N. Korean currency reform reported to have failed, official sacked

By Kim Nam-hee
SEOUL, Feb. 4 (Yonhap) -- North Korea's currency reform carried out last year
appears to have failed, while the official who led the reform may have been
fired, North Korea watchers said on Thursday.
Pak Nam-gi, chief of the planning and finance department of the ruling Workers'
Party who oversaw the currency revaluation, was blamed for the sharp price rise
and social chaos following the reform and may have been fired from his post,
according to North Korea watchers in Dandong, China, a city near the border with
North Korea.
But considering the closed and secretive system of North Korea, it is too early
to conclude that he has been dismissed for certain, they said.
The official has not appeared in North Korean media reports, as monitored by
Yonhap News Agency in Seoul, since early January. He was last seen in North
Korean media when he attended the workers' rally of the Kimchaek Steel Company in
North Hamgyong Province on January 9.
North Korea carried out a fundamental currency revaluation last November in a bid
to curb inflation and reportedly ensure a power transition from the North Korean
leader, Kim Jong-il, to his third and youngest son Kim Jong-un.
Pyongyang said the currency redenomination, which knocked two zeros off its bank
notes, was aimed at curbing inflation, while analysts said the regime was trying
to emasculate a growing merchant class and reassert control over market
activities.
Late last month, North Korea asserted that the currency reform was a success.
On Jan. 23, Kim Chol-jun, chief economist at North Korea's Academy of Social
Sciences, said the revaluation, conducted in November helped "implement socialist
economic principles better and create a monetary base that can bring about a leap
in the standard of living for people."
In an interview with Chosun Sinbo, a pro-Pyongyang paper in Tokyo, he said that
his communist country secured a monetary base that will underpin efforts to raise
living standards when it carried out a currency reform last year.
However, North Korea watchers here say the currency reform has turned out to be a
disaster.
The experts and analysts say North Korea held Pak responsible for throwing the
country into chaos with the economic and social aftereffects of the reform.
"People in Tanchon City in South Hamgyong Province are suffering the most in the
country with many residents in the region dying from hunger throughout January,"
said Good Friends, a Seoul-based human rights organization, in its newsletter
last Tuesday.
"The number of workers suffering from hunger and failing to go to work has
increased and more than one person dies everyday from starvation." the
organization said.
According to the group, merchants in the city of Chongjin, in North Hamgyong
Province, have suffered from the closing of private markets. The city was once
known as a center of market activity.
Since the currency revaluation, the North Korean won-dollar exchange rate has
reportedly gone up nearly 20 times. "The exchange rate has risen from 30 won a
dollar in early December last year to 530 won as of late January," said a source
familiar with North Korean issues. "The price of a kilogram of rice has also
spiked to 600 won from 20 won over the same period," the source added.
As the situation got worse, the ruling Workers' Party examined the living
conditions of people in mid-January. "According to the Party report, people are
in extremely difficult circumstances," said Good Friends. "Especially those
engaged in business are facing severe financial hardship because of the
prohibition of commercial activities and the skyrocketing price of goods."
kimnh@yna.co.kr
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