North Korea dismissed military chief Ri Yong Ho, the biggest publicly revealed power shift since Kim Jong Un succeeded his late father as leader last year, signaling policy differences over the totalitarian state’s direction.

North Korean leader Kim Jong Un, right, smiles with the Korean People’s Army senior officers, Vice Marshal and Vice Chairman of the Central Military Commission Choe Ryong Hae, center, and Vice Marshal and the military’s General Staff Chief Ri Yong Ho in Pyongyang, North Korea. North Korea has relieved Ri Yong Ho from all posts because of illness. Source: Korean Central News Agency via Korea News Service/AP

The ruling Workers’ Party relieved Ri from his military and Politburo posts yesterday, the official Korean Central News Agency said today, without naming a replacement. While KCNA cited illness as the reason, it was more likely part of a power struggle, according to Cheong Seong Chang, an analyst who cited conversations today with defectors and contacts in the North.

The removal of Ri, who oversaw the North’s 1.2 million- strong army, follows a push by Kim to deploy military resources for infrastructure projects. North Korea’s economy, isolated from most of the world’s markets over the country’s pursuit of nuclear weapons, contracted in four of the past six years, according to South Korea’s central bank.

“Ri Yong Ho was most likely fired for resisting the Workers’ Party leadership, mainly on mobilizing soldiers for economic initiatives,” Cheong said. “The party is on board with Kim Jong Un’s decision to improve the economy through flagship construction projects over bolstering military might.”

South Korea’s Kospi index of stocks rose 0.3 percent after the news to close at 1,817.79 in Seoul. The MSCI Asia Pacific Index advanced 0.3 percent. The South Korean won gained 0.3 percent to close at 1,147 per dollar, according to data compiled by Bloomberg.

Thanking Soldiers

Immediately following the report on Ri’s firing, KCNA said Kim Jong Un sent a message of thanks to soldiers of the North Korean internal security forces for “their tremendous feats in major construction projects.”

Kim lauded the servicemen for their participation in projects including the construction of the country’s largest hydroelectric power plant, a food processing factory and a university library, according to KCNA.

Ri, 69, was known to be a loyal advocate of the so-called military-first policy espoused by Kim’s father, Kim Jong Il, according to Yang Moo Jin, a professor at the University of North Korean Studies in Seoul.

“The firing of Ri means the end of the country’s hawkish military-first policy putting the troops before any other policy objective, and possibly the beginning of governance more focused instead on improving the economy,” Yang said.

Strengthening Grip

Kim, who was schooled in Switzerland and is believed to be less than 30 years old, has been trying to gain public support and strengthen his own grip on power.

South Korea’s Unification Ministry has no comment on the firing, ministry spokesman Kim Hyung Suk told reporters today in Seoul, while noting that the news was reported just a day later, in a “highly unexpected move.” State media often issues news days or weeks after the fact.

Some 16 million of North Korea’s 24 million people suffer from chronic food insecurity, high malnutrition rates and deep- rooted economic problems, Jerome Sauvage, United Nations resident coordinator in Pyongyang, said in a June 12 statement.

Gross domestic product in the communist nation increased 0.8 percent in 2011 after a 0.5 percent decline in 2010, according to an estimate published by the Bank of Korea in Seoul. North Korea’s per capita income was 1.33 million won ($1,160) while South Korea’s was 25 million won, according to its estimates.

Funeral Procession

In December, Ri led the funeral procession with leader Kim Jong Un in below-zero weather through the snow-covered streets of Pyongyang after the death of Kim Jong Il. Ri appeared healthy in delivering a speech at a parade on April 25 marking the 80th anniversary of the North Korean military’s foundation.

The Kim Il Sung Military University graduate first rose to prominence in February 2009, when he was promoted to vice marshal of the Korean People’s Army and chief of the General Staff, according to South Korea’s Unification Ministry.

Signs of division emerged after the April celebrations of North Korean state founder Kim Il Sung’s birth centenary. Choe Ryong Hae, a civilian official was promoted to director of the General Political Bureau of the Korean People’s Army, a position similar in ranking to Ri’s.

@Bloomberg