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North Korean Money Shift Sparks Violence

By EVAN RAMSTAD
DECEMBER 9, 2009

SEOUL — New reports emerged Tuesday of protests and deadly violence in North Korea as the country’s authoritarian regime over the past week seized most of its citizens’ money and savings via a new-currency issue.

Open Radio for North Korea, a Seoul-based shortwave radio station that broadcasts news to the North, said police killed two men in Pyongsong, a market center outside of Pyongyang, on Friday after they divided their savings among a large group of people and urged them to exchange the money for them, attempting to get around the government’s limit.

nkoreadefectorChosun Ilbo, a South Korean newspaper, cited informants in the North in reporting that women working in the goods and produce markets of some towns “openly curse government authorities despite the risk of being arrested.”

Those reports, and scrutiny of Pyongyang’s human-rights violations, coincided with the arrival of an American envoy for a meeting with North Korean officials.

The reports suggest that North Korean officials may be experiencing more difficulty than expected in using the currency issuance to collar the expansion of private wealth in the country.

“They’ve tried to wind back the system, but they’re potentially teaching the people that markets can’t be controlled,” says Shaun Cochran, head of Korea research at CLSA Asia-Pacific Markets, who published a report on North Korea’s move.

Pyongyang announced Nov. 30 its decision to issue new currency and limit the amount of old currency that could be exchanged to the equivalent of about $40, based on unofficial exchange rates, a step that essentially scrapped all other private money.

Mr. Cochran said that the regime’s money grab “could be the single most important event in defining North Korea over the next decade.” He called it more significant than the headline-grabbing nuclear-weapons program, which North Korea uses for international influence, because the regime’s power ultimately rests on its ability to make North Koreans believe that it controls their economic well-being.

The latest reports came as the top American envoy to North Korea, Stephen Bosworth, arrived in Pyongyang for the first time to work on the nuclear issue. He traveled with a small delegation to a meeting sought by North Korean officials to discuss whether the North would return to aid-for-disarmament talks with the U.S. and four other countries.

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U.S. officials played down expectations on Mr. Bosworth’s discussions. In a briefing in Washington, they said he won’t offer money to the North to re-engage in multilateral talks, nor would he offer new rewards to the North to keep promises already made.

North Korea’s state news agency announced Mr. Bosworth’s arrival in a one-sentence statement on its international Web site, but there was no indication that his presence was reported inside the country.

The main focus on North Korea in the past week instead has been on the new-currency issue. The action triggered immediate protests in several cities and, according to reports late last week, forced the government to increase patrols at its border with China.

Mr. Cochran, the investment analyst, said the biggest risk for the North’s government is if, after taking people’s money, it can’t deliver goods and services the way the unofficial market could. “Most damaging to the regime would be if the people learned that it cannot control the real price of goods and that there is economic value to competing with the public system,” he said.

Separately, North Korea’s human-rights abuses also are under scrutiny this week. Diplomats from Pyongyang appeared before the United Nations Human Rights Council in Geneva on Monday to answer questions from delegates from around the world about food deprivation and gulag-style prisons in the country.

On Thursday, former North Korean prisoners will speak at an inquiry at the International Criminal Court in The Hague in the first step of a process that could trigger a criminal case against high officials, possibly even the country’s dictator, Kim Jong Il.

ARTICLE CAN BE FOUND HERE.

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