[interview] Sanctions Relief Unlikely to Revive North Korea Economy

Even if all sanctions were lifted, North Korea's economy would remain in "bad shape" without further reforms, according to a Washington-based North Korea expert.

De-collectivization coupled with the selling of state assets to rich North Koreans should be the two-pronged approach taken in reforming the North's crippled economy, Bill Brown, an adjunct professor at Georgetown University School of Foreign Service, said in an email interview.

His remarks came a week after a second summit between U.S. President Donald Trump and North Korean leader Kim Jong-un broke down over disagreements on sanctions.

De-collectivization, which recognizes the advantages and greater role of markets, will help speed up individual contracts, thereby leading to a market economy ruled by supply and demand, with the desired outcome of rapid economic growth, he said.

Currently, under the collectivization system, the rural population is guaranteed a secure but low level of subsistence.

Brown expressed hope that the North would promptly de-collectivize as China did 30 years ago, given that the country is losing support among its state employees.

"One of their U.N. officials said last week that due to the sanctions, the government had to sharply cut food rations, which by now are only for state employees, not everyday people," he said.

As it appears that the food supply in the markets is fine, I think this is additional evidence that the state is losing ground. It can't even feed its own workers and military.

He said de-collectivization would make farmers happy and their output would soar.

"Ideologically this is difficult but Kim has been hinting at something like this and experiments have been done. So now he should go ahead and do it."

In Brown's view, selling state assets to rich North Koreans will bring in money that can be used to raise state salaries that have remained "too low" compared to growing market income.

A pay increase for state employees ? about one-third of the workforce there ? is not easy as it is feared this would create inflation, similar to what happened in the recent past.

The solution reflects the complex macroeconomic situation there, Brown explained.

Kim brought inflation under control and stabilized the North Korean currency (the won) by, among other things...