Nordkorea - bisarrt, fascinerande, sjukt

Key Takeaways

North Korea's Nuclear Progress
North Korea's pursuit of nuclear weapons has been deliberate, determined, and patient. The nuclear program is not the most secretive in the world and North Korea's progress has not come as a surprise.

US Diplomacy
US diplomacy since 2000 has been sporadic, reactive, and often motivated by a desire to avoid risk instead of manage risk. North Korea's nuclear program has been slowed, sometimes reversed, during periods of diplomacy but it has never been abandoned. One of the most important factors in slowing North Korea's nuclear program has been US/IAEA presence in Yongbyon.

Denuclearization
The charts show that nuclearization was a massive enterprise, taking 25 years to go to dark red. Going to dark green (denuclearization) will take time. Moreover, what does denuclearization mean? Does it mean no weapons, no deployed weapons, no fissile materials, no missiles, no people, and no civilian nuclear program?

North Korean Cheating
The narrative that North Korea "has cheated on every agreement" is neither accurate nor useful. We need to better understand the history of North Korea's nuclear program so as to not repeat mistakes.

What Now?
As bad as it was in 2017, the situation could get worse. The US has missed several opportunities in the past by not managing the incremental risks. The US must approach any denuclearization talks with an awareness of this history and a desire to manage the incremental risks so as to prevent the situation from worsening.

2012: G1
Kim Jong-un assumes power in North Korea and in June North Korea begins
implementation of a reform package, officially called the “Economic Management
System in Our Style,” but colloquially referred to as the “June 28 Measures.” The New
Economic Management System is described as bringing the economy into a system of
communist rule, providing for the coexistence of market and planned economies and state
ownership of the means of production. What this appears to mean in practice is that while
the state owns the means of production and appoints the heads of state-owned enterprises,
these enterprises can exercise independent decision-making to determine how to meet the
state’s production targets and market needs. These changes are announced for both the
agricultural and the manufacturing/services sector. North Korea’s GDP growth rate is
estimated at 1.3 percent, according to the Bank of Korea.

2013: G1
North Korea introduces the byungjin line of parallel development of the military and the
economy. North Korea’s GDP growth rate is estimated at 1.1 percent, according to the
Bank of Korea. This growth may be driven in party by gains in agriculture, mining, and
trade with China, with the combined value of its imports and exports registering at $7.34
billion.

2014: G1
North Korea institutes the May 30 measures that provide some market reforms for
enterprise managers, allowing them, among other things, to keep a share of their revenues,
hire inputs at market prices from suppliers of their choice, sell excess output, and enter
into joint ventures. These reforms might have recognized a private class of emerging
entrepreneurs, though they are not fully implemented. Nevertheless, North Korea
continues to see an increase in small-scale entrepreneurship. North Korea is estimated to
have a GDP growth rate of 1.0 percent, according to the Bank of Korea.

2015: G2
North Korea is estimated to have a GDP growth rate of -1.1 percent, its lowest growth
rate since 2007, according to the Bank of Korea. A bad drought in 2015 negatively
impacts North Korea’s economic growth. The results of the small-scale entrepreneurship
are noticeable as that activity continues to grow. Trade with China continues to grow.

2016: G2
North Korea’s GDP is estimated at $28.5 billion in 2016 with the largest growth in nearly
twenty years of 3.9 %, according to the Bank of Korea. This impressive gain in GDP may
be partially attributable to the recovery from the bad drought in 2015. The Kaesong
Industrial Complex is closed.

2017: G2
Market activity and entrepreneurial growth have continued, especially in Pyongyang.
Street vendors, luxury cars, high-rises, and modern supermarkets are all much more
present in Pyongyang. The private sector may now be producing up to half of North
Korea’s GDP. The international community imposes additional sanctions on North Korea
and China begins more effective implementation and enforcement of sanctions. However,
in 2017 the sanctions do not have a noticeable effect on North Korea’s economy. The
black market exchange rate for North Korea’s currency and the price of rice, for example,
remain flat, whereas conventional economic theory holds that if the economy were in
distress, these values would be expected to rise. North Korea touts the revitalization of
local production, which has been a key policy of Kim Jong Un.