Virus-hit economy poses threat to North Korean leader

By Kang Seung-woo

North Korea's recent announcement that it would unveil a new five-year economic development plan early next year means its economy is facing a serious crisis due to the sustained international sanctions and the COVID-19 pandemic, which are emerging as a “big challenge” to leader Kim Jong-un, Pyongyang watchers said Sunday.

North Korean leader Kim Jong-un presides over a plenary meeting of the Central Committee of the Workers' Party in Pyongyang, Wednesday. / Yonhap

On Thursday, the totalitarian state announced it would map out a new plan to boost its sagging economy in a ruling Workers' Party Congress in January 2021, admitting its current strategy introduced in 2016 has failed, citing “internal and external situations and unexpected manifold challenges.” These comments point to U.S.-led economic sanctions on the North, the coronavirus pandemic and a series of devastating floods, according to the experts.

“The North Korean economy is facing a serious and deep structural crisis, compounded by the COVID-19 problem,” said Daniel Sneider, an international policy expert at Stanford University.

“They are overdue actually in producing a five-year plan and the delay reflects the fact, acknowledged finally by Kim Jong-un, that their system is failing.”

While Kim failed to get U.S. President Donald Trump to loosen sanctions in their highly-touted summits in Singapore and Vietnam, the coronavirus pandemic has forced the reclusive country to close its border with its most important trading partner China, drastically slashing bilateral trade to nearly zero. The lockdown also cut off the flow of foreign tourists ― a significant legal source of hard currency for the North.

In addition, weeks of torrential rain in the North has flooded houses and rice paddies, taking a toll on its already struggling economy.

In that sense, the new path is expected to focus on how to deal with these current problems.

“I think it will largely be about how North Korea will navigate the big challenges it faces with sanctions that remain in place and will not be going away anytime soon; the COVID lockdown that has restricted economic activity with China; and the residual effects of the bad weather that has hammered the peninsula over the summer,” Naval War College professor Terence Roehrig said.

“Continuing the process is a sign of the importance he continues to place on economic growth.”

Sneider said, “The command sector of the economy is non-functional and the stunted and distorted market economy cannot effectively replace it. This is about trying to keep the system alive and it will ultimately fail, again.”

Joseph DeTrani, a former U.S. special envoy to the six-party talks, noted: “For Pyongyang, something has to change to improve the economy and get more food and nourishment to its people. That's Kim Jong-un's challenge.”

Roehrig also said the new plan has an important domestic political element.

“The announcement of the meeting now as well as the forthcoming plan are messages for domestic audiences that despite the difficulties the country faces from sanctions and COVID, it will endure and that the leadership is seeking to address these issues,” the professor said.

“The plan will seek to portray North Korea's strength and resilience, along with the wisdom of Kim Jong-un's leadership to home audiences.”

Kim's recent moves also back up Roehrig's view.

On Aug. 7, the state-run Korean Central News Agency (KCNA) reported the North Korean leader visited a flood-stricken village in North Hwanghae Province and instructed his officials to send his special reserves of grain to the victims and help in recovery work. Two days later, the ruling party provided relief supplies to Gaeseong, recently placed under a lockdown due to a defector's return with coronavirus symptoms, according to the KCNA.

Given the timing of the congress, there is speculation that the result of the U.S. presidential election in November may affect Kim in charting its new course. But the analysts did not agree on this speculation.

“The announcement of the plan will follow the U.S. election but I doubt that the election will have much effect on economic planning at this point. The economic planning that will go into this new strategy has already begun and regardless of who is elected in the U.S., the challenges that North Korea faces will remain,” Roehrig said.