In North Korea, Party officials’ wives run the money market
It is already known that in North Korea, the private loans market is dominated by the wives of Party officials. The question is why and how.
Lee Ok-jin from Pyongsong, the city close to Pyongyang that plays host to one of North Korea’s largest wholesale markets, escaped North Korea in 2011. She relates that “Party officials remain loyal to the regime” and its principles, at least on the surface. They do not allow their wives to go out into the marketplace to be seen to be directly involved in so-called “anti-socialist” activities.
When asked how Party officials’ wives sustain a living without going out to the marketplace – in a country of people wholly reliant on them – Ok-jin explained that “the average person cannot survive without trading in the market, but the wives of Party officials still obtain rations from the regime. They therefore get fed. In addition, much of the time they engage in trade through associates who act as intermediaries.”
What are some of the ways the wives of Party officials use their husband’s positions to their advantage? They often take on managerial roles in food processing factories or state distribution centres, using these positions to “steal goods and re-sell them” – and saving up and accumulating private wealth in the process.
Diversification is common in socialist command economies, and North Korea is no exception. With widespread proliferation of corruption during the great famine, it is not surprising that many Party officials’ wives are also involved in such activities.
Of course, there are not many such positions in a country as food-poor as North Korea. Ok-jin was quick to emphasize the fact that “wives of Party officials who cannot get such jobs instead put their money into the market as private lenders”. In North Korea this is known as “pro-interest” – i.e. professional interest rates.
Yoo Hyun-sook from Hyesan, a borderland city in North Hamgyong province, escaped North Korea in 2009. She told us the story of a close friend of hers in North Korea, whose brother-in-law is the Party Secretary of a district in Pyongyang.
This woman took charge of a ‘pro-interest’ business at the request of her older sister. She didn’t have to worry about her business going under, since her business was run with the savings of the Secretary. Moreover, since there were many people borrowing money, her profits were “extremely good”.
Hyun-sook went on to explain that just like Party officials’ wives, pro-interest lenders work through intermediaries: “They usually work with their close relatives.”
In a society with no prospect of financial law enforcement, the importance of personal relationships in business is crucial – especially when it comes to borrowing money. Hyun-sook emphasized the lengths people went to in order to “stay in the good books of her friend,” who was able to “use her brother-in-law’s position to ruin the lives of bad debtors”. She was at other times very lenient, “letting borrowers who were good to pay her back late”.
Relating the interesting fact that “loan-shark” is a term used only for loans given in grain, she added that such trades are “not done by the wives of Party officials”. Instead, they only focus on interest loans. Given the North Korean regime’s perennial attempts to crackdown on the sale of grain, this is not surprising.
The absence of interest in the public good was something our interviewees both pointed out. Emphasizing that “these people really do not care why the average person is so desperately in need of credit”, Hyun-sook stressed that these people are “interested only in making money” – the new North Korean way of “wielding power”.
Reporting by Choi Dami.
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