World Economy

Despite Sanctions, North Korea SEZ Thriving

Despite Sanctions, North Korea SEZ ThrivingDespite Sanctions, North Korea SEZ Thriving

Despite North Korea’s deepening isolation, along its border with China and Russia construction of tourist hotels is brisk and mountains of Siberian coal await shipment to Shanghai. A bustling bazaar-style market is overflowing with goods from Mickey Mouse baby shoes to bags of dried kiwi fruit.

The Rason Special Economic Zone, a North Korean experiment in limited capitalism, isn’t likely the next-big-thing-in-Asia that officials here paint it to be. But even as the country is hunkering down under the toughest UN-backed sanctions in decades for its nuclear and long-range missile programs, it is, by North Korean standards, thriving, Reuters reported.

For the US, South Korea and Japan, Rason is an irritating reminder that not everyone is on board with shutting off trade to Pyongyang, especially when there is money to be made. The three countries are spearheading efforts to impose even more punitive measures on North Korea for its fifth nuclear test, which was conducted last week and was the North’s most powerful to date.

North Korean officials in charge of trade promotion acknowledge that sanctions and fears of image problems resulting from doing business with the North have significantly slowed the expansion of new foreign businesses—from an average of more than a dozen each year over the past five years to exactly zero so far in 2016.

But they also note that thanks largely to China and Russia, the sanctions have hardly been a death knell. That holds for North Korea in general—its GNP is believed to be growing slightly and signs of economic improvements such as more goods available, more taxis and traffic on the streets and more people frequenting markets, particularly in the capital, Pyongyang, are noticeable.

“The more sanctions we are subject to, the more powerful our country will become,” Choe Sung Jin, an official in charge of trade promotion, told The Associated Press on a visit to the remote zone shortly before Friday’s nuclear test. Clearly the sanctions hurt, but Choe’s remark is something along the lines of the old adage, “what doesn’t kill you make you stronger”.

Rason is as far from Pyongyang as a North Korean city could be, tucked into the country’s northeast corner. Its economic zone has been a mixed bag of success and failure, but that is only partially because of sanctions.

A Russian railway from Khassan in Siberia across the border to Rason began operations in 2014. Kim Chol Ho, the port’s vice manager, said shipments have been steadily increasing ever since.