Why North Korea may be a threat to itself

A survey of refugees reveals a large underground economy in North Korea that runs on US dollars – and rising corruption. Perhaps the US needs patience as the regime rots from within.

Reuters
North Korean woman and child wash vegetables in the Yalu River in Sinuiju, North Korea, April 17.

As the Trump administration continues to rattle a saber at North Korea, it should take note of a new survey by two economists at South Korea’s central bank. In interviews with hundreds of recent North Korean refugees, they found the United States has already invaded the country in one big way: The preferred currency among North Koreans for buying food, goods, and services is the American dollar, not the local currency.

This is a sure sign of a thriving underground market despite the official line of a state-run economy. Some experts even estimate the informal economy now exceeds the official one. As in other countries with a high level of illegal business, there are also indications of rising corruption. Officials either take a cut of the gray economy or seek bribes to look the other way. A recent report in a South Korean newspaper told of farmers paying $300 to buy membership in the ruling Workers’ Party in order to gain official benefits.

North Korea’s regime, in other words, could be rotting from within as more of the party elite pursue self-enrichment. An increasing number of high-level members of the Workers’ Party have defected. And since taking power in 2011, third-generation dictator Kim Jong-un has overseen an unusual number of purges of top officials, including his uncle.

A black market first sprung up in socialist North Korea in the mid-1990s during a massive famine. People had to grow their own food. Many began to sell the excess in local markets. In addition, the regime devalued the country’s currency in 2009, forcing people to use the dollar (as well as the Chinese yuan). Then in 2012, it made circulating foreign currency a crime punishable by death. Yet even that law is largely ignored.

This trade in goods and services has made it difficult for Mr. Kim to pursue his economic policy. Last year he said North Korea would follow twin goals: building its nuclear and missile program while improving economic development. But these days many North Koreans are doing business with each other rather than with the state. This weakens the regime’s hold over the population.

For years, the party warned that it is an “old trick” of the US and other “imperialists” to infiltrate North Korea. Well, the infiltration is in the form of US dollars, used by the people to bypass a regime that has bungled the economy. Perhaps the pre-Trump policy of “strategic patience” by the US toward Pyongyang needs to be revived. Just ask North Korean refugees. Many know the center cannot hold.

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