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North Korean Loggers in Siberia

Monday, November 13th, 2006

Korea Times:
11/13/2006
Andrei Lankov

For the last few decades a visitor to Eastern Siberia would sometimes come across unusual logging camps: fenced off with barbed wire, they sported the telltale portraits of Kim Ilsung and Kim Jong-il. These are North Korean camps: from the late 1960s, North Korean loggers have been working in Russia’s Far East.

In the 1960s the timber shortage was felt both in North Korea and the USSR, but the reasons for the shortages were different.

The Russians had plenty of forest, but lacked labor. When the gulags were emptied after Stalin’s death, few people were willing to up and fell trees in remote corners of Siberia.

The North Koreans had an abundance of cheap labor, but almost no good timber. Thus, the two Communist states had a potential match made in heaven.

In March 1967, when the relations between the two countries began to recover after a serious chill, the logging agreement was signed.

According to the agreement North Korean loggers were allowed to work in designated areas of the Russian Far East.

They were housed in special labor camps, run by the North Korean administration. The timber was to be divided between the two sides: the Russians 60 percent and the North Koreans 40 percent.

At their peak in the mid-1980s the Far East joint logging projects employed over 20,000 North Korean workers. This means that some 0.5 percent of all North Korean able-bodied men labored there. Nowadays, the operations are smaller in scale, with some 8,000 workers employed. An additional 3,000 North Korean workers are employed in other joint projects in Russia (construction industry, vegetable gardening etc.). Since the workers were rotated every three years, it is likely that up to a quarter of a million North Koreans have taken part in this project over the decades.

Politically, this was not as dangerous as it might seem. Even in the 1960s, the Soviet Union had far higher standards of living and was much more liberal and permissive society than the North.

However, the North Korean workers were in the middle of nowhere, and kept under the watchful eyes of their supervisors in the nearly isolated camps. People who broke the rules were arrested and sent back to the North. If it was deemed too difficult or impractical, they could be killed on the spot _ the Siberian forests provided more than enough space for unknown burials.

The Soviets usually turned a blind eye to everything the North Korean administrators did. In the early 1990s the situation changed. During the heyday of perestroika, investigative journalists began to report on the conditions of the North Korean workers.

An expose of the prison maintained by the North Korean security police in one of the logging camps led to a particular public outcry. In those days the Russians felt a nearly universal enthusiasm for democracy and believed that Kim Il-sung’s regime would soon collapse.

There were also publications about the secret opium plantations and illegal harvesting of protected species of plants and animals _ both, frankly, long established pillars of North Korea’s foreign currency earning programs.

On top of that, some loggers used the change in the international situation to defect to the South. In those days, defectors were still rare and thus welcomed in Seoul.

In 1992-1994 it appeared that the entire timber project would be discontinued owing to political considerations. However, the situation changed. The events of 1992-2005 made Russians quite skeptical about democracy, and very suspicious of idealistic crusades of any kind.

Thus, the North Korean camps were left alone to the great relief of the local Russian administrators and businessmen who make good money out of these projects.

For them, the North Koreans were but a source of cheap labor, and they did not care how these “Orientals” were treated by their supervisors.

When the initial Russian enthusiasm for a free press died out, the local politicians learned how to keep journalists away.

By the late 1990s, it also became clear that South Korea was not going to encourage the defection of the loggers. On the contrary, anecdotal evidence indicates that loggers who approach the local South Korean consulate are unceremoniously turned away.

Seoul does not need these impoverished and potentially troublesome brethren in our sunshiny days! Of course, some loggers run away, but largely in order to find better job opportunities in Russia’s black economy.

There are about a thousand such runaways hiding in Russia now, but the authorities tend to ignore their presence.

But what was the incentive for the North Koreans workers? The short answer is: money.

Really good money _ at least, by North Korean standards.

Posted in Agriculture, Illicit activities, International trade, Lumber, Russia | 2 Comments »

US accuses DPRK of selling missles

Monday, October 30th, 2006

From the Korea Times
10/30/2006

North May Have Been Selling Missiles

North Korea was selling its missiles to the Near East as recently as 2003-2004, according to inferences made in the latest report by the U.S. Congressional Research Service (CRS).

