North Korean Economy Watch

Yonhap
4/10/2007

North Korean authorities have scaled back their country’s food rationing system and allowed rice to be bought and sold at open markets in major cities, sources here said Tuesday.

In July 2002, the communist country reduced food rationing and introduced an economic reform program under which wages were raised and farmers’ markets were expanded so that people could buy food. But the policy has zigzagged on the purchase and sale of cereals and rice. 

“Since last year, rumors have spread about the sale at state-run stores as the food rationing system did not function well. Currently, not only corn but also rice is being traded at the markets,” a government source said, asking to remain anonymous because of the sensitivity of the issue.

The source added that North Korean authorities permitted the sale of imported rice at state-run stores. “The authorities hope to clamp down on high rice prices at black markets by diversifying the sources of rice distribution,” the source said. On the North’s black market, the product costs about 20 times more than rice at state-run stores. 

Urgent: How to Topple Kim Jong Il
Foreign Policy Magazine
March/April 2007, P.70-74
Andrei Lankov

From: Andrei Lankov
To: Condoleezza Rice
RE: Bringing Freedom to North Korea

When North Korea tested a nuclear weapon late last year, one thing became clear: The United States’ strategy for dealing with North Korea is failing. Your current policy is based on the assumption that pressuring the small and isolated state will force itto change course. That has not happened—and perhaps never will.

North Korea’s Kim Jong Il and his senior leaders understand that political or economic reforms will probably lead to the collapse of their regime. They face a challenge that their peers in China and Vietnam never did—a prosperous and free “other half” of the same nation. North Korea’s rulers believe that if they introduce reforms, their people will do what the East Germans did more than 15 years ago. So, from the perspective of North Korea’s elite, there are compelling reasons to resist all outside pressure. if anything, foreign pressure (particularly from Americans) fits very well into what Pyongyang wants to propagate— the image of a brave nation standing up to a hostile world dominated by the United States.

Yet, sadly, the burden of encouraging change in North Korea remains the United States’ alone. China and Russia, though not happy about a nuclear North Korea, are primarily concerned with reducing U.S. influence in East Asia. China is sending considerable aid to Pyongyang. You already know that South Korea, supposedly a U.S. ally, is even less willing to join your efforts. Seoul’s major worry is not a North Korean nuclear arsenal but the possibility of sudden regime collapse. A democratic revolution in the North, followed by a German-style unification, would deal a heavy blow to the South Korean economy. That’s why Seoul works to ensure that the regime in Pyongyang remains stable, while it enjoys newfound affluence and North Koreans quietly suffer.

Do not allow this status quo to persist. Lead the fight for change in North Korea. Here are some ideas to make it happen:

Realize a Quiet Revolution Is Already Under Way: For decades, the Hermit Kingdom was as close to an Orwellian nightmare as the world has ever come. But that’s simply not the case anymore. A dramatic transformation has taken place in North Korea in recent years that is chronically underestimated, particularly in Washington. This transformation has made Kim Jong Ii increasingly vulnerable to internal pressures. Yes, North Korea is still a brutal dictatorship. But compared to the 1970s or 1980s, its government has far less control over the daily lives of its people.

With the state-run economy in shambles, the government no longer has the resources to reward “correct” behavior or pay the hordes of lackeys who enforce the will of the Stalinist regime. Corruption runs rampant, and officials are always on the lookout for a bribe. Old regulations still remain on the books, but they are seldom enforced. North Koreans nowadays can travel outside their county of residence without getting permission from the authorities. Private markets, once prohibited, are flourishing. People can easily skip an indoctrination session or two, and minor ideological deviations often go unpunished. It’s a far cry from a free society, but these changes do constitute a considerable relaxation from the old days.

Deliver Information Inside: North Korea has maintained a self-imposed information blockade that is without parallel. Owning radios with free tuning is still technically illegal— a prohibition without precedent anywhere. This news blackout is supposed to keep North Koreans believing that their country is an earthly paradise. But, today, it is crumbling.

