Bowing to necessity and Chinese pressure the North Korean economy is increasingly becoming one of privately run enterprises flourishing (because they are more efficient and provide better goods and services) while state-run operations rarely improve. This leaves the government with a growing number of inefficient state-owned companies that mainly lose money. It gets worse because the employees of the dying state-owned enterprises are angry (and literally cold and hungry) while those in privately owned firms are quite obviously much better off and also more troublesome (in other ways) for the government. Keeping a communist police state going requires that enough people can be policed (kept under control). With more and more state-owned firms being quietly and illegally (via bribing the state-appointed management) taken over by more efficient donju (entrepreneurs) the government is losing control of the economy and the people who depend on it for survival. This explains why government officials are more willing to risk imprisonment or execution to accept bribes. They are learning from the donju and selling what they have for as much as they can get. Often the bribes consist of illegal drugs; usually meth (methamphetamine) or the more expensive opium, heroin and exotic “designer drugs.” This helps the nervous and inept state officials deal with the stress of not having a clue but making the most of it.
The official government line is that the affluence of life in South Korea is not authentically Korean but rather the malign influence of American consumer culture. However, most North Koreans are aware that their leaders (and their families) have lifestyles similar to what is found in South Korea and that South Korean is much admired and emulated throughout East Asia and the world. Yet the North Korean government propaganda continues to stress how life in North Korea is superior and that those caught emulating South Korea (watching South Korean videos, wearing South Korea styles of clothing or haircuts or, worst of all using a South Korean smartphone will be sent to prison (actually labor camps for “reeducation”.) Those who survive the labor camps usually come away determined, more than ever, to get out of North Korea, or die trying. The North Korean government will help you with that last bit while many North Korean officials will, for a large enough bribe, help you avoid the “die trying” option.
Some of the bad news the government seeks to suppress keeps spreading anyway. This is particularly true of what is going on in the northeast border region (Ryanggang and North Hamgyong Provinces). A year ago North Korea officially closed its troubled (by tunnel collapses and radiation leaks) nuclear test site in the northeast at Kilju (North Hamgyong Province). This province is largely rural and undeveloped, one reason for putting the nuclear test site there. But before the Kilju site was officially shut down (with foreign reporters, but not any foreign nuclear experts, present) the government carried out a quiet effort to move anything of value, including some items that were not really portable (structures). What foreign observers may have missed is the extent of the poverty in the province, which was actually worse in neighboring Ryanggang Province. In both of these provinces, the military garrison (which guards the border as well as backing up local police if there is widespread unrest) is suffering more and more each year as food, fuel and other supplies (like cold weather clothing) are reduced. Troops are increasingly turning to looting and their commanders are only concerned if their subordinates are caught (which isn’t often). Fortunately, the troops cannot travel far and must walk on these looting expeditions. This limits how far they can go and how much they can carry back to base. The worst part of being stationed in these two provinces is that there is so little to steal.
Not Enough Koreans
Both Koreas are now faced with declining birthrates and the inability to reverse the problem. South Korea had this problem first, but for different reasons. In the north, the birthrate has been below the replacement rate for over decades and continues to decline because of extreme poverty. The situation is much worse in South Korea where, by 2010, it had the lowest birth rate (1.15 children per woman, on average) in the world and held that dubious achievement for two years in a row. This is because of growing affluence over the last half-century. South Korea is now one of the wealthiest nations on the planet. At the current birth rate, the South Korean population is expected to stop growing in the 2020s, after reaching about 52 million (about twice the population of the north).
If the birth rate stays under 2.1, the population will then begin to shrink. In North Korea, the birth rate is 1.9 and falling because of increasing poverty, famine and a feeling that North Korea is no place to bring up a child. For example, life expectancy in the north has declined from 72.7 years in the early 1990s, to 69 now. That's ten years less than in South Korea. Northerners are not only living shorter lives, they are literally shorter. A study of teenagers in the north and south revealed that the northerners are 8 percent shorter, and weigh nearly 20 percent less. It's not as bad with older adults, because they were not born during the famine (which began after Cold War Russian subsidies ended in the early 1990s).
By 2012 there was a very visible shortage of recruits for the North Korean armed forces. A lower birth rate in the 1990s, because of the famine (that killed five percent of the population back then) has reduced the number of 18 year old recruits for the army and security forces. So fewer exemptions are being allowed, and more 17 years olds are being taken. That escalated to pressuring 16 year olds to volunteer. Now the government is after 15 year olds. North Korean men serve at least six years (and usually ten) in the military, keeping them out of trouble for that time in their lives (18-24) when they are most likely to act out revolutionary fantasies. The military is really a large prison system. While the troops are trained to use weapons, they get little ammunition for training, and the weapons are locked up most of the time. Young North Koreans increasingly know how poor they are and in greater and greater detail. The soldiers born during the great famine of the 1990s are well-aware that they are physically much smaller than their South Korean counterparts. They also know that the average South Korean lives ten years longer and lives a much more pleasant life. All the more reason to limit the time North Korean troops can handle their weapons, especially when they have ammunition (which is actually very infrequently.)
