Archive for June, 2023

North Korean market prices suggest serious food shortages

Tuesday, June 20th, 2023

By: Benjamin Katzeff Silberstein

Recently, the BBC became one of few global outlets to succeed in interviewing ordinary North Koreans inside the country about the food situation. The image is dire: starvation, empty markets and other signs of severe food shortages.

In the past few years when reports of food scarcity have surfaced from North Korea, market prices have given remarkably little credence to the claims. Not so at the moment. Comparing current prices levels with historic ones, the overall picture suggests that prices since the onset of the Covid-19 pandemic (and the North Korean government’s border closure), market prices have moved to a permanently higher level, indicating that overall supply of food is lower. This does not give us a specific number on how severe the food shortage is, but it gives quantitative evidence that food has become significantly scarcer since the onset of the pandemic.

To show this, I use market price data gathered and reported by Rimjingang, an online news outlet with sources inside North Korea that regularly publish market prices. I chose this specific data set because it is transparent and specific about where in the country the data comes from. Due to tightened border controls under Kim Jong Un’s tenure, information from inside North Korea has become even more difficult to access. Therefore, transparency about the data is crucial.

The price data almost exclusively comes from the region bordering China, such as Ryanggang and North Hamgyong provinces. The border region is different from the rest of the country in several crucial respect, perhaps most crucially in that it is much more involved in trade and smuggling with China than other regions. Nonetheless, the North Korean market system is integrated to some extent, with goods being transported around the country for sale. Although dilapidated infrastructure and harsh state regulations make internal travel difficult, the overall price trends very likely hold for the national level.


Market changes after Covid-19

Prices fluctuate frequently on North Korea’s markets, but usually within a more or less fixed span. The following graph shows prices for North Korea’s two main staple goods, rice and corn, from 2017 until mid-June this year. The prices are shown in renminbi, the most commonly used foreign currency in the border region, to check for inflation in the North Korean currency, Korean People’s Won (KPW).

The left side of the graph shows prices before Covid-19. Aside from a few nonsignificant bumps, prices hovered between 1–1.5 RMB for corn and 3.5 RMB for rice for the most part prior to the inception of the pandemic, fluctuating throughout the year. Interestingly, although North Korea closed its borders in January 2020 to protect against the virus, prices don’t truly begin to move until October that year.

Over the course of the next few months, however, prices for both rice and corn climbed significantly.

Rice prices rose from their regular level to move between 4 and close to 6 RMB in late 2020 and early 2021 and shot up drastically during the spring and summer months, the lean season before the fall harvest, when the storage of food begins to dry up. Prices normally go up during this season, but perhaps a spreading awareness that the border wouldn’t open anytime soon pushed prices up much further than normal. After shooting up to close to 15RMB and remaining much higher than normal for several months, prices stabilized at an interval between 8 and 4.5–5 from the fall of 2021 and onward. Prices have been moving around 5RMB since the end of 2022. That is an approximate 1.5RMB difference from the normal price level, or 42 percent.

On the one hand, prices now are much more stable than last year’s fluctuations to very high levels. On the other hand, the price level is now permanently higher, meaning that North Korean consumers face a permanently higher price level. Higher prices, logically, suggest that supply has dropped. In other words, with food supply lower, people must pay significantly more for the same amounts of food.

We see the same dynamics in prices of corn. Graph 3 below show corn prices from the fall of 2017 until the latest observation in mid-June:

Corn is a generally less preferred staple good for North Korean consumers, meaning that people tend to increase their consumption of corn when food overall becomes more expensive. From moving around 1.5RMB/kg before the pandemic, corn prices climbed significantly from late 2020, hitting almost 3RMB – a doubling of the normal price level – by March 2021. Prices then climbed further during the rest of the year and hovered around 4RMB in the late summer and fall. Since late 2022, prices have moved between 2.3 and close to 3RMB, meaning they have increased by at least more than half on the lower end of the spectrum, and doubled for the higher end.


None of this is evidence of a widespread famine in North Korea, and the BBC’s three eyewitness testimonies also do not fully prove anything of the sort. But that the country is experiencing a significant food shortage seems beyond doubt, as suggested both by reports from people inside the country as well as market prices. These prices do not tell the full story. The situation likely varies significantly between regions, and the state appears to have increased food ration distributions to parts of the public (see one example here). That trade with China has continued to open up little by little in 2023 has probably contributed to food prices stabilizing as well. Still, current price levels remain far higher than normal. For a population’s whose margins are mostly very small, if it doesn’t amount to starvation, it means that an already difficult situation has gone from bad to worse.


MISSING THE TARGET: The complicated truth about sanctions on North Korea

Friday, June 16th, 2023

The following article was published in East Asia Forum Quarterly‘s June issue, and is re-published here with permission. 

On the surface, sanctions seem to have had little impact on North Korea’s behaviour. At the time of writing, the world is waiting for the launch of a new North Korean military spy satellite that Supreme Leader Kim Jong-un announced on 19 April 2023.

North Korea is under one of the harshest multilateral sanctions regimes of any country in the world. But the country still circumvents sanctions regularly through complex smuggling operations at which it is by now very adept. This situation raises questions about whether sanctions on North Korea have failed.

It is true that sanctions have not reached the stated political goal of inducing North Korea to give up its nuclear weapons. The country has made impressive advances in missile technology and is evidently capable of acquiring the necessary technology despite sanctions. The ‘spy satellite’ launch would be one of around 30 missiles tested in 2023.

Although North Korea has ways to evade sanctions, this does not mean sanctions have no impact. Sanctions interplay with domestic governance and economic systems in ways that are complex and often hard to fully evaluate. The alternative to sanctions is not an open, liberal and free-trading North Korea, but likely a slightly more well-off version of its current state.