North Korea’s 880-mile border with China is notoriously porous. Smuggling and human trafficking across this remote landscape is rampant. Today, 50,000 to 100,000 North Koreans reside illegally inside China, working for a couple of dollars a day (a fortune, by North Korean standards). In the past 10 years, the number of North Koreans who have been to China and then returned home may be as large as 500,000. These people bring with them news about the outside world. They also bring back short-wave radios, which, though illegal, are easy to conceal. It is also becoming common to modify state-produced radios that have fixed tuning to the state’s propaganda channels. With a little rejiggering, North Koreans can listen to foreign news broadcasts.

But there are few broadcasts that North Koreans can hope to intercept. It was once assumed that South Korea would do the best job broadcasting news to its northern neighbor. And that was true until the late 1990s, when, as part of its “sunshine policy,” South Korea deliberately made these broadcasts “non-provocative.” There are only three other stations that target North Korea. But their airtime is short, largely due to a shortage of funds. Radio Free Asia and Voice of America each broadcast for roughly four hours per day, and Free North Korea (FNK), a small, South Korea-based station staffed by North Korean defectors, broadcasts for just one hour per day.

Being a former Soviet citizen, I know that shortwave radios could be the most important tool for loosening Pyongyang’s grip. That was the case in the Soviet Union. In the mid-1980s, some 25 percent of Russia’s adult population listened to foreign radio broadcasts at least once a week because they were one of the only reliable sources of news about the world and, more importantly, our own society A dramatic increase in funding for broadcasts by Voice Of America is necessary.  It is also important to support the defectors’ groups that do similar broadcasting themselves. These groups are regularly silenced by South Korean authorities, and they have to do everything on a shoestring. A journalist at the FNK gets paid the equivalent of a janitor’s salary in Seoul.  Even a small amount of money- less than U.S. military forces in Seoul spend on coffee-could expand their airtime greatly. With an annual budget of just $1 million, a refugee-staffed station could be on air for four hours a day, 365 days a year.

Leverage the Refugee Community in the South: There are some 10,000 North Korean defectors living in the South, and their numbers are growing fast. Unlike in earlier times, these defectors stay in touch with their families back home using smugglers’ networks and mobile phones. However, the defectors are not a prominent lobby in South Korea. In communist-dominated Eastern Europe, large and vibrant exile communities played a major role in promoting changes back home and, after the collapse of communism, helped ensure the transformation to democracy and a market economy. That is why the United States must help increase the influence of this community by making sure that a cadre of educated and gifted defectors emerges from their ranks.

Today, younger North Korean defectors are being admitted to South Korean colleges through simplified examinations (they have no chance of passing the standard tests), but a bachelor’s degree means little in modern South Korea. Defectors cannot afford the tuition for a postgraduate degree, which is the only path to a professional career. Thus, postgraduate scholarships and internship programs will be critical to their success. Without outside help, it is unlikely that a vocal and influential group of defectors will emerge. Seoul won’t fund these programs, so it will be up to foreign governments and non-governmental organizations to do so. Fortunately, these kinds of initiatives are cheap, easy to enact, and perfectly compatible with the views of almost every U.S. politician, from right to left.

Fund, Plan, and Carry out Cultural Exchanges: The Cold War was won not by mindless pressure alone, but by a combination of pressure and engagement. The same will be true with North Korea The United States must support, both officially and unofficially, all policies that promote North Korea’s Contacts with the outside world. These policies are likely to be relatively expensive, compared to the measures above, but cheap in comparison to a military showdown with a nuclear power.

It makes sense for the U.S. government to bring North Korean students to study overseas (paid for with U.S. tax dollars), to bring their dancers or singers to perform in the West, and to invite their officials to take “study tours.” Without question, North Korean officials are wary of these kinds of exchanges with the United States. However, they will be less unwilling to allow exchanges with countries seen as neutral, such as Australia and New Zealand. In the past, Pyongyang would never have allowed such exchanges to happen. But nowadays, because most of these programs will benefit elite, well- connected North Korean families, the temptation will be too great to resist. in-other words, a official in Pyongyang might understand perfectly well that sending his son to study market economics at the Australian National University is bad for the communist system, but as long as his son will benefit, he will probably support the project.

