My first thought was "How wicked!" Second thought was "Hey, but we have those thingies in Russia too!"
There is a wired radio system in Russia, established way back in the Soviet era, which transmits three radio channels. Simple receiver can consist basically of a loudspeaker and variable resistor as a volume knob, while more complicated receiver can receive one of 3 channels. There's a simple receiver on the wall next to me as I write this. Interestingly, I couldn't find any pictures of my exact model, so here's my (lame) attempt:
There's another, 3-channel one, of the latest incarnation (late 80's or early 90's) in the kitchen. When my dad bought it, I remember everyone coming to our house thinking it's a VCR, so that should say something of its size and form factor. It still sits up there near the ceiling mainly because of its large luminiscent clock on the front panel. We don't turn these radios on except maybe twice a year out of curiosity :)
These things fit the description "closed-circuit system that... can't be monitored outside the country" if by that you mean "wired"
Also, an obvious hack to monitor this "close-circuit" system: just attach a satellite transmitter to the output of a receiver.
Even cheaper: make a web radio out of one of these. Wait, you need internet access to do that...
One of my earliest childhood memories is falling asleep to one of these things.