Why did North Korea believe that it could reestablish a socialist economy despite international sanctions? According to Open News, the men in the palace were expecting a substantial infusion of sanctions-busting cash from the Chinese:
North Korea expected to receive a financial aid of more than a hundred million yuans from china once the currency reform was in place, so that it provides better supply of goods. And, this is why North Korea had informed China of how and when the currency reform would be conducted although it is a domestic affair to be independently dealt with. (Note 1) But, as China keeps delaying the grant, the currency seems to be unsuccessful, and Kim Jong-Eun appears to be losing the ground in his leadership even before he got a chance to exercis his leadership.
While I remain skeptical of these insider reports about Kim Jong Il’s deliberative process, the timing certainly makes sense. Recall that China had offered North Korea a multi-billion dollar aid package about six weeks before the Great Confiscation. The Obama Administration reportedly protested, but North Korea seemed to think the money was on the way. I don’t doubt that China will find some way to prop up its puppet in Pyongyang, sanctions or not. Even so, the regime has already suffered grave damage. Every report I’ve read suggests that the Great Confiscation has brought popular discontent out into the open, which means that the time is right for an opposition movement to begin to organize.
Open News also reports that since the Great Confiscation, farmers in North Pyongan Province, in the strategic countryside along North Korea’s western corridor, are barely scraping by.
According to the Shin-ui-ju source passed on the 20th, peasants in the Shin-ui-ju periphery, South Shin-ui-ju, and nearby rural areas are suffering greatly. For every 20 household, about 16 are without heating due to the lack of firewood and half are surviving only one meal a day consisting of a whole corn. This is the same reality for North Pyong province as well as many other rural areas.
Source sees such phenomenon as the aftermath of the currency reform. Initially, the peasants were granted special privilege by receiving many million wons of the new currency. However, upon the government’s false advertisement of lowering about 1% on prices and promising 20won for a kilo rice, the peasants spend their new cash away.
When peasants get a hand on large shares of money, they typically spend it on clothing or purchasing home appliances such as T.V set, refrigerator, washer, and large recorder. Men prefer bicycles or motorcycles, and women tend to spend it on expensive clothing. Since state stores such as the First Department Store in Pyong Yang are not found in the rural regions, peasants buy the same product more expensively through private dealers. [Open News]
Recent reports of anti-government leafleting in that area suggest that things weren’t prosaic there before the Great Confiscation, either.