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C O N F I D E N T I A L SEOUL 000207 
 
SIPDIS 
 
E.O. 12958: DECL: 02/10/2030 
TAGS: PREL PHUM PGOV PINR ECON SOCI KN KS CH
SUBJECT: DANISH EMBASSY ON FOOD SHORTAGES, CURRENCY CHAOS 
IN PYONGYANG 
 
REF: SEOUL 136 
 
Classified By: POL M/C James L. Wayman.  Reasons 1.4 (b/d). 
 
Summary and Comment 
------------------- 
 
¶1. (C) SUMMARY:  Danish Embassy Political Counselor Mette 
Ekeroth told us that, during a late January visit to North 
Korea, food was hard to find -- even for diplomats.  Ordinary 
people, even in the capital, were clearly having a difficult 
time getting enough to eat.  Senior regime officials were 
using foreign currency to purchase food directly -- at 
cutthroat prices -- from the dwindling number of Chinese 
merchants still in the capital.  Inflation, she asserted, had 
made the new North Korean Won "nearly worthless."  Ekeroth 
asserted that train cars full of perishable food items had 
rotted in Pyongyang because of a lack of clarity from the 
government about official prices.  Ekeroth said a Danish WFP 
official in Pyongyang privately characterized the food 
situation in the DPRK's northeast provinces as "terrible." 
According to Ekeroth, the official Euro-new NKW rate was 
1:140; the black market rate was 1:560.  COMMENT:  Ekeroth's 
report, while perhaps the most alarming we have received, 
largely tracks with what we have been hearing from a range of 
sources about severely deteriorating conditions in North 
Korea (reftel).  End summary and comment. 
 
DPRK Trip Readout:  Food Hard to Find... 
---------------------------------------- 
 
¶2. (SBU) During a meeting at the EU Mission in Seoul, Danish 
Embassy Political Counselor Mette Ekeroth gave us and several 
EU colleagues a readout on her January 25-29 visit to 
Pyongyang with Ambassador Poul Hoiness, who is 
dual-accredited to the ROK and DPRK.  Ekeroth characterized 
the overall situation in Pyongyang as "very bad," noting that 
even her delegation had a difficult time finding food.  No 
public restaurants were open during their stay and most 
hotels had no food.  A major department store opened for a 
few hours on one day during their visit; Ekeroth said a line 
several hundred meters long formed quickly, with people 
"obviously" seeking to unload DPRK currency for goods of any 
kind.  Ordinary people, even in Pyongyang, were clearly 
having a difficult time getting enough to eat, she 
emphasized. 
 
...Unless You're a Regime Crony with Foreign Currency 
--------------------------------------------- -------- 
 
¶3. (C) In contrast, Ekeroth asserted, senior regime officials 
and their families were using foreign currency to purchase 
food directly from the dwindling number of Chinese merchants 
in the capital.  She said these businessmen have small 
warehouses in Pyongyang where they sell perishable and 
non-perishable food items -- at cutthroat prices -- to regime 
elites; a kilo of oranges, for example, was going for 30 
Euros. 
 
Food Rotting at Rail Depots, NE Provinces Hit-Hard 
--------------------------------------------- ----- 
 
¶4. (C) Ekeroth blamed the DPRK's disastrous currency 
replacement for exacerbating chronic food shortages. 
Inflation, she asserted, had made the new North Korean Won 
"nearly worthless."  Echoing observations by Italian Embassy 
Political Counselor Filippo Nicosia, who visited the DPRK 
January 19-22, Ekeroth claimed there were food products 
sitting in train cars at rail depots in Pyongyang; they have 
not been unloaded and distributed, however, because "nobody 
knows what the prices should be."  Both Nicosia and Ekeroth 
asserted that train cars full of perishable food items had 
rotted in Pyongyang because of a lack of clarity from the 
government about prices.  Ekeroth noted that while things in 
Pyongyang were a mess, the situation in the northeast 
provinces was reportedly much worse.  Dilapidated rail and 
road links to the northeast have been shut down by severe 
winter weather, Ekeroth said, meaning that North Hamgyong 
Province was "basically not getting any food supplies." 
 
¶5. (C) According to Ekeroth, a Danish WFP official in 
Pyongyang privately told Ambassador Hoiness that the food 
situation in the northeast was "terrible."  The official said 
he had recently been to Hungnam to supervise the offloading 
of a shipment of corn on a day when the temperature was minus 
20 Celsius.  A bag of corn was dropped and broke open, the 
official said, prompting a huge scramble as dock workers 
pulled off their gloves and tried to scoop up the loose corn. 
 
 The official also told the ambassador that, during the visit 
to Hungnam, he had seen emaciated KPA troops building small 
rafts that, despite the bitterly cold weather, they were 
apparently using to float out to sea far enough to catch 
fish. 
 
They "Have No Idea What They Have Gotten Themselves Into" 
--------------------------------------------- ------------ 
 
¶6. (C) Both Nicosia and Ekeroth said that banks in Pyongyang 
apparently had instructions setting official exchange rates 
for the new North Korean Won (NKW) against major foreign 
currencies, but were not widely publicizing the information. 
According to Ekeroth, the official Euro-new NKW rate was 
1:140; the black market rate was 1:560.  Ekeroth said 
Ambassador Hoiness had a tense exchange with a Vice Trade 
Minister about the currency replacement issue, which ended 
with the minister being "really upset" and displaying "no 
understanding of basic economic principles."  Ekeroth said 
Ambassador Hoiness summed things up succinctly: "the North 
Korean have no idea what they have gotten themselves into." 
STEPHENS