North Korean Economy Watch

UPDATE 1 (2011-4-15): Andrei Lankov reminds us of some historical lessons when it comes to Pyongyang-ology.  According to his article in the Asia Times:

Last week, world media reported that two key North Korean officials were executed a few months ago. One was Kim Yong-sam, the former minister for railways. Reportedly, he was held responsible for a mysterious explosion that in 2004 wiped out the entire railway station of Ryongchon a few hours after the armored train of Dear Leader Kim Jong-il had passed through – a suspected assassination attempt.

The other North Korean official was Mun Il-bong, the finance minister. His alleged crime was the inability to handle the currency reform that in late 2009 nearly brought the North Korean economy to a complete standstill.

This news was first broken by the major South Korean newspaper Chosun Ilbo, which cited its North Korean sources. The newspaper has good connections among the North Korean refugee community, whose members are in touch with officials in North Korea.

These reports were widely discussed in the media, and produced the usual wave of speculation about supposed factional disagreements in the North Korean leadership. However, such speculation might be premature. There is no way to verify with sufficient confidence whether the alleged executions actually took place. We do not know – and, in all probability, are not going to know anytime soon – whether the North Korean ex-ministers indeed met their ends.

Those who do not deal with North Korea seldom realize how little outside observers know about its high politics. North Korean media stretch the definition of state secret to an extent that would likely appear excessive even to Joseph Stalin. There have been numerous cases where North Korean media chose not to report some very important (and, interestingly, very public) events that had a profound impact on the lives of every North Korean.

For example, the 2009 currency reform which, if the above-mentioned reports are to be believed, led to the lethal downfall of Mun Il-bong, one of its major planners. Generally speaking, the reform emulated the Soviet currency reform of 1947 that for decades has served as a prototype of currency reforms in all communist countries. There was an important difference, though.

In 1947, all major Soviet newspapers ran lengthy front-page stories about the currency reform, extolling its timeliness and explaining the need to improve the lives of the good common Soviet citizen by wiping out the ill-gotten cash holdings of shameless profiteers.

In 2009, no North Korean media even mentioned the planned reform, which was by far the most important news of the time and had a dramatic impact on the lives of every North Korean. Information about the changes and their conditions was delivered via public notices pinned to the doors of banks, as well as through confidential messages to local authorities.

Foreign embassies were notified by a short official letter. Finally, the Pyongyang-sponsored Korean newspaper in Japan ran a couple of stories about the reform. But mainstream media within North Korea remained completely silent about the dramatic upheaval.

Those who keep a track of North Korean affairs might remember the so-called “July 1 reforms” of 2002. These were once heralded (wrongly, as it turned out) as a sign of Pyongyang’s willingness to emulate the Chinese reformist policy. Few people are aware, though, that North Korean media first mentioned the ongoing reform in September, a few months after its launch.

This is especially relevant in regard to promotions and demotions, as well as purges and persecution of the regime’s top officials. The North used to stage open show trials in the 1950s, but this Stalinist tradition was discarded. In subsequent decades, disgraced officials simply ceased to be mentioned in media and disappeared from the public view, so the general public – including the lower reaches of the elite – could only guess the reasons behind the sudden disappearance of some powerful minister or, say, a Central Committee secretary.

The disappearance of a dignitary is nearly always interpreted as a sure sign that he or she has been purged. The North Korean public inevitably starts to circulate a rumor that the hapless official was not just removed from office, but arrested or even executed.

After some time these rumors reach foreign media, often through the North Korean refugee organizations that have good networks inside the North. Consequently, the world’s media run another story about a North Korean minister who was allegedly executed for his wrongdoings or as a result of alleged factional strife.

Very often, impressive details are added – for example, it is frequently stated that the alleged execution was public or, at least, held in the presence of other top dignitaries (as a matter of fact, the present author has never seen any reliable evidence of a public or semi-public execution of a former dignitary – this type of brutal show seems to be reserved only for humble folks).

There have been a number of cases, to be sure, when these rumors were eventually confirmed. For example, we now know for certain that the state security minister Kim Pyong-ha, who disappeared in 1982, was either executed or committed suicide during his arrest (his downfall was followed by a large-scale purge of the North Korean secret police).

There is little reason to doubt that So Kwang-him, the party secretary for agriculture, was indeed executed in 1997. The aging bureaucrat was accused of espionage and subversion. The charge was that he had deliberately ruined the North Korean agriculture sector and provoked a disastrous famine, being on the payroll of the US Central Intelligence Agency and other foreign intelligence agencies.

However, things are not that simple. There have been numerous cases when prominent dignitaries first disappeared and were universally believed to be arrested and executed – but then made a comeback and re-entered North Korean politics. A good example of such political resurrection is the fate of Pak Chong-ae, a Soviet Korean who was dispatched to Korea for intelligence gathering and subversion in the early 1930s.

After 1945, she became a prominent member of the North Korean leadership. Unlike a majority of Soviet Koreans, Pak Chong-ae survived a mass purge of pro-Soviet elements in 1956-1961, but suddenly disappeared in 1985. At the time, everybody, including the Soviet diplomats, were certain that she had been shot or probably died in prison – and this is what the rumors confidently told. However, in 1986, Pak Chong-ae re-emerged in the Korean political scene, albeit in secondary roles.

