Tuesday, February 8, 2011

North Korea Today No. 387, January 26, 2011

[“Good Friends” aims to help the North Korean people from a humanistic point of view and publishes “North Korea Today” describing the way the North Korean people live as accurately as possible. We at Good Friends also hope to be a bridge between the North Korean people and the world.]

Rice Price Hits 3,000 KPW in Pyongyang
Food Prices Fluctuate due to the Forced Collection of Army Provisions Nationwide
Party Officials Not Exempt From Military Rice Obligations
“The Nation cannot Exist without Soldiers” - Mobilizing Military Food Supply Daily
Central Party Directs to Take a “Bold and All-Out” Stance When Dealing with China

Rice Price Hits 3,000 KPW in Pyongyang
The price of rice in Pyongyang has exceeded 3,000 KPW for the first time. Rice was traded at 3,200 KPW per kilogram on January 19th, 2011. This sudden increase happened only one week after the price dropped to 1,500 KPW. The price of rice had soared to 2,100 KPW on January 7th, 2011 and went down temporarily the next day, as each police station and security department was provided with ten days’ worth of food in celebration of the birthday of Kim Jong-un, the Vice Chairman of the Central Military Commission of Worker' Party of Korea.

However, the price started to surge as some of the originally expected food rationing did not happen. One City Party official noted regarding the soaring rice price, “it is because the food imported from outside has been delayed and no food is available at the market in Pyongyang because the neighboring farms were required to provide the army provisions first.” It was also pointed out that the increasing value of the dollar and yuan day by day is another factor that added fuel to the rising food prices. On the 19th of January, the dollar exchanged for 3,400 KPW in Pyongyang and Pyongsung. As for the reason of skyrocketing foreign exchange rates, one City Party official pinpointed the intensified competition for foreign currencies among institutes, public enterprises and trade companies. He noted, “Everybody purchases dollars to use for trading with Chinese partners. On the contrary, some foreign representatives bring dollars and exchange those dollars for Renminbi in North Korea. This is because the price of the Renminbi is higher in North Korea than in China. In recent days we observe an increasing number of trade representatives looking for international traders in China. After the lunar New Year’s, the customs offices are expected to overflow with trade representatives.”

Prices of Rice, Corn and Dollar in Major Cities as of January 19th

Food Prices Fluctuate due to the Forced Collection of Army Provisions Nationwide
The price of rice hit 3,200 KPW in Pyongyang, and the corn traded at 2,200 KPW, which shocked the majority of North Korean people. By January of this year the price of rice skyrocketed to 2,100 KPW. However, the price of corn had never passed 1,000 KPW before. Even Central Party officials felt puzzled at the fluctuating grain prices. However, local party officials say that it is an inevitable result. One city party official in Pyongsung pointed out, as the first reason, the fact that the government is exacting army provisions on a priority basis although it had promised not to do so. On October 30th, 2010, the Central Party decided to stop collecting army provisions and gave notice to some regions on November 1st 2010. However, it resumed its requirement as a form of “voluntary sharing” of the provisions because of the emergency situation for securing army provisions. Recently farms near Pyongyang were provided with food provisions for one year. However, the actual amount barely covers 10 months. Many farmers in South and North Hwanghae, Kangwon, South Hamkyong and Ryanggang Province did not receive food provisions enough for even half a year. Since the party is requiring food for the army despite its promise not to do so, the farmers have minimized the purchase of essential goods and stocked up on food to prepare to make it through the lean months in the spring. As a consequence, food has not been distributed to the market.

One City Party official in Hamheung noted that the expected food provisions on January 8th, 2011 (Birthday of Kim Jong-un) did not materialize, and this is one of reasons for the increasing food prices. Food should be distributed using whatever pretext; absent that, food prices are bound to rise.

Party Officials Not Exempt From Military Rice Obligations
Party officials and those in law enforcement, even those who received 10 days’ ration, are not exempt from making contributions to the military. For those in law enforcement, even the lowest-ranking officials are each required to donate 50kg of corn. The higher their rank, the more they must donate. A police officer in Pyongyang remarked that the 10 days’ ration he received was limited to himself and did not include his family, resulting in difficulties with food shortage, like all other ordinary families. For fear of losing his position, he still contributes food to the military, but states that this kind of situation goes hand-in-hand with colleagues’ practice of increasing crackdowns on illegal behavior. Tightened law enforcement increases bribing practices by civilians. This is reflected in the expression, to “squeeze blood from citizens to meet food contributions”.