Convince Fellow Republicans That Subtle Measures Can Work: Some Republicans, particularly in the U.S. Congress, might object to any cultural exchanges that will benefit already-privileged North Koreans. And, for many, funding Voice of America isn’t as attractive as pounding a fist in Kim’s face. But these criticisms are probably shortsighted. As a student of Soviet history, you know that mild exposure to the world outside the Soviet Union had a great impact on many Soviet party officials. And information almost always filters downstream. A similar effect can be expected in North Korea. During the Cold War, official exchange programs nurtured three trends that eventually brought down the Soviet system: disappointment among the masses, discontent among the intellectuals, and a longing for reforms among bureaucrats. Money invested in subtle measures is not another way to feed the North Korean elite indirectly; it is an investment in the gradual disintegration of a dangerous and brutal regime.

North Korea has changed, and its changes should be boldly exploited. The communist countries of the 20th century were not conquered. Their collapse came from within, as their citizens finally realized the failures of the system that had been foisted on them. The simple steps outlined here will help many North Koreans arrive at the same conclusion. It may be the only realistic way to solve the North Korean problem, while also paving the way for the eventual transformation of the country into a free society. This fight will take time, but there is no reason to wait any longer.

Daily NK
Han Young Jin
4/2/2007

“100,000 won (approx. US$32.2) doesn’t cut it.” This is a sigh-ridden comment of a North Korean citizen, who states that even if he has 100,000 won, it is not much to spend.

The recent currency depreciation of the North Korean won has been exacerbating the North Korean citizens’ burdens of their costs of living.

Such a situation has been ongoing since the July 1st Economic Measure in 2002, but with the concentration of money in the privileged class, the grim realities of life of vulnerable persons have been becoming more difficult.

Hoiryeong citizen Park Hyun Sik (pseudonym), in a phone conversation with Daily NK on the 30th, stated that “a decent Chinese jumper costs 30,000 ~50,000 (approx. US$ 9.7~16) won for one, 3,000 won for 1kg of meat, and 2,700 won per a bottle of oil. After eagerly awaiting a month, I go to the market with 100,000 won (approx. US$ 32.2), but end up with nothing even though I did not buy much.”

Mr. Park, who conducts the wholesale business of relaying goods received from overseas Chinese emigrants to the provinces, receives a monthly income of 300,000 won. This puts him in a good class in North Korea. Mr. Park’s family, which consists of his wife and son, plans to secure food with this money.

Evidently, a family of four needs 50kg (50,000 won) of rice, which costs 1,000 won per kg, and 20 kg (7,000 won) of corn, which costs 350 won per kg, to survive. Additionally, the cost of buying a bottle of bean oil at 2,700 won as well as pepper powder, vinegar, garlic, onions and other vegetables is almost equal in value to the cost of buying rice.

On top of this, the family says they eat pork meat about once a month, which costs 3,000 won per kg. The rest of the money goes to the three family members’ clothing and cigarettes and drinks for Mr. Park, all of which cost about 300,000 won. Even then, Mr. Park tends to be on the well-fed side.

Working Citizens Cannot Eat Meat Even Once A Month

Kim Jung Ok (Alias), who sustains her living through a noodle business in the Hyeryung South Gate jang (market), has a monthly living expense of approximately 60,000 won. Ms. Kim is a housewife, who has taken on the responsibility of her three-member family.

Even if she sells noodles all day, she only makes 2,000~3,000 won. She merely earns around 60,000 won per month, all of which goes to food. Making a profit from her business is a mere dream, she expresses. She cannot even think about rice; after buying 70 kg of corn (23,000 won), bean oil, beans (950 won per kg) and other vegetables, she has nothing left.

The monthly income of her husband, who works at a machine shop in Hoiryeong, is 4,000 won. That is enough to buy 4kg of rice. Fearing starvation if she solely depended on her husband, she opened her noodle shop 10 years ago. “Even if we are both working like this, it is barely enough for corn meals. It is difficult to buy a kg of meat in a month. It has been a long time since I fed meat to my child,” she confessed.

Currently, with the exception of storekeepers who trade with Chinese emigrants, foreign currency traders, and those who have relatives in China, a majority of residents in Hoiryeong live daily as Mr. Park.

