North Korean Economy Watch

According to the Choson Ilbo:

The Agostinho Neto Center of Culture is a massive national park that the Angolan government is building on 12,000 sq. m of land in the capital city Luanda in memory of its first president. On Oct. 24, the entrance was firmly shut with a black iron gate. Through barred windows, three or four Asian workers could be seen: they are staff of North Korea’s Mansudae Overseas Project Group of Companies, which earns much-needed foreign currency for the regime from massive construction projects and monumental sculpture in the developing world.

Initially, the Agostinho Neto Center was commissioned to a Brazilian construction company, but work came to a halt until the North Koreans took over at the end of 2007.

The North Korean workers are living together in temporary wooden accommodation in a corner of the construction site. There are reportedly 100 to 120 of them in Angola. North Korea supported independence movements and civil wars of some African countries, and has been involved in some large construction projects there based on the diplomatic ties built this way. The North provided military aid to the side currently in power during the Angolan civil war and is reportedly building other parks and peace monuments in Cabinda and Huambo, one or two hours away by plane from Luanda.

The Daily NK reported North Korea has earned at least US$160 million in construction projects in Africa since 2000. A South Korean resident in Angola said, “Although North Korean workers only get minimum living cost from their government, they make additional money by working on smaller-scale projects locally when they have some spare time waiting for equipment or materials to arrive.”

One North Korean worker said, “When we go to the site for work, we sometimes get Angolan traditional congee called Fungi. It’s delicious. We eat better here than in North Korea because we can get rice from Chinese construction firms.”

In a predominantly black residential area in Luanda, there is a pharmacy run by a North Korean doctor in a shabby one-story building. “I work at a national hospital in the morning, and run this pharmacy privately in the afternoon. This is the only way I can make the ends meet,” he said.

According to a local source, there are about 180 North Korean doctors across Angola, including about a dozen in Luanda. There are also North Korean doctors in Mozambique and Congo, and some practice oriental medicine. At the pharmacy, acupuncture costs $80 for the first treatment and $40 thereafter.

Read the full story here:
N.Koreans Struggle for Hard Currency in Africa
Choson Ilbo
11/20/2010

UPDATE 2: Here is the actual Treasury Department Press Release (11/18/2010):

Treasury Designates Key Nodes of the Illicit Financing Network of North Korea’s Office 39

11/18/2010
WASHINGTON – The U.S. Department of the Treasury today designated Korea Daesong Bank and Korea Daesong General Trading Corporation pursuant to Executive Order (E.O.) 13551 for being owned or controlled by Office 39 of the Korean Workers’ Party.  Office 39 is a secretive branch of the government of the Democratic People’s Republic of Korea (North Korea) that provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing slush funds and generating revenues for the leadership. Office 39 was named in the Annex to E.O. 13551, issued by President Obama on August 30, 2010, in response to the U.S. government’s longstanding concerns regarding North Korea’s involvement in a range of illicit activities, many of which are conducted through government agencies and associated front companies. Korea Daesong Bank is involved in facilitating North Korea’s illicit financing projects, and Korea Daesong General Trading Corporation is used to facilitate foreign transactions on behalf of Office 39.

“Korea Daesong Bank and Korea Daesong General Trading Corporation are key components of Office 39’s financial network supporting North Korea’s illicit and dangerous activities,” said Under Secretary for Terrorism and Financial Intelligence Stuart Levey.  “Treasury will continue to use its authorities to target and disrupt the financial networks of entities involved in North Korean proliferation and other illicit activities.”

E.O. 13551 targets for sanctions individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in certain illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. As a result of today’s action, any assets of the designated entities that are within U.S. jurisdiction are frozen and U.S. persons are prohibited from conducting financial or commercial transactions with these entities.

UPDATE 1: Here is the US Treasury Department’s web page on North Korea.

ORIGINAL POST: According to Reuters:

The United States sanctioned on Thursday two North Korean companies linked to a group it accuses of drug smuggling and other “illicit” activities to support the nation’s secretive leadership.

U.S. sanctions against North Korea aim in part to persuade Pyongyang to abandon its nuclear programs, which the United States views as a threat to its allies South Korea and Japan. The North tested nuclear devices in 2006 and 2009.

The Treasury Department’s moves against Korea Daesong Bank and Korea Daesong General Trading Corporation will freeze any assets belonging to them that fall within U.S. jurisdiction as well as bar U.S. companies from dealing with them.

Their main aim is not to block North Korean assets in U.S. banks — analysts say there are unlikely to be any — but to discourage other banks from dealing with North Korea, thereby cutting off its access to foreign currency and luxury imports.