The annual report, titled “ Conventional Arms Transfers to Developing Nations,” says 40 surface-to-surface missiles were sold to the Near East by “other suppliers” that exclude the United States, Russia, China, and European countries.

The New York Times, quoting Pentagon and other U.S. administration officials, said North Korea is the unnamed supplier.

CRS reports are written for congressmen and their aides.

Dated Oct. 20, the report tallies and analyzes general weapons transfers between 1998-2005. The missile sales figures were for 2001-2005.

The number of missiles sold by “other suppliers” is the same as that of the previous report that covered the period between 2001-2004, suggesting North Korea did not export more missiles in 2005.

But in a report for the 2000- 2003 period, the other suppliers were believed to have sold 20 surface-to-surface missiles to the Near East, indicating there were additional exports of the weapons to the region between 2003 and 2004.

The year 2004 was when the U.S.-led Proliferation Security Initiative (PSI) got under way to interdict shipments of weapons of mass destruction.

Posted in Arms shipment, Illicit activities | Comments Closed

US Agencies releases stats on Supernotes

Friday, October 27th, 2006

From the US Treasury, Federal Reserve and Secret Service:

From the report: p. 66

Since 1989, the U.S. Secret Service has led a counterfeit investigation involving the trafficking and production of highly deceptive counterfeit notes known as supernotes. The supernote investigation has been an ongoing strategic case with national security implications for the U.S. Secret Service since the note’s first detection in 1989. The U.S. Secret Service has determined through investigative and forensic analysis that these highly deceptive counterfeit notes are linked to the Democratic People’s Republic of Korea (DPRK) and are produced and distributed with the full consent and control of the North Korean government.

In March 2005 and again in June 2006, Interpol issued an “Orange Alert” regarding the DPRK and its continued quest to obtain or purchase printing supplies that would facilitate the counterfeiting of U.S. currency. The U.S. Secret Service is working very closely with the intelligence community in analyzing supernote distribution activity and monitoring the broader illicit affairs of the DPRK. Over the course of this sixteen-year investigation, approximately $22 million in supernotes has been passed to the public (table 6.5), and approximately $50 million in supernotes has been seized by the U.S. Secret Service.

Posted in Counterfeiting | Comments Closed

Bank of Korea sees hardship in sanctions

Tuesday, October 24th, 2006

From the Joong Ang Daily:
Bank sees North pain if sanctions take hold
10/24/2006
Choi Hyung-kyu, Ser Myo-ja

The Bank of Korea said yesterday, in a report prepared for a legislator, that international financial sanctions on North Korea could deal a heavy blow to the North’s shaky economy.

In an assessment for Representative Yim Tae-hee of the Grand National Party, the central bank said a 30-percent reduction in foreign currency inflows to North Korea would lower economic activity by three-quarters of a percentage point. A halving of North Korea’s external trade, the paper said, would reduce economic growth by nearly 5.5 percentage points; a 70-percent falloff in trade would drop economic output by 8.25 points.

Estimates of economic activity in centrally planned economies are difficult at best, however, and North Korea’s secrecy makes such estimates even more tenuous.

“When international financial institutions join in the sanctions and cut the influx of the annual $800 million in foreign currency to the North, Pyongyang will face serious trouble,” Mr. Yim said.

He added, without citing sources, that the North earns about $300 million through legitimate activities, such as inter-Korean economic cooperation deals and remittances from North Koreans abroad, adding that counterfeiting and drug trafficking bring in about $500 million more annually.

Christopher Hill, the U.S. assistant secretary of state for Asia, arrived in Hong Kong on Saturday to meet, among others, William Ryback, the deputy chief executive of the Hong Kong Monetary Authority.

“The U.S. team asked the Hong Kong authorities to cooperate in its effort to freeze North Korean assets in Hong Kong and Macao,” a Hong Kong source said yesterday. “Hong Kong gave a positive answer.”

Another Hong Kong government source said Mr. Hill also asked the government there to help inspect suspect North Korean ships.

