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Money & Power in North Korea Hidden Economy North Korea 2015 North Korea, officially the Democratic People's Republic of Korea, is a country in East Asia, in the northern part of the Korean Peninsula. The name Korea is derived from the Kingdom of Goguryeo, also spelled as Koryŏ. At the end of World War II in 1945, the Korean Peninsula was divided into two zones along the 38th parallel, with the northern half of the peninsula occupied by the Soviet Union and the southern half by the United States. Initial hopes for a unified, independent Korea evaporated as the politics of the Cold War resulted in the establishment of two separate states with diametrically opposed political, economic, and social systems. Soviet General Terentii Shtykov recommended the establishment of the Soviet Civil Authority in October 1945, and supported Kim Il-sung as chairman of the Provisional People's Committee for North Korea, established in February 1946. During the provisional government, Shtykov's chief accomplishment was a sweeping land reform program that broke North Korea's stratified class system. Landlords and Japanese collaborators fled to the South, where there was no land reform and sporadic unrest. Shtykov nationalized key industries and led the Soviet delegation to talks on the future of Korea in Moscow and Seoul. In September 1946, South Korean citizens had risen up against the Allied Military Government. In April 1948, an uprising of the Jeju islanders was violently crushed. The South declared its statehood in May 1948 and two months later the ardent anti-communist Syngman Rhee became its ruler. The Democratic People's Republic of Korea was established in the North on 9 September 1948. Shtykov served as the first Soviet Ambassador, while Kim Il-sung became Premier. Soviet forces withdrew from the North in 1948 and most American forces withdrew from the South the following year. Ambassador Shtykov suspected Rhee was planning to invade the North, and was sympathetic to Kim's goal of Korean unification under socialism. The two successfully lobbied Joseph Stalin to support a short blitzkrieg of the South, which culminated in the outbreak of the Korean War. Capital: Pyongyang Supreme leader: Kim Jong-un