KPW nearly obsolete as private economy expands

With the greater relaxation of regulations
on the market front this year, the private economy in North Korea expanded, but
most people are said to believe the looser grip on trade at the marketplace is
not to help improve people’s livelihoods but to secure more funds for the Kim
Jong Un leadership, Daily NK sources have reported. 

“Crackdowns on markets have been much more
lax this year compared to last year, so sales have been more vibrant,” a source
from South Pyongan Province told Daily NK in a telephone conversation. “Some
merely take it as a change in policy, but a lot of people who have been selling
goods for quite some time see it as a method of Kim Jong Un to gain more

“Donju [newly affluent middle class], who
are taking part in the larger market space, and cadre members who work with
them to earn in foreign currency, are paying up loyalty funds with that money
to the Central Party,” he explained.

“The relaxation of rules on the marketplace
actually has three prongs. The state wants to secure more funds for the
leadership and state governance while also winning over people’s loyalty.”

The growing presence of markets in the
economy has led to greater use of foreign currency in everyday life. In the
past, foreign currency was only used for trade, donju product distribution, or
for wholesale transactions, but now U.S. dollars and the Chinese yuan are used
even when people buy simple things like side dishes. Prices not only at the
official general markets but also street stalls and alleyway markets are all
marked in dollars and yuan as a result.

“The radius in which foreign currencies are
used has expanded this year, and it’s not only in big cities but small cities
that people use foreign money. Young people even consider using North Korean
money as being behind the times,” added the source. “It’s not uncommon to see
teenage girls asking for pocket money for snacks in dollars, saying they don’t
want ‘money with the General [Kim Jong Il] present.’”

Many people wonder out loud where all the
foreign currency they now see circulating in the markets had been in the past
few years, and donju who look to run a stable business pay up bribes to cadres higher up and that again goes to the central Party as ‘loyalty funds’, he said.

Another source in North Hamgyong Province
also confirmed the omnipresent use of foreign currencies, saying, “Almost all
goods at the market in border towns are traded in yuan.”

She went on to add, “With the lax rules now
on market trade, using foreign currency, which is illegal, has now become in
effect permissible, so more people are using it.”

When all is said and done, foreign money
winds up with rich Party cadres and the donju, who turn over , as the source
put it to us, “astronomical amounts to those even higher up at the provincial
or higher levels of the Party and military.”

“There are now even cadres at Party agencies
and their family members that specialize in taking care of needs for donju
money-making operations,” she explained. “They work together with donju and
accumulate massive wealth, and then pay central Party high-level officials in
dollars and yuan to turn a blind eye.”

Many donju and residents, unsure of when
the North Korean state will flip its stance on foreign currency use, are said
to be seizing this opportunity to save up while they can. “The belief is that
regardless of your place in North Korean society, safety comes in one form and
one form only: foreign currency savings.”