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The North Korean authorities are playing a risky game borne of the need to secure hard currency flows to finance imports whilst preserving regime security, according to Lee Suk of the Korea Development Institute.
Lee, speaking earlier this afternoon as part of the Asan North Korea Conference 2013, explained how, despite visible signs of economic growth in Pyongyang, the overall North Korean economy remains in recession, imports have been stagnating since the beginning of the year, and regional areas are changing to only a modest extent.
Therefore, he went on, the North Korean authorities must generate greater hard currency flows if they wish to finance future growth in imports, which must mostly be paid for in foreign currency due primarily to the terminal weakness of the North Korean Won.
What North Korea is doing today is extracting hard currency from both the North Korean people, by coopting tentative economic openness for its own ends, for example by selling Chinese-made cellphones at a 200% mark-up and permitting corruption to flourish across the nation; and also from its external economic partners, namely by “selling access:” be it to natural resources, labor, tourism, or SEZs.
However, while Lee focused on the concern that the this dangerous game is likely to inspire greater reliance on nuclear weapons, another speaker, Zhang Dongming, said that North Korea’s recent moves toward controlled economic opening could be positive.
Showing a number of images of visible development in Pyongyang, Zhang explained, “We can read from the DPRK people that they want to live a better life. We can see it in their faces.” However, he warned, prevailing economic circumstances, as well as North Korea’s own political limitations, are likely to circumscribe progress.
The Asan North Korea Conference 2013, which concludes today, was hosted by the Seoul-based Asan Institute for Policy Studies.
