Kim Jong-un Drags North Korea into Worst Economic Crisis in 20 Years: Once Again Suppressed Private Activity and Expanded State Control of Society

North Korea’s latest economic plan failed “enormously”, he complained. And his inner circle lacked “innovative point of view and clear tactics” to create a new one, Kim told the ruling Workers’ Party last month, shouting and pointing fingers at frightened delegates.

Its Minister of the Economy, appointed in January, has already been sacked.

It is not entirely surprising. North Korea is suffering its worst decline in more than two decades, experts say. It is a combination of international sanctions and, most importantly, a self-imposed blockade of international trade in an effort to keep the coronavirus pandemic at bay.

A shortage of spare parts regularly supplied by China has led to the closure of factories, including one of the country’s largest fertilizer factories, and crippled production at the country’s aging power plants, according to the news. Power shortages, a long-standing chronic problem, have become so acute that production has even stopped at some coal mines and others, Kim himself admitted in mid-February.

“Without imported materials, raw materials and components, many companies have shut down, and people have lost their jobs,” Alexander Matsegora, Russian ambassador to North Korea, told Interfax news agency.

Economic pain is unlikely to threaten the Kim regime or force a postponement of North Korea’s confrontation with the United States and its allies over Pyongyang’s nuclear program. It also shouldn’t cause starvation – as it did in the 1990s, when hundreds of thousands of people died – in part because food production and distribution has improved over the past decades. and that China’s ally would likely come to North Korea’s rescue.

But it portends more pain and misery for millions of ordinary North Koreans.

Even in the capital Pyongyang, the regime’s stronghold and home to its elite, the shelves have been emptied and it is even difficult to buy basic items such as pasta, flour, vegetable oil and sugar. Matsegora said, as well as appropriate clothing. And shoes.

“If you get something, it’s three or four times more expensive than before the crisis,” he told Interfax.

But Kim’s response to the risks of a crisis seems to make matters worse.

Andrei Lankov, a Russian university professor based in Seoul, called it a “dramatic 180 degree turn.” Kim turned his back on even modest economic and economic reforms and returned to de facto Leninism, emphasizing central planning and trying to suppress private business activity that has become a mainstay of the country’s mixed economy. .

In his speeches to the ruling party, Kim demanded the restoration and strengthening of the system in which the economy operates “under the unified direction and management of the state”, with particular emphasis on the metallurgical and chemical industries such as “the main link in the whole chain of economic development”.

Kim also announced plans to expand state control of society, suppress foreign culture and media, and launch a “powerful mass campaign against practices contrary to the socialist way of life.”

Benjamin Katzeff Silberstein, a non-resident researcher at the Stimson Center for Foreign Policy Studies, said Kim was unwilling to undertake serious reforms in the state-controlled system. “The only thing left is to blame officials for not doing their job well,” he said, “as if a more competent official could work within the system and make it more efficient, when in in reality, the problem is the system itself. “.

North Korea’s economic officials are flying blind, without even the reliable data they would need to run a command economy, said Kim Byung-yeon, professor of economics at Seoul National University.

The few clues you can get suggest that cement production has fallen 25% since 2016, while interviews with defectors suggest household incomes declined by a similar amount between 2017 and 2019. The overall economy could have been contracted by 20% since 2017, he calculates. “

In rural areas, there are many days when households receive only two hours of electricity., reports the Seoul-based Daily NK news service, as a fertilizer shortage could worsen an already volatile food situation.

But it is the shortage of goods in Pyongyang and the possible discontent of the elites that will worry Kim the most, experts say.

Their attempt to re-impose state control over the economy may be motivated in part by a desire to conserve existing limited resources. But it could also be motivated simply by insecurity. “Running a Stalinist economy today is as impossible as teaching pigs to steal,” Lankov said. “You probably understand, but you don’t feel so sure that you’re losing control. He decided that in times of crisis he had to increase his control over the economy and the people ”.

Lankov noted that Kim’s father, Kim Jong Il, oscillated between turning a blind eye to private enterprise, actively promoting market reforms and returning to state control during his reign. Now it looks like your son could go the same way. “He used to believe that Kim Jong Un would be different from his father,” he said. “I did not expect him to hand over his nuclear weapons or pursue political liberalization, but he did expect him to continue economic liberalization.”

Since the 1990s, North Korea has allowed some degree of private enterprise as the only way to avoid total economic collapse, allowing traders to sell food and consumer products in markets, and to others. to manage small businesses. Since coming to power, Kim had quietly extended these freedoms in measures “clearly copied from China in the 1980s,” Lankov said.

Now Kim’s apparent shift to central planning and the “juche” philosophy of self-reliance is unrealistic in an economy that relied on trade with China, experts say.

“The economy was quite open before the sanctions,” said Kim, a professor at Seoul National University. “He tries to encourage people by saying that they can overcome the crisis with the Juche ideology. But if you really try to apply it, it will make the economic situation worse. “

The crisis is partly self-inflicted, fueled by what Katzeff Silberstein calls “remarkable paranoia” over the coronavirus pandemic, which has seen the regime not only block the movement of people across its border with China – with armed guards on orders to shoot on sight – but also to block the flow of goods.

Despite the crisis, Lankov said, North Korea’s diplomatic calculus is unlikely to change, and that certainly won’t make Kim go red-handed to seek help from Washington or Seoul.

Kim will never surrender his nuclear weapons, which he considers essential to the survival of his regime and his family, Lankov said.

“Kim Jong Un basically wants to negotiate the partial or total removal of the sanctions, but at a limited cost,” he said. “Denuclearization is not acceptable to North Koreans, so if Americans just want to talk about denuclearization, that means no one will talk to them.”

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