Recently, the Ministry of People’s Safety Agency issued the order that “Rations will be distributed in April. So, stop engaging in illegal trade.” Due to this decree, the control of the jangmadang (market) has been tightened. Discontent among residents who sell Chinese industrial products has climaxed, “How can we live if they feign ignorance while not providing the rations?”

The regulation of jangmadang (market) by ministry officials has only raised the price of Chinese industrial products. Before that, there would be joint bargains, but now, purchasers are visiting the merchants and so the costs of products are going up.

On one hand, the influence of the dollar’s recent bearish turn in the international market is fully reflected in the North Korean black market. The exchange rate of 800 won to a dollar between the Chinese Yuan and the dollar remains unchanging, but the North Korean currency following suit to the dollar and the Yuan changes day to day. Ultimately, North Korea is not “a region with a fixed exchange rate” due to the fact that exchange merchants occasionally apply the exchange information received from China.

Due to the dollar’s slump, the ratio of the North Korean won to the dollar and to the Yuan has been on the decline for several months. Mr. Park said, “In January, the North Korean currency went up to 42,000 won per 100 won RMB, but has drastically gone down to 36,500 won per 100 won.”

Daily NK
Han Young Jin
3/29/2007

North Korean inside source informed that authorities had been asserting control over illegal selling and use of mobile phones at the markets near the border regions. National Security Agents have also been conducting in-depth investigations on illegal acts such as drug smuggling and slave trade.

In a telephone conversation with a reporter on the 28th, Park Jong Run (pseudonym) of Musan, North Hamkyung said, “Authorities came to the People’s Units and said furtively, ‘Rations will be distributed in April. In future, you will live a good life. So, stop engaging in illegal trade.’ Why would we listen to them when they tell us to stop selling especially since they aren’t going to give us distributions anyway?”

Park relayed, “They said, don’t sell our confidential information about our country through the mobile phone. People already in possession of mobile phones will be forgiven if they self-confess at the National Security Agency.” Since last year, North Korean authorities have been keeping a close watch on mobile phone use particularly in the border regions.

He said, “They threaten us with a declaration, so that we will report cases of illegality or corruption such as slave trade and drug trade.” For example, large amounts of drugs were found in the home of a Chairwoman for the Women’s Union of Hoiryeong City, late February.

According to Park, authorities will directly carry out the procedures at Jangmadang (markets) themselves, with assistance from Hoiryeong Security Agency and various police departments. Some goods found to be linked to illegal trade are in part taken away by the sudden wave of control. In particular, these authorities have a keen eye for goods made overseas such as Chinese items.

National Security Agents and the police confiscate the items arguing that, “now we have a gap between the rich and poor, as well as the richer getting richer and vice versa, because you, tradesmen have tasted some money. Now, socialism has been infected by capitalism.” However, even the security agents are acting tactful by removing only some of the goods as a mere example of punishment.

Goods confiscated are locked up at the security agency and kept in provision. The endless lines in the waiting rooms of the security agency make up the people ready to pay a fine and recollect their items, says Park. Nonetheless, security agents are reluctant to return the goods back to the traders and so bribes must be ready at hand also.

“I barely got my goods back after bribing them with 10 packets of cigarettes, but there was only half the goods left remaining in the bundle” Park criticized and said that the security agents sarcastically remarked, ‘Hey, let us eat and live a little.”

Following the nuclear experiment, authorities have been trying to gather regime support and elevate the nation’s pride arguing the nation had become a strong militaristic country. They proclaim, “The world is cooperating with us and is throwing their goods at us. In future, you will live well.” It will be difficult for North Korean authorities to prohibit trade, especially with the people’s strong will power to make money.

Daily NK
Kim Song A
3/23/2007

A North Korean missionary organization revealed that about 1,000 undergrounds existed in North Korea, totaling 135,000 members nationwide.

In an interview with Radio Free Asia (RFA) on the 21st, Pastor Issac Lee of Cornerstone Ministries International, a Korean-U.S. missionary based organization said, “About 100,000 people (North Korean Christians) are being detained in prisons or are unknown, but about 35,000 North Koreans are accessible to the Cornerstone.”

