N. Korea in wealth divide conundrum

By Kim Young-jin

As nations worldwide grapple with rising wealth inequality, the “socialist paradise” of North Korea appears to be no exception, with the gap between its emerging entrepreneurial class and the rest of the country widening rapidly, experts say.

Emboldened by Chinese investment and new trade opportunities, those among the wealthy are not difficult to spot, according to recent visitors to Pyongyang. Imported cars now cause regular traffic jams and businesspeople chatter on state-sanctioned mobile phones _ previously unimaginable occurences.

But experts say the development is concentrated in the capital and a handful of other urban areas, namely Sinuiju, Nampo, Sariwon and Kaesong while the rest of the country faces a starkly different story.

“It’s like two different planets,” said Bernhard Seliger, a Seoul-based unification expert who periodically visits the North. “Pyongyang is modernizing but in the countryside the water supply is primitive and people still use oxcarts.”

The situation could place the isolated country in the same boat with much of the rest of the world as many countries face backlash against severe income disparity, embodied by the Jasmine Revolution in the Middle East and the Occupy movement.

Analysts say that the conditions are unlikely to soon explode into strife given the regime’s tight controls over the populace _ millions of whom the United Nations says direly need food. But the new wealth presents it a mix of opportunity and risk as the late Kim’s youngest son, Jong-un, consolidates power.

The disparity stems from the North’s economic hardship in the 1990s, when its system virtually collapsed and the country suffered a disastrous famine that killed an estimated hundreds of thousands.

The chaos forced citizens to rely on private markets and the regime to allow for grassroots capitalism. Speculators took advantage of the reforms by buying supplies when the economy was in relative health and selling them when demand was greatest.

Opportunities for those with money increased as the North’s economy slowly rebounded despite international sanctions. The wealthiest and best connected made their money through companies that worked under the guise of being state-run, mostly through joint projects with Chinese companies or in areas such as mining and transportation. Lower-level entrepreneurs _ many female _ have succeeded by trading in private markets goods that come through the porous border with China.

The wealth is spurring spending in Pyongyang, where high-end restaurants now serve sushi, pizza and gourmet coffee and women wearing designer clothing and accessories. Visitors to the Pyongyang airport report seeing streams of North Koreans arriving with plasma televisions.

Reports show that imports of tobacco, laptops and domestic electrical appliances have all jumped in recent years.

An Chan-il, a political scientist who defected from the North, says ordinary people are aware of the inequality but lack the political tools to speak out.

“On special occasions, the gifts the state gives to the people are administered according to wealth. Wealthy children go to high-ranking universities while those who don’t have rich families don’t. But most have yet to grasp that the gap is due to the political situation.”

Further entrenching the elite class is the pervasive practice of nepotism. Defectors say that high-ranking officials pull strings to place their children in jobs handling diplomatic and trade relations, areas where they position themselves to earn foreign cash and lead stable lives.

But the increased economic activity brings in outside ideas in the form of foreign DVDs and interaction with potential investors. It also introduces to officials an alternative to Kim Jong-il’s staunch militarist approach at a time when Kim Jong-un’s emergence has raised cautious hopes for reform.

One highly-cited reason for hope is that Jong-un, thought to be no older than 30, studied for a time in Switzerland, exposing him to Western affluence. Some say his father may have been planning as part of the power succession more tolerance for reforms.

Others suggest that the wealthy class will do what it can to maintain the status quo, despite the opportunities afforded to them through increased engagement, fearing revolution. Such a development could precipitate unification with the capitalist South, whose powerful firms would outshine the North’s entrepreneurial class.

Expert Seliger cautiously suggested the relative prosperity of the few might one day trickle down.

“Certainly (the disparity) has a social impact and in the end people won’t accept it,” he said. “At least now some people are getting richer. Hoping to stay rich, maybe they could change things.”