Perks and luxuries such as jewelry, fancy cars and yachts derived from North Korea’s shadowy network of overseas interests are believed to be one of the main tools Pyongyang uses to ensure loyalty among top military and party leaders to North Korean leader Kim Jong-il.

The Treasury described the two entities as “key nodes of the illicit financing network” of Office 39 of the Korean Workers’ Party, which it accuses of producing and smuggling narcotics to earn foreign exchange for the government.

“Korea Daesong Bank and Korea Daesong General Trading Corporation are key components of Office 39’s financial network supporting North Korea’s illicit and dangerous activities,” Treasury Under Secretary Stuart Levey said in a statement.

Heroin Production?
The Treasury designated the two under a recent executive order that targets entities that support North Korea’s arms trafficking, facilitate its luxury goods purchases and engage in illicit economic activities such as money laundering, drug and bulk cash smuggling and counterfeiting goods and currency.

President Barack Obama signed the executive order on August 30 allowing the Treasury to block the U.S. assets of North Korean entities that trade in arms or luxury goods, counterfeit currency or engage in money laundering, drug smuggling or other “illicit” activity to support the government or its leaders.

When that executive order was announced, the Treasury accused Office 39 of producing opium and heroin and of smuggling narcotics such as methamphetamine.

U.S.-North Korean relations have deteriorated since Obama took office, with his aides deeply unhappy about Pyongyang’s decision to conduct nuclear and missile tests last year as well as the March 26 sinking of the South Korean corvette Cheonan.

Forty-six South Korean sailors were killed in the incident, which the United States, South Korea and other nations blame squarely on North Korea. Pyongyang denies responsibility.

In the August 30 executive order, Obama cited the Cheonan’s sinking as well as 2009 nuclear and missile tests by North Korea as evidence it poses “an unusual and extraordinary threat” to U.S. national security, foreign policy and economy.

The Obama administration has been skeptical about returning to so-called six-party negotiations with the two Koreas, China, Japan and Russia under which Pyongyang committed in 2005 to abandon its nuclear programs.

U.S. officials say they do not want to talk for the sake of talking and North Korea must show some commitment to abandoning its nuclear programs.
Read the full story here:
U.S. sanctions two North Korean entities
Reuters
Arshad Mohammed
11/18/2010

According to the Daily NK:

A source has reported that the North Korean authorities are allowing ordinary people to visit China again, while claiming it as an example of “Kim Jong Eun’s consideration” for the people.

A lengthy ban on cross border visits was imposed in late August to cover the anniversary of the regime founding on September 9th, Party Delegates’ Conference on September 28th and anniversary of the Workers’ Party founding on October 10th. This has now been lifted.

The source said, “Visiting relatives in China has been allowed since the 5th.“ According to his explanation, the propaganda department of provincial committees of the Party held a lecture on the 5th targeting those requesting permits to visit China so as to educate them on things to keep in mind. During which, a cadre in one lecture reportedly claimed, “Thanks to the consideration of Comrade Youth Captain, private tours to China are to be allowed, and in future will progress in the form of state business.”

The National Security Agency is responsible for preparatory lectures for would-be North Korean tourists; the NSA makes them sign an oath not to reveal any national secrets, not to have any connection with South Koreans or Chinese religious organizations in China, and to submit items that they cannot bring back into North Korea.

However, the source sought to emphasize, “The propaganda department of the Party has carried this out this time in an attempt to let the North Korean tourists know that it is part of “Kim Jong Eun’s consideration.”

Additionally, the source said that the lecturing cadres were keen to encourage tourists to “receive actively and willingly help from Chinese relatives” and told them “there is no limit, so bring as many products and as much money as you want.” However, there was one limitation, “You should not meet South Chosun people or bring South Chosun products.”

The source added also, “The department demanded that would-be tourists offer donations,” saying, “Since the Comrade Youth Captain has done you a special favor, it is reasonable for you to prepare the necessary goods for local kindergartens, schools or other social facilities.”

Interestingly, the process of issuing passports, visas and permits has apparently been significantly quickened.

Normally, when a North Korean who has relatives in China submits an application form to a municipal or provincial office of the National Security Agency, the application goes to Pyongyang NSA via the foreign affairs section in each city or province. The NSA confirms that the applicant has relatives in China through the Chinese authorities, and then the authorities issue permits and visas.

Going through the whole process generally takes between three and six months. Of course, bribes are needed to keep an application moving along, and the process can be expedited depending on the value of the bribe.

However, this time the process, from submitting the application form to receiving the permit, is only 15 to 20 days.

Looking at the situation, the source added wryly, “Since the authorities are encouraging people to take trips to China and therefore tourist numbers will increase, cadres in foreign affairs sections of the local NSA will be in a favorable situation.”

