It’s still premature to say that the North Korean regime has retreated in its attack on the system of markets, known as jangmadang, on which the majority of the people had come to depend since the collapse of the state distribution system in the 1990’s. The best available information — and the qualifiers to the aforementioned phrase should be obvious — suggests that the regime has decided against pressing the attack in certain specific places for now. For the time being, food prices and exchange rates have begun to stabilize, at least in the border provinces of Ryanggang, North Hamgyeong, and North Pyongan. Time will tell if the regime allows markets to reopen in the “core” area of Pyongsong, a city near Pyongyang that had become a trading center. The reopening of markets near the capital would likely signal an abandonment of the anti-market campaign.
Adding to the confusion, the state has finally announced the long-delayed “official” prices for foodstuffs, threatening to confiscate goods sold for higher prices, despite the fact that the goods’ market value is substantially higher. The Daily NK thinks the new prices will be difficult to enforce.
The regime’s retreat appears, remarkably, to be the result of civil unrest like the reported riot in Hamhung, what I call the Ajumma Rebellion, and alarming reports of violent attacks against members of the security forces. Via Good Friends, there is a new report of civil unrest, this time in the South Hamgyeong town of Dancheon:
Danchun City, South Hamgyong Province is named to have the highest death due to starvation by the result of the field survey, and war veteran residents from the city held a mass protest in front of their city hall. Mainly war veterans over the ages of 70-80 gathered and they were followed by other elders and residents, so the momentum was great. War veterans sat across from city office and violently complained, “We worked hard for our survival during the Arduous March, but the current movement of opening doors to the Strong and Prosperous Nation would make everyone starved to death with currency exchange. Are you going to starve us to death?” The atmosphere turned ugly for a while when residents charged up with emotions screamed after hearing war veteran’s speech. An elder cried, “What is the use of the City Party or people’s government organization when they cannot feed their people? When we followed the Great Leader during the revolution, we wanted to make sure our descendents were well-off. It doesn’t matter if old people die, but our descendents are all about to die. We don’t need such government. The City Party of Danchun City reported this incident directly to the Central Party. On January 26, the Central Party ordered, “Distribute 1,000 tons of rice that is being saved as Number 2 reserve in Danchun City farms. The City Party rushed distribution at the end of January to residents with the most difficult living situation. An official at Danchun City commented, “Residents of other cities and counties are having difficulties, but our residents seem to suffer the most. More people are dying and many households with 4-5 members are living off of 500g of corn noodle boiled in water. [Good Friends]
Even among those without the extraordinary courage needed to openly resist the state, there is more open discontent than in previous years:
Chang, Keum-Ok (alias), a resident in Danchun city, south Hamgyong province complained about the government’s inaction: “they know of people dying of hunger, but they do nothing to resolve people’s suffering. People cannot find grain even if they want to buy, and the food prices skyrocket everyday. People can do nothing but despair at this moment. Ko, Byong-Gook (alias) complained that “if the government took away all of people’s money, they should provide services and goods to ensure people’s basic living conditions. They just say nicely, but nothing is actually coming out to support people’s basic living conditions. There are some rumors from some part of the City Party that PDS (Public Distribution System) may be reactivated around February 16 holiday, but people are not terribly excited by that. People complain that “even if that is true, people will die of hunger while waiting for that to happen. Will the government let starving people die?” People complain that they are experiencing the worst ordeal right now: “our government does not show any mercy; instead they seem to test how long their people could survive without sufficient food.
