Commentary Magazine


Topic: bank notes

North Korea’s Dilemma

Uncanny events in North Korea this week hint at the fragility of the regime and the effectiveness of sanctions. Though tough to confirm, it’s being reported that two senior members of the government have been canned, and the DRPK has had to backtrack on some of its pet policies, which were targeted at centralizing the economy and choking the black market.

In November, Pyongyang enacted major economic changes. It cracked down on private markets allowed to operate with very limited freedom since 2002. It restricted imports from China. It revalued the currency, replacing old bank notes with new ones and limiting how much money a normal citizen could swap out, introducing the new currency in a way that flagrantly favored corrupt party members and the elite. That policy alone wiped out the savings of many average North Koreans. Reports suggest the price of rice is now 100 times what it was in October, and starvation deaths are on the rise.

This problem is worsened because aid has been cut off. The South Koreans, led by the formidable Lee Myung-bak, have made aid contingent upon North Korean nuclear concessions. And North Korea lost 500,000 tons of food from the United States last year.

Though it’s tough to say exactly what’s going on in North Korea, the food shortage seems to have elicited popular outrage, becoming a turning point for its citizenry. Veterans from the Korean War staged a protest in Danchon, riots have broken out, and citizens have attacked officials patrolling the markets, according to news reports gathered from defectors, smugglers, South Korean news agencies, and off-the-record comments from Seoul officials. The ruthlessly repressive North Korean government appears to be caught off guard by the uprisings.

Now Pyongyang is yielding slightly. The author of the November policies has been fired, as was the government official responsible for ensuring access to foreign currency for Kim Jong-Il, almost certainly because European Union blacklisting. The North Korean government is likely easing some of the November restrictions.

This isn’t the concession the West has been looking for, by any means. But it’s a good sign. The sanctions, paired with North Korea’s own suicidal policies, are inflicting pain – pain that is evoking reaction from ordinary North Koreans, pain that is forcing Pyongyang to make at least some changes against its will. If Obama and his friends are smart, they’ll acknowledge that their sanctions can put Kim Jung-Il’s government in a corner. One of these punches may just be a deadringer.

Uncanny events in North Korea this week hint at the fragility of the regime and the effectiveness of sanctions. Though tough to confirm, it’s being reported that two senior members of the government have been canned, and the DRPK has had to backtrack on some of its pet policies, which were targeted at centralizing the economy and choking the black market.

In November, Pyongyang enacted major economic changes. It cracked down on private markets allowed to operate with very limited freedom since 2002. It restricted imports from China. It revalued the currency, replacing old bank notes with new ones and limiting how much money a normal citizen could swap out, introducing the new currency in a way that flagrantly favored corrupt party members and the elite. That policy alone wiped out the savings of many average North Koreans. Reports suggest the price of rice is now 100 times what it was in October, and starvation deaths are on the rise.

This problem is worsened because aid has been cut off. The South Koreans, led by the formidable Lee Myung-bak, have made aid contingent upon North Korean nuclear concessions. And North Korea lost 500,000 tons of food from the United States last year.

Though it’s tough to say exactly what’s going on in North Korea, the food shortage seems to have elicited popular outrage, becoming a turning point for its citizenry. Veterans from the Korean War staged a protest in Danchon, riots have broken out, and citizens have attacked officials patrolling the markets, according to news reports gathered from defectors, smugglers, South Korean news agencies, and off-the-record comments from Seoul officials. The ruthlessly repressive North Korean government appears to be caught off guard by the uprisings.

Now Pyongyang is yielding slightly. The author of the November policies has been fired, as was the government official responsible for ensuring access to foreign currency for Kim Jong-Il, almost certainly because European Union blacklisting. The North Korean government is likely easing some of the November restrictions.

This isn’t the concession the West has been looking for, by any means. But it’s a good sign. The sanctions, paired with North Korea’s own suicidal policies, are inflicting pain – pain that is evoking reaction from ordinary North Koreans, pain that is forcing Pyongyang to make at least some changes against its will. If Obama and his friends are smart, they’ll acknowledge that their sanctions can put Kim Jung-Il’s government in a corner. One of these punches may just be a deadringer.

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