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North Korea wants dollars. It is a sign of trouble.


SEOUL, South Korea – When Kim Jong Un, the leader of North Korea, came to power more than a decade ago, he repeated two promises his family had made since the country’s founding in 1948: to strengthen the army and improving the economy. .

On the military front, Kim, 38, has delivered more than his father and grandfather who ruled before him, accelerating the country’s nuclear and missile programs.

On the economic front it has struggled, an already isolated country made even more so by years of international sanctions over its nuclear program and border closures since the coronavirus pandemic.

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Its trade with the outside world devastated, North Korea is scrambling for US dollars and other hard currencies, not just to feed its people but to fund Kim’s military and economic ambitions. He smuggles coal and steals cryptocurrency. He also tries to squeeze every penny out of the public, sell smartphones and other imported goods to the wealthy class, and collect “loyalty” donations in return for political favors.

State-run stores like the one in the capital Pyongyang are a staple. Customers can use US dollars to pay for international brands of instant noodles, deodorants, diapers and shampoos, while change is given in North Korean won.

Such transactions, and other illicit activities, have allowed Kim to continue to trickle US dollars into his coffers. This has given him the means to expand the country’s arsenal and capabilities, including testing a new intercontinental ballistic missile this month.

North Korea is now firing missiles at a rapid, sometimes daily rate. Washington, Seoul and Tokyo have all warned that Kim may soon conduct a nuclear test, his first since 2017.

Rise to power

On April 15, 2012, Kim gathered a massive crowd in Pyongyang to deliver his first public speech as leader of North Korea. He said he would guide the country through any obstacle or challenge to prosperity, but said his first priority would be to “strengthen the people’s army in every way”.

As he pursued his dual goals, he used a mixture of propaganda and terror, purging or executing anyone who stood in his way, while portraying himself as a “people-loving” leader in state media. He made government relatively less opaque, giving frequent speeches and making decisions in large party meetings. Kim even apologized for his shortcomings, casting aside the myth of a divine and blameless leader.

But Kim also knew that a real breakthrough for his country could only be achieved through negotiations with the United States, which led the push for international sanctions. When he met Donald Trump in 2018, he became the first North Korean leader to hold a summit with a US president.

An expanding arsenal

Although North Korea has spent decades developing its weapons, Kim can take credit for most of the advancements. During his reign, the country became the first US adversary since the Cold War to test both an intercontinental ballistic missile and what he called a hydrogen bomb. Four of the six underground nuclear tests in the country took place under his direction.

In 2017, North Korea carried out its first successful test launch of an ICBM, the Hwasong-15, which Kim said was capable of attacking the United States with a large nuclear warhead. Since his diplomacy with Trump collapsed, he has focused on diversifying and sophisticating his arsenal, unveiling and then testing a host of new weapons, from a next-generation ICBM, the Hwasong-17, to nuclear-capable short-range missiles.

At a party convention in January 2021, Kim ordered his government to build both “super large nuclear warheads” and to make “smaller, lighter and more tactical nuclear weapons”. He called for the development of hypersonic missiles, submarine-launched ICBMs, nuclear-powered submarines and spy satellites. In April, it pledged to expand its nuclear forces “at the fastest possible speed”.

Although some recent ICBM tests have failed, North Korea is believed to have enough plutonium and enriched uranium to produce 45 to 55 nuclear weapons and may have already assembled 20 to 30 warheads, according to an estimate by the Nuclear Information Project with the Russian Federation. United States. Scientists.

During a congressional hearing last summer, John Plumb, the Pentagon’s assistant secretary of defense for space policy, confirmed that most of North Korea’s ballistic missiles have a “capability to carry nuclear payloads “.

The country has tested a dizzying array of weapons in recent months, one of which has flown further and higher than its previous ICBMs. But North Korea has never launched a missile at a full 6,000-9,300 mile ICBM range, raising doubts that it has fully functional nuclear warheads capable of surviving the violent ‘re-entry’. in the Earth’s atmosphere and to hit targets across an ocean.

So far, it has launched all of its ICBMs at deliberately high angles, with the missiles hovering high in space. Their thrust was powerful enough that, if launched at normal angles, they could theoretically hit parts or all of the United States, missile experts say.