Good Friends also reports dire conditions in Chongjin, and reports that the damage to the market system is persistent. Traders who lost everything in the Great Confiscation were hit hardest. The markets were their survival strategy. Now, some of them are literally starving. Most ominously for the state, there are worries about the sufficiency of the army’s food supply. And according to multiple reports, people are speaking much more openly of their discontent than in the past:
The residents in Sunchun, South Pyongan province do not hide their opposition. They complain that “the government’s new economic measures make people die of hunger. Instead of making a Strong and Prosperous Nation for people, the new economic measures open the door of poverty and hunger for people. Heyoung Kim (alias) said “women who feed a family have many opinions on the new economic measures. Compared to the days of old monetary system, our living condition is much worse. Many households cannot even eat corn porridges. Since people’s living condition is at the bottom, they talk badly to the government. Police officials agree with such sentiments. “In these days, people are increasingly angry and harshly blame the government. Their firm belief and commitment about the Strong and Prosperous Nation are already gone. Political speeches and lectures these days are not effective to reorient and realign the people to the nation’s ideology. They seem to think only about the means and ways to make their living. [Good Friends]
For obvious reasons, it’s hard to know how much of this is true, though it’s consistent with other things we’ve heard recently. North Korea never emerged from the Great Famine entirely. The most vulnerable and obedient are already dead, but in a place like North Korea, the arbitrariness of the state produces an unsteady but constant supply of vulnerable people whose deaths pass unnoticed.
I predicted before that eventually, “the diktats that demand tomorrow’s sacrifices will be mostly forgotten because no one will have the luxury of obedience.” Most likely, what we’re seeing is a return to the old pattern of the people ignoring, evading, and bribing their way about the state’s economic regulations, as the security apparatus ceases to enforce those regulations as anything more than good reasons to shake down targets of opportunity.
Ordinarily, the palace economy and the peoples’ economy live their separate lives, but there are exceptions. If the state is willing to risk civil unrest because the state wants the money, I’ll speculate that this means that the palace economy needs the money. The sharp drop in revenue from weapons sales certainly also suggests as much. The most telling evidence, however, is the indication that the regime is purging the people who finance the palace economy: first, Pak Nam Gi, the Finance Director of the Workers’ Party, and now, Kim Dong-Un, the head of the notorious Bureau 39:
South Korea’s Yonhap news agency said Kim Dong-un was dismissed because he had been blacklisted by so many foreign governments, including the EU in December, leaving him unable to travel on behalf of Room 39’s legal companies. He has been replaced by his deputy, Jon Il-chun, Yonhap said, citing an unidentified source.
Housed in an unremarkable government compound in Pyongyang, Room 39 oversees 120 companies and mines, accounting for a quarter of all North Korean trade and employing 50,000 people, according to Lim Soo-ho, a research fellow at the Samsung Economic Research Institute. He said Kim’s dismissal may be part of attempts to get around international sanctions. [….]
Some of the money generated by Room 39 is used to buy the loyalty of senior party officials, a role that may take on greater prominence as Kim Jong-il, who suffered a stroke in 2008, prepares to hand over power to his third son, Kim Jong-un. Analysts have estimated that illegal activities account for up to 40% of all North Korean trade and an even higher share of total cash earnings. [The Guardian; hat tip, Curtis]
It’s possible that Kim Dong-Un was replaced simply because he was a marked man outside North Korea, but his dismissal now seems unlikely to be completely unrelated to the regime’s current instability. There are other indications of infighting within the inner party:
“Right now, North Korean officials are busy blaming each other for the failed currency reform and Pak, who spearheaded the revaluation, is believed to have been sacked,” said a diplomatic source in Beijing. “Markets have come to a grinding halt following the currency revaluation and prices have soared,” the source said. It seems North Korea hoped to stabilize prices through the currency reform and then credit the achievement to Kim Jong-il’s third son and heir apparent Jong-un to consolidate his grip on power, but this flopped, the source added.
Some North Korea watchers in China predict that the regime may perform a U-turn back to timid market reforms now that Pak, who led the crusade against capitalism, has been fired. One North Korea expert in Beijing said, “There is a strong possibility that high-ranking North Korean officials who led the drive to crush market forces since 2004 will be removed from office, while policies will shift toward market reforms starting in the second half of this year.” [Chosun Ilbo]
Although it would be reasonable to infer from this that the sanctions are working, as is often the case in North Korea, not all signs point in the same direction. One would not expect a regime in financial distress to proceed with something as useless as cladding the useless Ryugyong Hotel in glass (see, e.g., this excellent photograph, and yes, Pyongyang looks even colder than D.C.)