Not Enough Of Anything
In the north, there is an additional problem. People are no longer following the rules, especially the ones that mandate (via your internal passport) where you can live and work. If this sounds like medieval serfdom it is and is a much hated feature of communist states. The government is introducing a new biometric (digital fingerprints and memory chip to store info) ID card which, in theory, makes it easier for police to catch rural serfs illegally moving to urban areas. In reality, it provides new opportunities for police to collect bribes. The exodus from the rural areas also means hardships for those left behind as there are fewer people to make the rural economy work at all. Even government employees suffer. Teachers, for example, have less work because there are fewer students and a growing number of school buildings are being abandoned and teachers are illegally neglecting their duties to work in the growing market economy. Parents have to bribe teachers to teach. Or pay to send the kids to private schools or tutoring services. Both of these are staffed by former state school teachers who were attracted by better paying jobs that put more emphasis on teaching than indoctrination.
Public opinion in North Korea (collected at great risk because of every more vigilant and oppressive secret police) is not good, but it is not a direct threat to the police state rule either. The majority of North Koreans are more concerned with their own problems, which often revolve around getting enough to eat. The only government actions that attract any attention from most North Koreans are those that improve the supply of necessities (food, fuel and shelter). While more and more North Koreans seek to participate in the donju (entrepreneur) economy most cannot and have to find other ways to survive. That tends to occupy all the attention of those living on the edge of survival. For the West and South Korea, there is one opportunity in all this. If more food and fuel can be shown as directly linked to denuclearization than the majority of North Koreans would support it. But that option is not seen as realistic because all North Koreans tend to believe the Kims and their associates do whatever they want and North Koreans have to make the most of that or be punished (labor camp or execution).
The government does demonstrate some concern about the welfare of soldiers because most of them are also suffering from shortages of food and fuel and soldiers have access to weapons. Yet, the soldiers are rarely allowed to handle weapons and ammunition. For one thing ammo is expensive by North Korean standards and the average soldier rarely gets to fire his assault rifle or pistol. Troops who do get to fire their weapons regularly are the ones who are well fed and taken care of.
On The Bright Side
The sanctions have had the most impact on the majority of North Koreans who have neither money nor power. The sanctions have put a lot of North Koreans out of work. Since the 1990s the social safety net of state-supplied food in emergencies has disappeared. Lose your job and cannot find another one and you are in big trouble. This is why there so many abandoned children are seen moving about in packs, or more and more prostitution and criminal activity (burglary, robbery and assault). The impact of this often gets to neighboring countries, like the hundred or so North Korean fishing boats that drift ashore in Japan each year. Most are empty but some have people in them and most of those are dead. The few survivors on these boats explain that desperate times compel more people to take their boats out further or in bad weather to catch enough to survive. The North Korean police guard the coastal waters between the north and south but the Sea of Japan is too wide for fishing boats to get across deliberately. Those forced to make the crossing because of engine failure, navigation problems or running out of fuel rarely survive the trip. On the west coast (opposite China) there is another problem; the government sells fishing licenses to Chinese fishermen who are allowed to get most of the available catch leaving North Korea fishermen with little or nothing. The North Korean government needs the hard currency and is less concerned about their own fishermen starving.
The need for hard currency remains, despite the sanctions making that a lot more difficult. This may have had something to do with North Korean willingness to halt ballistic missiles and nuclear weapons tests. Both of these are very expensive and the government has to build a new underground nuclear testing site and the previous literally collapsed, sending a noticeable (but not fatal) amount of radioactivity into China. Chinese leaders were not pleased so no more nuke tests until a new test site can be built. There may be some disagreement with China about putting the new test site near the Chinese border. The thousands of scientists, engineers and techs working on the missiles and nukes have not been idle. There is much to be done with making the warheads smaller and more reliable when delivered by ballistic missile. North Korean ballistic missile tech also needs a lot of work. But without testing a lot of development work is wasted as more dead ends are pursued because there is no testing to determine what works and what doesn’t. Meanwhile, this talented workforce has to be paid for. These folks, and their families, need adequate food, fuel and accommodations, plus the occasional luxury as an incentive to keep at it. But the longer there is no testing the less effective the missile and nukes effort becomes.
For North Korea the reduction of tensions with South Korea, and the recent mutual reduction in troops stationed at the DMZ has allowed North Korea to transfer those troops to construction and other non-combat (but economically useful) tasks. North Korea still has most of their army deployed near (not on) the DMZ and most of those troops grow less combat ready each year. The temptation (and urgent need) to use these troops for economic, not military activities, means troops spend more time on non-military tasks. The troops don’t mind because those commercial jobs usually mean more food and other goodies. North Korean military leaders are aware of the shift in military superiority in favor of South Korea and that there is not much they can do about it given the economic conditions in North Korea. The only solution is to develop a convincing nuclear threat because the North Korean conventional forces are becoming an embarrassment. The North Korean military has become a slave labor pool, with most North Korean men forced to serve for ten years as contract and temp labor for commercial enterprises while pretending to be soldiers.
