Turmoil in N. Korea

Last week the secretive Communist government of North Korea revalued its currency -- informing all its people that their "old" currency would no longer be accepted as legal tender, but it could be exchanged for "new" currency at a rate of 100:1. To translate that into terms Americans can understand, a $3 loaf of bread would rocket to $300 overnight.

According to a news story printed today at the Web site of The Chosun Ilbo (English edition), the government is targeting the burgeoning middle class:

The North Korean military is on alert for a possible civil uprising following last week's sudden currency reform, according to a Russian business newspaper citing foreign diplomats in the communist country. The currency reform involved the exchange of only limited amounts of old bills at a rate of 100:1, with the state confiscating the remainder. People who are afraid of exposing the size of their wealth have no choice but to hide their old bills. It is difficult to ascertain the actual circumstances, but it is apparent the North Korean regime is virtually stealing money equivalent to two or three months' wages for the average worker. And public discontent is rising to the degree that the regime had to order the military on standby to quell riots.

The currency reform may seem illogical, but it appears to follow careful political considerations. Ever since the regime became unable to feed its own people, a primitive form of the market economy in the form of open-air markets emerged everywhere as North Koreans struggled to stay alive. A certain group of North Koreans were able to amass a little wealth that way, and when the gap between rich and poor began to widen in a country where such differences are acutely visible, the regime probably began to view them as a threat to the system.

In other words, the currency revaluation was probably aimed at destroying the middle class before it swells any further and becomes a real threat. Destitute North Koreans still outnumber the new middle class, which means the outcry from the currency revaluation will not be as widespread, assuring North Korean officials that any demonstration of discontent can be suppressed.
(Read the rest at http://english.chosun.com/site/data/html_dir/2009/12/07/2009120700659.html)

Another source reported that the government has stationed North Korean troops at border crossings with China, to prevent the escape of people with gold. (This is from an online source for which I have not found confirmation, but since it seems to agree with the news story cited above, it's probably accurate.):

translated by an ex-pat freeper:

The headline is 北朝鮮デノミ：「住民騒乱を懸念、軍が戦闘準備」 ("North Korean Currency Devaluation: Worries Over Uprising By North Korean People; North Korean Army Goes on Sub-War Status")

Upshot of the article (at 8:30 p.m. U.S. Eastern Sunday):


--The North Korean (KPA) Korean Peoples Army, concerned about popular uprising growing in North Korean over the recent devaluation of the NK currency, has expressed worries and accordingly has gone on a sub-war footing in response and in advance.

--The information came out of North Korea from a Russian diplomat who reported it to the mainline Russian economic news source Kommersant (Коммерсантъ ), and was then relayed in the Korean language and then into Japanese on the Chosun site from South Korea.

--North Korea has ordered shops closed. People who have the old usely notes cannot use them. The popular sentiment among the North Korean people is that "the North Korean leadership has just boldly stolen from them without inpunity."

--Not just the average North Korean people are affected. FOREIGN DIPLOMATS STATIONED TO PYONGYANG ARE ANGRY AND HAVE FORMED GROUPS AND ARE TELLING THE NORTH KOREAN AUTHORITIES THEY WANT THE DEVALUATION RESCINDED AND THEIR CURRENT /OLD NOTES RESPECTED.

--North Korean Supreme Military Authority has issued shoot-to-kill orders on the Chinese-DPRK border for anyone trying to leave. Authorities are afraid of massive escapes by "middle class North Koreans with gold", getting out while they can. They accordingly want to zip up the country ASAP with such an order.

--South Korean government says there are no major reports of large scale demos or group defections, but since the North Korean people would have a difficult time organizing in such a police state, their only other option would be to flee the country, therefore the NK leadership is taking this preemptive action.

--In Hamgyonbukdo region's Chonjin City (清津市)and and Pyonganando region's Pyongsong (平城市) City, etc. there have been reports of the North Korea People starting to deface and rip up of the new DPRK currency notes with the image of deceased leader Kim Il Sung's photo on them; this cause the local Public Security Bureau of North Korean police to go on emergency alert.

--Reports of a death now in Ryongando over the currency exchange. Either an official or a citizen was pummeled to death over an argument. Anti Kim Jong il grafitti and circulars are starting. A woman running a cosmetics shops was taken into custody for yelling at the North Korean Worker's (Communist) Party authorities as well.

--Other issues such as cities not receiving the new denominations but then the period to exchange the old notes running out, is causing anger and confusion.

--Heart attacks (of elderly losing most of their savings in one fell swoop), suicides and arson reports are also emerging from North Korea (this from other multiple Asian news sources I found).
(End freeper ex-pat summary/translation)

I believe this is an internal matter for North Korea, similar to the Tienanmen Massacre in China, and I doubt it will spread outside their borders, but it is something to be watched, for three reasons:

1. It could spread, into conflict with South Korea, for example.
2. It gives us a picture of what might happen in other countries, should their economy tank and the government choose to take a hard line.
3. It is immoral for government officials to treat their people this way...just as China's crackdown at Tienanmen Square was an immoral act. Immoral acts on this scale affect us all.