Will sanctions kill North Korea's quiet consumer revolution?

Pizza parlors and coffee shops may not be the first things you think of when it comes to North Korea, but big changes...

Posted: Dec 21, 2017 11:44 AM
Updated: Dec 21, 2017 11:44 AM

Pizza parlors and coffee shops may not be the first things you think of when it comes to North Korea, but big changes are taking place inside the secretive nation.

Under Kim Jong Un, the country's totalitarian regime is overseeing a quiet consumer revolution. Long used to the state controlling how they eat, dress and travel, North Koreans have recently been getting more of a taste of Western-style capitalism.

"People have access to more consumer goods and business opportunities than at any point in the past," said Curtis Melvin, a senior fellow with the U.S.-Korea Institute at Johns Hopkins School of Advanced International Studies.

Melvin, who studies North Korea's economy, says privately run pizza parlors, coffee shops, bars and gas stations have mushroomed in Pyongyang, the country's capital.

Related: Where North Korea's elite go for banned luxury goods

President Trump is pushing for increasingly tough international sanctions aimed at squeezing the life out of the North Korean economy. The sanctions are part of Trump's efforts to pressure Kim into backing down on the regime's rapidly developing nuclear weapons program.

But on the ground in North Korea, the government is allowing more entrepreneurial activity and even encouraging competition between small private firms.

"In North Korea, now you can found your own company," said Andray Abrahamian, an Asia-Pacific research fellow at the Center for Strategic and International Studies. "A shop, a makeup company -- you can run it as your own, and keep most of the profit."

Related: North Korea may be making a fortune from bitcoin mania

Visitors to the country have reported commuters on pricey electric bikes. North Koreans also have a choice in which taxi company they use, and which brand of toothpaste they buy.

That might not sound like a big deal to Westerners consumers used to an ever increasing choice of goods and services. But it's a huge change for North Korea, one of the world's poorest countries and a place where the state has historically controlled most aspects of citizens' lives.

Related: North Korea's economy: What's left to sanction?

Experts say that reflects how much the country's economy has changed under the rule of Western-educated Kim Jong Un, who took over as North Korea's leader after the death of his father Kim Jong Il six years ago.

"He is more accepting of market activities" compared to Kim Jong Il, said Kim Byung-yeon, an economics professor at Seoul National University who studies the North Korean economy.

The changes seem to have coincided with an economic uptick.

The regime doesn't publish any data, but an estimate from South Korea's central bank puts the North's economic growth at 3.9% in 2016, its fastest pace since the turn of the millennium.

That healthy figure comes despite more than a decade of international sanctions.

"The economy is in a much better shape than 20, 10 and even five years ago," said Rudiger Frank, an economics professor at the University of Vienna who specializes in North Korea.

Related: How North Korea is hacking companies and governments

The flurry of entrepreneurship is believed to be providing a boost to the coffers of Kim's regime.

Most of those running these new shops and restaurants are likely to be privileged North Koreans with close ties to the government who are required to kick up a portion of profits to the regime.

"The government and the party are probably making more money than ever" because of them, Melvin said.

But there's a lot of uncertainty about whether the rise in private business activity will continue.

So far, it appears to be concentrated in Pyongyang, a showcase city for the regime that gets the lion's share of resources. Much of the rest of the country remains decades behind in wealth and technology.

Related: A journey into the heart of North Korea

And none of the market-friendly changes have been put into law, which means traders are still subject to the regime's whims.

For example, a botched currency reform by the government in 2009 stripped many North Koreans of their personal savings.

Experts also think North Korea is unlikely to follow the path of other centrally planned economies that have embraced capitalism, such as Russia and China.

Frank points to the example of Mikhail Gorbachev, the former Soviet leader, who was booted from power shortly after implementing wide-scale reforms.

"Kim is thus very cautious," he said.

Related: North Korea's mystery ship: The curious case of the Hao Fan 6

The intensifying sanctions, meanwhile, could throttle the amount of money and goods coming into the country.

They have targeted North Korea's major exports like coal, iron ore and seafood, nearly all of which were being sold across the border into China.

"They are very effective in stifling the market economy," Frank said of the sanctions.

He told CNNMoney he has heard reports of a number of North Korean businesses shutting down as a result.

But many experts are still skeptical that the U.S.-led economic pressure will convince the North Korean government to change tack on its nuclear program.

Related: Why an oil embargo won't stop North Korea

Abrahamian said it's everyday citizens who are likely to suffer the most from sanctions that hurt North Korea's major industries.

