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Cautious Optimism for the Future of North Korea

As this series on North Korea draws to a close, I would like to take the chance to discuss Kim Jong Un’s grasp on power, the potential for conflict, and what a renewed Korean War could mean for the future of peninsular peace. Overall, the regional situation has reached a relatively high point; however, North Korea’s ability to initiate hostilities, and survive, is quite low. From a political standpoint, North Korea has recently been undergoing a metamorphosis. Waves of defectors form the basis for this assertion. Each year, successive defectors give accounts of a country that is a shadow of its famine ravaged decades in the 1990s and 2000s. While black markets have always existed in the North, market reforms by the government have allowed rapid growth of village markets and commercial enterprises around the country.

Economic reform in North Korea takes an odd form. Rather than comprehensive, national policies, the government implements reforms in Pyongyang, the North’s Capital, and then neglects to enact policies addressing village markets. In keeping with the often times bizarre and roundabout way of addressing issues, these economic shifts are the result of the North’s bureaucratic failure coupled with the late Kim Jong Il and Kim Jong Un’s desire to remain in power.

In 2009, as one of his last grand displays, Kim Jong Il opened a modern department store in Pyongyang. Despite being a state sanctioned store, shoppers openly pay for items using foreign currencies. This is indicative of a weakened North Korean government. Why? Because foreign currency is very, very illegal in North Korea. So illegal, in fact, that in 2012 North Korea made the act of using it punishable by death. Despite this, Party elites and rural North Koreans alike have been turning to foreign currencies in earnest. The recent trend follows a catastrophic revaluation of the North Korean Won in 2009 that all but destroyed the currency’s usefulness for facilitating the exchange of goods and services. As a result, foreign currencies are widely used in illicit and legal marketplaces, despite the threat of death.

So why did the North Korean government destroy its own currency in 2009? Further, why does Kim Jong Un appear to hold official and unofficial positions regarding foreign currencies that are polar opposites?  It all goes back to the famine in the 1990s. During the 90s, the government’s ability to distribute food to famine-stricken areas was severely diminished. As a result, Kim Jong Il had to make use of illegal village markets to distribute famine relief. Against the backdrop of the waning famine, a sort-of merchant class emerged from the collection of individuals who had run market stalls. Whether it was intended as a response or not, Kim Jong Il revalued the North Korean Won as a new, less inflated currency and made it so only a fraction of the old currency could be converted. This decision destroyed the majority of individual North Korean’s savings. To make matters worse, the ensuing rush to obtain foreign currencies after the revaluation sparked hyperinflation in black market money exchanges, making the currency go from 30 Won equaling one US dollar to 8,500 Won equaling one US dollar.

As a result of the famine precipitating rapid black market growth, the legal North Korean economy is entirely reliant on the illegal economy, with an estimated “30 to 50 percent of its GDP coming from the black market.” This reliance has grown to the point that legally established and state-run businesses are using black market exchange rates to openly price goods and services in foreign currencies. This puts Kim Jong Un in the awkward position of having to allow an illegal economy in order to prop-up the legal economy. In the context of an officially communist country, this represents a major government failure, since North Korea’s government is no longer able to centrally plan economic shifts without the existence of an unregulated black market.

Beyond the economic issues, North Korea’s military, though intimidating, is significantly weaker than its southern rival. I don’t mean this in terms of straight numbers, but in terms of capacity. Despite what routine military parades and massive live-fire drills suggest, North Korea’s relative military strength has been and continues to be in decline. Compared to the South, North Korea’s military is larger, but less well equipped and supported. While it’s hard to predict how destructive an active conflict would be, there’s no doubt that North Korea would not be victorious and that the current government would ultimately collapse.  In the event of a second Korean War, Kim Jong Un would likely use every military option available to him—including chemical weapons, nuclear devices, and an estimated 200,000 soldiers trained to wage guerilla warfare similar to what is seen in the Middle East—to wreak as much havoc as possible. Although a collapsed North Korea is not ideal for China, it is unlikely they would even begin to tolerate such a major insurgency before acting to reestablish in the North.

From their incredibly weak economy to their structurally unsound military, North Korea is not as formidable as it imagines. While it cannot reasonably guarantee its own future, North Korea’s government is fanatical enough and possesses enough weapons of mass destruction that it can guarantee any collapse due to war bears an astronomical human and economic price. What’s more difficult is that, because North Korea is aware of its tenuous position, it has planned to ensure any transition towards peace would be long and incredibly difficult.  Even still, further domestic declines have the potential to strip North Korea’s government of any remaining political power and provide a small chance for a non-violent, peaceful transition out of totalitarianism.

I recognize that this leaves us with a fairly grim view of the situation on the Korean peninsula. But understanding that North Korea is equal parts “Kim Jong Un & friends being crazy” and equal parts “human beings trying to cope with a declining regime” is important. Additionally, understanding how North Korea is changing, despite its rigid government and appearance of being frozen in time, allows us to look at the situation hopefully. Beneath the military posturing and constant war of words between the world and Kim Jong Un, the potential for a peaceful decline exists. As hopeful as this is, and assuming some unpredictable event doesn’t ignite the current powder keg of tensions, it’s comforting to know that a future free of the current North Korea problem may be possible without an actual war.



Pearson, James, “North Korea's black market becoming the new normal,” Reuters, 29 October 2015. Web. Accessed: 22 May 2017.

McCarthy, Niall, “How North And South Korea's Armed Forces Compare [Infographic],” Forbes, 11 April 2017. Web. Accessed: 22 May 2017.

Stilwell, Blake, “Here's who would win in a war between North and South Korea,” Business Insider, 12 April 2017. Web. Accessed: 22 May 2017.

Farmer, Ben, “What is North Korea's military might?,” The Telegraph, 19 April 2017. Web. Accessed: 22 May 2017.

Lankov, Andrei. The Resurgence of a Market Economy in North Korea. Moscow: Carnegie Endowment for International Peace, 2016. Web. Accessed: 22 May 2017.

Choe Sang-hun, “As Economy Grows, North Korea’s Grip on Society Is Tested,” The New York Times, 30 April 2017. Web. Accessed: 22 May 2017.

Reynolds, Phil W., “What Happens If North Korea Collapses?,” The Diplomat, 3 September 2016. Web. Accessed: 22 May 2017.

Lee Young-sun and Yoon Deok-ryong, “The Structure of North Korea's Political Economy: Changes and Effects,” Korea Economic Institute of America, 12 January 2005. Web. Accessed: 22 May 2017. <>



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