of that, it could be very positive or it could be very negative.

So I think that we have been -- we have to keep an open mind about it. And that's why I think that in the general risk averse environment investors tend to reduce their positions in Korea today. But as we have seen in 2006, 2009 and last year, usually after these either the nuclear test incident or an attack on the South Korean --

CHIOU: The ship there.

DO: The ship or let's say some shelling, usually the markets tend to recover.

CHIOU: All right, Khiem Do, from Baring Asset Management, thank you very much for your analysis today.

DO: Thank you.

CHIOU: We really appreciate it. It was a big news day today.

But interestingly enough, Kristie, the European markets are not really reacting to this news here in Asia. So we'll certainly keep our eye on the markets there as well.

STOUT: For sure. Pauline, thank you.

And still ahead, we will take you inside Pyongyang, that in the next hour of our rolling coverage of the death of Kim Jong-il. You're watching CNN, the world's news leader.

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