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How North Korea added to crushing misery

The Nov. 30 currency devaluation was for some the worst disaster since a famine that killed hundreds of thousands in the mid-1990s.
Image: A North Korean border guard rides his motorcycle on the banks of the Yalu river at the border with China near the North Korean city of Hyesan
A North Korean border guard rides his motorcycle on the banks of the Yalu river at the border with China near the North Korean city of Hyesan in December 2008.Reinhard Krause / Reuters file
/ Source: The New York Times

The North Korean construction worker lived in penury. His state employer had not paid him for so long that he had forgotten his salary. Indeed, he paid his boss to be listed as a dummy worker so that he could leave his work site. Then he and his wife could scrape out a living selling small bags of detergent on the black market.

It hardly seemed that life could get worse. And then, one Saturday afternoon last November, his sister burst into his apartment in Chongjin with shocking news: the North Korean government had decided to drastically devalue the nation’s currency. The family’s life savings, about $1,560, had been reduced to about $30.

Last month the construction worker sat in a safe house in this bustling northern Chinese city, lamenting years of useless sacrifice. Vegetables for his parents, his wife’s asthma medicine, the navy track suit his 15-year-old daughter craved — all were forsworn on the theory that, even in North Korea, the future was worth saving for.

“Ai!” he exclaimed, cursing between sobs. “How we worked to save that money! Thinking about it makes me go crazy.”

Devaluation is breaking point
North Koreans are used to struggle and heartbreak. But the Nov. 30 currency devaluation, apparently an attempt to prop up a foundering state-run economy, was for some the worst disaster since a famine that killed hundreds of thousands in the mid-1990s.

Interviews in the past month with eight North Koreans who recently left their country — a prison escapee, illegal traders, people in temporary exile to find work in China, the traveling wife of an official in the ruling Workers’ Party — paint a haunting portrait of desperation inside North Korea, a nation of 24 million people, and of growing resentment toward its erratic leader, Kim Jong-il.

What seems missing — for now, at least — is social instability. Widespread hardship, popular anger over the currency revaluation and growing political uncertainty as Mr. Kim seeks to install his third son as his successor have not hardened into noticeable resistance against the government. At least two of those interviewed in China hewed to the official propaganda line that North Korea was a victim of die-hard enemies, its impoverishment a Western plot, its survival threatened by the United States, South Korea and Japan.

South Korea’s charge that North Korea sank one of its warships, the Cheonan, in March was just part of the plot, the party official’s wife said.

“That’s why we have weapons to protect ourselves,” she said while visiting relatives in northern China — and earning spare cash as a waitress. “Our enemies are trying to hit us from all sides, and that’s why we lack electricity and good infrastructure. North Korea must keep its doors locked.”

War as relief from hard life
Others were more skeptical of the government’s propaganda but still cast war as an inevitability. “We always wait for the invasion,” said one former primary school teacher. “My son says he wishes the war would come because life is too hard, and we will probably die anyway from starvation.”

They and other North Koreans spoke only on the condition that they could withhold their names in discussions largely arranged by underground churches operating in China just across the border. If they were identified as traveling or working in China illegally, they could be deported and imprisoned, along with their relatives.

About half of those interviewed said they planned to return to North Korea; the other half hoped to defect to South Korea.

On many details, their accounts, given separately, dovetailed. They also reinforced descriptions by economists and political analysts of a stricken nation.

A Contracting Economy
Citing aerial photos of plumeless smokestacks, economists say roughly three of every four North Korean factories are idle. The economy has been contracting since 2006, when Kim Jong-il pulled out of multinational talks aimed at ending his nuclear weapons program. The sinking of the Cheonan will further shrink the economy: South Korea has suspended nearly all trade, depriving the North of $333 million a year from seafood sales and other exports.

When the Korean Peninsula was divided in 1945, South Korea was poorer than its neighbor. Now its average worker earns 15 times as much as an average North Korean, according to cost-of-living-adjusted data. The number of defectors who make it through China to South Korea has steadily risen for a decade, hitting nearly 3,000 last year.

Infant and maternal mortality rates jumped at least 30 percent from 1993 to 2008, and life expectancy fell by three years to 69 during the same period, according to North Korean census figures and the United Nations Population Fund.

The United Nations World Food Program says one in three North Korean children under the age of 5 are malnourished. More than one in four people need food aid, the agency says, but only about one in 17 will get it this year, partly because donors are reluctant to send aid to a country that has insisted on developing nuclear weapons.

The currency devaluation has only heightened the suffering. Its aim was to divert the proceeds of North Korea’s vast entrepreneurial underground — its street markets — to its cash-starved government businesses.

