Economy & Politics

North Korea: Drastic measures against the economic crisis

In order to curb foreign exchange trading, ruler Kim Jong un takes drastic measures
In order to curb foreign exchange trading, ruler Kim Jong un takes drastic measuresimago images / UPI Photo

North Korea is taking drastic action against the collapse of its own currency: a foreign exchange trader was executed. The “Financial Times” reports, referring to the South Korean secret service. Accordingly, the regime of Kim Jong Un wants to prevent the use of foreign currencies – and apparently does not shy away from executions itself.

In the past few years, Kim had tolerated private currency exchange. But against the backdrop of the corona pandemic, the North Korean currency is crashing. According to the South Korean news site NK News, which monitors the exchange rate in various North Korean cities, it has lost around 20 percent of its value against the dollar in recent months.

This crash worries the Pyongyang regime. It also threatens to weaken the already fragile economic system. Now, Kim is about to regain full control of forex trading. The execution signals how serious he is.

In 2009 the won crashed dramatically. Since then, the use of foreign currencies – the dollar and the Chinese yuan – has increased. Kim, who took over from his father in 2011, tolerated this. His regime even encouraged the private and underground economy, which also benefited from access to foreign currency because it improved the lives of many North Koreans.

The cautious opening made a major contribution to the country’s imports and exports increasing between 2010 and 2017. But now the regime is running out of money Рand it is reacting violently.

The difficulties are mainly related to the corona pandemic. The country, which was already largely isolated, had sealed itself off even further and made the borders even more impermeable at an early stage.

Trade almost comes to a standstill

This also brought trade with China, by far the most important partner, to a virtual standstill. According to the Chinese customs authorities, China only exported goods worth the equivalent of $ 253,000 to North Korea in October – 99 percent less than in September. The imports from North Korea into the People’s Republic were accordingly in October 74 percent below the level of the previous year.

This collapse in trade, essential for North Korea, shows how far Kim is willing to go to prevent the virus from spreading in his country. He accepts to further reduce the already poor supply of food and gasoline. And that although China apparently has the pandemic under control and North Korea – at least according to its own information – is currently not recording any infections.

The drastic measures are not only affecting foreign exchange traders: according to CNN, an example has also been made of a customs officer. He was executed for allegedly failing to adequately follow the corona rules when checking a delivery from China. North Korea’s state media announced that the precautionary measures would be tightened. These include: Even more controls at the borders, more difficult access for ships from China – the authorities are also instructed to burn any garbage that was washed up by the sea on the country’s beaches.

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