The supposedly voluntary food contribution is in fact an obligation, and there is even greater pressure placed on trade representatives in foreign countries and officials in international trading companies. When domestic officials in North Korea donate 1 to 2 tons of food, they are well received, but if any officials overseas or in a trading company contribute the same amount of 1-2 tons, they are subject to great scrutiny. It is not explicitly stated how many tons of food are required in their contributions, but it is generally established that the minimum contribution is 5 tons, and to receive a good evaluation, it must be over at least 10 tons. If they (trade representatives) donate less than 5 tons, the party can suspect the officials’ loyalty to the party and country, and in the worst case scenario, will audit their assets. Hence, officials are willing to sell their personal assets to meet food contribution requirements. An official explained that the same fixed standards apply to monetary contributions that are accepted in lieu of actual food.

“The Nation cannot Exist Without Soldiers” - Mobilizing Military Food Supply Daily
The Central Party recently issued a nationwide order to collect food for soldiers, stating, “Our country cannot exist without soldiers. We are in a difficult time, but you must help secure food for them.” Every organization, enterprise, and people’s unit of district offices held lectures in which ordinary people are made to swear the oath, “Without the General and soldiers, we cannot be happy. Even if we are starved or ragged, we will follow the Great Leader’s measure and do our best to support the soldiers.” Although they swear an oath of support at the lectures, they leave cursing, “This is crazy, and they are killing the people”. The farmers, who had been ecstatic at news of halting the military food contributions, responded now with a sense of having been fooled. Some outright refuse to trust the party any longer, disbelieving what they hear regardless of the content. A Central Party official explained their own perspective on the situation, saying, “The food shortage of the people is worsening despite the Party’s efforts, due to an unexpected situation. Last September, when a Party organization meeting received report of the people’s unspeakable troubles and we decided to stop collecting food contributions for soldiers, we still had a way out of this situation. It was when our plans to import food from China did not come through that we could not put off the issue of feeding the soldiers any longer, and we began collecting military food contributions again”.

Central Party Directs All Departments to Take a “Bold and All-Out” Stance When Dealing with China
The Central Party is once again emphasizing to all institutions, enterprises and government units the importance of strengthening cooperation with China. Following the instructions requesting to take a "big and all-out stance," every government unit, including economic trade, political, and military areas, is reshaping its China policy. In particular, they are setting up internal guidelines at the party level to punish those enterprises or individuals committing credit violations or damaging credit in trade with China. Thus, there are claims that recent currency soaring valuations of the Yuan can be linked to the atmosphere of encouraging trade with China. As each of the institutions and enterprises tries to establish credible trading with China, many transactions based on credit are no longer possible. As a result, competition to acquire foreign currency has become more intense because deals can only be made with Yuan or dollars. Although recently there is a sharp increase in the number of inquires coming from China’s Three Northeast Provinces about investing in North Korea’s mining or ore mines, not many deals have been finalized. Therefore, foreign investment influx is insignificant. In other words, the value of foreign currency is rising rapidly because there are a lot expenses to be paid with foreign currency while there is no source of foreign currency income.

Especially, with all trading companies attempting to acquire food in preparation for February 16 holidays, the foreign currency value is expected to continue to rise for the time being. Trading companies have established the policy of refraining from importing everyday essential goods other than special items, and making every effort to acquire food instead. In terms of politics, the recently proposed political dialogue with South Korea can be interpreted as North Korea’s attempt to win China’s good will by showing respect to China’s demand. An official says, "All the departments of the government are having on-going discussions to reshape the policies with China because we are instructed to honor the demands made by China as much as we can and cooperate closely with China to solve all the problems by strengthening our ties with them. We are reaching out to South Korea first because of China's influence, but it doesn’t matter whether South Korea accepts our offer or not. We are not responsible for South Korea’s refusal to accept our offer. We're just trying to show that we have done our part.”

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