Pastor Lee said, “When I visited a U.S. missionary organization in 1984, they already had a list of 3,500 names and addresses” and estimated, “There will most probably be about 1,000 underground churches in North Korea today.”

He said, “Rather than arresting spies, greater focus is placed on capturing Christians” and explained, “It is estimated that approximately 20,000 detainees are being imprisoned in North Korean gulags. Some reports have suggested that more than half these prisoners have been detained for religious reasons. Other reports claim this figure to be at least 10% or 20,000 prisoners in custody.”

Additionally, he said, “There is a large number of Christians who die in the gulags or experience greatest torture as they are the ones to express their faith.”

Regarding the Bongsu Church and Chilgol Church created by North Korean authorities, he said, “I do not doubt that these churches are mere puppets fabricated by the North Korean government…It is a controlled show by the Chosun Christian Alliance to fill the spaces in this movement.”

Since 1985, Cornerstone Ministries International began its missionary movement in North Korea and has been sending revised version bible in simple North Korean, as well as spreading pamphlets and fostering for greater awareness of the real situation of underground churches in North Korea.

Daily NK
Kim Young Jin
3/23/2007

Many North Koreans are saying that making money is different to the past. With the sudden wave of North Korea’s Jangmadang (integrated markets) spreading throughout the nation and with the whole population diving in trade, competition is soaring high. Individualism has intensified so much that the average person openly remarks that family and friends mean nothing when it comes to money.

In mid-March, Kim Jae Chun (pseudonym, 42) of Musan, North Hamkyung province, went to visit his relatives in Yanji, China. He said, “Nowadays, you cannot make a profit by operating small-trade… Selling goods has become tough as there are so many vendors now, even around the areas of Jangmadang, though their stores may not be legitimate.”

Kim’s wife sells rice nearby the Jangmadang in Musan. Up to a year ago, she would easily sell 10kg of rice. These days, she is lucky to sell even half. Normally, 100won (10% of the rice) remains as profit after selling 1kg of rice (1,000won). Simply put, Kim’s wife income has reduced from 1,000won to 500won.

Kim said, “People who own large-scale businesses sell expensive products targeting the rich or elite officials. Though these goods are different, nowadays, it has become hard to make money with rice, noodles or by selling a couple of clothing items.”

Nonetheless, Kim did agree that some business was better than no business. At the least, trade meant that you would not die of starvation.

He explained, “If you want to earn big cash at Jangmadang, you need to possess goods with greater value. If you want to earn even more money, people say, go to the integrated markets.”

“Lately, as people become experienced in trade, the more they are becoming obnoxious. Maybe it’s because they only think about money, it seems like a battlefield. There are even cases where friends and family become distant or ignored altogether. Why should we help each other out they argue since everyone has it touch,” he said.

When inquired whether or not relatives neglecting each other was an incident which had started during the food crisis, Kim responded, “Back then, it was because people really didn’t have anything. The problem is that today, people are not willing to help, even if they have something to share. People neglecting one another during the times where distributions were terminated is different to people who now only think about money.”

Lim Gil Man (pseudonym, 44) who had traveled with Kim from Chongjin agreed with Kim. He said, “In the past, people acted the way they did because they were starving to death. Today, people either stick by others with power or engage in corruption, with more and more people focused on making money.”

“Despite this, selling itself is not so bad. Compared to the times where we were all poor, at least now since there are some rich people, we can sell goods, and we have come to live more independently.”

As competition increases between North Koreans, it is expected that profits will continue to decline. The general populace of merchants trading in the North Korea-China region suspect that unless North Korean authorities propose reform measures to control the spread of markets, this wave of marketing will produce negative effects, with the possibility of rising antagonism amongst the people.

Daily NK
Han Young Jin
3/20/2007

(UPDATE: On Oct. 23, [2008] the State Department blacklisted two North Korean companies, Korea Mining Development Corp. and Korea Taesong Trading Co., for violating U.S. bans on the sale of equipment used in building missiles or other weapons of mass destruction to Iran and Syria. Citation: “North Korean Plane Was Grounded at U.S. Request “, Wall Street Journal, Jay Solomon, 11/1/2008 )

Daesung Trading Company and Maebong Company, Two Pillars of North Korea’s foreign currency

In the 80~90’s, the aim of the People’s Army of North Korea was to make foreign currency and consequently, each division of the government began to operate trading companies. However, there were many kinds of trading companies.