The issue of evasion illustrates why the impact of sanctions is so hard to evaluate. Sanctions-evading actions are not rare events, but are institutionalised within North Korea’s economy. Since the 1970s, North Korea has systematically smuggled alcohol, tobacco, drugs and other contraband through its diplomatic networks abroad. These activities continue today and with North Korean capabilities expanding into the cyber realm, sources of illicit income will likely continue to constitute an underestimated part of the regime’s hard-currency revenue flows.

But sanctions evasion and smuggling are very expensive activities. For Chinese, Taiwanese and Singaporean trading companies and entities to risk smuggling oil to North Korea, Pyongyang must pay a massive risk premium on its purchases. North Korea has to pay well above market prices to give sellers a reason to take the risk of arrest and prosecution for sanctions violations.

The same is true for illicit North Korean exports. Sanctions do not stop coal exports entirely, but they slash the prices that North Korea can charge. Any buyer—almost always China—will only risk importing from North Korea if prices are cheap enough to outweigh the risks. Even prior to the harsher sanctions levied in 2016 and 2017, China, through its position as a virtual monopoly buyer, consistently paid below-market prices for North Korean coal. This dynamic is likely even stronger today, as Chinese imports of coal and other sanctioned North Korean goods continue but go mostly unrecorded.

Despite North Korea’s evasion tactics, sanctions are indisputably hurting the North Korean economy. The country’s exports are estimated to be worth only a few hundred million dollars per year—much smaller than its . The UN Panel of Experts estimated, for example, that North Korea earned around 370 million dollars from sanctions-violating coal exports in 2019. This is only a fraction of the 1.19 billion dollars it earned from such exports in 2016, before the harsher sanctions.

The civilian impact of sanctions is unclear. On one hand, sanctions have likely dealt a harsh blow to labour-intensive industries like textiles, where a of workers are women, resulting in increased unemployment and lower wages. The falling incomes of North Koreans working in sanctioned industries substantially dampen the wider economy. On the other hand, there is no evidence that sanctions have driven up the price of food or other essential goods.

Sanctions have undoubtedly worsened North Korea’s food shortage by hindering imports of fertiliser and spare parts for agricultural equipment. North Korea’s own border closure, though, likely also provided an obstacle to foreign trade. But the impact of sanctions on North Korea’s food system is minimal compared with the regime’s refusal to undertake basic reforms in agriculture. The government bristles at dismantling collective farms or letting farmers sell their products on open markets.

Trade by evasion should logically become easier and cheaper. For sanctions to be effective against North Korea, China—which constitutes more than 90 per cent of North Korea’s foreign trade—would have to implement them. As US–China tensions continue to grow, reasons for China to implement sanctions on North Korea are diminishing.

Reports of North Korean trade deals in weapons and labour with Russia in the wake of Russia’s invasion of Ukraine are already circulating. Very little is confirmed about these transactions, but there is evidence to support increased economic exchange between the countries. Earlier this year, satellite imagery from the border area indicated that Russia was increasing oil exports to North Korea while exporting unknown goods that could be arms destined for the Wagner Group.

But this does not change North Korea’s situation. Combined with its poor global reputation, sanctions will continue to make North Korea dependent on a very small number of trade partners—mainly China —who can charge highly unfavourable prices.

None of this is to say that the current thinking on North Korea sanctions is without serious flaws. The demand that denuclearisation should come before any relief on sanctions, for example, is unrealistic. But many also exaggerate the possible gains of abolishing sanctions. A common misperception is that, were sanctions to be lifted, North Korea would open its doors to foreign investors who would flock to the country for its strategic geographic location and cheap labour.

Removing sanctions would not change the basics of North Korea’s economic system. Despite a permissive attitude towards markets during former supreme leader Kim Jong-il’s reign and the first few years of Kim Jong-un’s, harsh state control over the economy best serves the regime’s political and social goals by allowing it to control the distribution of resources. Sanctions hurt, but removing them is no silver bullet for political or economic progress.

Benjamin Katzeff Silberstein is Associate Fellow at the Swedish Institute for Foreign Affairs and a Postdoctoral Fellow at the Safra Center for Ethics at Tel Aviv University.


How large are Russia’s oil exports to North Korea in context?

Thursday, June 15th, 2023

By: Benjamin Katzeff Silberstein

For the first time since 2020, Russia recently reported oil exports to North Korea in their official trade statistics. These numbers obviously do not include the unknown but likely large quantities of oil that the country buys from Russia under the radar, through smuggling. According to the official numbers,

Russia had exported 67,300 barrels of refined petroleum to North Korea by April, the first deliveries reported to the U.N. since Moscow said it shipped 255 barrels of refined oil to the North in August 2020.

Under U.N. sanctions against Pyongyang’s nuclear and missile programmes, countries are required to report monthly sales of refined petroleum to the Security Council North Korea sanctions committee.

The oil sales began shortly after train travel between Russia and North Korea resumed in November for the first time since 2020, raising expectations of a resumption of trade.


Although likely an underestimate of the total (including smuggling), this number is significant, not least because of the rapid increase. But as with other current trade figures on North Korea right now, as the border seems to be opening slowly to trade, the numbers are only a fraction of North Korea’s regular imports. North Korea’s annual imports of refined petroleum before the pandemic, for example, were estimated at 4.5 million barrels per year. Assuming the same pace of Russian exports continues through the year, that would put these imports for North Korea at around 3 percent of total annual imports.

This is not to say that the news isn’t significant, particularly if it marks the beginning of a longer trend. But for now, North Korea’s oil and fuel imports remain, as far as we can tell, far lower than their regular levels.