It is no secret that North Korea is in great need of foreign currency. But getting it has not been so easy in recent months. One way of getting foreign currency, is by sending out North Korean labourers to other countries to work as waitresses or loggers. Their salaries are collected by the North Korean government.
Another way is tourism. Particularly tourists from China come in their thousands to the North Korean beaches and mountains. China has even stimulated tourism to North Korea in an attempt to support the regime without breaking international sanctions. However, the incredibly strict Covid lockdown that was issued by North Korea, has put an end to tourism and to sending workers abroad.
Still, there is a lot of foreign currency in North Korea. It is just not in the hands of the government. It is in the hands of the people.
North Koreans have long understood that they cannot trust their government to provide for their needs in times of crisis. So those who can, like to save up money. However, in 2009, the government decided overnight to take two zeros off their currency, leaving people with just 1% of their savings. Also, trading in foreign currency was forbidden. In the long run it proved impossible to enforce this, since people no longer trusted their own currency. Both the Chinese Yuan and the American Dollar as well as Euros are commonly used in commerce, and by the richer people to save or to use for the purchase of imported products.
Daily NK reports that there is even more foreign than local currency circulating in society. The government knows that and wants to ‘absorb’ it. They returned to their 2009 play book. In May, there was a report on Radio Free Asia that people would no longer be able to use foreign currency to purchase things, so that they would be forced to exchange it for local currency in government exchange offices. However, that did not seem to be working. They quoted officials who said:
“So far, the authorities have been trying to enforce the ban, [hoping to] retrieve foreign currency from residents, but their efforts have repeatedly hit a wall due to resistance and uncooperative behavior from both ordinary residents and officials,” the second source said.
“The ban on the use of foreign currency has not been effective, resulting in only a drop in the status of the authorities, [and] the dollar and yuan are still in circulation in the marketplaces.”
About a month later, according to a Daily NK report, the government decided to take action in the opposite direction. Stores that previously had given people the option to buy with foreign currency, would now be foreign currency only stores. While other stores in the provinces would start to offer a foreign currency option.
In this way the government hopes to encourage the citizens to pay with the foreign currency they have saved, so they can eventually get their hands on it. Aside from a cash boost for the government, it would also take economic power from the people and put it back in the hands of the government, leaving people once again at their mercy. A source of the Daily NK put it this way; it is a “silent standoff” between the “money-hungry government” and “people struggling to survive.”
It is hard to say if it will work. There is just not much for sale in the stores after so many months of lockdown. And people may realise more than ever, that it is better to keep your lifeline just in case.
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