The Maebong Company under the General Staff which was established in the 80’s, Birobong Trading Company, Yongsung Trading Company, Manpoong Trading Company and Danpoong Trading Company founded in the 90’s, all under the top 5 trading companies in North Korea. Of these, Maebong Company is the most well-known; once also known as Kwangmyung Trading Company until 2000.

Following “Military First Politics,” Maebong Company became one of North Korea’s active traders with Daesung Trading Company belonging to the Worker’s Party Division 39.

One of the reasons that the military became directly involved in foreign currency came from the fact that the nation was unable to acquire the necessary war supplies itself due to the economic crisis. Further, as the Soviet Union and the East European bloc collapsed, trade was changed from bartering goods to dollars and hence, North Korea was in a dire state of insufficient currency.

Presently, the Maebong Company’s main office is in Pyongyang with branches throughout the country such as the border districts of Shinuiju, Haesan and Hoiryeong.

In order to attract powerful Chinese traders, Maebong Company only appoints those who have experience with foreign money as regional directors such as North Korean citizens with relatives in China. After giving the title of regional director, a permit is given. Though the regional director is registered as a tradesman for the military, actually he/she is in fact not a soldier.

With a certificate which states their position of foreign tradesmen, regional directors have the privilege of freely entering and exiting China.

Trading branches in each city, trading with Japan in the opensea

Trading partners are mostly China and Japan. Traders from Maebong Company dealing with China exchange goods such as second hand cars, medicinal herbs, silk cocoons and seafood.

With copies of Kim Jong Il’s orders distributed by Maebong Company, trading partners are able to transport secured goods supplied by foreign currency directors as far as the border regions without much difficultly from security posts.

One defector from Shinuiju said “In 1995, hundreds of trading companies were established in Shinuiju… Maebong Company was one of these companies which served as a shabby storage factory stocking 10tons of flour and medicinal herbs in which people could exchange for aluminum. At that time, these people who were called foreign currency directors wore overcoats made of dogs fur and rode second hand bicycles made in Japan.”

At one point, Maebong Company illegally sold second hand cars along the border region and gained considerable income. Nowadays, medicinal herbs and minerals are more popular and whereas more of the traders from the West Coast export seafood such as shells and razor clams to China, expectedly, export seafood to Japan occurs mainly on the East Coast.

Conceal illegal foreign currency, smuggling of gold prohibited

In 1997, authorities conducted a thorough investigation against traders in order to straighten the chaotic mess created by border tradesmen. After the investigation, Kim Jong Il ordered every trading company to be merged under the control of each agency. As a result, trading companies which had once been organized by the military divisions were disintegrated and became incorporated as part of the Maebong Company, now an integrated trading group.

After becoming a director for Maebong Company in Hoiryeong, “Kim” who had once lived a tough life is now known to be one of the richest people living in the area, frequently traveling to China.

According to one defector who had worked under the Korea Service Bureau of Workers’ Party division 16, there were 6 employees at the Hoiryeong Maebong Company located in Manghyang, which planned to earn $100,000 annually. Also, additional funds are kept in celebration of national events such as Kim Il Sung and Kim Jong Il’s birthday.

There is a great number of Maebong Company employees who engage in corrupt activity and ultimately are defaced. There is a saying in North Korea, “earning foreign currency is educational punishment,” meaning that though earning foreign currency is an occupation preferred by the many, it does at the same time involve greatest risk. In 1997, an investigation was made targeting central authorities. Many of these directors in charge ended up receiving severe punishment.

Once, “Park” a director of Shinuiju Maebong Company was convicted under the suspicion of depositing foreign currency into a Chinese bank and while undergoing the preliminary hearing was known to have attempted self-injury by swallowing a spoon. On another occasion, ‘Kim’ of Chongjin Maebong Company was known to have been executed for being involved in a case of smuggling gold.

Daily NK
Kim Min Se
3/19/2007

Today, a rich person in North Korea is someone who can spend roughly US$100~$500 (300,000~1.5mn North Korean won) a month. This amount is so large, that it is a figure unfathomable to the average North Korean.

