The Associated Press

Wed, Jan 14, 2009 (3:33 a.m.)

North Korean leader Kim Jong Il has reportedly ordered a crackdown on street markets in an apparent move to reassert control over the economy amid an influx of foreign goods into the isolated country.

The authoritarian leader has ordered that all manufactured goods and imported items be sold at state-run shops rather than markets beginning this month, South Korea's Chosun Ilbo newspaper said.

Street markets have been allowed to spring up in communist North Korea in recent years, but officials are concerned about the infiltration of movies and music from the U.S. and South Korea into the reclusive country, analysts said.

"The growth of markets poses a threat to the North Korean regime," Park Hyeong-joong, a North Korea expert at the government-funded Korea Institute for National Unification, told The Associated Press on Wednesday.

Defectors from North Korea say South Korean pop culture is gaining popularity in the North, with DVDs of films and television soap operas smuggled into the country from China.

The two Koreas technically remain at war since their 1950-53 conflict ended in a truce, not a peace treaty, and possession of goods from enemy nations such as the U.S. and South Korea is tightly controlled.

In Seoul, a Unification Ministry official said he had heard about the crackdown but could not confirm the details reported in the Chosun Ilbo. An intelligence official said he knew about the crackdown but declined to elaborate. Both asked not be named because they were not authorized to speak to the media.

Park said a complete crackdown would be impossible to enforce because North Koreans rely on the markets to make a living.

North Korea has relied on outside food handouts since the mid-1990s, when the economy collapsed due to natural disasters and mismanagement as Soviet aid dried up.

The regime introduced economic reforms in 2002, including regular street and farmers' markets. But the government backtracked in 2006 after the reforms failed to revive the economy and resulted in an influx of foreign goods.

A note posted at a market in Haeju, south of the capital, Pyongyang, said the markets were just a "transitional step during economic difficulty." The note, an order from Kim, said only food and clothes would be sold at markets, the Chosun Ilbo report said.

Kim has made rebuilding the economy a focus for 2009. North Korea appears to be focusing on science and technology as part of a five-year plan that began last year to develop those fields, Unification Ministry spokesman Kim Ho-nyeon said in Seoul.