Even more interesting is the case of Ch’oe Kwang, a former chief of staff. Ch’oe Kwang disappeared in 1969, and rumors held that he was shot soon afterwards. This was hardly the case, since in the late 1970s, Ch’oe Kwang first appeared in secondary positions, then re-launched his career and in 1988 was again appointed chief of general staff!

So how should one treat the reports about the execution of Kim Yong-sam and Mun ll-bong? With caution. There is no reason to reject the reports completely – they might indeed be true. There is no doubt that rumors about the execution of ex-ministers are now circulating widely among North Korean officials. The 2009 currency reform was indeed a disaster, arguably, the worst prepared currency reform in the entire history of communist countries.

The 2004 Ryongchon explosion also was an exceptional event, irrespective of whether it was an assassination attempt targeting the Dear Leader, or a result of bad luck and remarkable negligence. Therefore, one may well expect the severe punishment of people who were responsible for both disasters. However, the experiences of previous decades demonstrate that such rumors be taken with healthy skepticism.

Incidentally, about a year ago, rumors persisted that another high-ranking official, the head of the party finance department, Pak Nam-gi, had been executed for his alleged mishandling of the currency reform. This story was universally believed, but so far no definite evidence of his sorry fate has emerged.

To complicate things further, a few weeks ago a well-informed defectors’ group reported that Pak Nam-gi, alive and well, was spotted in Europe where he is managing the personal funds of the Kim family. So, is Pak Nam-gi dead, with all his family shipped to a prison camp? Or is he running a multi-billion dollar business from a North Korean embassy in Switzerland? We know not. But this is another reminder of the many uncertainties a North Korean watcher has to deal with.

So, the rumors (and rumor-based reports) about Kim and Mun’s execution may well be true, but at the moment it is virtually impossible to talk about this with certainty. Things will become clear eventually, but this will happen, probably, only after several years. Sooner or later some relevant documents will be leaked.

Even before that, some trustworthy witness of their execution will emerge. It is also possible, though, that one day the allegedly executed ex-ministers will reappear, alive and healthy for their advanced age. However, by that time this entire story will be of greater interest for historians, not journalists or policy analysts.

ORIGINAL POST (2011-4-4): According to the Choson Ilbo:

The North Korean regime in June last year executed the ex-minister of railways Kim Yong-sam on espionage charges and ex-finance minister Mun Il-bong over a botched currency reform in late 2009, it has belatedly emerged.

A South Korean government official confirmed Kim’s execution but was not clear about Mun’s, saying, “We have relevant intelligence, which we are checking.”

According to a North Korean source, Kim, who was minister of railways between 1998 and 2008, was executed for involvement in a massive explosion at Yongchon Station in North Pyongan Province in April 2004 that allegedly targeted a special train carrying leader Kim Jong-il.

Kim Yong-sam was accused of leaking information about the timetable of the train, which was returning from China. Kim Jong-il’s travel itineraries are known only to his personal guards and secretaries and the railways minister.

Mun, who was finance minister between 2000 and 2008, apparently took the fall for the botched currency reform alongside then director of the Workers Party’s Planning and Finance Department Pak Nam-gi.

The regime executed Pak by firing squad on the same charges in April last year. “It seems Mun was executed because public discontent got worse even though, unlike Pak, he had nothing to do with the actual preparations for the currency reform,” the source said.

About 20 senior officials in the munitions industry ministry and the second economic committee in charge of munitions were also purged for embezzlement late last year. They had reportedly been caught by the State Security Department attempting to siphon off money from arms exports.

Another source said, “Rumor has it that the purge targeted long-serving senior officials in the military who have the authority to export arms overseas.”

The purge has been raging in Pyongyang since early last year, when Kim’s son Jong-un was named as the successor to his father and the currency reform was sweeping the North, a third source said. “It seems Kim Jong-il is trying to remove obstacles to the transition of power with his own hands.”

Regarding the suspected fate of Kim Yong-sam, I find it odd that the DPRK would execute him six years after his alleged offense.  There are only a couple of reasons I can guess as to why the situation was handled this way: 1. If he was executed, he was executed for another reason, 2.  If he was executed too soon after the April 2004 explosion, it would cast doubt on the DPRK’s official claim that the Ryongchon explosion was caused by an accidental train collision rather than an internal conspiracy to eliminate the leader.

UPDATE: A reader (in the comments) reminds me that Kim Yong-sam’s demise was also reported in the media back in July 2010.  At the time, his punishment was due to his failure to maintain locomotive trains that had been in store for wartime.  So maybe his death has nothing to do with Ryongchon at all but a failure to carry out his duties.

Regarding the execution of Mun Il-bong:  The DPRK allegedly executed Pak Nam-gi over the currency reform in early March 2010.  If Mr. Mun shared the same fate three months later, then the number of public officials executed over the country’s disastrous currency reform now stands at two.

Additional Information:

1. Last I heard, Jon Kil-su is the DPRK’s Minister of Railways, being named just before the last SPA elections.

2. Here are satellite images of Ryongchon from before and after the explosion.  Most of these can now be seen on Google Earth.

3. The story above mentions a purge in the munitions industry, but Kim Jong-il recently praised their efforts.

4. The Daily NK and Yonhap also reported on this story.

Read the full story here:
2 Senior N.Korean Apparatchiks Executed
Choson Ilbo
4/4/2011

This entry was posted on Thursday, April 14th, 2011 at 9:00 am and is filed under Arms shipment, Fiscal & monetary policy, Illicit activities, Military, Ministry of Railways, Political economy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.