The North Korean regime has sacked the Workers' Party's Finance Director Pak Nam-gi, letting him take the fall for the failed currency reform late last year. Until December, Pak was frequently spotted accompanying North Korean leader Kim Jong-il on his "on-the-spot-guidance" tours, but he suddenly dropped from sight in January.
Diplomatic sources in Beijing say Pak was probably removed as a sacrificial lamb after social unrest increased following the currency revaluation, which led to skyrocketing prices. When millions of people starved to death or fled the country to escape famine and flooding between 1995 and '96, North Korea accused Minister of Agriculture So Kwan-hui of espionage and executed him in public in the streets of Pyongyang.
North Korean defectors say the official price of rice was 20 won per kilogram, but in the month after the currency revaluation, it jumped 20 times to 30 times and now costs 600 won. In some areas, prices are said to have soared 50 times to 1,000 won. As a result, frustrated North Koreans have no qualms about making insulting comments about their leader now, even in front of state security agents.
North Korea revalued its currency because a nascent market economy began taking root in various parts of the country following the collapse of the state's ability to distribute food and other supplies in the late 1990s, which created a new class of relatively wealthy merchants who became an increasing threat to the privileges of party members. North Korea wanted to revamp the system of state distribution system and reclaim economic control to protect the communist ruling class and to ensure the smooth transfer of power from Kim Jong-il to his third son Jong-un.
The crisis demonstrates the losing battle the North Korean leader is fighting against market forces and rising public discontent. The regime is even said to have issued live ammunition to security agents and authorized them to shoot and kill protesting citizens. But the regime still had to resort to blaming its chief economic policymaker after the draconian measures failed to appease public anger, a tactic commonly used by regimes that have lost the support of the public.
If the rumors coming out of North Korea are accurate, then the country is a ticking time bomb. During the last crisis during the late 1990s, North Korea pursued the Geneva Agreement with the U.S., while sending armed infiltrators to South Korea aboard submarines and launched the Taepodong-1 long-range missile. Now it is resorting to similar tactics by demanding talks with South Korea while launching massive military exercises and firing artillery rounds near the maritime border in the West Sea.
Grand National Party leader Chung Mong-joon said on Wednesday, "I would like to be briefed by intelligence officers" on the situation in North Korea. The South Korean public is even more anxious about the situation. Cheong Wa Dae, the Unification Ministry and the National Intelligence Service are saying that the situation in North Korea is not serious enough to threaten Kim's rule. In January 1989, the West German government said there were no unusual signs coming out of East Germany, but soon after, masses of East Germans fled their country and headed to Hungary and Austria, and in November the same year the Berlin Wall came down.
This does not mean South Korea's intelligence is inaccurate. It is important to note that nobody can be certain of the fate of the North Korean regime at this point. But what is required is for the government to set aside its preconceived ideas and prepare contingency plans in case of an emergency in North Korea. South Korean officials from the president on down must be prepared to deal with any scenario.