An economy built on drug dealers, ivory poachers and counterfeiters
From Richard lloyd Parry in Seoul
The Times October 11, 2006
NORTH Korea’s economy, and the methods it uses to support a Stalinist society in the globalised 21st century, is a subject as murky, dark and dangerous as its totalitarian leadership. Many of the country’s traditional industries, such as mining, chemicals and textiles, are in ruins.
But 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.
The greatest danger from Monday’s underground nuclear test may lie not in the potential for a missile attack on another country, but in the export of nuclear devices or technology, to which President Bush referred in his first remarks on the explosion.
Peter Beck, of the International Crisis Group in Seoul, said: “I’m not worried about them using one of their warheads on a neighbour because that would be suicide. But given their record of selling whatever they have — drugs, missile technology, counterfeit currency — the primary concern has to be proliferation.”
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.
If the North does attempt to profit from its nuclear success it will be covert networks like these that it will employ.
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.
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.
A US Senate hearing last April concluded that income from these operations amounted to between $500 million and $1 billion a year.
“These extracurricular revenue streams allow North Korea to balk at participation in negotiations,” Tom Coburn, the chairman of the hearing, said. “Economic pressure is the civilised world’s only real leverage.”
If Kim Jong Il is ever to be forced to the negotiating table it is these sources of income that must be cut off.
“It will take a lot international co-operation, and it will take time,” says Song Young Sun, a South Korean MP and security expert. “It will not kill Kim Jong Il with a single shot. But if it works, it will slowly dry him to death.”