The DPRK’s export economy

The (London) Times reminds us that in a country which is alleged to rely on illegitimate foreign exchange earnings, the effectiveness of sanctions against legitimate trade is not going to hurt much.

The North Korean military and ruling elite have held off political collapse in the years since the end of the Cold War thanks to a web of criminal businesses backed by the power and military might of a well-armed dictatorship.

Illegal export businesses that North Korea is accused of operating include the manufacture and sale of drugs, counterfeit currency, fake brand goods such as cigarettes, the forging of tax revenue stamps and money laundering. On top of this there is the lucrative trade in weapons, principally missile parts, which is perfectly legal but deplored by the United States and its allies.

Over the years North Korea’s partners in these enterprises have ranged from Japanese yakuza, Russian drug dealers, Irish republican terrorists, bankers in Macau, ivory poachers in Africa, and the Armed Forces of Egypt, Iran, Libya, Pakistan, Syria, Vietnam and Yemen.

North Korean official crime dates back at least to the 1970s when its diplomats based in the four Scandinavian countries were reselling tax-free alcohol and cigarettes.

Anna Fifield’s piece in the weekend FT reminds us that this sort of activity is still thought to go on, quoting David Asher, co-ordinator of the US State Department’s North Korea working group from 2003 to 2005:

North Korea is perhaps the only country in the world whose embassies and overseas personnel are expected to contribute income to the ‘Party Centre’, not rely on central government funds for their operations.

Richard Lloyd Parry in the Times resumes:

Diplomatic bags were frequently abused for the purposes of smuggling drugs produced in North Korean factories, beginning with heroin and opium but diversifying in the late 1990s into crystal metamphetamine or “shabu”, the most popular drug in Japan, South Korea and South East Asia. In 2003, Australian coastguards seized the North Korean boat Pong Su after it dropped off 150kg (330lb) of heroin at a beach in Victoria.

Even harder to pin down are the counterfeit $100 bills known to law enforcement agencies as Superdollar. US security services have seized $50 million of the counterfeits since they began appearing 1989, of a quality so high that they are often detected only when they reach the Federal Reserve. Sean Garland, the leader of the Official Irish Republican Army, a Marxist splinter group of the IRA, is presently fighting extradition from Ireland to face charges in the US that he purchased and distributed North Koran supernotes in Belarus, Russia and Ireland.

North Korean factories are reckoned to produce 41 billion fake cigarettes a year, for sale in China, Japan and the US.

In the past ten years at least six North Korean diplomats have been expelled from Africa for smuggling elephant tusks and rhinoceros horns.

Indentured labourers are exported to Russian logging camps and Czech factories as cheap labourers, in wretched conditions. Last year the FBI arrested 59 people at an elaborately staged fake gangster wedding, breaking a Chinese-North Korean racket which sold tens of millions of dollars of contraband every year, including forged notes, postage stamps, tax stamps for cigarettes, Viagra and AK47 assault rifles.

Most difficult to police is the North Korean arms trade — because, as big Western governments know better than most, the lucrative arms trade is not a crime. The US Government estimated that North Korea’s sales of rockets, missiles, parts and technology amounted to $560 million. In 2002 the Spanish Navy boarded a North Korean ship carrying Scud missiles to Yemen — but had to let it go because it was operating perfectly legally.

The finalised UN sanctions target military and luxury goods. Here’s the first part of article 8 of the UN resolution (the full text is on the BBC site here):

All Member States shall prevent the direct or indirect supply, sale or transfer to the DPRK, through their territories or by their nationals, or using their flag vessels or aircraft, and whether or not originating in their territories, of:

(i) any battle tanks, armoured combat vehicles, large calibre artillery systems, combat aircraft, attack helicopters, warships, missiles or missile systems as defined for the purpose of the United Nations Register on Conventional Arms, or related materiel including spare parts, or items as determined by the Security Council or the Committee established by paragraph 12 below (the Committee);

(ii) all items, materials, equipment, goods and technology as set out in the lists in documents S/2006/814 and S/2006/815, unless within 14 days of adoption of this resolution the Committee has amended or completed their provisions also taking into account the list in document S/2006/816, as well as other items, materials, equipment, goods and technology, determined by the Security Council or the Committee, which could contribute to DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes;

(iii) luxury goods;

Faces of North Korea (BBC site)

Finally, a couple of random topical links:

  • A couple of good op-ed pieces in the New York Times are worth a read: Jimmy Carter (Solving the Korean Stalemate, One Step at a Time) and BR Myers (Kim Jong-il’s Suicide Watch)
  • Some good DPRK pictures from the BBC site (a sample is shown above)

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