Nowadays, a small number of lower class North Koreans sell noodles at the markets and earn 1,500~2,000won a day. On average, this equates to 50,000~60,000won a month. Additionally, the living costs of a family of 4 in Pyongyang normally costs about 50,000~100,000won.

While a laborer with a stable job earns about 2,000~3,000won (approx. US$0.66~1) a month, spending more than 100,000won (approx. US$32.2) a month is an extravagant figure. Simply put, it has become difficult to live only on selling noodles.

Anyone who spends more than 100,000won a month is probably eating rice and can afford to eat nutritious vegetables. This is the middle class of North Korea today.

The distinctive nature of this middle class is the disparity of the work as well as their past background being rather simple. This class has naturally appeared simply because of their genuine skills. These people know exactly the flow of the market and know how to make money. The only thing important to them is finding the opportunity to make money. In all, they have come to an understanding that money is needed in order to buy goods and live a life to the envy of others.

This middle class is closely linked to power. If a person only takes pride in the sense that he/she can money, then that person will be hit with a severe fall. It is a characteristic of North Korean society that power is critical in living a life making lots of money without trouble.

With money, these people are earning even more by buying the supervision of low ranking safety and security agents and local administrative officers. Simply put, the small amount of money invested as bribery in securing a good location at the markets is petty compared to the income reaped. In other words, whenever a new market is established at a village, a person can be confident in having the best spot by winning over the person in charge. For example, the bidding for the best spot at the Sunam Market, Chongjin is 900,000~1.5mn won (approx. US$290~$490).

Entrepreneurs may become the rich after regime reform

In 2002, the North Korean government passed the July 1st economic reforms which gave more freedom to marketers with less control by authorities and hence, trade became more active.

The mindset of the middle are so fixated on money, that they believe that money can solve anything even if a war was to break out the following day or North Korea was to be completely overturned. Though these people conspire with those in power in order to make money, they are unconcerned with what happens or rather does not happen to the Kim Jong Il regime.

There is a definitive difference between the middle class who are rubbing hands and the central class just in case the Kim Jong Il regime did collapse, compared to the upper class. The middle class are not from any particular special background, but with the skills and guile of making wealth, they are confident that there will be no problems irrespective of regime change.

People from this class even have the freedom to save and keep some food and daily necessities in preparation of this incident. Furthermore, currency is undoubtedly being saved, this also being foreign currency such as dollars. This, they call emergency relief in preparation for the time the North Korean regime does collapse, as well as a safe deposit to use whenever trade needed.

In addition, with the change of the North Korean regime, this class will be able to celebrate and radically transform from being an entrepreneur to the newly-rich with all the wealth acquired during the Kim Jong Il regime.

Daily NK
Kim Min Se
3/18/2007

In socialism, the laborer and the peasant dominate the nation and society. However, since the late `60’s, the role of the laborer and peasant has decreased with the bureaucracy taking power, to the extent that a country can no longer remain in traditional socialism.

Currently, North Korea’s leader Kim Jong Il with a minority of the central class surround this core power. In North Korea, the laborers and peasants are rather subject to extortion.

Amidst a North Korean market economy, a middle class is being established. The middle class comprises of people who have assets that the average citizen cannot afford and own medium-sized businesses or engage in wholesale trade.

Undoubtedly, this group of people are dominating the middle class as well as playing a vital role in the lifeline of North Korean citizens and market, a fact that could not have been fathomable in North Korea’s past.

Until the 80’s, North Korea’s economy was a planned economy. Supply and demand of goods was distributed according to the national plan. However, in the late-80’s, small holes began to emerge in the socialist planned economic system and with a lack of daily necessities, people began to rely on the black market.

Arising from the major cities, goods were secretively traded in the black market and eventually the majority of North Koreans acquired their needed goods through this system. This system operated evading the control and regulation of North Korean authorities, but when caught, a person was condemned to severe punishment and the goods confiscated.

However, the mass food crisis of the mid-90’s completely collapsed the remnants of a socialist planned economy that had subsided unto the time. What had happened was the end of the national food distribution system.