Kim delivered a message to Washington in 2018: “The United States must be clear that this is not just a threat but a reality,” he said. “The nuclear button is on my desk all the time.”

His arsenal is not only a deterrent to ensure the security of his regime against foreign invasion, but a diplomatic lever to obtain economic and other concessions. As part of his diplomacy with Trump, Kim halted nuclear and ICBM testing. But when that failed, he tried to bolster his bargaining power by doubling down on the expansion of his weapons program.

Kim appears to have come to the conclusion that delivering on his promise of military strength is his best hope for economic gain, trading some of his arsenal for sanctions relief. The recent torrent of missile tests, analysts say, was part of his bid to flaunt his growing threat and bring Washington back to the negotiating table.

Economic reforms

When he gave that first speech in 2012, Kim also said he would make sure his people were “no more belt-tightening,” a promise his father and grandfather had made but he didn’t. did not hold.

He introduced reforms that gave factories and farms more autonomy while keeping them under state ownership. It opened more markets to supplement North Korea’s fragile ration system, which collapsed in the 1990s and contributed to a devastating famine. He is committed to eliminating corruption and patronage. He announced his intention to open a multitude of free economic zones to attract foreign investors.

The scale of Kim’s economic drive is most clearly visible in Pyongyang, home to the loyal elite. The city has become brighter, its supermarket shelves are more filled with imports and domestic products. Its skyline also became dotted with tall, newly built apartment towers. Much of the change is cosmetic, with many decrepit buildings covered in pastel-colored paint.

As other cities lag far behind, Kim has focused his resources on the capital, positioning Pyongyang as a model for urban development. Under Kim, North Korea opened a new terminal at the city’s international airport, renovated subway stations and opened new amusement parks.

Last year, Kim created several new residential neighborhoods on the outskirts of the city. He said there would be 50,000 new homes by 2025, the 80th anniversary of the holiday, to help ease the housing shortage and replace older homes in the city. Many are high-end apartments to be distributed to elites in hopes of maintaining their loyalty.

These reforms did little to improve the country’s economic prospects.

North Korea emerged from the catastrophic impact of the famine of the 1990s, with an average growth of 1.2% per year between 2012 and 2016, according to the South Korean statistical agency. But that was before the sanctions and the pandemic.

The economy began to contract again in 2017. None of Kim’s planned economic zones were built.

Resorts that were built to attract foreign tourists remain half-finished or empty.

Last year, Kim warned of a potential food crisis and urged her people to prepare for the tough times ahead. He also told them to be ready to “tighten their belts” again.

follow the money

To keep her promises, Kim urgently needs money. He told parliament in September that the government’s most important task was to solve the problem of people’s standard of living. Missile testing this year has cost North Korea hundreds of millions of dollars, according to estimates by South Korean and American researchers.

His options are dwindling. The country’s combined trade deficit – the gap between the goods and services it imports and the amount it exports – stood at around $8.3 billion between 2017 and 2021. Even taking smuggling into account coal mining, fishing rights sales, cryptocurrency theft and other illicit activities, the trade deficit could still be at least $1.9 billion, according to researchers from the Institute for National Security Strategy, a think tank affiliated with South Korea’s National Intelligence Service.

The Kim regime is now aggressively trying to absorb as much foreign currency as possible from the public, especially North Koreans who have accumulated such savings by smuggling goods from China.

The country has cracked down on the use of US dollars in non-state markets, to force people to convert them into local currency. An unlicensed stockbroker has been executed for disrupting currency exchange rates, according to South Korean intelligence officials. The government encouraged people to deposit their savings in dollars in banks, to place them under state supervision.

To lure spenders with foreign savings, department stores are stocked with imported goods, including Rolex and Tissot wristwatches, Sony and Canon digital cameras, and Dior and Lancôme cosmetics — all luxury items banned by United Nations sanctions.

Selling cellphones and airtime has also become a lucrative business for the Kim regime. More than one in five North Koreans are thought to own a cellphone.

A range of cell phones, assembled in North Korea with components imported from China, are on sale and advertised on state television. They come with pre-installed dictionaries and state propaganda, but also have apps for road navigation and games, including Super Mario and Angry Birds ripoffs, and even an app that promises to repel mosquitoes with sound. .

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