Where North Korea Excels
Among the many problems, North Korea suffers from corruption and is one of the worst corrupt countries in the world. But even that has a silver lining since North Korea has become less corrupt since current leader Kim Jong Un took control in 2011. North Korea is still among the ten most corrupt nations in the world but back in 2012 it was one of the three most corrupt.
Currently, North Korea ranks 176th out of 180 nations compared with 171 in 2016). South Korea did much better, ranking 45th in 2018 and 51st in 2017.
Corruption in the Transparency International Corruption Perception Index is measured on a 1 (most corrupt) to 100 (not corrupt) scale. The most corrupt nations (usually North Korea/14, Yemen/14, Syria/13, South Sudan/13 and Somalia/10) have a rating of under 15 while of the least corrupt (New Zealand and Denmark) are over 85. The current North Korean score is 14 (versus 17 in 2017) while South Korea was 57 and 54. This is compared to 63 (61) for Taiwan, 40 (40) for India, 29 (29) for Russia, 33 (35) for Vietnam, 85 (84) for Singapore, 72 (73) for Japan, 38 (37) for Indonesia, 38 (38) for Sri Lanka, 31 (33) for the Maldives, 36 (34) for the Philippines, 33 (32) for Pakistan, 26 (28) for Bangladesh, 28 (30) for Iran, 16 (15) for Afghanistan, 29 (30) for Burma, 70 (71) for the UAE (United Arab Emirates), 62 (64) for Israel, 72 (75) for the United States, 27 (27) for Nigeria, 43 (43) for South Africa, 18 (18) for Iraq, 41 (40) for Turkey, 49 (49) for Saudi Arabia and 28 (28) for Lebanon,. A lower corruption score is common with nations in economic trouble and problems dealing with reality and crime in general. North Korea’s corruption score has improved since 2012, when it was eight but that has not lifted out of the bottom of the list. South Korea has not changed much since 2012, when it was 56. South Korea is doing it right and North Korea is not and more North Koreans are becoming aware of this.
February 10, 2019: South Korea agreed to pay the United States $924 million a year to help support the American forces deployed in South Korea or offshore (naval forces) and ready to quickly move to South Korea in wartime. The U.S. wanted $1.5 billion a year and South Korea agreed to have these agreements last only one year rather than the usual five so that negotiations could continue. The new annual payment is eight percent higher than the previous payments.
February 6, 2019: The leaders of the U.S. and North Korea have agreed to meet again, in Vietnam on February 27 and 28. As expected North Korea has not made much progress in getting rid of its nuclear weapons and the official propaganda line inside North Korea is that the nuclear weapons will never be given up. Since lifting of the sanctions depends on successful denuclearization it is unclear what is being achieved by these negotiations.
February 5, 2019: Commercial satellite photos and reports from North Korea confirm that North Korea is continuing work on its nuclear weapons and ballistic missiles program. Satellite photos show North Korea ballistic missiles being dispersed to more separate bases, to make it more difficult to put them out of action in wartime. Much of the nuclear weapons work is conducted underground and new facilities for this were apparently established in Chagang Province (on the Chinese border). In 2018 the government declared more of the province restricted military areas. Chagang is already the site of some secret facilities, including underground record storage facilities (like Iron Mountain in the United States) as well as escape tunnels to China for senior officials in case of emergency. Border security has been increased in the province and it is believed that a new underground nuclear testing facility is being prepared, just in case. Chagang would be an ideal place to hide all manner of secrets, like a nuclear weapons program that would be continued after a treaty denuclearized all of Korea. Truck traffic into Chagang province over the last year indicates a lot more special shipments were sent in. While the province has a lot of mining and lumbering activities those operations are supported by certain kinds of truck traffic. Over the last year, much of the truck traffic indicated “special use” like underground nuclear weapons research and production. Military satellites could confirm such indications and apparently did so.
January 31, 2019: The North Korean leader was seen using a new Maybach S600 armored limousine while traveling around his capital. Maybach is the German answer to the Rolls Royce luxury cars and Kim Jong was seen traveling around in an armored Rolls back in October 2018. Kim is often captured on video using his luxury cars because many of his public events include foreign journalists. The current Phantom model costs about half a million dollars and armored Maybachs cost over a million dollars each. Luxury car imports are one of the items banned by the current sanctions. That said it is not too difficult to smuggle such cars into North Korea. Someone from China could order one from the manufacturer and then drive it to North Korea and return to China by other means. For Kim showing off his luxury rides sends a message, which was probably no accident.
January 30, 2019: A UN North Korea sanctions monitoring group accused China of violating the sanctions by tolerating Chinese fishermen buying fishing licenses to operate in lucrative North Korea waters. The Chinese paid about $7,000 a month per boat. South Korea was also criticized for illegally bringing in several hundred tons of petroleum to operate a new liaison office at Kaesong. North Korea is limited to 520,000 tons of imported petroleum products a year and all of that has been coming from China (which normally shipped four times as much a year). China is believed to be exceeding the quota by 20 percent or more via its oil pipeline to North Korea. Illegal imports can be estimated by monitoring retail fuel prices in North Korea. You can easily see if the smugglers are successful by monitoring the prices of petroleum products and consumer goods in the free markets. Fuel prices are now back to where they were before the stricter sanctions were imposed in early 2017.