“A North Korean ship under a U.S. intelligence watch is on its way to Hong Kong,” the official said. “Mr. Hill asked the authorities to inspect the boat thoroughly when it enters port here.”

Posted in Arms shipment, Counterfeiting, Drug smuggling, Finance, Fiscal & monetary policy, Illicit activities, International Aid, International trade | Comments Closed

An economy built on drug dealers, ivory poachers and counterfeiters

Wednesday, October 11th, 2006

London Times
Lloyd Parry
10/11/2006

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.”

Posted in Illicit activities | Comments Closed

Biref history of US sanctions on DPRK

Monday, October 9th, 2006

From AFP:
10/9/2006

The US already has broad sanctions in place against North Korea, giving it little additional economic and trade leverage to bring to bear following Pyongyang’s defiant nuclear test explosion.

Washington imposed a near total economic embargo on North Korea at the start of the Korean War in June 1950, only beginning to ease the sanctions slightly from 1989 amid efforts to draw the reclusive Stalinist regime into the international community.

A series of measures aimed at encouraging North Korea to not develop nuclear arms culminated in a June 2000 Executive Order legalizing most transactions between US and North Korean nationals.

The order allowed many products to be sold to North Korea, though sanctions affecting trade in military, so-called dual-use and missile-related items remained in place.

But imports from the country remain under tight restrictions, managed by the Treasury Department’s Office of Foreign Assets Control, and North Korean assets frozen since 1950 remained frozen.

While restrictions on US investments in North Korea and on the travel of US citizens to North Korea were also eased under the 2000 measure, the two countries have no formal diplomatic relations and have never officially ended the Korean War.

Most forms of US economic assistance, other than purely humanitarian aid, remain prohibited and North Korea does not enjoy “Normal Trade Relations” with the United States, so allowable exports are hit by high tariffs.

The State Department acknowledges that “US economic interaction with North Korea remains minimal” and that Washington’s leverage over the reclusive regime is limited.

“There’s not a lot to grab hold of,” commented a senior State Department official about the hunt for ways to impact the North Korean economy bilaterally.

North Korea receives the bulk of its imports over the Chinese and Russian borders and relies on hefty aid from South Korea, giving those three governments far greater potential leverage in economic sanctions.

Washington did find one powerful pressure point last year when the Treasury Department slapped sanctions against a Macau-based bank, Banco Delta Asia, which US officials charged was the main conduit for bringing North Korean counterfeit dollar bills into the international system.

Washington and its allies have long contended North Korea uses counterfeiting, drug trafficking and sales of weapons to prop up its ailing economy.

The US decision to designate the Banco Delta Asia a “primary money-laundering concern” left the bank teetering and could foreshadow similar action targetting other financial transactions by the North.

Many analysts pointed to the banking sanction as possibly the main reason North Korea went ahead with its nuclear test shock at this time.

The North Koreans were “feeling under a great pressure from the United States and the sanctions that were being imposed, particularly the financial sanctions,” said David Albright, a former UN nuclear weapons inspector.

“I think this test is coming from that sense of being backed into a corner,” he said.

Posted in Banking, Fiscal & monetary policy, Illicit activities, USA | Comments Closed

More Fake Smokes in Greece

Tuesday, September 26th, 2006

From the Choson Ilbo:
9/26/2006

N.Korean Ship With Contraband Cigarettes Nabbed

Officials in Greece nabbed a North Korean freight vessel that was carrying 1.5 million cartons of contraband cigarettes and arrested the seven seamen aboard, it was announced Monday. The ship’s load would have brought 3.5 million euros in taxes.

The Greek Merchant Marine Ministry said the vessel was discovered about 11 km southwest of the Katakolo port on the Peloponnesus Peninsula in southern Greece, and all of the cargo looked bound for that country. The Evva is currently anchored at the Katakolo port. Greece has uncovered 4 million cartons of contraband cigarettes at sea so far this year, of which 3 million were aboard North Korean vessels.

Posted in Illicit activities, Tobacco | Comments Closed

U.S. puts the brakes on N.K. missile sales

Sunday, September 10th, 2006

From the Korea Herald:
9/10/2006

The United States has had some success in limiting North Korea’s export of missiles by persuading other countries not to buy them, a senior administration official says.

