Reporting from Seoul and Beijing — A recent move by North Korean officials to rejigger the nation's economic system has introduced a new level of misery to everyday life.
In the last month, the price of rice rose tenfold at private markets, and residents often had to wait in line for hours in subzero temperatures to buy food.
Humanitarian aid workers have been unable to travel to large portions of the country because many hotels no longer accept foreign currency and the exchange rate bounces around wildly.
At the heart of the turmoil is a series of dictates imposed late last year by Kim Jong Il's regime: revaluing the currency, closing down privately run markets in favor of state-owned shops and banning the use of foreign currency and the sale of many imports from China.
Recent visitors to North Korea, aid agencies and defectors say the changes have sent the already-troubled economy into a tailspin.
"It's all really chaos. Everybody is confused," said a businessman, who asked not to be identified.
After the 1990s, when food distribution collapsed and as many as 2 million people died as a result, North Koreans began buying food privately from vendors who sold homegrown produce on the streets and at covered bazaars. By last year, the regime had rolled back many of the liberal reforms, tightening the hours of the markets and the types of Chinese goods available.
The new dictates appear designed not only to put the entrepreneurs out of business but to confiscate any accumulated wealth.
"We need to strengthen the principle and order of socialist economic management," Cho Song Hyun, an official with North Korea's central bank, said in December to a pro-regime newspaper in Japan.
On Nov. 30, North Korea announced it would knock two zeros off its currency, the won, which was then trading on the black market at about 3,500 to the U.S. dollar.
People had just one week to trade in their money for new notes, and they were given a limit: Each family could exchange 100,000 old won for 1,000 new won, the equivalent of less than $30.
Any cash in excess of the limit would become invalid -- meaning life savings were being wiped out with the stroke of a pen.
"People panicked. They had all their savings in cash because nobody trusts the banks. Many committed suicide," said Song Jung-su, a former railroad security official who defected from North Korea in 2006 but is still in touch with relatives.
Won Sei-hoon, head of South Korea's National Intelligence Service, is reported to have told South Korean lawmakers in a closed session last week that the move led to outbreaks of violence.
"The move late last year led to riots in some places," the Seoul-based newspaper JoongAng Daily quoted Won as saying. "But the North Korean government appears to have them now under control."
Given North Korea's absolute grip, organized protest was impossible. But many expressed their anger by discarding the worthless currency.
Some threw it into the wind from motorbikes, others made bonfires or tossed the money into the ocean, according to North Korea Today, a newsletter produced by a Seoul-based Buddhist charity with sources in the country. Arrests followed, the newsletter reported, and at least one man was executed -- not only because the law requires the old notes to be turned in, but because desecration of the image of the nation's late founder, Kim Il Sung, whose portrait was on the currency, is considered treason.
In the days before the old won lost its value and foreign currency was banned, people shopped frantically, snapping up whatever they could find: electronics, rice cookers, shoes, cosmetics, clothing and, most of all, food, said a foreign resident of the capital, Pyongyang, who asked not to be identified.
Authorities twice raised the limit on how much currency could be traded in, but they couldn't stop the hysteria. By the time the new won was distributed, almost all market shelves were bare.
When a little food went back on sale, there was such pent-up demand that prices soared out of control. Police tried to impose limits on staples such as corn and rice, but minutes after authorities left the premises, prices would climb again.
In some cases, angry vendors and residents were reported to have attacked security agents who tried to close markets, Daily NK, a Seoul-based newsletter put out by defectors, said Tuesday.
"I think they [North Korean authorities] miscalculated in their judgment," said Kim Hyuck, 27, a defector who is getting a degree in North Korean studies in Seoul. "They wanted to stop inflation, but they made things worse."
The currency reform has had peculiar side effects. North Korea's treasury didn't print enough small-denomination notes, so shops have had to give out candy and gum as change.
Uncertainty about the currency has all but stopped cross-border trade with China. A shortage of construction materials has caused delays in Pyongyang's showcase building projects.
