NORTH KOREAN ILLICIT ACTIVITIES: THE BUREAUCRACY OF CRIMINAL PATRONAGE, Part 2

As promised, here is part two of my paper on North Korean crime:

http://smallcrowdedworld.com/2013/12/13/north-korean-illicit-activites-the-bureacracy-of-criminal-patronage-part-1/ – Here is part 1 for those that missed it

Drugs and Counterfeiting

One of the major ways that Office #39 has used to generate money is drug trafficking.  When North Korea first started this business it mainly focused on the production of opium and heroin.   North Korea has many advantages over other criminal organizations in that it has all the resources of a nation-state, including the protection of sovereignty.  These resources can be seen at use in the way these drugs have been produced.  In 1993 Kim Il Sung ordered the opening of a factory in North Hamgyong province that is capable of producing one ton of opium and heroin a month, and in 1998, his son Kim Jong Il ordered each collective farm to dedicate approximately 25 acres for opium cultivation. North Korea was able to produce such a massive quantity of these drugs that in 2003 it was estimated to be the third largest exporter of opium and heroin, and was estimated to have approximately 7,000 hectares under cultivation.9  This fact is amazing and troubling on its own, but it takes on added significance due to the poor growing conditions in North Korea.  It takes on even greater significance when considering that North Korea has trouble feeding its population and that farmers are growing drugs that they cannot consume or profit from.  This unique situation is only possible through the application of the totalitarian state apparatus in North Korea.  While communist theorists probably never imagined central planning being used in this manner, it is clearly a successful application of national mobilization.

In the 1990’s, North Korea also became actively involved in the production and exportation of methamphetamines.  The 1995 and 1996 floods damaged much of the opium crop, making it necessary to look for a new product.  In 1997 a North Korean boat was seized by Japanese authorities where they found $95 million worth of methamphetamines hidden in cans of honey.  In 1999 40 percent of all the methamphetamine seized in Japan was thought to have been of North Korean origin.10  The mass amounts of methamphetamines that have been produced in North Korea are also having a hugely negative effect of those living in China near the North Korean border.  One stark example is the border city of Yanji, where the number of registered drug addicts grew from 44 in 1991 to 2,090 in 2010, with the suspected number of actual addicts being much higher.11  Recent reports have even shown that although the methamphetamine was never intended for domestic use, in some North Korean provinces near the Chinese border 50 percent or more of the adults were using the drug.12

Since 2003 the number of North Korean drug seizures has fallen. One reason for this may be the Pong Su case.  In 2003 the Pong Su, a North Korean ship, was captured off of the coast of Australia with $50 million dollars worth of heroin, which resulted in unwanted attention and scrutiny for the regime’s criminal behavior.  A new tactic that has emerged is the counterfeiting of cigarettes.  Because cigarettes are a legal commodity, it carries less risk than importing hard drugs and is easier to export unnoticed.  Millions of the illegal cigarettes have been shipped to America in large container ships.  This trade has been estimated to bring in as much as $720 million in revenue per year, and is likely to continue to be a major source of income.13

North Korea’s Office #39 also produces super notes, which are the highest quality counterfeit US $100 bills in the world.  The first suspected super note was found in 1989 in the Philippines, and has now been found throughout Asia, Europe, the Middle East, and even in America.  This is another instance where North Korea’s status as a state allows it to carry out crime on an industrial scale.  The North Korean super notes are produced in a highly professional manner, using the same high quality tools -such as the intaglio press – and same quality of materials, they use paper composed of cotton and linen as does that the U.S. Treasury Department.  North Korea is thought to print around US $15 million worth of counterfeit currency a year, and has even managed to adapt to design changes in the bills undertaken to deter counterfeiting.  North Korea uses a variety of methods to put the super notes in circulation including Chinese and other Asian gangs, its diplomatic staff, and foreign banks.  Out of all of the criminal activities, this is the one that is the most concern to the United States, especially since counterfeiting other states currency has traditionally been considered an act of war.14

Criminal Networks and Sovereignty

North Korea’s criminal activities have repercussions beyond just law and order concerns.  Many of North Korea’s actions have significant global security repercussions.  The Kim regime has been involved with many other criminal organizations such as the Yakuza, Russian Mafia, South East Asian and Chinese gangs.  These organized crime groups play a destabilizing role in the Pacific region, but perhaps even more dangerous is North Korea’s involvement with separatist groups.  Sean Garland, an official of the IRA official, was caught working with Office #39 to distribute millions of counterfeit super dollars. The rebels in Myanmar use their drug trade with North Korea to obtain weapons to continue their fight against the central government in Rangoon.  Most troublesome of all is that the Kim regime has used the hard currency it has earned from illicit activities to support its huge army and even its nuclear program.  North Korea depends on its military capability to wield an outsized influence in the international system, holding the populations of Japan and South Korea hostage in order to win concessions in negotiations and protect its sovereignty.  Also, it is a fundamental factor of legitimacy for North Korea’s military first social order.15

Other states are aware of the problems that come from the Kim family running a criminal enterprise out of the North Korean state.  North Korea is able to use its status as a state to practice a unique form of criminal sovereignty, where its sovereign status prevents other states from interfering in its domestic affairs, which allow it to conduct criminal operations openly without any concern for any sort of internal policing.  Despite the difficulty of counteracting a criminal sovereign, states have taken some measures towards constraining Pyongyang’s criminal activities.  Since the beginning of the Office #39’s activities, states have taken a traditional police approach where they have acted reactively to North Korean criminal provocations.  This typically involves actions like deporting North Korean diplomats after they have been found smuggling drugs, seizing drugs and other illegal merchandise at sea, or prosecuting criminals who work with Pyongyang.  There have been some major successes, with tens of millions of dollars worth of contraband seized and destroyed, but this hasn’t been enough to deter North Korea.

Notes

9. Jasper Becker, 162.

10. Raphael F. Perl, Congressional Research Service, Drug Trafficking and North Korea: Issues for U.S. Policy, January, 2007 (accessed December 7, 2013); available from http://www.fas.org/sgp/crs/row/RL32167.pdf

11. Yong-an Zhang, Brookings Institute, Drug Trafficking From North Korea: Implications for Chinese Policy, December, 2010 (accessed December 7, 2013); available from http://www.brookings.edu/research/articles/2010/12/03-china-drug-trafficking-zhang

12. ABC New Australia, Professor Kim Seok-Hyang Speaks to Asia Pacific, August, 2013 (accessed December 7, 2013); available from http://www.abc.net.au/news/2013-08-29/professor-kim-seok-hyang-speaks-to-asia-pacific/4922848

13. “North Korea’s Dollar Store” Vanity Fair.

14. Ibid.

15. Paul Rexton Kan, Bruce E. Bechtol, Jr. and Robert M. Collins.

I will post part 3 next week.

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About Leon Whyte

I'm a recent graduate of the Fletcher school of Law and Diplomacy. My interests include Pacific Asia and Security. I am looking for related opportunities.
This entry was posted in Crime, International Relations, Korea, Pacific Asia and tagged , , , , , , . Bookmark the permalink.

One Response to NORTH KOREAN ILLICIT ACTIVITIES: THE BUREAUCRACY OF CRIMINAL PATRONAGE, Part 2

  1. Pingback: NORTH KOREAN ILLICIT ACTIVITIES: THE BUREAUCRACY OF CRIMINAL PATRONAGE, Part 3 | Small Crowded World

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