for only slightly more than $7 million of imports and exports (a decrease of 10 percent from the prior year), and Russia was a distant number three at around $2 million (a 70 percent decrease). Inter-Korean trade plummeted to about $1 million that year, down from $333 million in 2016, deepening the gap between the Koreas and undoubtedly exacerbating North Korea’s fears about absorption in a unification scenario. (According to market research firm IHS Markit, North Korea’s total trade was around $6.4 billion in 2016, less than that of Malta, which has a fraction of the population—less than half a million compared with North Korea’s twenty-five million. Total trade in South Korea was $835 billion, 130 times more than in the North.) North Korea’s trade deficit with China ballooned to almost $2 billion in 2017, with exports to China down almost 90 percent to $210 million—the lowest since 2001—and imports down 33 percent to $2.2 billion. In 2018, as a result of Beijing’s sanctions implementation, North Korea’s trade with China dropped almost 50 percent from the prior year, resulting in a similar decline in the country’s overall foreign trade volume, given its overwhelming dependence on its powerful neighbor. North Korea’s economy overall shrank by about 5 percent in 2018, reducing it to a level comparable to the regime’s economic situation in 1997, when the country was in the midst of a devastating famine. And for the first time since he came to power, Kim saw his country’s foreign trade fall below $3 billion. Kim is almost certainly aware of the toll that his weapons program has taken on his push for economic prosperity.
North Korea does not publicize its own economic statistics, of course, but anecdotal information and reports trickling out of the country in early 2019 suggest that the regime is shuttering or suspending activity and production at government-backed factories and mines amid a drying up of trade and restrictions on flows of oil into the country, and that it is trying to squeeze more from North Korean overseas laborers to fund various projects in the country. North Korea’s dispatching of its diplomats to cultivate relationships with its neighbors, as well as with Europe and Southeast Asia, is surely intended to drum up investment and trade ties. These internal developments and trends, such as greater information penetration, marketization, and the growth of a newly wealthy class driven more by money than ideology, are probably stressing Pyongyang and adding to concerns that these conditions could potentially overwhelm the regime as it buckles under the weight of internal contradictions and rising expectations.
Kim Jong Un no doubt understands at least the broad contours of the challenges he faces. And he is likely to use diplomacy to mitigate the negative effects of his actions, including ensuring that China will not turn its back on his country, exploiting any cleavage among the regional players, encouraging foreign investment and aid from South Korea and other countries to lessen Pyongyang’s dependence on China, and reducing the world’s appetite for sanctions implementation. There is little doubt that Kim wants to stimulate North Korea’s economic development, not just muddle through like his father, especially since he is probably planning to be in power for the next few decades and pass down a stable, thriving, nuclear-armed North Korea to one of his children. Amid rising expectations—especially among young people and the jangmadang generation, who are more individualistic than their elders—the crippling effects of sanctions, and North Korea’s intentional isolation, it will be difficult for Kim to sufficiently match reality with his aspirations and rhetoric.
But his ability to quickly pivot to diplomacy and secure a slew of summits with the United States, China, South Korea, and Russia in just a matter of months has probably boosted his confidence that he can accomplish these goals at little or no cost to his weapons program. Kim’s calibration of provocations and diplomacy, as well as his adroit use of ambiguity and flattery, also underscore how we must be clear-eyed about his goals, while also maintaining analytic agility in our assessment of his intentions and identifying risks and opportunities in a given scenario.
THE EVOLVING PUZZLE
If figuring out Kim’s intentions is like completing a jigsaw puzzle, crafting a solution to the North Korea problem should be likened to solving the Rubik’s Cube. This 3-D puzzle befuddles players with seemingly endless permutations, only to frustrate them further when they see that even though they’ve solved one side, the other five are a jumble of colors.