Read the full article here:
North Korean Tourists Back in China
Daily NK
Im Jeong Jin
11/10/2010

According ot the Daily NK:

The rapid ascent of Kim Jong Eun and the building of a new ruling cast in Pyongyang is causing ripples to be felt in North Korea’s foreign currency earning apparatus. In Beijing, it is clear that anyone considered a supporter of Kim Jong Nam or Oh Keuk Ryul faces a rough ride.

One of the most prominent cases is that of Kang, a pro-Kim Jong Nam foreign currency earner who has distinguished himself in various ways, including by installing air conditioning in the Mansudae Assembly Hall. He is noteworthy among North Korea trade workers in China, and was mentioned in articles released by The Daily NK in June on the subject of emergency inspections over North Korean trade departments.

According to the testimony of Kang’s acquaintances, Kang was supposedly summoned to Pyongyang in early July, whereupon he was violently beaten by agents of the National Security Agency. The alleged reason behind the summons was that Kang was guilty of embezzling national assets and corruption; however, trade workers in China generally assume that it was a part of systematically “taking care” of Kim Jong Nam‘s closest associates.

In North Korean diplomatic circles in Beijing, the general interpretation is that Kim Jong Nam‘s outspoken negativity towards North Korea‘s third generation succession has helped to bring trouble upon his supporters.

One Chinese building contractor, Jwa, who sells construction materials to North Korean traders, commented, “Kang pledged allegiance to Kim Jong Nam and received a lot of favors as his affiliate. But a battle between Kim Jong Eun and Kim Jong Nam is taking place, and trade workers are suffering.”

However, the more surprising fact was the return of Kang to Beijing in October. It is highly unusual for someone from a privileged office to be so severely “investigated” by the National Security Agency but then return to their former seat in a foreign trade office.

According to one of Kang’s acquaintances, this was down to the fact that he is actually the person in charge of the North Korean Liaison Office in Beijing.

One Chinese trader who has done business directly with Kang told The Daily NK, “Kang, who is well known as a famous trade worker, was really in charge of North Korean maneuvers for more than ten years while maintaining the identity of a trade worker. This fact has been confirmed through several sources.”

However, South Korean intelligence has neither confirmed nor denied Kang’s true role.

The North Korean Liaison Office is an organization said to be responsible for maneuvers against South Korea, and is thought to have pulled the strings in the South Korean Chosun Workers‘ Party incident of 1992, in which the largest spy ring since the liberation was uncovered, that of Kim Dong Sik, an armed espionage agent arrested in 1995, Choi Jung Nam and Kang Yeon Jung, an agent couple who committed suicide in 1997, the assassination of Lee Han Young, Kim Jong Il’s nephew, in 1997, and the 2006 Ilsimheo spy ring incident.

Mr. Kang also owns a well-appointed villa, recent sedan and VIP membership of the fitness center at a five-star hotel.

Generally, North Korean employees abroad have to leave one of their children in Pyongyang as what can only be described as hostages to loyalty. However, the testimony of Kang’s acquaintances states that he is permitted to live in Beijing with his wife, daughter and son, who has studied in England. This is due to Kim Jong Nam’s full support, an extraordinary level of operational funding and the superior status of a person in charge of a covert operation.

He has avoided being outright purged, despite the fact that he is an affiliate of Kim Jong Nam, thanks to the fact that he is the person in charge of operations against the South. However, other trade workers in China who are also affiliated with Kim Jong Nam are desperate to forge new connections in Pyongyang to secure their positions, and, as such, many seem to have been absorbed by the Jang Sung Taek camp.

Other overseas officials are also on the back foot. Not only are affiliates of Kim Jong Nam being called into Pyongyang, but affiliates of Oh Keuk Ryul, a Vice Chairman of the National Defense Commission who is also actively involved in bringing foreign capital into North Korea in de facto competition with Jang Sung Taek, are also being summoned. Oh Keuk Ryul was shut out of the recent process of realigning the Chosun Workers’ Party and has lost a lot of his former influence as a result.

North Korean foreign trade departments are a target of veneration within North Korea. However, trade workers must strive to preserve their status with bribes like supplies which are hard to find within North Korea or large amounts of money. Now the dynamic is changing, so it is proving difficult to preserve their desirable positions.

Read the full story here:
Traders Living in Fear of Pyongyang Summons
Daily NK
Shin Joo-hyun
11/8/2010

According to the Daily NK:

It has been confirmed by The Daily NK that North Korea failed in a recent attempt to import beef from New Zealand for the purpose of providing special gifts to cadres on Kim Jong Eun’s birthday, January 8, after the plan ran afoul of the New Zealand government, which froze the funds.

