March 08, 2018 13:43
According to North Korea experts, the monthly spending of the North's poorest households stands at only US$10-20, barely enough to scrape a living. Middle-class households spend $50 to $100 a month, and a new class of wealthy market traders probably spend twice as much. But high-ranking Workers Party and military officials, who have nothing to sell, live like kings even though the party officially pays less than a dollar a month.
They get their money from bribes, which are graded from light gray to black. North Korean officials skim off money from trade with China, and the money apparently goes into the pockets of party officials. This is quasi-legitimate form of bribery amounts to an estimated $300-500 million a year. Around 50,000 to 60,000 North Korean laborers abroad all paid hefty bribes to get that chance, and some of the hundreds of dollars these workers send home to their families each month is siphoned off by officials.
But everyday corruption is also thriving. There are now about 1,000 small and large open-air markets in North Korea with hundreds of thousands of stalls. Since state distribution of goods has collapsed, these markets account for 90 percent of people's incomes. North Korean men go to work in sputtering state-run collectives only to keep jobs that pay less than a dollar month so their wives and children can sell goods in open-air markets. Some market traders have grown rich, but everyone has to pay bribes up the chain of command. This is the basic structure of the new North Korean economy.
It is this frail ecosystem that is being threatened by the latest UN Security Council sanctions against North Korea. By blocking trade with China, the kickbacks disappear, resulting in a shortage of hard currency in state-run businesses. But shrinking trade also impacts market traders and the amount of bribes they can pay. When North Koreans who paid bribes to work overseas are forced to return home, as the sanctions mandate, that flow of money into the pockets of party officials also stops. As a result, workers become increasingly disgruntled, and it is easy to picture the sense of crisis a party official feels if his monthly income of $100-200 from bribes comes to a screeching halt and he or she is forced to subsist on 50 cents a month.
North Korea frantically boosted imports last year as it braced for the coming sanctions. That is why experts believe the North will only feel the full-blown impact this year, when the reserves run out. Kim Byung-yun at Seoul National University described the situation in North Korea right now as the "calm before the storm."
North Korea's foreign-currency income earned from exports is expected to drop by up to 90 percent this year. High-ranking party officials are growing increasingly nervous about their future. They stand in principle by their leader and his push for nuclear weapons, but their real concern is their shrinking income. This is why Kim Jong-un is now embracing South Korea. He is struggling to shield himself from the impending maelstrom.
Kim has no intention of giving up his nuclear weapons. He knows that doing so will lead to the collapse of his regime. He believes he will be able to keep ruling if he makes it through the next two years to complete his nuclear arsenal. That is why he wants to buy time by holding talks with the U.S. and a summit with President Moon Jae-in. Two years is all he needs to perfect his nuclear arsenal and develop more than 100 warheads. Once his nuclear arsenal reaches that level, the crisis will reach a whole new dimension. This is a race against time and a war of wills is raging.
The key is how long the world can maintain the intensity and momentum of sanctions and how to fix any loopholes. Kim's nuclear ambition will be crushed only when more and more North Korean officials begin to believe they will starve to death as long as they support that twisted dream. Right now, discontent seems to be spreading. That is the only way Kim will start to rethink his nuclear game plan.
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