North Korea Completes Great Confiscation (Upated)

[Updated below.]

By now, it is December 7th in Pyongyang, and the period for exchanging old currency for new has passed. By filling the streets with troops and police, the regime has, for the moment, managed to contain the “fury and frustration” of people who, robbed of their savings and deprived of food rations, no longer know how they’re going to make it through the winter.

For now, only isolated outbreaks of dissent are reported. The people know that this regime will stop at nothing to preserve the state of terror, most recently evidenced by wire service reports that border guards have been given shoot-to-kill orders to prevent an exodus of desperate, hungry people:

North Korea has ordered its border guards to open fire on anyone who crosses its border without permission, in what could be an attempt to thwart defections by people disgruntled over its recent currency reform, a news report said Saturday.

The National Defense Commission — the top government body headed by North Korean leader Kim Jong Il — recently instructed soldiers to kill unauthorized border crossers on the spot, South Korea’s mass-circulation Chosun Ilbo newspaper said, citing unidentified sources inside the North.

It said the order could be an attempt by the communist government to stop members of North Korea’s middle class who are angry over suddenly being deprived of their money from leaving the country. [AP, Kwang-Tae Kim]

The latest reports speak of a mood that could have been written into Madame Defarge’s knitting.

Angry citizens burned piles of old bills at two separate locations in the eastern coastal city of Hamhung on Monday, the Daily NK, a Seoul-based online news outlet that focuses on North Korean affairs, reported late Thursday, citing an unidentified North Korean resident. It quoted the resident as saying he saw graffiti and leaflets criticizing North Korean leader Kim Jong Il in and around a college in Hamhung — a rare move in a country where the totalitarian government keeps tight control over its 24 million people. [AP, Kwang-Tae Kim]

“People are mad at Kim Jong-il,” says Ha Tae Keung, head of Open Radio for North Korea, which broadcasts two hours a day of news from Seoul into North Korea. “Suddenly your wealth is gone, and you have nothing. It is very difficult.” The question, he asks, is “whether the protest is organized or random.” [Christian Science Monitor, Don Kirk]

Some say that such measures, combined with the currency grab, fuel resentment. “There is huge demand for a more open economy and society,” says Kim Sang-hun, a North Korean human-rights activist. In Myanmar, the closest parallel to North Korea in the vicious incompetence of its thugocracy, the cancellation of high-value banknotes in 1988 contributed to a nationwide uprising. North Korea may be some way from such an explosion. But you might expect confidence in the regime to be at a low ebb. [The Economist]

And we can safely dispense, once and for all, with the myth of a North Korea that only wants our help to reform gradually, a myth generally fueled by the regime’s periodic showcase efforts to sustain itself with hard currency. (These efforts tend to generate a great deal of shallow press coverage but seldom last very long, and they never penetrate far into North Korea itself.)

In a sign that the regime may want to screw the rich as well as the poor, the regime announced all transactions in foreign currency would be banned without exception, and that even foreigners would not be permitted to spend hard currency there. In Pyongyang, people were “stocking up like mad on necessities” before the end of the exchange period, suggesting that the currency revaluation will only make the inflation problem worse. Before the exchange, the price of a kilo of rice surged from 1,700 won to 15,000.

The first quasi-official acknowledgement of the Great Confiscation comes via the pro-Kim Jong Il, Japan-based Chosun Sinbo, which “normally reflects official thinking” except when it’s endorsing American politicians while they are adored by the American media (though the North Koreans may be having second thoughts by now). The Chosun Sinbo has run a rather remarkable interview with Jo Song-Hyon, an official with the North Korean Central Bank, who asserts in fluent doublespeak that the Great Confiscation is widely popular even as he implicitly acknowledges the “disorder” it has triggered:

The newspaper said the reform had widespread support because it favoured those who have worked “faithfully for their nation and society.” It quoted Jo as saying North Korea would take more steps to stop disorder while all shops and restaurants will be banned from trading in foreign currency. [….]

North Korea will further strengthen “socialist principles and order in economic management,” Jo was quoted as saying. The currency measure “will weaken the role of markets and expedite the distribution of goods through a state-controlled commercial network,” he said. [AFP]

Yonhap’s translation of the interview is a bit different from AFP’s:

“An absolute majority of workers from laborers, farmers and office workers are giving their support to this government measure,” Jo said. [….]

“The imperialists’ vicious isolation and suffocation maneuvers against us, subsequent natural disasters and the fall of the socialist market have posed great impediments to the normal economic development of our country,” Jo said. He even mentioned the so-called “arduous march” of the late 1990s, during which about 3 million North Koreans died from hunger, according to foreign estimates. The official said productivity fell and the government was forced to spend lavishly to maintain the nation. “As a result, the currency became inflated, and an abnormal imbalance in the people’s economic development has ensued,” he asserted.

