North Korea's elusive 1 percent thrive on overseas connections

SEOUL, April 18 (UPI) -- They drive BMWs, own Samsung televisions and import household pets from China. The state has built golf courses, a ski resort and riding stables for their leisure.

North Korea's elite have been described as leading lives of luxury unimaginable to the rest of the population, and as the group most loyal to leader Kim Jong Un, are often the target of U.N. economic sanctions.

Who they are -- or are becoming -- is the subject of growing speculation, especially in a rapidly changing North Korea. But experts watching the reclusive country are coming to understand this enigmatic group in different ways.

John Park, a faculty affiliate with the Project on Managing the Atom at the Harvard Kennedy School of Government, told UPI that North Korea's top 1 percent have been able to thrive because of their activities overseas, especially in China.

"North Korea is not a traditional nation state. You're looking at a cleavage between the 1 percent and the 99 percent," Park said.

What that means is the population that constitutes the well-off operates differently – the 1 percent is "essentially an organization unto itself," the analyst said.

That organization is key, since the North Korean upper class make money through elite trading companies, many of which are under multiple sanctions.

"If you view it from the angle of North Korea Inc., this is a constellation of companies that basically enable the North Korean regime to carry out its activities in terms of procurement, very specialized procurement, as well as things like mineral resource sales," Park said in a phone interview.

China connection

Those revenue-earning schemes include sale of North Korean coal to China that was a "very lucrative trade" for Pyongyang before the tanking of the global commodity price for coal, Park said.

In early 2015, China's crackdown on coal-related pollution also could have contributed to a downturn in North Korea's coal industry, and Beijing's other crackdown – on corruption – is posing what Park calls the "No. 1 shock or threat to the regime."

But even with the downturn and trends in Chinese politics, the thriving Chinese economy is providing tremendous opportunities for top North Korean executives, Park said.

That's because of established commercial channels between China and North Korea. North Korea transports purely commercial items through these networks, but in some cases the channels are being used to bring in sanctioned items, like luxury goods.

"And a smaller percentage looks like it's related to the [weapons of mass destruction] program," Park said, adding that there are limits to the degree to which sanctions can hurt the elite.

"Inside of China, because of the broader sovereignty issue, it's hard to pursue Chinese actions inside Chinese jurisdiction," the analyst said.

Rooted in famine

Park also said North Korea's elite are a group that emerged from the legacy of a situation starting from the mid-1990s, when a famine devastated the country and millions died.

The regime doesn't control the population, but rewards including gifts on certain anniversaries developed a bond between the regime and its chosen people.

"If you did something the regime liked, you received increased rations. If you did something the regime didn't like, you received reduced rations," Park said, describing one aspect of the mechanism that brought about North Korea's current state of socioeconomic inequality.

The 1 percent took care of their own, which in turn, has given rise to the prosperity of places like Pyongyang.

But while North Korean defectors in South Korea have testified to the existence of a caste system that ranks members of society according to the loyalty of their family to the regime, North Koreans who stay in the country do not acknowledge the caste's existence, at least not to outside visitors.

Aram Pan, a Singaporean filmmaker and photographer who has visited North Korea 11 times, told UPI that class differences never came up as a topic of discussion during his visits. The North Korean capital isn't just for the elites either, he said.

"In Pyongyang, I see what I think is a mix" of North Koreans, Pan said.

"I personally don't think that Pyongyang is a place just for the elites. Because I do see people who generally look poorer than the rest of them," the filmmaker said.

Since his frequent trips to North Korea began in August 2013, Pan's exposure to North Koreans wasn't limited to those at the top.

A young North Korean woman and tour guide featured in Pan's videos attended the Pyongyang University of Foreign Studies, where she learned to speak English, but Pan said it's likely she was not of any particular class.

Access for travelers

The North Korea that Pan describes has embraced competition and a certain degree of openness for travelers like him, who may have become a familiar face to the staff at Korea International Travel Company, a state enterprise.

Pan said he had even been taken to the country's unofficial gray markets, but pictures and videos weren't allowed of the small stalls with galvanized steel roofs. The photographer, though, was allowed to see North Korean vendors selling household items like makeup, undergarments and men's clothes – mostly of Chinese origin.

There are now hundreds of gray markets in North Korea – signs that the country is headed in a new direction, and marketization is being allowed as a rising economic tide is lifting non-elite North Koreans with it.

While Pan said it would be hard to judge whether the improvements are real unless "you live there," he said he has noticed changes in the public infrastructure and greater access to technology.

There are now solar-powered LED street lamps in Pyongyang that weren't there in 2013 and also a "huge increase" in the number of people using phones.

"When I went to the rural markets, they weren't using cellphones, they were using the cheaper kind of old-fashioned phones, but they have phones," Pan said.

The threat of war with the United States or South Korea is always present, though it is an expectation that North Koreans grow up with, Pan said.

But in a society that is now encouraging competition among state enterprises, and gray markets are an important center of commercial life, the shadow of total war is being downsized and more North Koreans are regarding the state's rhetoric as "saber-rattling," Pan said.

They might not be alone either. The North Korean leadershp may share a similar view.

The same day North Korea warned in its state newspaper a famine and a fight against "the enemy" loomed ahead, another state outlet ran photos of Kim Jong Un and his wife on a jaunt to a place other than a bomb shelter, and perhaps a more familiar refuge to those in the West: an upscale department store associated with another kind of panacea – retail therapy.