North Korea Today No. 340 June 2010

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[Source Summary Statement]
The information sources of this newsletter are North Korean people who reside in North Korea. Validity of the information is limited to the sources' localities and their level of accessibility to the information. The sources provide information based on what they observed or heard. As a rule, Good Friends limits its own editing to explicating unfamiliar North Korean words in South Korean and for the purpose of translating Korean to English for English version. Exceptions to this rule are Editorials and Investigative Reports where Good Friends expresses its own opinion.
May 26 Party Directives, “The Country has no immediate solution to food situation”
Details of Directives Handed Down to Each Ministry
Blanket Permission to Open Markets, “Everyone can do business”
“Do not regulate commerce by people”, Safety Authorities Instruct
The City Party Makes a Discussion Based on Market Price Instead of Official Price

May 26 Party Directives, “The Country has no immediate solution to food situation”
On May 26th, the Party stated that there will be no immediate government support and announced, “The government cannot take any immediate measures due to the worse than expected food situation.” Accordingly, the cabinet and all sectors delivered ‘the current North Korea’s Food Situation’ command to affiliated organizations. The attitude has changed radically from last January 31 when the cabinet minister Kim Youngil announced written apology during the cabinet meeting and asked to wait three months for a resolution. The May 26 announcement surprised the officials because there had been many announcements to ‘Trust and follow the Party even though the food situation is getting worse. Be patient,’ but no statements like this one where they announced that ‘the government cannot help immediately’. This is especially shocking to the Central party officials, prime organization workers who were receiving special distribution benefit, and Pyongyang residents. Some central party officials commented that “5.26 Action” is a real definition of the major incident. However, there are a small number of positive voices. They claim that “at least they are being honest by announcing that the government cannot help the situation. This is better than those times where they only promised food and asked us to wait with no carried out results.” An official commented, “I think this action is an improvement. People who only look up to the governmental distribution will die waiting. Instead, the government is being considerate and states that people need to find their own solution”.

Details of Directives Handed Down to Each Ministry
Central Party and Cabinet issued thorough directives to such department as trade, industry, safety agency, and security agency.

1. To Ministry of Foreign Trade, “Revive foreign trade at any cost”
In the case of the Ministry of Foreign Trade, it was given a directive to “revive the inactive companies by getting help from relatives in China if that is what it takes” since it suffered a huge blow in the beginning of 2010 as some of the trading companies had to go through dissolutions, mergers, and acquisitions. Thus the directive to the Ministry of Foreign Trade was to restore the business ties that were cut as a result of currency revaluation at any cost.
Previously, individuals who made a personal deal while belonging to a unit or company were given stiff penalties when caught. Now, the new directive allows individuals to engage in foreign trade if they belong to a trade company. Regular companies not doing foreign trade are encouraged to form a partnership with trade companies. It went further to suggest an incentive bonus for a person at a company, whatever his position may be, if the person can make a substantial contribution to a trade company by making a business deal. Even forcibly dissolved companies, some of which are military related, are allowed to be involved in trade if they can attract foreign investment.
On top of all of that, state controlled companies were given subsidies of at least 150,000 won with the new currency issued by the central bank. The subsidy, which ranged from 400,000 won to 600,000 won on average, was the government’s intention to place the responsibility on the enterprises, whereby the company has to take care of salaries and all other responsibilities. In a nutshell, the new 5.26 directive was designed to encourage companies to stand on their own with a minimum level of subsidy and sends a clear message that the government will not exercise control so that companies can revive themselves.

2. To Each Ministry of Industries, “Do the best you can to prevent workers suffering from hunger.”
A directive asking to “take measures to ensure livelihood for laborers at each agency and enterprise” was issued to each Ministry including the Ministry of Light Industry. The main message was to inform that the government is unable to provide food distribution and ask them to revive the factories so that they can handle the food problem on their own for their workers. It said that since the worker’s livelihood is in a dire condition, “Do the best you can to prevent workers from suffering from hunger.” The directive also urged to help laborers who are unable to come to work due to starvation.