In particular, the collapse of the food distribution meant the death sentence. Tens and hundreds of thousands of North Koreans began to die of starvation and as a means to live, people became active in the market and trade began to emerge in different regions of North Korea.

Mass starvation which created expert tradesmen

The immobilization of a socialist planned economy activated Jangmadang (North Korea’s integrated markets) which then led to the formation of a new class within North Korea’s own expert tradesmen. North Korean authorities who had no other countermeasures had little choice but to comply as the lives of the citizens were now left to the hands of trade.

In the mid-90’s, North Korean authorities approved personal trade to occur between North Korea and China and then permitted markets to exist along the border districts. Simply put, the mass food crisis created a new class which actually gave North Koreans an opportunity to trade.

At first, people would sell goods that they already had such as household appliances, television, recorder and bicycle. Furthermore, any type of stock accessible, particularly clothing, candy and other foods coming from China such as rice, flour and corn were also traded.

As people gained more experience and came to know the basics of marketing, tradesmen became more specialized. People who sold rice, only sold rice, whereas people who traded fabric only sold fabric.

North Koreans began to realize that specializing in a particular field was the way to make money and the people who were unable to assimilate to this culture broke away penniless.

Accordingly, the market gradually became a center for specialized tradesmen to provide goods and daily necessities. The goods sold by these tradesmen eventually became the mark for the middle class merchant. During this time, stabilized distributors began to dominate the market and more individualized entrepreneurs surfaced.

People skilled at cooking, baked decorative and delicious bread in their homes and then sell them at the markets. In addition, candy distributors have made a mark at the markets with candy making having become an advanced skill. People who once made candy in their homes now brag that they have been able to produce a small-scale sugar factory. In particular, clothes making and candy making has become enterprises leading to great money.

Today, 50% of candy, home-made clothing and 30% of uniforms, sold at North Korean markets are products made from home. Through goods such as these, Chinese merchants, tradesmen and the middle class are earning money through North Korea’s markets supplying the customers, the majority of the lower class.

Daily NK
Park Choel Yong
3/18/2007

Rigorous Military Training is Killing North Korean Students
Buying food from outside the camps is, however, the privilege only for the wealthy students. Students who came from privileged families often are excluded from the military trainings for one or two months. The training is notorious for hardness, and hence students from the high authorities offer bribes with money or goods to military officers in return for taking rests at home.

For instance, if one ton of coals were offered to a training camp, a student can rest for a month; a box of cigarette, the “Cat” which costs 1,500 won (approx. US$4.8), is worth a day’s break.

With wealthy students out of training, the rest of students suffer from more than double the hardness. Often, poor students end up patrolling for 8 to 10 hours during national holidays and New Year’s Day.

Girl students in the training have their hair cut shortly and cannot keep private things; even cosmetics are not allowed. Therefore, wealthy girl students take their time at home with bribery.

Even during the training period, the students must take lectures. The basic subjects taught during the training are “The Unification History of the Fatherland” and “History of the Invasion of Japanese Imperialism,” and also includes a few majors.

The lectures, however, are often cut off to make room for the farm supporting activity and national performances.

According to the educational schedules, the college lasts four years, not including the training period; however, the time for lectures generally take only two of those years.

In spring and fall, students take part in the farm supporting activity to transplant rice for 40 days in spring and to harvest for 30 to 40 days during fall. Additionally, students from nationally renowned universities are often brought to various national performances. For six to eight months, students do not take lectures in order to practice military parades for Kim Jong Il’s birthday on the 16th of February and Kim Il Sung’s birthday on the 15th of April.

For torchlight processions, students take practices for two to three months. The torchlight processions are held usually in the Foundation Day of the State and the North Korean Workers’ Party, with more than ten thousand university students participating in the event. Students also practice dancing for another two to three months for students’ dancing party at the Kim Il Sung Plaza, which is held during the Chinese New Years’ Day.

That is not all, however. Working in the subsidiary farms that belong to the universities takes students a few months. Students who make the survey on the revolutionary historic spots and the Korean War landmarks are also exempt from the lectures for a few months.

In the end of a semester, reducing the day for lectures is not a special thing. The students do take lectures more intensively and even on Sundays to remedy this as necessary.