In North Korea, angry crowds and rising prices spur power plays

North Korea is seething with discontent while the regime looks for scapegoats for the failure of an attempt at reforming the currency and curbing free enterprise, analysts here said Thursday.

The reported dismissal of North Korea’s chief financial planner is just the most obvious sign of mounting discontent with revaluation of the currency, according to reports reaching here, as restive crowds attacked officials in marketplaces far from the capital of Pyongyang.

Analysts say Pak Nam-gi, director of planning for the Workers’ Party, has disappeared. He was responsible for revaluing the currency in hopes of curbing runaway inflation and stopping profiteers from hoarding money and then changing it to Chinese or Western currency.

“They need some scapegoat for the failure of their policy,” says Choi Won-ki, North Korea senior analyst at the Korea Institute of National Unification. “People can’t buy food in the market. The food flow is very bad. The number of dead is increasing.”

Analysts see a power struggle under way as the North’s ailing leader Kim Jong-il attempts to smooth the path for his youngest son, Kim Jong-un, to succeed him, and powerful military men assert themselves. North Korean artillery exercises in the Yellow Sea are seen as an outward manifestation of the internal struggle.

“Kim Jong-il’s controlling power as chairman of the National Defense Commission is gradually relaxing,” says Ha Tae-young, president of Open Radio for North Korea, which relies on informants inside North Korea as primary sources for two hours a day of shortwave broadcasting from here into the North. “North Korean policy toward South Korea is very unstable, back and forth.”

Angry crowds in marketplaces

Inside North Korea, angry crowds reportedly besiege marketplaces as the price of rice, the staple food when it’s available, rises many times from its level in December and the value of the currency sharply deteriorates.

Good Friends, an aid organization here that disseminates information from sources in the North, reports an angry crowd in one provincial center shouting, “Households who can afford barely one meal a day are increasing,” and “Will you starve us to death?”

The mounting shortages evoke memories of the famine of the 1990s, in which 2 million people are estimated to have died from starvation and disease. Daily NK, another organization here that puts out reports based on source inside North Korea, reported “an explosion in the number of casualties resulting from popular resentment at harsh regulations of market activities.”

Among signs of restiveness, said Daily NK, were attacks on government security agents attempting to crack down on smuggling food and selling it on open markets. One agent reportedly was shot and critically wounded after a protester grabbed his gun – a level of protest almost unheard of in the North’s tightly controlled system.

Daily NK also reported the easing of regulations in two provinces at the beginning of February – and stabilization of prices in those areas. The real significance, however, was not clear.

“We’re not sure if it’s removal of the crackdown or just local behavior,” says Mr. Ha.

In any case, loosening of rules is not believed likely to undo the underlying problem of a country that does not have enough food, or money, to care for its people.
“It’s too late to give up currency reform,” says Choi Won-ki. “They have tried to control markets for too many years.

Pak himself is believed to have been responsible for reasserting stringent controls several years ago after a brief flirtation with increasingly open markets – and then strengthening controls in early December as free-enterprising merchants again seemed to pose a threat to the regime.

'Bureau 39' chief dismissed

With his disappearance have come reports of the dismissal of the chief of the notorious Bureau 39, a powerful financial sub-agency that deals in everything from counterfeit currency and narcotics to the export of missiles and the import of materiel for weapons of mass destruction.

Pak was believed to have overall control of Bureau 39, whose chief, Kim Dong-un, was reported by South Korea’s Yonhap news agency to have been replaced.

“In the tradition of dictatorial regimes worldwide, scapegoats have apparently also been chosen,” said Daily NK, noting that Pak may face draconian punishment. The agriculture minister during the famine of the 1990s was executed, while the premier at the time was sent off to a state enterprise far from Pyongyang.

The real question is the likely impact of the power struggle in Pyongyang on the rule of Mr. Kim. Analysts believe Kim and his youngest son initiated the reform – and see the dismissal of top finance officials as a reflection on their influence.

“They say there is an advocacy group who favors the succession of Kim Jong-un, and there are those who do not favor it,” says Open Radio's Ha. “And there are those who favor currency reform and those who do not. They hate each other.”