3. To People’s Safety Agency, “Confiscate what can be used as weapon” in Response to Rampant Increase in Homicide
The People’s Safety Agency was cautioned against ominous sign of crime as food crisis may lead to social unrest. The directive includes, as a preventive measure, “confiscation of what can be used as weapon.” The biggest reason was because of a sharp increase in aggravated crime amid social panic exacerbated by food shortage. A knife, if longer than 9 cm, is considered as a potential weapon and, thus, should be confiscated. So is a saw, though for domestic use. Besides that, the Party’s Organization and Guidance Department ordered the Security Department to expel those whose family defected to South Korea and send those who had a phone conversation with family overseas, including China and South Korea, to re-education centers. Officials at the Central Party and officials under the Cabinet were urged to maintain exemplary behavior as a Party member. Provincial Party officials were asked to “find out a way of addressing food crisis on their own using all possible means and get closer to the public by setting an example for ordinary people.”

Blanket Permission to Open Markets “Everyone can do business”
Authorization of public market is included at the core of the 5.26 Party directives. The North Korean authorities decided to allow everyone to have access to markets and overturned their original plan to close down the general market and exercise strong control over market. They announced that there will be no time restrictions, product control or age limitation. In reality, they allowed Democratic Women’s Union’s weekly prohibition from market operation during official work so people can work at market regardless of Democratic Women’s Union hours. Their only condition was to participate in labor mobilization. Pyungsung City, which suffered the most since last year’s decision to prohibit general market, is now allowed to open business and cancel other market regulations. A city official described the background on allowing of the market, “The living standard drastically decreased since the currency exchange and the government cannot provide distribution so they have to bring market back up.” He added, “There are increasing deaths from starvation so opening market is a reasonable resolution. Death due to starvation has gone out of control.” However, although the market doors are open wide, products are not being distributed and there is no cash flow. Market has shrunk that a businessman who used to make 3,000 won a day is barely making 200-300 won a day.

“Do Not Regulate Commerce by People”, Safety Authorities Instruct
Pursuant to the notion to deregulate the entire market, the Safety Bureau instructed the safety authorities in each region not to regulate commerce from now on. The instruction was that even though they should continuously carry out the role to maintain the market order, they should not confiscate the commodities from the merchants nor make an unreasonable demand in the pretext of regulation. It was conveyed because people will be starved to death one after another if commerce is banned where the national food situation is extremely fragile. In Hoeryong City of North Hamgyong Province, the sales booths were reorganized according to the orders of the Leading Secretary of the City Party. The instruction was that age or other limitations were lifted and anyone may come in the market to conduct a trade because people who were unable to enter the market used to open a street stall in the outside and thereby promoting disorders. Moreover, they decided to expand the size of the market again, which had been expanded but inevitably reduced in the past. Two years ago, Hoeryong City had reconstructed the market and increased the food booths; it demolished everything last year, handed over the place to the Fuel Department and utilized the place to produce coal briquettes. It is planning to retrieve the place, make sales booths again, and accept the entire merchants in sales booths. On the other hand, as of June, the safety authorities have decided not to regulate commerce nationwide, so each region has started to expand the size of the market. This is the measure to maintain the market order and to guarantee that even the residents who were thrown out from the market and conducted a trade by peddling or opening a street stall can make ends meet by commerce.

The City Party Makes a Discussion Based on Market Price Instead of Official Price
A food policy was discussed based on the market price of rice and corn for the first time in the City Party Meeting in Hamheung City, South Hamgyong Province. This is the first time where a market price, instead of official price or declared price, was mentioned in an official meeting. An officer from the City Party explained: “The state cannot allocate rations any more. Since we have received an instruction that there is no resolution, the City Party is determined to prepare a countermeasure based on the civil transactions.” In addition, he said that “The residents who do not receive wages are engaged in commerce, but the price of rice is 500 won/kg and the price of corn is 270 won/kg in the market these days, so people who were able to buy 10 kilograms of rice in the past cannot afford to buy even 1 kilogram”. He evaluated that although it was mentioned while diagnosing the current situation, it is still a meaningful change compared to the past where some foolish discussions were made with unrealistic official price or declared price.