"The authorities are willing to pass along the economic pain to their citizens for a long time," he said.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 37210

Reported Deaths: 1495
CountyConfirmedDeaths
Hennepin12048782
Ramsey4777222
Stearns231219
Dakota224890
Anoka2155107
Nobles16616
Olmsted107615
Washington104840
Mower9322
Rice8277
Scott6844
Clay58037
Kandiyohi5661
Wright4535
Blue Earth4422
Todd4002
Carver3611
Lyon3052
Sherburne3035
Freeborn2890
Steele2231
Watonwan2150
Benton2123
St. Louis17415
Martin1615
Nicollet15512
Cottonwood1340
Goodhue1278
Winona12015
Crow Wing10412
Pine1030
Chisago971
Otter Tail921
Le Sueur911
McLeod850
Carlton830
Dodge830
Unassigned8237
Polk812
Chippewa761
Isanti650
Itasca6412
Waseca620
Douglas610
Meeker591
Morrison591
Becker550
Jackson550
Faribault540
Murray540
Sibley532
Pennington510
Mille Lacs342
Brown312
Pipestone311
Wabasha310
Beltrami290
Rock290
Yellow Medicine290
Renville282
Fillmore270
Houston250
Swift211
Norman200
Wilkin203
Redwood170
Wadena150
Aitkin140
Big Stone140
Cass142
Kanabec141
Koochiching141
Marshall120
Grant100
Lincoln100
Pope100
Roseau100
Clearwater70
Mahnomen71
Lake60
Hubbard50
Traverse50
Lac qui Parle40
Stevens40
Red Lake30
Kittson20
Cook10
Lake of the Woods00

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 30173

Reported Deaths: 718
CountyConfirmedDeaths
Polk6275178
Woodbury320144
Black Hawk218058
Buena Vista170511
Linn123882
Johnson12318
Dallas122329
Marshall103519
Story7463
Pottawattamie71911
Scott70410
Wapello70230
Crawford6752
Muscatine62444
Dubuque60922
Sioux4610
Tama45829
Wright3771
Louisa36013
Jasper32117
Plymouth3134
Dickinson2592
Warren2581
Washington2349
Hamilton1871
Webster1702
Boone1421
Cerro Gordo1381
Clarke1272
Clay1270
Allamakee1264
Mahaska11517
Shelby1110
Clinton1041
Poweshiek1048
Pocahontas931
Carroll911
Bremer906
Des Moines862
Henry853
Franklin840
Cedar801
Taylor790
Emmet780
Cherokee751
Monona740
Floyd682
Marion680
Hardin650
Guthrie644
Sac630
Benton621
Jefferson580
Osceola580
Jones560
Harrison530
Humboldt531
Butler522
Buchanan511
Iowa510
Lee502
Monroe506
Hancock490
Calhoun482
Delaware481
Lyon400
Madison402
Clayton393
Davis391
Mills360
Palo Alto360
Winneshiek360
Grundy350
Fayette340
Mitchell340
Kossuth330
Lucas304
Greene280
Howard280
Chickasaw270
Jackson270
Union270
Winnebago270
Ida230
Cass210
Appanoose203
Keokuk201
Page200
Van Buren190
Audubon161
Adair150
Ringgold150
Worth150
Decatur110
Montgomery102
Wayne90
Adams80
Fremont70
Unassigned70
Rochester
Clear
84° wxIcon
Hi: 87° Lo: 67°
Feels Like: 87°
Mason City
Clear
84° wxIcon
Hi: 89° Lo: 67°
Feels Like: 86°
Albert Lea
Scattered Clouds
82° wxIcon
Hi: 88° Lo: 69°
Feels Like: 86°
Austin
Broken Clouds
82° wxIcon
Hi: 89° Lo: 69°
Feels Like: 85°
Charles City
Few Clouds
84° wxIcon
Hi: 88° Lo: 69°
Feels Like: 86°
HOT AND HUMID
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Minnesota baseball players get a sense of normalcy

Image

Sean's 10pm Weather 7/2

Image

Mask Mandate in Cerro Gordo County

Image

Raising Kids to be Tolerant

Image

Student Athlete Speaks Out About Racist Comments

Image

Volunteer of the Month

Image

June Jobs Report Shows Promise

Image

Intermittent Fasting may slow aging process

Image

Extra enforcement to keep boaters safe and sober

Image

All State Award for local VFW

Community Events