History has shown us that, sometimes, the
impossible happens. Mikhail Gorbachev went
from leading the Soviet Union…
to becoming the face of a North American multinational
company.
So, will we ever see something like this in
North Korea? Well, listen up.
North Korea is a very, very poor country.
The estimates available state that their per
capita production value is 50 times smaller
than that of South Korea;
less than 1,000 km of their roads are paved;
the average life expectancy is the lowest
in the entire region;
and despite having received humanitarian aid
for more than 22 years, there’s still poverty
all over the country.
But... that’s not even the worst of it.
The worst is a total lack of respect for human
rights.
The North Koreans live under an iron-clad
dictatorship, in a police state where political
prisoners amount to tens and tens of thousands.
In fact, according to the United Nations,
there could be between 80,000 and 120,000
political prisoners in "reeducation" camps.
In North Korea, my friends, the State controls
everything.
But just a moment… because in recent years
an important change seems to have started
in the country. A change that has a lot to
do with money, commerce and the market.
See, theoretically, North Korea, is the last
large country, the last large state, with
a communist ideology.
Here, practically everything is directed,
organized, manufactured and provided for by
the State: housing, health, education, food,
employment…
But... this is all in theory. The truth is…
very different.
See, the state system has a lot of limitations...
basically, it’s becoming less able to do
stuff.
Allow me to explain: many of the state’s
factories and farms’ productivity levels
are on the floor.
And, additionally, in many cases, as a result
of very old machinery, backwards production
methods, international sanctions and even
electrical supply problems, for a great part
of the time, their production centers aren’t
even operative.
Due to all of this, a new private economy
has gained strength in recent years, from
which more and more North Koreans now depend
to survive and improve their poor living standards.
Wait a second, private economy in North Korea?
Markets? Capitalism?
Yes… you heard that right.
Listen up.
(THE NEW NORTH KOREAN MARKET)
My friends, when Kim Jong-un was officially
declared “supreme leader” - absolute dictator
– of North Korea, on December 28th, 2011,
many analysts thought that things could change.
At the end of the day, this was a generational
change that was bringing a 28-year old into
power, a 28-year-old who’d studied abroad,
in Switzerland!
However... it soon became clear that some
things weren’t going to change. North Korea’s
new leader, Kim Jong-un has turned out to
be just as terrible as his father was:
The purges, the inhuman punishments, the rampant
persecution, the leader-centered cult and,
in short, the complete control of its citizens’
lives have continued being this regime’s
main characteristics.
( It’s like a religion. From birth, you
learn about the Kim family, learn that they
are gods, that you must be absolutely obedient
to the Kim family. The elites are treated
nicely, and because of that they make sure
that the system stays stable. But for everyone
else, it’s a reign of terror. A doctor who
worked at a hospital in Hyesan, North Korea,
and now works as a doctor at a hospital in
South Korea.)
However, dear viewer, since Kim Jong-un came
to power, something surprising has happened:
dozens of markets where North Koreans trade
privately have opened throughout the country.
You heard that right.
A new class of merchants and entrepreneurs
is growing... in North Korea.
In fact, according to The Korea Institute
for National Unification, around 1 million,
- 1 million people! - work directly in these
markets, which have already become one of
the main sources of wealth in the country.
Now... you may be wondering, but SIMON...
how did these markets come about? Well, my
friends, they don’t have the most glamorous
or happiest beginning.
See, it all started in the 90s, when famine
caused by government mistakes, lack of resources,
weather conditions and the collapse of the
Soviet Union, caused havoc in the country.
Estimates state that between 1 to 2 million
people died due to starvation.
Well, right at the time when North Koreans
were struggling to survive, the first markets
arose, places were people could exchange anything
they could to get resources with which to
buy food.
“We realized that if we did nothing, we
would die of hunger, so we started to trade”,
Joo Yang)
Suddenly, dozens and dozens of markets appeared
throughout the country, saving thousands and
thousands of lives.
That’s precisely why the regime didn’t
persecute this type of private activity, as
would’ve been expected.
Kim Jong-il, the current leader’s father…
was… let's say that sometimes he tolerated
these markets and sometimes he repressed them.
But since Kim Jong-un came to power... the
number of private markets has multiplied and
satellite images show that they won’t stop
growing.
Now the government authorizes, many of these
markets in exchange for “renting” out
spaces to the merchants.
Yes, that's right, the Pyongyang government
is taking advantage of this new private economy.
By how much? Well, according to The Korea
Institute for National Unification’s calculations,
they get more than $ 220,000 per day.
So, precisely for this reason, recently, the
government isn’t only promoting these markets
but is also granting visas to many Chinese
entrepreneurs and traders to further stimulate
this activity.
But, my friends, it doesn’t end there, not
at all. Listen up.
