THIS IS HOW NORTH KOREA IS FINANCED
The People’s Democratic Republic of Korea – the first communist dynasty in history – is the world capital of appearances. It has invested millions in sustaining a threatening image for the West but receives help from the UN to feed its population. Its economy is submerged in illegality.
Kim Jong Un is similar to his father and his grandfather, his predecessors on the throne, but it is not the same. The young North Korean head of state enabled the arrival of foreign companies in several areas: tourism, electronics, telecommunications, metalworking, food and energy and others.
In 2013 they invited entrepreneurs from all over the world to Pyongyang to show them “new opportunities”. Many accepted the invitation, such as Google President Eric Schmidt. So far, there are 200 Chinese companies at the forefront of foreign direct investment with their mining bets; followed by some telecom Egyptian corporations.
The North Korean agricultural system was reformed in 2012 in order to optimize the yield of its scarce 15% of arable land. Until then the State decided everything: types of cultivation, sowing scheduling and harvest management. But from that year on, they allowed half of the land to be managed by farmers for their own consumption or for commercialization within the border: the idea of an internal market was born.
The million and a half members of the Armed Forces usually participate in agricultural work. Every April they go en masse to harvest, along with hundreds of thousands of civilians. From the loudspeakers in the plantations they cheer them with the cry of “Let’s overcome the world! Everyone to the harvest! ”.
The effort is not enough. Production does not meet the country’s needs: the UN World Food Program allocates North Korea $ 120 million each year. It is a humanitarian cooperation that generates controversy in the international community, the food is distributed by the government and not by the United Nations.
While from 2012 humanitarian aid increased 10% per year, the South Korean regime multiplied its luxury goods imports.
North Korea exports weapons, metalworking parts, pharmacological products, shoes, textiles, fish, coal, iron, gold, limestone, graphite, ginseng and mushrooms: a total of 2.5 billion dollars per year comes in from exports. In addition, it receives 200 million dollars in remittances from North Koreans abroad. On the other hand, it imports for a value of 3.5 billion dollars. It spends $ 5 billion from its military budget. The numbers don’t match: 2.7 billion in income versus 8.5 billion in expenses.
There is no North Korea without China, with whom they carry out legal and much of the illegal trade. Political support comes through China, as well as warnings when a Supreme Leader steps out of line. When the Soviet Union fell, the countries that depended on Moscow had to look for another main sponsor to escape the commercial blockade imposed by the United States. Just as Cuba found it in Venezuela, North Korea found it in China. From the red giant comes 60% of food and energy. The trade balance is $ 1.25 billion in favor of China.
There is no North Korea without China
What feeds the Kims’ country is international smuggling. Countless incidents are evidence of this undeclared economic network.
Over time, production and marketing diversified. During the Hard March, hunger levels made every single dollar welcome. They increased the production of poppies, whose resin is used to produce narcotics. The country professionalized its cultivation and mass production. Within the Southeast Asian drug trade, the North Korean synthetic drug gained a high reputation.
Smuggling is not only fueled by drugs. Hundreds of millions of dollars have been counterfeited in recent decades. The United States Secret Service called those issued in North Korea “superbills” – the best counterfeits in history.
Former US Treasury Printing Director Robert Leuver found several North Koreans training in Switzerland and confirmed that Pyongyang has the same banknote printing press model as the United States: a Swiss-made Intaglio Color. Like the White House, Pyongyang has sent technicians to the city of Lausanne to learn how to operate such equipment. The possibility of strategic partners in Washington is not ruled out.
Since 1980 there have been at least nine incidents in Africa involving North Korean officials attempting to traffic rhino horn and ivory. In October 2012, diplomat Kim Jong Guk was captured in Mozambique with 130 pieces of ivory worth $ 36,000 each.
The country has between 100 million and 160 million dollars income a year on cigarettes’ adulteration, according to a report by the Coalition of Tobacco Companies. They rate the land of the Kim as the place where the largest production of fake cigarettes in the world takes place. “There are between ten and twelve factories, of which at least six are near Pyongyang and the rest in the Rajin area,” says the tobacco report. If true, the production would be destined for export, because ordinary North Koreans find cigarettes expensive and difficult to obtain.
It’s believed that the intelligence services hold a department in charge of nuclear monitoring: Office 39, created by Kim II in 1974, through which financial operations abroad were allegedly carried out, such as the creation of accounts in tax havens supposedly owned by the Kims for about $ 5 billion.
Office 39, which specializes in military reconditioning of Soviet equipment, has possibly managed the war market through the export of conventional weapons such as tanks, air defense systems, artillery and explosives. No one can pinpoint these exports’ value and, while extremist groups are believed to be among the customers, in 2008 North Korea was removed from the US State Department’s List of State Sponsors of Terrorism.
North Korea’s alternative market is extensive. Kim Jong Un offers the West a legal opportunity to cut costs. In 2015, the Australian textile company Rip Curl located part of its production there, paying $ 30 a month to its North Korean workers. The numbers add up: the profit margin was really a Korean miracle.
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