One of the biggest beneficiaries of Russia’s war against Ukraine is undoubtedly North Korea, or more specifically its leader, Kim Jong Un. Since Russia invaded Ukraine four years ago, North Korea’s foreign revenues have soared, earning $22 billion—four times what it earned in the previous four-year period. With a 3.5% growth rate, the once-isolated nation has been called the most surprising economic success story of 2026. Kim has used some of this windfall to modernize Pyongyang, which is now filled with upscale restaurants, 80-story skyscrapers, electric cars, neon lights, and modern technology including ride-sharing apps.

While Kim is triumphantly taking credit for this growth, he has Russia and China to thank. North Korea earned about $14 billion by providing military support to Russia, plus hundreds of millions more from trade and foreign aid from China. Ukraine’s government estimates that from 2024 to 2025, North Korea supplied half of the munitions Russia used on the front lines, including approximately 120 missiles and millions of artillery and mortar rounds. North Korea also sent about 14,000 troops to Russia, a number expected to swell to up to 50,000 this year.

A Growing Partnership with Russia

The military alignment between Pyongyang and Moscow has deepened significantly since the war began. Over the past 18 months, Russia and North Korea have conducted 23 high-level visits involving ministers, compared to only eight between China and North Korea. This flurry of diplomatic activity signals a strategic bond that has provided North Korea with both financial reward and geopolitical leverage. In exchange for weapons and soldiers, Russia has offered economic aid, technology transfers, and diplomatic protection. The relationship has allowed North Korea to reduce its historical dependence on China, even as Beijing remains its primary trading partner.

North Korea’s arms exports to Russia have transformed its economy. The Kim regime has been able to generate billions in revenue without subjecting its domestic industries to market reforms. Instead, it leverages its military-industrial complex and labor force to extract wealth from external partners. The influx of hard currency has also allowed Kim to reward his inner circle and invest in prestige projects that reinforce his cult of personality.

China’s Reassertion of Influence

Despite North Korea’s growing ties with Russia, China remains Pyongyang’s economic lifeline. China accounts for up to 95% of North Korea’s total external trade, although Beijing has mostly generated a trade surplus. In recent years, North Korea has seen an uptick in exports to China in goods such as wigs, hair products, and tungsten ores, with two-way trade growing this year by almost 20%. These rising economic ties are not coincidental. As Russia and North Korea have grown closer, Beijing has sought to reassert its central role in the region.

A face-to-face meeting between Kim and Chinese leader Xi Jinping took place in June of this year—the first in seven years. China is trying to catch up with the flurry of meetings between Russia and North Korea. And China is not just seeking to improve economic ties but also military ones. Xi’s military alignment with Kim serves as a counterweight to Russia and counterbalances Japan’s military buildup, while also strengthening Beijing’s military options against Taiwan. A 1961 pact commits both nations to offer immediate military aid if the other faces an unprovoked attack. As evidence of this Sino-North Korean cooperation, in March the two countries revived passenger trains running from Beijing to Pyongyang that had been suspended due to COVID-19. Direct flights between the two capitals resumed as well.

North Korea’s Citizens Are Barely Surviving

China and Russia certainly contributed to North Korea’s economic success, but it is not clear how much of this wealth trickles down to benefit the average citizen. Compared to South Korea, which has the 14th biggest economy in the world, North Korea remains incredibly poor. Seventeen million of its 27 million people live in extreme poverty. The monthly salary of a doctor is less than the amount needed to buy one kilogram of rice. UN agencies estimate that more than 40% of the population—about eleven million people—are undernourished.

One of the ways North Koreans survived economic mismanagement was through black market activity. During the avoidable famine of the 1990s, when up to 3 million people died, the rationing system was unable to deliver food or other daily necessities to most citizens. Amid state breakdown, North Koreans turned to “self-help” by engaging in illegal or quasi-legal markets, known as jangmadang, to exchange or barter goods. It started with bartering basic items like fish, vegetables, or even a haircut. This “grassroots capitalism” or “marketization from below” eventually led to smuggling, with goods from China popping up across the country.

Initially, the Kim regime tolerated these markets and even taxed them. But Kim Jong Un became concerned that modern goods coming into North Korea—such as USB drives, cell phones, and DVD players—could affect information control and propaganda. In 2020, Kim used the pandemic as an excuse to crack down on these markets with an anti-market campaign to curtail foreign influence. To stop internal market activity, citizens were told that seafood carried COVID-19. To ensure smuggling from China stopped, anyone coming in or out of the border was shot at, with shoot-to-kill orders. Since then, merchants have been actively forced back into state-administered storefronts, with profits going to the central government. This has restricted cash flows for the average North Korean and diminished survival options but has built additional capital for the regime.

Exploiting North Korean Labor

Another source of wealth for the regime is Office 39 (also known as Room 39 or Bureau 39), a secret government organization established in the 1970s to manage the Kim family’s slush funds and generate foreign currency for Kim and his elites. Its exact worth is unknown, but it may be worth billions—possibly as much as $5 billion—and functions as Kim’s personal piggy bank. In interviews with high-level defectors who had worked for Office 39, profits were generated by arms and crystal meth sales, hacking (including stealing $2 billion in cryptocurrency in 2025), and by North Koreans working overseas. Workers are mostly sent to China and Russia but have operated in forty countries around the world, mostly in construction, textiles, medicine, information technology, and food service.

The workers are watched constantly by North Korean agents to ensure they don’t defect. They work 16 hours a day, earning about $10 a month. The program of sending North Korean labor abroad generates about $500 million in foreign currency revenue each year. This exploitation is a key pillar of the regime’s financial stability. The workers are essentially forced labor, with their wages funneled directly to the state. The UN and human rights organizations have repeatedly condemned this practice, but it continues unabated.

Kim Jong Un’s Personal Wealth

All of this has made Kim very wealthy. Satellite imagery has documented luxury palaces and residences across North Korea that Kim owns, along with a collection of over 100 luxury European cars, a private jet, and a multi-million-dollar yacht. Even as his people face chronic food shortages, Kim enjoys a lifestyle that rivals any global oligarch. The regime’s economic windfall has not been used to improve public welfare but to consolidate power and maintain the personality cult around the leader.

Not surprisingly, the North Korean economic miracle will not lead to any sort of democratization push, as it did in South Korea in the 1970s and 1980s. In fact, despite sanctions, North Korea is in a stronger position than at any point in decades, according to Andrei Lankov, a specialist in North Korea from the Korean Risk Group. The benefits of that growth have mostly strengthened Kim. Most North Koreans outside Pyongyang have seen little of these gains, and the gap between the capital and the countryside remains vast. The regime’s resilience is a testament to its ability to exploit external crises and internal repression to survive, but the vast majority of North Koreans continue to live in poverty, hunger, and fear.

Source:Forbes News