Pyongyang, North Korea - It's rush hour and the once-empty streets of the North Korean capital now show signs of traffic congestion. Expensive cars with tinted windows occasionally pass crowded public buses and trucks crammed with soldiers, prompting traffic officers to raise their hands in a military salute.
In downtown Pyongyang, department stores are filled with goods from all over the world: Swiss chocolates, packets of Doritos, German sausages, Coca-Cola and Italian wine. Clothes from the Spanish Zara stores, Chanel makeup kits and perfumes, watches and jewellery stock the shelves. Chinese middlemen, who serve as brokers between North Korean trading firms and China-based companies, secure a continuous flow of goods and equipment into the country.
Mobile phones and elegant handbags lay on the tables of smartly dressed young women who sip drinks at Sunrise Coffee and Bakery on Changjon Street. Waitresses roam the tables with iPads, ready to place customers' orders.
The latest figures show that 1.4 million people in North Korea own a mobile phone and demand for computers is high. Although only a handful of the population has access to the Internet, owning a laptop is a sign of prestige.
Sanctions are not working in any sense. The North Korean government faces some minor problems it can easily manage.
A new fleet of taxis cruise the streets of Pyongyang, alongside the outdated, poorly maintained public buses and trams. There are reportedly more than 1,000 taxis imported from China.
Over the past two years, Pyongyang has been transformed. The military barracks and shabby cottages on the banks of the Taedong River were replaced by roller-coasters, playgrounds, tennis and basketball courts. Children line up to get marshmallows and candy floss from street vendors at the parks.
'Joy of the people'
State-controlled media claim the parks are "constructed for the joy of the people". But the joy has a price: 10 won (0.8 cents) to enter the park and 60 won (5 cents) to use the playground. Renting a pair of roller skates costs 2,000 won ($15), while an hour in the basketball court is priced at 4,000 won ($31).
Official statistics are not available, but monthly state wages in the country are between 2,000 and 4,000 won. The state subsidises food rations and housing is free, but the majority of North Koreans try to supplement their income in the informal private sector.
Changjon Street, with its high-rise apartments, new restaurants and department stores, is at the heart of the transformation.
Nineteen-year-old Lee proudly points to the upper floors of a residential compound on Changjon Street. He moved to a five-room apartment on the 42nd floor in 2012, with his parents and two younger brothers. Lee says getting this apartment is proof of the "love and care" from North Korea's leader Kim Jong-un to his people.
Lee is a student of fine arts at the prestigious Kim Il Sung University. He spends his spare time painting idyllic scenes of Pyongyang on the banks of the Taedong River with his girlfriend, an 18-year-old student.
Their families belong to the fortunate middle-class of North Korea. There are no figures on how many belong to the middle-class, and officially there are no class differences. However, those living and working in North Korea have observed this non-existent middle-class has been expanding since 2009 - not just in the capital, but beyond.
While the affluent middle-class is growing, the majority of North Koreans still rely heavily on international aid. Two-thirds of the population struggle to secure their daily meal, while some 2.4 million people - mainly children, pregnant women and the elderly - need food assistance to survive, according to the World Food Programme.
Sanctions and economic growth
Following North Korea's February 2013 nuclear test , sanctions were imposed by the international community, banning imports and financial transactions. Sanctions and economic isolation are supposed to stem financing for North Korea's nuclear programme and halt the import of luxury goods to the country's elite, but their impact is not apparent in Pyongyang.
|While the affluent middle-class is growing, the majority of North Koreans still rely heavily on aid [Fragkiska Megaloudi/Al Jazeera]
"Sanctions are not working in any sense," says Andrei Lankov, professor of Korean Studies at Kookmin University in Seoul, South Korea, and author of The Real North Korea: Life and Politics in the Failed Stalinist Utopia.
"The North Korean government faces some minor problems it can easily manage and the general population, while very poor by the standards of the region, do not feel much pressure. Had such pressure existed, the people in North Korea would have little if any way to challenge government policy."
