Kim Jong Un's unfinished hospital shows sanctions are biting

Kim Jong Un lashed out at the building committee over "serious problems in economic organisation for the construction". PHOTO: EPA-EFE

SEOUL (BLOOMBERG) - Kim Jong Un's latest appearance, in which he dressed down officials building a showcase hospital, illustrates why the North Korean leader can't afford to languish under sanctions forever if he wants to fix his economy.

In a visit to the Pyongyang General Hospital, Kim lashed out at the building committee over "serious problems in economic organisation for the construction", the official Korean Central News Agency said on Monday (July 20).

Kim "rebuked" the committee for not following ruling party policies and accused it of "careless" budgeting.

The tense field inspection comes less than three months before the 75th anniversary of the Workers' Party of Korea on Oct 10, which Kim in March had chosen as a symbolic completion date.

The project appears to have been hit by a shortage of building materials, underscoring the difficulty he faces to improve living conditions while toiling under a US-led sanctions campaign designed to curb his nuclear program.

"There's simply nothing more he can do but to scold officials, or people would start questioning Kim's legitimacy to deliver people's needs," said Cha Du-hyeogn, a visiting research fellow at the Asan Institute for Policy Studies.

The country's economy risks shrinking 6 per cent this year, according to Fitch Solutions, which would be its worst contraction since a historic famine more than two decades ago. The coronavirus, which prompted North Korea to shut its borders in January - virtually eliminating what little legal trade it had - helped exacerbate the problem.

More than two years after a flurry of summits with US President Donald Trump, China's Xi Jinping and South Korea's Moon Jae-in, Kim still hasn't achieved the sanctions relief he wanted in exchange for any offers to scale back his nuclear weapons program. Besides curbing North Korean imports of metals, machinery and petroleum products, the sanctions also restrict Kim's access to foreign currency.

The language coming out of a recent Central Military Commission meeting indicates denuclearisation is off the table for now for Kim, and his regime will continue to build up its atomic arsenal, the 38 North website, which specialises in North Korea, said in a Monday commentary.

Sanctions have made it difficult to get medical equipment to the Pyongyang General Hospital site, the NK News website reported last month. Kim has dedicated two of his two dozen publicly announced trips this year visit to the twin-towered facility, which covers an area of 60,000 square metres - roughly the size of the former World Trade Center site in lower Manhattan.

Kim's other major construction project - the Wonsan-Kalma tourism zone on the east coast that includes more than 100 buildings, an airfield and a sports stadium - has made major progress over the past nine years but remains unfinished, apparently hit by a shortage of building materials, 38 North reported in April, based on analysis of satellite images.

North Korea learned a lesson about the dangers of expensive construction when it started building the 105-storey Ryugyong Hotel in 1987 and saw work halted for 16 years because the costs of its completion on the building that dominates the Pyongyang skyline could have bankrupted the state. The regime under then leader Kim Jong Il for a time airbrushed the hotel out official photographs. It has undergone a facelift but never opened for guests.

Rachel Minyoung Lee, a former US government analyst specialising in North Korea, said Kim's attention to the project appeared intended to demonstrate that he's a pragmatic and hands-on leader.

"North Korea likely needed to launch a feasible economic project - smaller scale, but nevertheless symbolic," Lee said. "Kim Jong Un clearly thought building a hospital in the nation's capital met those conditions."

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