I just read this article on DPRK defectors in the Washington Post, and it drove my pessimism about North Korea to even greater depths. The article shows, I think, why North Korea simply cannot liberalize and open up the easy way—it’s going to be a messy collapse at best.
Starting several years ago, North Korea tried to liberalize their society just a wee bit. Many across the globe thought this was an welcome development from the world’s last Stalinist regime. But it has proved troublesome for North Korea’s leaders. As business, political, and military leaders in North Korea have more contact with the outside world, they realize how poor their country is, and that the privilege of a rice cooker and a color television isn’t much to brag about. Just listen to the words of recent defector “Kim”:
“From my Chinese and South Korean clients, I heard about just how rich South Korea really was,” said Kim, who in January joined the growing ranks of North Korean defectors when he sought asylum… “I began to understand that I was living in a poor country, and that China and South Korea had riches beyond our imagination,” he said. “Once I could see through the lie that we were as well-off as any nation, I knew I could not live in North Korea anymore.”
Look at the DPRK defection statistics for the last few years:
1998 – 78
1999 – 148
2000 – 312
2001 – 583
I can’t find accurate statistics after 2001 (sources vary wildly), but this increase has continued. For example, more than 450 North Koreans defected in just one incident this past July.
And liberalization is the sole cause. We know that the famine that starved millions reached its worst levels in 1997-8, but that year saw no uptick in the number of defectors. It was only once North Korea began market reforms that allowed some DPRK citizens (or is that subjects?) to meet with outsides that the exodus began.
I was also glad to hear that Tom Barnett also advocates “taking down” Kim Jong Il. That is, I believe, the only way we are ever going to solve this mess, and as difficult as it may be, it’s probably the best of many bad choices.
P.S. On a sidenote, it’s worth noting that as one of their liberalization policies in mid-2002, North Korea depreciated their currency from the artificial peg of 2.2 won to US$1 to the “more realistic” exchange of 150 won to $1 US. Even then some black market exchanges have traded at 700 won or lower. Talk about making a killing on FOREX markets—George Soros, where were you?!
P.P.S. For more on DPRK transition issues, see this archive from the Nautilus Institute.
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COMMENTS / 3 COMMENTS
Saru added these pithy words on 28 Dec 04 at 2:34 pmSome thoughts in my usual discursive, not well thought out manner…
In order to make a profit on FOREX trading on the NK won, you’d have to short a massive amount of won at 2.2. Normally, FX profits are made by taking advantage of small differences in price, but in this case, since the price is so high, I suppose one might make a profit a bit easier. Nevertheless, this means that you’d first have to find someone to lend you the currency, and then someone stupid enough to want to buy it all. I suppose if you were feeling wild, you could offer to sell at lower than 2.2 but higher than 150, although that would eat into your profit. After the devaluation, you’d then have to buy a shitload more won for the lower price of 150 to make good on your short selling obligation. I would expect anyone who would be willing to make transactions on the NK won is not as trustworthy as say, Goldman Sachs, so in addition to the currency risk, you have to also factor in the international mafioso risk.
Additionally, considering the fact that the US won’t let Bobby Fischer back into the country for playing a chess game with a commie champ decades ago, you’d be considered pretty much a persona non grata by the US government, which is a whole hell of a lot different from invoking Mahathir’s ire.
On the other hand, unlike previous currency crises, the chances of financial contaigion are extremely limited, due to the isolated nature of the NK economy, and this means no external lender of last resort need be involved.
Saru added these pithy words on 28 Dec 04 at 2:34 pmGreat shot of Arafat, by the way.
Mutangfrog added these pithy words on 28 Dec 04 at 7:05 pmSaru, I’m sure you well remember our own experiences in the currency black market on the China/Kazakhstan border? Imagine that a million times greater? Without a doubt, the DPRK Won is under the same export restrictions as the Chinese Yuan, if not even more limited. I wouldn’t be surprised if it was illegal for a foreigner to even open a bank account inside the DPRK without a special business permit.