He adds: "The period of sanctions was also the time when the North Korean economy experienced a modest but noticeable growth, while the North Korean nuclear programme did not slow down."
The Bank of Korea reported that North Korea's economy grew 1.3 percent in 2012, compared to a 0.8 percent annual growth the year before.
Another report released earlier this year by the Hyundai Research Institute, a South Korean private think-tank, said North Korea's per capita GDP grew 4.8 percent in 2013.
Mathieu Duchatel, head of the China and Global Security Project at the Stockholm International Peace Research Institute, notes that China - North Korea's most important ally - is the key player in the North's economic surge.
"China is moving in the direction of 'smart sanctions', trying to enforce targeted sanctions that are designed to avoid humanitarian consequences and that leave the door open for trade of goods that are not under sanction," Duchatel told Al Jazeera.
Those left behind
But in Pyongyang, the economic advance seems to only affect a small part of its three million residents. Behind the shiny new apartment blocks, deeply potholed streets surround faded old concrete buildings.
|Foreign aid has helped the Chollima district hospital in Nampo city to set up two new operating rooms, but it suffers from a lack of antibiotics and anaesthetics [Fragkiska Megaloudi/Al Jazeera]
Electricity cuts are common and central heating is a luxury few can enjoy. People wear winter jackets inside their apartments in winter and early spring; hot water is a rare commodity. According to data from the latest Population Census, six out of 10 households in urban areas use coal as their main fuel for heating and cooking; three out of 10 employ wood-burning stoves.
These cylindrical coal briquettes can be seen along the backstreets of Pyongyang, covered with plastic sheets and lined in long tidy rows or piled up on balconies. In the narrow alleys, men and women - with faces blackened from the dust - shovel black sticky bricks of coal dust, water and starch into round metal presses and leave them to dry.
In the countryside, people turn to wood or makeshift briquettes made of sawdust and dried corn stalks - or any other dried vegetation that could be mixed with water and earth to produce the man-made "coal".
The further you move away from the capital, the more stark the differences are between the expanding middle-class and the rest of the population.
A two-hour drive west of Pyongyang in Unchon County, South Hwangae, the "anaesthetics" of the capital give way to people in dull brown or blue suits, riding rusty bicycles crammed with firewood on the back seat. They are not allowed to talk to foreigners and they cautiously avoid eye contact. In the corners of the narrow streets, old men sit with a hammer and what looks like leather, waiting to repair shoes and belts. Barefoot children in T-shirts shiver in the morning chill of late autumn.
International organisations here - and only a few are based in North Korea - are struggling to run their projects, and in the end the highest price [of sanctions] is paid by ordinary citizens.
Healthcare is free to all citizens, but hospitals face serious shortages. In the Chollima district hospital in Nampo city, some 80km southwest of Pyongyang, only a handful of patients line the cold corridors. The examination rooms look deserted. Despite the fact that the hospital, helped by foreign aid, has two new operating theatres, it suffers from a lack of antibiotics and anesthetics. Plastic vials, disposable plastic syringes, needles and transfusion sets line an autoclave in order to be reused.
Women and children suffer
One-third of children under age five don't get enough food and suffer from anaemia, and a quarter of women in the reproductive age are undernourished, according to UN agencies. International organisations in North Korea struggle to find the necessary funds to continue their operations.
The latest sanctions imposed by the international community did not help.
"No international organisation is currently able to send funds from their respective headquarters to one of the Korean banks. Our projects are affected by the blocked bank transfers and also by a much more difficult procurement process," says Katja Richter, country director of the German aid group Welthungerhilfe.
"Normal citizens outside Pyongyang hardly have any access to luxury goods, which are banned now, and they have no direct relation to government business. International organisations here - and only a few are based in North Korea - are struggling to run their projects, and in the end the highest price [of sanctions] is paid by ordinary citizens."
Meanwhile in Pyongyang, the priorities are set: In January, the North Korean government orchestrated an official ceremony to announce the latest Chinese investment in the country - a new luxury shopping mall that will soon open its doors in east Pyongyang.