The reform is aimed at curbing burgeoning free market trade, a necessary step to build a strong socialist nation in three years, he said. North Korea, which depends on international food aid to help feed its 24 million people, has set the target year for economic revival at 2012, the birth centennial of Kim Il-sung, the country’s founder and father of the current leader Kim Jong-il. “We are not headed toward a free market economy, but will further consolidate the principles and order of the socialist economy” with the revaluation, the official said. [Yonhap, emphasis mine]

You’re going to love the reason this regime found it necessary to shock its entire population with a surprise announcement. Yes, North Korea is now a fastidious foe of money laundering!

He also said the reform took effect so suddenly so as to give no time for money laundering. “If this measure is made public beforehand, there would arise time for illegal money to become legal by subterfuge,” he said. “In the future, a large share of economic activities will be subject not to the market, but the planned supply and distribution system” of the government, he said.

The measure is expected to reduce cash circulating in the market. Jo said people can make exchanges for new banknotes for seven days ending Sunday, and “bills that were not exchanged during the period — and our currency that has been illegally taken outside the country — will become entirely invalid.” [Yonhap]

Of course, for unadulterated blackwhite, nothing beats the original source:

The Korean people are now striving hard to build a great, prosperous and powerful socialist nation, giving a full display to the spirit of self-reliance and hard working. This spirit is the powerful ideological and moral weapon of the Korean people, who have covered the road of victory and glory under the leadership of the Workers’ Party of Korea. Since the torch of a new great revolutionary upsurge of the Songun era was kindled the Korean people have fully demonstrated what miracles and feats the owners of this spirit can perform on all fronts of the building of such a country. [….]

The Korean people have still suffered from different shortages in their efforts for finally building a thriving nation. However, there is nothing impossible for the Korean people, who, closely united around the WPK, have an indomitable spirit, a superior socialist system and a solid foundation of self-reliant economy consolidated in trying ordeals.

It is thanks to the spirit of self-reliance and hard working that they have established the Korean-style production system based on domestic raw materials and resources, introduced the Juche-oriented up-to-date technologies and built monumental edifices with an indefatigable will and strenuous efforts. The Korean people are convinced that only in the spirit of self-reliance and hard working, can they emerge victorious and usher in the future of a powerful nation. [KCNA]

If North Korea had an organized opposition, and if that opposition was prepared to continue the currency exchange program without limits and with counterfeit versions of the new North Korean currency, that opposition would make itself very popular over the course of this coming winter. I’m just saying ….

Update 1: This Chosun Ilbo report appears to the be basis for the “shoot-on-sight” reports. It, in turn, cites the Russian business daily Kommersant and “sources” inside North Korea:

The North Korean Army is on standby and ready to quell any protests against last week’s drastic currency reform, Russian business daily Kommersant last Friday quoted diplomatic sources in North Korea as saying. The sources said authorities had ordered the Army to stand by as outrage grew in cities across the North, with critics describing the reform as daylight robbery.

North Koreans are panicking as all shops were ordered closed during the currency reform period and they can no longer use any money they have saved up. Foreign diplomats are meeting with North Korean authorities in efforts to persuade them to reverse the reform, the sources added. [Chosun Ilbo]

I don’t know if the dissent is spreading or if more reports are simply leaking out.

According to sources in the North, the National Defense Committee has ordered guards on the border with China to shoot at will at anyone who crosses without permission. This is seen as an attempt to thwart defections by people disgruntled by the currency reform.

The sources said there could be a mass defection of middle-class North Koreans who have suddenly been deprived of their money. One South Korean intelligence officer said, “We don’t have any information that there’ll be a riot or a mass defection, but since North Koreans have never so far taken collective action, they are more likely to choose defection if the situation gets worse.”

The Ministry of Public Security has been on emergency alert after old 5,000-won bills carrying the image of Kim Il-sung were found torn or damaged on piles of garbage in Chongjin, North Hamgyong Province, Hamhung, South Hamgyong Province, and Pyongsong, South Pyongan Province. Graffiti and leaflets criticizing North Korean leader Kim Jong-il have also started to appear, the sources added. North Koreans are reportedly reluctant to replace old bills with new ones as a gesture of protest against the currency reform.

I don’t claim to know what’s going to happen next. But to the North Korean people, this is a very big deal, and I’ve based on everything I’ve read, they’ve never been angrier.