STREAMING NOW: Watch Now

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 12:44 PM
Updated: Dec 21, 2017 12:44 PM

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.

Terre Haute
Clear
82° wxIcon
Hi: 83° Lo: 56°
Feels Like: 83°
Robinson
Clear
83° wxIcon
Hi: 84° Lo: 57°
Feels Like: 85°
Indianapolis
Partly Cloudy
80° wxIcon
Hi: 82° Lo: 58°
Feels Like: 81°
Rockville
Partly Cloudy
83° wxIcon
Hi: 84° Lo: 55°
Feels Like: 83°
Casey
Clear
82° wxIcon
Hi: 83° Lo: 58°
Feels Like: 82°
Brazil
Partly Cloudy
82° wxIcon
Hi: 83° Lo: 56°
Feels Like: 83°
Marshall
Clear
82° wxIcon
Hi: 83° Lo: 54°
Feels Like: 83°
A Comfortable Overnight
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Cases: 1582392

Reported Deaths: 26884
CountyCasesDeaths
Cook60726610902
DuPage1026891351
Will862101080
Lake761221053
Kane65145838
Winnebago38503541
Madison37519564
St. Clair34621558
McHenry32619311
Peoria25609359
Champaign25478182
Sangamon24108264
McLean21470203
Tazewell19477326
Rock Island17502342
Kankakee16409232
Kendall15177104
LaSalle14258273
Macon14134230
Vermilion12805180
Adams12525147
DeKalb11460126
Williamson11116152
Whiteside7759176
Boone753381
Jackson748379
Coles7121109
Ogle699985
Grundy690481
Clinton673597
Franklin658994
Knox6439163
Marion6392135
Macoupin629997
Henry604172
Jefferson5933130
Effingham580980
Livingston560294
Woodford548291
Stephenson534088
Randolph517096
Monroe501098
Morgan477995
Fulton475369
Christian474980
Logan471373
Montgomery459776
Lee452456
Bureau421687
Perry407770
Saline393562
Iroquois389170
Fayette385256
McDonough350855
Jersey318753
Douglas301236
Shelby296943
Crawford294030
Union292445
Lawrence291031
Wayne263956
White259229
Richland254052
Hancock250934
Pike249456
Cass245628
Bond241524
Clark241038
Ford232755
Clay230547
Edgar226844
Carroll223637
Warren218655
Johnson207821
Moultrie206730
Washington203827
Jo Daviess201624
Greene197738
Mason194551
Wabash193715
Massac192643
De Witt191230
Piatt188314
Mercer185434
Cumberland172423
Menard154112
Jasper148718
Marshall132721
Hamilton125720
Brown10127
Pulaski96711
Schuyler9568
Edwards94015
Stark75426
Gallatin7214
Scott6885
Alexander66011
Calhoun6342
Henderson62614
Hardin55413
Putnam5414
Pope4685
Unassigned1192432
Out of IL80

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Cases: 918230

Reported Deaths: 15011
CountyCasesDeaths
Marion1252491952
Lake623371084
Allen52301746
Hamilton43009443
St. Joseph41155584
Elkhart32831485
Vanderburgh29698436
Tippecanoe26442247
Johnson23106414
Hendricks21708338
Porter21255340
Clark16988222
Madison16899378
Vigo15562272
Monroe14186190
LaPorte13961235
Delaware13613215
Howard13531258
Kosciusko11150134
Hancock10534159
Warrick10431174
Bartholomew10233166
Floyd10099202
Wayne9557216
Grant8858194
Morgan8654158
Boone8231109
Dubois7521123
Henry7391126
Dearborn734186
Noble7208100
Marshall7168127
Cass7060117
Lawrence6803150
Jackson638980
Shelby6386106
Gibson5999105
Harrison587984
Huntington586490
Montgomery5663101
DeKalb555691
Knox532999
Miami523183
Clinton522464
Putnam519067
Whitley509851
Steuben480267
Wabash470192
Jasper465760
Jefferson456091
Ripley439074
Adams435565
Daviess4008106
Scott389563
White383457
Decatur376895
Clay376455
Greene375589
Wells375183
Fayette363074
Posey351841
Jennings341756
Washington324046
LaGrange312074
Spencer310734
Fountain306553
Randolph302087
Sullivan294947
Owen275961
Orange269659
Starke268961
Fulton264451
Jay248134
Perry244950
Carroll239926
Franklin229337
Vermillion225850
Rush225530
Parke212020
Tipton205354
Pike200938
Blackford163834
Pulaski155250
Crawford140818
Benton138316
Newton138141
Brown130646
Martin124416
Switzerland122310
Warren112616
Union92211
Ohio75811
Unassigned0461