According to a source from North Korea today, “$170,000 remitted by ‘Myohyang Bureau’ to a New Zealand bank in October to import parts for Japanese tourist buses and beef has been frozen by the New Zealand authorities.”

The source added, “The New Zealand authorities are investigating whether or not the money is related to (North Korea’s) drug dealing.”

The source explained, “The beef is for special distribution to cadres on the Youth Captain (Kim Jong Eun)’s birthday, while the parts of Japanese buses are to repair buses operated by the Tour Bureau,” adding, “Myohyang Bureau is alarmed that there might be a snag in Comrade Youth Captain’s birthday special distribution.”

In North Korea, workplaces have already started to prepare presents for Kim Jong Eun’s birthday. There are two types of presents: the first is from cadres to Kim Jong Eun; and the latter is special distribution to cadres in Kim Jong Eun’s name. However, even though the special distribution is like a gift handed out by a monarch, factories and Party organs have to prepare it. According to the source, the Myohyang Bureau’s duty this time is to supply beef.

The Myohyang Bureau is directly in charge of tour events including Arirang performance-related tours and Mt. Baekdu and Geumgang tours. It sends the profits from these businesses involving foreign tourists to the No. 39 Department of the Central Committee of the Party.

The source explained further, “Due to Japanese sanctions against North Korea, the Tour Bureau has not been able to obtain parts for Japanese buses, so the Myohyang Bureau asked a New Zealand business partner to obtain them for them. In doing that, they also asked for beef.”

“Since the Myohyang Bureau sent the money via a secret bank account held with a bank in Latvia to a bank in New Zealand, it incurred the suspicion of the New Zealand government. Money is still money, but the bigger problem is to expose the Latvian account.”

This is the first time that a Latvian account has been linked to North Korea, adding to known secret accounts in Switzerland, China, Macau and the Caribbean.

The source said, “The Myohyang Bureau opened the account in the name, ‘RUSKOR International Company Ltd’ in a bank of Latvia,” adding, “The account name is the connecting of the words Russia and Korea.”

“Gift rations” have been in the news a lot lately.  Links to previous posts about the DPRK’s “gift rations” can be found here.

Read the full story here:
North Korean Funds for Beef Frozen by New Zealand
Daily NK
Park In Ho
11/5/2010

According to KBS:

The U.S. Treasury Department has announced detailed rules concerning the implementation of U.S. sanctions on North Korea.

The Treasury listed additional regulations relating to the implementation of sanctions placed on the North in June 2009 for weapons testing and in August of this year in response to North Korea’s sinking of a South Korean warship.

The rules stipulate the definition and interpretation of terminology and procedures for implementing the sanctions by U.S. government agencies and financial institutes.

At present, there are two sets of sanctions effectuated by administrative orders in the U.S. that specifically target North Korea.

The sanctions have frozen assets of certain North Korean organizations and individuals and they also ban U.S. transactions with the designated entities.

The US Treasury Department has updated their North Korea page with all relevant information. You can see their web page here.

I have added this resource to my Economic Statistics Page and Business Resources Page.

Read the full story here:
US Treasury Adds Rules on NK Sanctions Implementation
KBS
11/5/2010

According to the Choson Ilbo:

North Korea is pushing the implausible dream of turning the city of Rajin-Sonbong in North Hamgyong Province into an international freight brokerage, export processing and finance hub. A 3D video elaborating on a blueprint for the development of the city was made right after leader Kim Jong-il visited China in May.

The video, obtained by the Chosun Ilbo from a North Korean source in China, says the North worked out a plan in June to develop the city by giving distinctive roles to each of its six districts. “The video was made as material for reporting to Kim Jong-il,” the source said. “Discussion on the blueprint started right after Kim’s visit to the city in December last year and it was then hastily completed when people were talking about possible Chinese aid to the North after Kim’s visit to China in May.”

In December, Kim reportedly reprimanded senior officials there for making no progress in two decades since it was designated a development zone.

The regime upgraded Rajin-Sonbong to a special city in January. Rumor has it that Kim’s brother-in-law Jang Song-taek, the influential director of the Workers Party’s Administration Department, is pushing for development there.

The narrator in the video says, “In the future, Rajin-Sonbong will turn into a world-class economic and trade zone based on international freight brokerage, export processing and finance business and into a beautiful cultural port city in the era of the Songun (military-first) ideology.”

The narrator quotes regime founder Kim Il-sung as saying, “Rajin-Sonbong must become a better city than Singapore when you establish an economic and trade zone there.” Kim Jong-il is quoted as saying, “To build Rajin-Sonbong well, we must carry out the construction project according to an urban development plan.”

