North Korea's 'Currency Reforms' Hurt Thousands
RENEE MONTAGNE, host:
You might think it would be hard to make life more miserable for North Koreans, but their government did just that last fall when it tossed out its old currency and introduced a new one. Reporter Barbara Demick has traveled regularly to China's border with North Korea to seek out North Korean escapees to get a glimpse of what's happening inside their mysterious country. In the New Yorker magazine, Demick describes the disastrous consequences that flowed from the North Korean government's decision. We called her in Beijing to talk about it.
Thank you for joining us.
Ms. BARBARA DEMICK (Reporter, The New Yorker): Thank you.
MONTAGNE: Now, your article begins with a young woman, Song-hee - a girl, really, barely 17 years old - who just escaped from North Korea by crossing the border into China. She wasn't starving. I mean, she had a couple of prized possessions, one of them an mp3 player. And you describe her family as part of North Korea's nascent middle-class. Tell us a little about what that means to be middle-class in North Korea.
Ms. DEMICK: Yeah, it's a funny word, middle-class, by our standards, but it means that she was not starving. Her parents were very typical. Her father was an iron miner. He mother was, like many middle-aged North Korean women, working at the market in these, you know, tiny businesses. Her mother was selling socks. The family was growing vegetables on their own plot in the (unintelligible). So they were, you know, eking by an existence. Song-hee told me, you know, that she considered herself extremely privileged because she would occasionally get an egg to eat.
MONTAGNE: So these people, again, managed to raise themselves up. They were hit terribly hard by a currency devaluation that the government brought about last fall.
Ms. DEMICK: That's right. Overnight, basically, all their money was wiped out. You know, not very much money. We're talking about people who had maybe $100, $200 in savings. But by a North Korean standard, that was what was going to give them a future. It was going to give Song-hee a chance to go to college. And even though education is nominally free in North Korea, you have to buy books, you have to give gifts of cash to your teachers who are themselves not paid. And she had a sliver of hope for the future, as did some other North Koreans.
And overnight, they were thrust back into the darkness of the - really, the worst period of the 1990s when North Korea went through a famine. And that was the tragedy that all of the hard work that they had done to bring themselves up from that despair was lost overnight.
MONTAGNE: You talk about people having heart attacks and sort of nervous breakdowns when this happened because it was so sudden and, even by North Korean standards, so cruel.
Ms. DEMICK: That's right. People were told in most towns about noon on a Monday that, you know, henceforth, all their money would be basically garbage, just paper. And they had usually till the end of the day to turn in their money. And they would get new money dispensed that would be worth a dollar or two. It wasn't really clear what the value was.
And so what happened was that, you know, anybody who was, you know, living above mere survival was completely wiped out, all that hard work and personal enterprise and the struggling, you know, wiped out immediately, and people freaked out. They collapsed. They killed themselves. They swore against the regime. Things like this had never happened.
MONTAGNE: What is the thinking on why the government did this?
Ms. DEMICK: From the perspective of the North Korean government, they saw the very notion of money, currency, as sort of antithetical to the socialist way of doing things. This is a very undiluted brand of communism, and you're supposed to be handed your house, your clothing, your food. You're not supposed to buy things for yourself. And the government hated the fact that people were working privately on the markets, buying their own food and having that level of economic freedom. And that's what they wanted to wipe out.
And then there was another mode of - is the North Koreans are doing these huge celebrations in 2012 to mark the 100th anniversary of Kim il-Sung's birth. Kim il-Sung is the founder. And this 2012 business is like the Olympics. They want to rebuild Pyongyang, the capital. And they needed money, and they didn't have it. So, in effect, by destroying the money supply, the government can print new money and use it for its own purposes. So, in effect, the net effect was confiscating everybody's money. It's a little bit of a slight of hand -actually, it's a lot of slate of hand. It's a trick that they call currency reform.
MONTAGNE: Although somebody paid a price, because this got out of hand.
Ms. DEMICK: That's right. And that's what's really unusual here. They've done this kind of trick before. In fact, I think this is the sixth time they've done it. This is what a North Korean economist told me. But this time, they faltered. They didn't have the confidence, and they actually had to apologize. And as I keep on saying, you know, being a totalitarian regime means never having to say you're sorry.
But in this case, it went so bad, they said they were sorry. And then they made this old party cadre, Pak Gi Nam(ph), the scapegoat. He was executed. So this was, you know, very dramatic. And, you know, the finding of fault with themselves really indicated a weakness.
MONTAGNE: Well, you do mention in the New Yorker article that North Korea watchers are now talking about the possibility of regime collapse. Do you think it's a bigger possibility?
Ms. DEMICK: Definitely, most definitely. And it's not just the currency reform. It's Kim Jong-il, the leader's poor health. He's had a stroke. He possibly has kidney disease or cancer. He's very thin. We saw him recently, visiting in China. We saw, you know, shocking footage of this leader who was famous for his, you know, jowly face and pot belly looking very drawn.
And he is behaving like somebody who's been given a deadline. They're having a very rare session of the Workers Party in September, and that is believed to be an occasion to name his youngest son, whose name is Kim Jong-un, as his successor. This is a boy who's 27 or 28. We really don't know that much about him. And I think people are nervous about what happens next, and you just - you can feel the fallibility and uncertainly and the hesitancy of this regime in a way that you couldn't a few years ago.
MONTAGNE: Thank you very much for joining us.
Ms. DEMICK: Okay, thanks. My pleasure.
MONTAGNE: Barbara Demick's article on the currency devaluation in North Korea is in the New Yorker. Her book is called "Nothing to Envy: Ordinary Lives in North Korea."
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