The markets are the sole source of income for many North Koreans, but they flout the government’s credo of economic socialism. Theoretically, everyone except minors, the elderly and mothers with young children works for the state. But state enterprises have been withering for 30 years, and North Koreans do all they can to escape work in them.

Farmers tend their own gardens as weeds overtake collective farms. Urban workers duck state assignments to peddle everything from metal scavenged from mothballed factories to televisions smuggled from China.

“If you don’t trade, you die,” said the former teacher, a round-faced 51-year-old woman with a ponytail. She went from obedient state employee to lawbreaking trader, but could not escape her plight.

Too Hungry to Study
She taught primary school for 30 years in Chongjin, North Korea’s third-largest city, with roughly 500,000 people. What once was an all-day job shrank by 2004 to morning duty; schools closed at noon. At least 15 of her 50 students dropped out or left after an hour, too hungry to study.

KAESONG, DEMOCRATIC PEOPLE'S REPUBLIC OF: TO GO WITH STORY 'NKOREA-KIM-TOMB' North Koreans ride past a poster of the late leader Kim Il-Sung in the town of Kaesong, near the Demilitarized Zone (DMZ) at Panmanjon in North Korea, 27 March 2005. Kim Il-Sung ruled North Korea from the nation's founding in 1948 until his death in 1994. His son, Kim Jong-Il, succeeded him in power although he remains \"president for life\", as enshrined in the constitution, and his image still appears everywhere around the country. AFP PHOTO/Peter PARKS (Photo credit should read PETER PARKS/AFP/Getty Images)Peter Parks / AFP

“It is very hard to teach a starving child,” she said. “Even sitting at a desk is difficult for them.”

Teachers were hungry, too. Her monthly salary scarcely bought two pounds of rice, she said. A university graduate, she pulled her own child out of the third grade in 1998, instead sending her to a neighbor to learn to sew.

She quit in 2004 to sell corn noodles outside Chongjin’s main market, an expanse of stalls and plastic tarpaulins half the size of a city block where traders mainly sell Chinese goods, including toothpaste, sewing needles and DVDs of banned South Korean soap operas.

But noodles were barely profitable, so she tried a riskier trade in state-controlled commodities: pine nuts and red berries used in a popular tea. That scheme collapsed in October. After she and her partners collected 17 sacks of goods from a village, a guard at a checkpoint confiscated them all instead of taking a bribe to let them pass. She was left with $300 in debt.

Like her, the construction worker, a rail-thin 45-year-old with a head for numbers, figured that private enterprise was his family’s only salvation. But as a man, it was harder for him to shake off his work assignment.

On paper, he said, a Chongjin state construction company employs him. But the company has few supplies and no cash to pay its employees. So like more than a third of the workers, the worker said, he pays roughly $5 a month to sign in as an employee on the company’s daily log — and then toil elsewhere.

Such payments, widespread at smaller state companies, are supposed to keep companies solvent, said one 62-year-old woman who is a trader in Chongjin. Even a major enterprise like the city’s metal refinery has not paid salaries since 2007, she and others said, though workers there collect 10 days worth of food rations each month.

“How would the companies survive if they didn’t get money from the workers?” she asked without irony.

Recently, the construction worker’s firm has been more active. The state has resurfaced Chongjin’s only paved road and built a hospital and a university for the 2012 centennial of the birth of Kim Il-sung, Kim Jong-il’s father and North Korea’s founder.

But the burst of projects bore a cost: each family was required to deliver 17 bags of pebbles every month to its local party committee. The construction worker enlisted his elderly parents to scour creek beds and fields for rocks that the family smashed by hand into grape-size stones.

With no state salary, he earns money by his wits. Every October, he sells squid caught from a boat he pilots in treacherous coastal waters. In other months, he bicycles about 20 miles every day looking for goods to sell, typically detergent bought from a factory that is resold by his wife at a 12 percent markup on a purple tarpaulin outside the main market.

The government periodically tries to rein in the markets, regulating prices, hours, types of goods sold, the sellers’ age and sex and even whether they haul their wares on bicycles or their backs.

Savings Wiped Out
In one 2007 Central Committee communiqué, Kim Jong-il complained that the markets had become “a birthplace of all sorts of nonsocialist practices.” The Nov. 30 currency devaluation upended them. The state decreed that a new, more valuable won would replace the old won, but that families could trade only 100,000 won, about $30 at the black market rate, for the new one. The move effectively wiped out private stores of money.

