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The coronavirus pandemic is causing one of the worst economic crises in North Korea in decades, probably the worst. The restrictions imposed by the government led by the dictator Kim Jong-un have practically blocked imports, complicated exports and closed the tourism sector, one of the last sources of income for the country, which has been greatly affected by international sanctions and travel difficulties. According to estimates by Kim Byung-yeon, a professor at Seoul National University, South Korea, the North Korean economy could collapse by 10 percent in 2020, an even higher percentage than in 1992, when the country was seen affected by a very serious famine.
Like most news about North Korea, estimates of the economy’s performance should also be viewed with caution. The numbers compiled by Kim Byung-yeon, who has been studying the North Korean economy for twenty years, are based on data collected by the South Korean central bank and not directly from official and reliable information released by the Korean government. from the North, which does not exist; but they are equally indicative to assess a trend and help to understand the current situation of North Korea and its regime.
Although North Korea has claimed it has no coronavirus cases, a claim considered unlikely by many experts, in recent months the regime has imposed severe restrictions and prolonged closures on its territory: “Pyongyang [la capitale della Corea del Nord] had no choice but to make a strong defense, “said the Wall street journal, because a coronavirus epidemic would have put an already extremely weak and vulnerable healthcare system in extreme suffering.
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However, the restrictive measures imposed by the coronavirus have caused enormous economic consequences, which have been added to those related to international economic sanctions (decided by North Korea’s nuclear and missile program) and the devastating typhoons and floods that hit. to the country during 2020.
One of the sharpest collapses occurred in trade with China, North Korea’s only great power. According to data released by the Chinese customs office, in 2020 trade with China dropped by 75 percent compared to the previous year. In October alone, the collapse was 99 percent compared to the same month in 2019, due to the blocking of exports of certain goods, such as shoes and watches, and the import of food and medicine. Illegal trade in goods, which is a significant part of North Korea’s imports, developed primarily to circumvent international sanctions, has also decreased significantly. The regime has ordered border guards to take extra precautions to disinfect goods and increase penalties against traffickers who allow goods to enter without guarantee.
The bridge connecting the North Korean city of Sinuiju with the Chinese city of Dandong (AP Photo / Helene Franchineau, file)
Restrictive measures and reduced trade have quadrupled the price of some staples, but not only. The value of the North Korean won has risen twice this year relative to the US dollar (the most recent increase was 20 percent), possibly as a result of the regime’s attempt to prevent its depreciation. The authorities tried to limit the use of the dollar and the Chinese yuan, threatening harsh penalties for those who did not respect the rules. According to South Korean intelligence services, at least one of the leading currency traders was sentenced to death and killed.
Several analysts argue that the appreciation of the local currency was decided after an offensive against dollar-based transactions: the regime’s objective would be to strengthen its control over the economy, after years of liberalization. Andrei Lankov, a North Korean expert at Kookmin University in Seoul, told al Financial times that since October there have been “significant changes” in the situation of the North Korean currency after years of “remarkable financial stability.”
However, North Korea’s new economic difficulties do not appear to prompt Kim Jong-un to resume negotiations with the United States on its nuclear program, at least for now. Negotiations resumed in 2018, when Kim and US President Donald Trump met for the first time in Singapore, but they ran aground fairly quickly due to the excessive distance between the two sides’ positions, which the only one had achieved. Outcome. within reach of both: a recognition of international legitimacy for Kim Jong-un and an apparently promising foreign policy outcome for Donald Trump. Nor does it appear that the situation could cause the collapse of the North Korean regime, which in recent decades has shown that it can survive serious crises and the imposition of harsh international sanctions.
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