North Korea’s Kim Jong Un seeks to build on Russia ties to resuscitate economy

North Korean leader Kim Jong Un raised fears he was preparing for war this year when he renounced the country’s commitment to peaceful reunification with the south.

But since then, North Korea’s armed forces have had a more prosaic task: making good on the 40-year-old leader’s promise to build a factory in each of the country’s 200 counties and cities over the next 10 years.

“The overall regional economy is in a terrible situation,” Kim told the country’s rubber stamp parliament in January as he acknowledged his own “failure to provide the people in local areas with basic living necessities”.

With many of North Korea’s existing factories already running under capacity, experts are sceptical that the regime’s latest development initiative — the regional development 20x10 policy — will bear fruit.

But they said its ambition — and Kim’s unusual willingness to outline concrete metrics for success — reflected his growing confidence as a result of his burgeoning relationship with Russian president Vladimir Putin following Moscow’s full-scale invasion of Ukraine two years ago.

“The war in Ukraine has proven a bonanza for North Korea,” said Peter Ward, a research fellow at the Sejong Institute think-tank in Seoul. “After years of severe hardship for ordinary North Koreans during the coronavirus pandemic, Kim appears determined to use some of his windfall to improve living standards and increase his industrial base.”

Last month, Moscow vetoed a UN panel’s mandate to monitor compliance with international sanctions on North Korea, in effect collapsing a central pillar of the sanctions regime.

The Financial Times had earlier revealed that Russian ports are being used by sanctioned North Korean tankers to collect tens of thousands of barrels of oil and petroleum products, in apparent payment for the delivery of millions of artillery shells for use on the battlefield in Ukraine.

North Korea has welcomed Russian tourist groups in recent months, while Russia’s ambassador to North Korea said in February that Moscow and Pyongyang were discussing new rail, ferry and car routes.

A North Korean delegation led by a high-ranking agricultural official visited Russia this week, according to North Korean state media.

South Korean defence minister Shin Won-sik said North Korea’s economic situation “has improved significantly” in recent months as a result of Russian deliveries of food, raw materials and oil products.

This marks a turnaround in fortunes since 2021, when the regime admitted to a “food crisis” brought on by pandemic-era border closures, tough international sanctions and a miserable harvest.

Experts stressed that the exact state of North Korea’s economy is impossible to measure in the absence of reliable official data.

South Korea’s central bank estimated last year that the North Korean economy contracted for the third straight year in 2022, with a real gross domestic product of $24.64bn, equating to an annual GDP per capita of $1,123 — about 30 times less than that of South Korea.

The economy, which largely relies on the production of coal, concrete and industrial plastics, has been kept afloat by food, fuel and fertiliser from neighbouring China, Pyongyang’s biggest trading partner.

The state’s resources, topped up by criminal enterprises including smuggling and crypto theft, are directed towards the military and Pyongyang. Provincial areas are largely expected to fend for themselves, with ordinary North Koreans surviving on small-scale farming and grassroots market activity.

“Kim will have been worried about what he saw when he travelled the country during the pandemic — not just its state of disrepair and the plight of his people, but the extent to which it relies on China for necessities,” said Ward.

The regional development drive is “perfectly compatible” with Kim’s desire to build up the country’s capabilities for a future conflict, said Rachel Minyoung Lee, a senior fellow at the Stimson Center think-tank in Washington.

“If North Korea can encourage its regional economy to take care of itself, that will eventually free the centre to devote more attention and resources to its real priorities, which include building its military capabilities and providing for the elites in Pyongyang,” said Lee.

“Whether or not Kim Jong Un cares about the ordinary North Korean, it’s important for him to be seen to care,” she added. “If the time comes, he needs a loyal and motivated population that is prepared to fight for him.”

So far, Kim’s “20x10” factory initiative has got off to an energetic start. Over a six-day period in March, 13 groundbreaking ceremonies took place, state media reported.

While North Korean state media have not said what the individual factories will make, Ward noted that Kim Jong Un — who has talked repeatedly of the country’s “import disease” — was likely to prioritise the production of basic goods such as paper and soap as well as processed food and clothing that are traditionally imported from China.

“Kim wants to reduce his exposure to global markets, not increase it,” said Ward. “You can make a quick buck in the Chinese market, but from a North Korean perspective to rely on the good graces of Beijing for such basic things is a security nightmare.”

But he added that “with so many of their existing factories already running under capacity, to build 200 more is irrational”.

Benjamin Katzeff Silberstein, an expert on the North Korean economy at the Swedish Institute of International Affairs, said that Kim appeared to be motivated by a desire to return to a situation similar to the cold war, when Pyongyang could “exploit the benefits of having two patrons rather than one”.

“By strengthening his economic partnership with Russia while reducing his dependence on China, Kim is reviving that strategy,” he said.