To cushion the blow, workers say, they were promised that their salaries would be restored if they returned to their government jobs. In fact, the construction worker and others say, they got one month’s pay, in January, before salaries again disappeared.

Some with political connections skirted the worst. One woman from Hamhung, North Korea’s second-largest city, said the local bank director allowed her relatives to exchange three million won, 30 times the official limit.

The party official’s wife, hair softly curled, a knock-off designer purse by her side, boasted about her six-room house with two color televisions and a garden. In the next breath, she praised devaluation as well-deserved punishment of those who had cheated the state, even though she acknowledged that it lead to chaos and noted that a top finance official was executed for mismanaging the policy.

“A lot of bad people had gotten rich doing illegal trading with China, while the good people at the state companies didn’t have enough money,” she said. “So the haves gave to the have-nots.”

The former teacher gave all she had. After her creditors stripped her of all her money, she said, she walked across the frozen Tumen River at night and into China to seek help from her relatives there. Famished and terrified, she said she banged randomly on doors until a stranger helped her contact them.

Image: Woman washes clothes in river.
Some North Koreans buy basic Chinese goods like laundry detergent on the black market.

Now safe in her relatives’ home, she said, she marvels over how they enjoy delicacies like cucumbers in winter. But temporarily deserting her son and daughter, both in their mid-20s, has left her so guilt-ridden that she sometimes cannot swallow the food set in front of her. “I don’t know whether my children have managed to get some money, or whether they have starved to death,” she said, her eyes brimming with tears.

For the construction worker, his sister’s news of the coming devaluation unleashed a furious scramble to salvage the family nest egg. He emptied the living-room cabinet drawer that held their savings and split it with his wife and daughter, telling them, “Buy whatever you can, as fast as you can.”

The three bicycled furiously to Chongjin’s market. “It was like a battlefield,” he said.

Thousands of people frantically tried to outbid one another to convert soon-to-be worthless money into something tangible. Some prices rose 10,000 percent, he said, before traders shut down, realizing that their profits soon would be worthless, too.

The three said they returned home with 66 pounds of rice, a pig’s head and 220 pounds of bean curd. The construction worker’s daughter had managed to purchase a small cutting board and a used pair of khaki pants. Together, he said, they spent the equivalent of $860 for items that would have cost less than $20 the day before.

His daughter tried to comfort him. “Father, I will keep this pair of pants until I die!” she pledged. He told her the cutting board would be her wedding gift.

“At that moment, I really wanted to kill myself,” he said. He gestured toward the safe-house window and beyond toward nighttime Yanji, brightly lighted and humming with traffic. “It is not like here,” he said. “Here, it is not a big deal to make money. There, it is suffering and suffering; sacrificing and sacrificing.”

He said he lay awake night after night afterward, fixated on the navy track suit his daughter had coveted. She had said it put her thick winter sweater and plain trousers to shame. He had put her off because the cheapest ones were nearly $15. When she brought it up once too often, he had cursed and shouted, “People in this house need to eat first!”

“I cannot describe how terrible I feel that I didn’t buy that for her,” he said, his voice trembling.

A Profound Isolation
Those North Koreans who have never crossed the border have no way to make sense of their tribulations. There is no Internet. Television and radio receivers are soldered to government channels. Even the party official’s wife lacks a telephone and mourns her lack of contact with the outside world. Her first question to a foreigner was “Am I pretty?”

Slowly, however, information is seeping in. Traders return from China to report that people are richer and comparatively freer, and that South Koreans are supposedly even more so. Some of the traders cellphones linked to the Chinese cellular network that can be surreptitiously borrowed for exorbitant fees.

Punishment for watching foreign films and television shows is stiff. The trader said a 35-year-old neighbor spent six months in a labor camp last year after he was caught watching “Twin Dragons,” a farcical Hong Kong action film starring Jackie Chan. Yet to the dismay of the former teacher, her 26-year-old son takes similar risks.

Her sister is married to a government official in the capital, Pyongyang, she said, but neither is a fan of Kim Jong-il. On her most recent visit, she said, her sister whispered to her, “ ‘People follow him because of fear, not because of love.’ ”

Since the currency devaluation, she and others say, people are noticeably bolder with such comments.

“Now, if you go to the market, people will say anything,” the construction worker said. “They will say the government is a thief — even in broad daylight.”

His wife was not among them. For weeks after the devaluation, he said, she lay on a living-room floor mat, immobilized by depression. “I had no strength to say anything to her,” he said.

Finally, he told her to get up. It was time to start over.

Su-Hyun Lee contributed research from Seoul, South Korea.

This article, View of North Korea Shows How a Policy Spread Misery, first appeared in The New York Times.