(THE "UNOFFICIAL" MARKET)
It isn’t only the regulated markets’ activity
that’s growing, it’s also that of the
unofficial markets, that is, those that don’t
have the authority’s official approval:
the black market.
See, this all works in the following way:
in an economy parallel to the public sector,
people make everything they can: shoes, sweets,
clothes... and naturally they try to sell
these products in the markets to get money...
if possible in yen or even dollars. Yes, dollars.
But ... even so, it’s estimated that 80%
of the products sold in North Korean markets
come from China.
In other words... “illegal” trade, which
happens behind the government's back, also
crosses the border, in huge and ever-growing
volumes…
By the way, many of these unofficial markets
are becoming a window to the outside world
for many North Koreans. Because, my friends,
in these places you can even buy USB sticks
full of foreign movies and shows, including
Hollywood productions.
( “When we saw foreign programming, we had
to close all the doors and curtains and pretend
that there was nobody at home. Danbi Kim)
But... you may be wondering... contraband?
Crossing borders? And what about the guards
and security services? Why are they tolerating
this illegal trade?
Well... basically for two reasons:
the first is that in Pyongyang, there doesn’t
seem to be much pressure to combat these markets,
and we’ll see why in a moment.
And second, because the soldiers and border
guards are also part of the business... and
sometimes even lend a hand.
That’s right.
A common method of payment, according to many
of the traders who now live outside of North
Korea, is to deliver packs of cigarettes stuffed
not with cigarettes, of course, but with yuan,
yen or even dollars to the police and soldiers.
Well, the fact is that these international
merchants buy products in the North Korean
authorized markets or black market, transfer
them to China, sell them, and with that money
they buy Chinese products and take them back
to North Korea to sell them.
An age-old trade process.
And here my friends, within this world of
international trade, is where a new class
is emerging-- individuals who usually have
power or influence or dealings with high officials,
and who are making serious money... and, by
the way, they’re driving a lot of activities
that have nothing to do with the old socialist
model, within Pyongyang itself.
“The salary for doctors was about 3,500
won a month. That was less than it cost to
buy one kilogram of rice. So of course, being
a doctor was not my main job. My main job
was smuggling at night. I would send herbal
medicine from North Korea into China, and
with the money, I would import home appliances
back into North Korea. Rice cookers, notels,
LCD monitors, that kind of thing”. - A doctor
who worked at a hospital in Hyesan, North
Korea)
Here’s an anecdote: today, for example,
one can buy Coca Cola in the streets of Pyongyang,
and according to the South Korean intelligence
service, at least 40% of all North Koreans
participate in private activities and businesses
in some way.
Surprised? Well... there’s still more.
But first of all, an important note:
We’re talking about a still very incipient
process.
In North Korea, the government still controls
virtually everything. If these black markets
are growing, it’s because they’re being
allowed to in Pyongyang, because they are
more efficient, they work better, they give
the government money and many North Koreans
are now finding a way to improve their terrible
living standards.
Something similar happened in the Soviet Union,
in Vietnam and of course in China.
Now, let's see what else is happening.
REFORMS MADE IN CHINA?
This new class of merchants and entrepreneurs
that’s emerging has a name among the North
Koreans: donju.
And, as you can imagine, many of them, especially
those who really make money, are people who
belong to the Communist Party and are well
connected with the government.
That’s to say, they are part of the elite...
which they take advantage of not only to get
special treatment from the security forces...
but also to reach advantageous agreements
with public companies.
Yes, indeed.
There are clear suspicions that many "irregular"
exports are manufactured by public companies...
but the benefits go to these elite members.
However, this new economic "approach" isn’t
something that bothers the Pyongyang government.
In fact, everything indicates that the North
Korean government wants to reproduce the Chinese
model in some way:
That is, to seek foreign investment that will
allow them to grow and develop, but without
losing political control.
See, since Kim Jong-un came to power, his
government has granted more freedom to public
companies so that they can organize as they
wish, and find their own suppliers and customers.
It has also promoted, as we’ve seen, private
markets. They turn a blind eye to the black
market, and families in collective farms now
have individual plots assigned to them whose
harvest, once they meet the state quota, can
be used as they wish.
They can, for example, sell it in private
markets.
They’ve even started talking about special
economic zones.
But, I stress that this is still a very new
process.
This doesn’t mean that a radical change
is going to happen in the short term, but
due to the official system’s incapacity,
the North Koreans are developing an alternative
to improve their poor standard of living.
And even though, unfortunately, North Korea
is still the totalitarian and poor country
that it was before Kim Jong-Un’s arrival,
you can’t deny that this new kind of parallel
economy’s growth is somewhat surprising.
But now, it’s your turn. Do you think North
Korea will try to follow the Chinese model?
Leave your answer in the comments as well
as in the survey.
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