Washington has long sought to stop such sales and stepped up its initiative after Pyongyang tested a string of missiles in July, including a long-range missile.

“As a direct result of our policies, we have cut off North Korea from several of its customers for ballistic missiles,” Robert Joseph, the Bush administration’s top nonproliferation official, told Reuters.

“We have made it more difficult for the North to ship missiles and have made it more likely that these shipments will be exposed. The risk of exposure further turns off customers,” he said in a recent interview.

He said Yemen committed not to buy more North Korean missiles after taking delivery of a shipment of 15 Scuds in 2002 and Libya promised to forgo North Korean missiles as part of a 2003 agreement in which it abandoned its weapons of mass destruction and missile programs.

Some U.S. officials say Pakistan and Egypt also are no longer buying from Pyongyang, leaving Iran and Syria as the major missile customers.

Some other U.S. officials and experts are skeptical of the effectiveness of the Bush administration policy.

Jonathan Pollack, chair of the Asia-Pacific Studies Group at the U.S. Naval War College in Rhode Island, welcomed the close scrutiny the U.S.-led program had brought on North Korea’s activities but said the results were difficult to measure and it was probably too soon to draw firm conclusions.

The U.S. strategy includes a crackdown on banks that aid the North’s illicit activities and the “proliferation security initiative” in which some 88 member nations share intelligence and practice interdicting weapons shipments.

In addition, potential buyer nations now may find their U.S. aid curtailed if they buy weapons from North Korea. Pakistan, Iraq and Egypt are major recipients of U.S. assistance.

After Pyongyang tested seven missiles in July, the United Nations called on countries to avoid supporting the missile program. Missile sales earn the impoverished state hundreds of millions of dollars in hard currency.

One long-range missile crashed soon after launch during the July tests, but the other medium range missiles hit their target areas, U.S. officials and experts said.

U.S. Defense Secretary Donald Rumsfeld has said North Korea – which claims itself to be a nuclear weapons power – is more dangerous as a proliferator than as a military threat to neighbor South Korea.

Pyongyang has been working on missile production for three decades and is the leading supplier of ballistic missiles to the developing world, experts say.

The chief exports are variations of Soviet-origin Scud missiles, regarded as fairly reliable and accurate but based on technology advanced military powers would consider obsolete.

North Korea’s oldest and most loyal customer has been Iran, which helped finance Scud development, according to various U.S. studies. The connection dates to the Iran-Iraq war of the 1980s when Pyongyang tested and shipped missiles to Tehran.

North Korea, as well as China, provided ballistic missiles, cruise missiles and their production facilities to Iran, Iraq, Syria and Egypt, U.S. government reports say. Libya and Pakistan have also been missile customers.

Arms connections between North Korea and Iran are very strong, with the former regime being the main supplier of ballistic missile technologies to Tehran, a senior U.S. nonproliferation official said Wednesday.

Undersecretary of State Robert Joseph, in charge of arms control and international security, was cautious about going into intelligence.

“But I can say that the connections between North Korea and Iran are very strong,” he said at a news conference with the foreign press.

“And North Korea has been, I think, the principal supplier to Iran of ballistic missile technologies,” he said.

Suspicions about exchanges of personnel, technology and equipment between Pyongyang and Tehran on missile development date back decades. Joseph noted that a number of revelations about such ties have already been made public.

Posted in Arms shipment, Iran, Syria | Comments Closed

Suspects Admits Smuggling N.Korean ‘Supernotes’

Monday, August 28th, 2006

From the Choson Ilbo
8/28/2006

A Californian man indicted on charges of smuggling counterfeit dollars into the U.S. testified at his trial that the high-quality counterfeit US$100 bills or “supernotes” were manufactured in North Korea, the National Intelligence Service said Monday. The NIS reported to the National Assembly’s Intelligence Committee that the man admitted conspiracy to smuggle the supernotes and admitted where the phony bills were made.

