North Korea’s last economic plan failed “tremendously,” he complained. And his inner circle lacked an “innovative viewpoint and clear tactics” in drawing up a new one, Kim told the ruling Workers’ Party last month, yelling and finger-pointing at frightened-looking delegates.
It’s not altogether surprising. North Korea is suffering its worst slump in more than two decades, experts say. It’s a combination of international sanctions and especially a self-imposed blockade on international trade in attempts to keep the coronavirus pandemic out.
A shortage of spare parts usually supplied from China has caused factories to close, including one of the country’s largest fertilizer plants, and crippled output from the country’s aging power plants, according to news reports. Electricity shortages, long a chronic problem, have become so acute, production has even halted at some coal mines and other mines, Kim himself admitted in mid-February.
“Without imported materials, raw materials and components, many enterprises stopped, and people, accordingly, lost their jobs,” Alexander Matsegora, the Russian ambassador to North Korea, told the Interfax news agency.
The economic pain is unlikely to threaten Kim’s regime or force any retreat in North Korea’s standoff with the United States and allies over Pyongyang’s nuclear program. Nor should it lead to famine — as it did in the 1990s, when hundreds of thousands of people died — partly because food production and distribution has improved in the past decades and ally China would probably come to North Korea’s rescue, experts say.
Even in the capital Pyongyang, the regime’s bastion and home to its elite, shelves have emptied and it’s difficult even to buy basic products such as pasta, flour, vegetable oil and sugar, Matsegora said, as well as suitable clothes and shoes.
“If you manage to get something, it is three to four times more expensive than before the crisis,” he told Interfax.
Andrei Lankov, a Russian university professor based in Seoul, called it a “dramatic U-turn.” Kim has turned his back on even modest economic and market reforms and reverted back to de facto Leninism, emphasizing central planning while trying to clamp down on the private entrepreneurial activity that has become a mainstay of the country’s mixed economy, he said.
In speeches to the ruling party, Kim demanded the restoration and strengthening of the system under which the economy runs “under the unified guidance and management of the state,” putting special emphasis on metal and chemical industries as the “main link in the whole chain of economic development.”
Kim also announced plans to expand state control of society, clamp down on foreign culture and media, and launch a “powerful mass campaign against practices running counter to the socialist lifestyle.”
Benjamin Katzeff Silberstein, a nonresident scholar at the Stimson Center foreign policy think tank, said Kim is unwilling to undertake serious reforms to the state-controlled system.
“The only thing left is to blame officials for not doing their jobs properly,” he said, “as if a more competent official would be able to work within the system and make it more efficient — whereas, in fact, it’s the system itself that’s the problem.”
North Korea’s economic managers are largely flying blind, without even the reliable data they would need to run a command economy, said Kim Byung-yeon, an economics professor at Seoul National University.
The few clues he can glean suggest cement production has fallen by 25 percent since 2016, while interviews with defectors suggest household incomes declined a similar amount between 2017 and 2019. The overall economy may have contracted by 20 percent since 2017, he “guesstimates.”
In rural areas, there are many days when households only get two hours of electricity, the Seoul-based Daily NK news service reports, while fertilizer shortages could compound an already shaky food situation.
But it’s the scarcity of goods in Pyongyang and possible discontent among the elites that will have Kim more worried, experts say.
His attempt to reimpose state control of the economy may partly be driven by a desire to corral what limited resources are there. But it also could be simply driven by insecurity.
“To make a Stalinist economy work these days is pretty much as hopeless as teaching pigs to fly,” Lankov said. “He probably understands that, but he also feels insecure about losing control. He decided that, in the days of crisis, he should increase control over the economy and population.”
Lankov noted that Kim’s father, Kim Jong Il, oscillated among turning a blind eye to private enterprise, actively promoting market reforms and reverting to state control during his rule. It now appears his son may be following the same path.
“I used to believe Kim Jong Un would be different from his father,” he said. “I didn’t expect him to surrender his nuclear weapons or pursue political liberalization, but I did expect him to pursue economic liberalization.”
Ever since the 1990s, North Korea has allowed a degree of private enterprise as the only way to prevent total economic collapse, allowing traders to sell food and consumer goods in markets, and other people to run small businesses. Since taking power, Kim had quietly expanded these freedoms in measures “that were clearly copied from China in the 1980s,” Lankov said.
Now, Kim’s apparent swing back toward central planning and the “juche” philosophy of self-reliance is unrealistic in an economy that was dependent on trade with China, experts say.
“The economy was quite open before sanctions,” said Seoul National University professor Kim. “He is trying to encourage people by saying they can overcome the crisis by the juche ideology. But if he really tries to implement it, it will worsen the economic situation.”
The crisis is partly self-inflicted, driven by what Katzeff Silberstein calls a “remarkable paranoia” about the coronavirus pandemic that saw the regime not only block the movement of people across its border with China — with armed guards told to shoot on sight — but also block the movement of goods.
Despite the crisis, Lankov said, North Korea’s diplomatic calculus is unlikely to change, and certainly won’t induce Kim to go cap-in-hand to Washington or Seoul for help.
Kim is never going to surrender his nuclear weapons, which he considers essential for the survival of his regime and his family, Lankov said.
“Kim Jong Un basically wants to negotiate the partial or complete removal of sanctions, but at a limited cost,” he said. “Denuclearization is not acceptable to the North Koreans, and so if the Americans only want to talk about denuclearization, it means nobody is going to talk to them.”