A North Korean source has shed more light on an apology by Premier Kim Yong-il on Feb. 5 which apparently acknowledged that the currency reform in late December went disastrously wrong.
The source said Kim, not to be confused with leader Kim Jong-il, read out an hour-long statement before village chiefs and other party officials at the People's Palace of Culture in Pyongyang on Monday morning. "I sincerely apologize for having caused great pain to the people by recklessly enforcing the latest currency reform without making sufficient preparations or considering the circumstances," the source quoted him as saying.
Kim also pledged to rectify the mistakes, saying he would do "my best" to stabilize people's financial circumstances. The revaluation of the won, instead of curbing inflation, led to skyrocketing prices of daily necessities.
He indicated that the regime will allow people to use foreign currency, which has been banned since the reform, and permit open-air markets to return to normal after a crackdown that seemed aimed at strangling a nascent market economy.
But Kim at the same time stressed the need to stick to state-set prices, adding that the government will strictly crack down on the hoarding of goods.
Some experts say the situation in the North has returned to almost the state before the currency reform. A South Korean official said North Korean authorities loosened their control of the markets since there has been unprecedented resistance from ordinary people. This seems to have forced Kim's hand.
After Kim's apology, most money changers and illegal traders who had been arrested were reportedly freed. The number of people leaving for China has grown noticeably as offices of state agencies or state-run corporations involved in earning dollars, which suspended business due to the ban on use of foreign currency, have resumed business.
The apology apparently quenched a lot of the simmering public anger. "Premier Kim Yong-il's direct apology to village chiefs, who are representatives of the people of each region, is tantamount to an apology to the people themselves. It's a big event in the history of North Korea," a former senior North Korean official who defected to the South said. "Authorities have never apologized to the people for wrong policies before."
He believes the apology came "because discontent with the currency reform had spread widely even among core supporters of the regime," he added.
Residents in Hwanghae Province are in some cases said to have beaten security officers who were cracking down on the use of dollars. Since the climbdown, there have reportedly been calls to return the money the authorities confiscated. The won was revalued at a rate of 100:1, but the new won immediately plummeted in value, and those who saw their savings disappear into thin air have been demanding compensation.
The source said the apology may encourage North Koreans to become more assertive in the future.