Tuesday, January 12, 2010

Shaky North Korea

By Anthony Vasquez

With the H1N1 flu and rising inflation, the North Korean government has recently had its hands full.

On Dec. 9, state-run Korea Central News Agency reported that nine people contracted the H1N1 virus, also known as swine flu. The North Korean government accepted South Korea’s donation of 500,000 doses of flue medicine. The country’s self-imposed isolation from the outside world makes it difficult to gauge the severity of H1N1 there.

The World Health Organization reports that the round of H1N1 that began spreading last spring has caused the deaths of more than 11,500 people worldwide. H1N1 activity has slowed down, East Asia included.

Also, recent reports that the government has revalued the won, the official currency, are signs of worsening inflation. On Nov. 30, the government announced a “currency reform” in which old won notes were exchanged on a 1-for-100 basis.

Analyzing this development, Nicholas Eberstadt of the American Enterprise Institute urges people to pay close attention to the Hermit Kingdom’s economy. What happens there has long-ranging effects elsewhere. He gives good background information on the North Korean economy:

In the North's "golden era" (before the end of the Cold War, into the 1980s), total wages and salaries ultimately accounted for barely one-fifth of national output. Apart from Pol Pot's Cambodia, no other modern government has come so close to completely demonetizing a national economy.

With the collapse of the Soviet Union, the public distribution system fell apart as foreign aid dwindled. A famine that killed more than two million in the mid-1990s resulted. Changes in economic policy also happened and the government had to put up with some private-sector activity.

North Koreas mismanaged economy is extremely fragile. Maybe this is one reason why the Kim Jong Il regime wants an official end to the Korean War. The United States government wants North Korea to first abandon its nuclear ambitions and return to multilateral talks with its neighbors before any peace talks.

Related Links+

Wall Street Journal
North Korean Money Troubles
By Nicholas Eberstadt
January 11, 2010

BBC News
North Korea calls for end to hostility with US
January 1, 2010

Wall Street Journal
North Korea Seen Battling Wave of Flue
By Jaeyeon Woo
December 31, 2009

Here's a clip of the National Geographic Explorer episode "Inside North Korea." Corespondent Lisa Ling and her team go undercover with Nepalese doctor Sanduk Ruit's humanitarian mission of free eye surgeries (9 min 29 sec).

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