The man is a Chinese-American named Chao Tung Wu, the NIS said. There have been reports in the U.S. media quoting anonymous government officials as saying the supernotes were made in North Korea, but this is the first time the claim was confirmed in legal testimony by a chief suspect.

A joint taskforce of the FBI, the CIA, the Justice Department and the Treasury conducted secret investigations and rounded up 59 suspects around the U.S. on charges of smuggling counterfeit dollars and cigarettes in August last year. The taskforce worked under the code name “Smoking Dragon” and “Royal Charm” between 1999 and 2005. It alleges suspects attempted to smuggle millions worth of forged dollars and some $40 million worth of counterfeit cigarettes.

The case drew much publicity not only because of its sheer scale but also because of North Korea’s suspected involvement. The Treasury Department led the investigation that ended up designating Macao’s Banco Delta Asia as Pyongyang‘s “primary money laundering concern” on Sept. 15 last year, a month after the suspects were arrested.

“We should note that talk of political solutions between the U.S. and North Korea over the counterfeit dollars disappeared in South Korea and China since the end of last year,” a diplomatic source in Seoul said. Some until then claimed the U.S. was pressuring the North without clear evidence, but they lost their ground as Washington acquired evidence to support North Korea’s involvement.

The trial is likely to take one or two years, a diplomatic source said. If it ends with a guilty verdict for the main suspect for smuggling made-in-North Korea supernotes, it would get Pyongyang into serious trouble on the global stage. The North denies the charges and says the resulting sanctions amount to “theft.” The communist country in a statement last Saturday said the U.S. has produced no clear evidence so far. But the suspect’s guilty plea undermines the credibility of that claim.

Posted in Counterfeiting, Tobacco, USA | Comments Closed

Pyongyang Selling Missiles in Pieces: Report

Monday, August 28th, 2006

From the Korea Times:

North Korea has recently changed its means of selling missiles to avoid interception, delivering them by air instead of by sea and in the form of components and equipment rather than complete products, a U.S.-based research organization said yesterday.
In its latest report, the Center for Nonproliferation Studies (CNS), headquartered in Monterey, California, said North Korea’s missile program appears to be under the command and control of its air force, not the army, an arrangement similar to Iran, which is believed to be buying missiles from the communist regime, according to the Yonhap News Agency in Seoul.

The report, called “CNS Resources on North Korea’s Ballistic Missile Program,” said that as Western opposition to the deliveries has increased, Pyongyang’s shipments have begun to be made by air rather than by sea, sometimes with the help of Moscow.

“Insome instances, this has been accomplished with private-sector Russian assistance, thereby calling into question the Russian government’s ability and/or willingness to control North Korea’s missile proliferation,” said the report.

The CNS Web site says the report was updated Aug. 11 this year.

North Korea also resorted to selling missile components and production equipment to clients, which include Iran, Pakistan and Syria, the report said.

“These changes will allow more rapid shipping deliveries, and interception of such shipments will become more difficult,” it said.

The CNS noted with interest that North Korea’s ballistic missiles appear to be under air force, not army, command and control.

It was Gen. Jo Myong-rok, then commander of the North Korean Air Force, who led a delegation to Iran in February 1994 to discuss testing of the Rodong missile in Iran, the report said.

“It should also be noted that Iranian ballistic missiles fall under the command and control of the air wing of the Iranian Revolutionary Guard Corps,” it said.

North Korea’s missile program came under renewed scrutiny after the secretive regime test-fired seven missiles last month, ranging from versions of its short-range Rodong to its long-rang Taepodong presumed to be able to strike the U.S. west coast.

The CNS said that while the test launches suggest advances in North Korea’s missile capabilities, there are still several technical hurdles before the long-range versions can be fielded.

“The developmental leaps to successful multiple stage systems using large rocket motors cannot be achieved without external technological assistance,” it said.

“Some of this assistance is probably being provided by Russian specialists, both in North Korea and Russia,” said the report, due mainly to Moscow’s inability to completely halt the leakage of information.

It added that while the shorter-range Rodong missiles are operational, since it has exported some to Iran, Pakistan and other nations, “it may not have enough missiles to field a full brigade.”

Posted in Arms shipment, Russia | Comments Closed

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