The video says the regime made a detailed plan to develop the city. A Kim Il-sung statue and public buildings such as an exhibition hall will be built in the Jungsim District. Changpyong District, which lies close to Rajin-Sonbong Port, will become a residential area. Anju District will become a finance center with hotels, banks and a department store will be built. High-risers including a 40-story office building will be built in Sosan and Dongmyong, and light industry will be built on both sides of Rajin Railway Station in Yokjon District.

Six design research centers in Pyongyang and Rajin-Sonbong were tasked with producing the blueprints.

But experts say chances that the project will come to fruition are near zero. “If Rajin-Sonbong is to be developed according to the blueprint in the video, the North would have to reform and open up. It can’t become an international trade and finance center without huge investment from South Korea, the U.S. and Japan,” a South Korean government official said.

So far, only a road linking the Chinese city of Hunchun with Rajin-Sonbong Port is being built in accordance with Chinese plans to ship goods from there.

Cho Bong-hyun, a researcher at the Industrial Bank of Korea’s economic research center, said an estimated 5 million tons a year of grain, coal and timber from northeastern China are being transported to southern China, and China can save up to US$10 per ton or $50 million a year in transport costs if it uses Rajin-Sonbong Port instead of railways.

The port could also be of help to China for exports. There are also rumors of a joint industrial complex in the area where North Korea would provide the labor for Chinese firms.

But a Chinese businessman operating in the North said the North and China have different ideas about the development plan, so nobody knows if and when development will get under way.

The video can be seen at the Choson Ilbo web page below.

Read the full story here:
N.Korea Pursues Dream of Int’l Business Hub
Choson Ilbo
11/5/2010

According to the AFP (via Straits Times):

North Korea’s premier, who is reportedly close to the son and heir apparent of leader Kim Jong Il, has visited north-east China this week for talks with Chinese officials, state media reported.

Choe Yong Rim – who in late September was named a member of the ruling party’s politburo presidium, of which Mr Kim had been the only member – met with Chinese Vice-Premier Zhang Dejiang in Changchun, Xinhua news agency said.

It is the same region bordering the North that Mr Kim toured for five days in late August – a visit that state media said had largely focused on economic issues and analysts speculated included calls from Beijing to speed up reform.

Mr Choe ‘congratulated China on its economic and social development’ and said Pyongyang was ‘willing to draw experience from China and further strengthen its exchanges and cooperation with the country,’ Xinhua said late on Wednesday.

Mr Zhang said Beijing would work with the North to ‘promote the China-DPRK friendship to a new height’, the report said. South Korea’s Yonhap news agency, citing unnamed sources, said Mr Choe toured electronics and pharmaceutical companies in the region this week, as well as an agricultural research centre in the city of Harbin.

Xinhua did not specify when Mr Choe and Mr Zhang had met, nor did it say when Mr Choe was due to return home. Yonhap also reported that Mr Choe was believed to be a key aide to Mr Kim’s son Jong Un, in his late 20s, who in September was promoted to a four-star general and given powerful posts in the ruling party.

KBS also reported on the story.

Read the full story here:
N.Korea premier visits China
AFP via Straits Times
11/4/2010

According to the Korea Times:

North Korea’s information technology (IT) industry, especially in the field of computer-based animation production, is well on its way to achieve success, according to a Dutch outsourcing specialist currently conducting IT business with North Korean companies.

Speaking to an audience in Seoul for the launch of a book, “Europe-North Korea, Between Humanitarianism and Business,” Paul Tjia said France and Italy are two big users of North Korean animators.

He said that his Dutch clients also outsource animation to North Korea. European cartoon versions of classic literature such as “Arabian Nights” and “Les Miserables,” which aired on European television, were animated partly in North Korea.

The ceremony was organized by the Hanns Seidel Foundation, a German organization.

Clients of animation produced in the isolated communist regime aren’t just Europeans.

In early 2000 when the inter-Korean relations were at a peak, even a few South Korean animations were made in North Korea.

“Pororo the Little Penguin,” an animated cartoon series, was an inter-Korean project completed in 2002. Also the same year, Akom, a South Korean company, also outsourced the production of “Empress Chung” to North Korea. The animation was released in 2005.

Tjia mentioned that some of the American Walt Disney animations were created by North Koreans, purely by accident. Politically North Korea and America have a thorny relationship and the American government prohibits the private sector from doing business with North Korean companies.

“There was a time when Walt Disney outsourced their animation production to countries in Asia like Vietnam or the Philippines. But the company didn’t have complete control over exactly which country the work was created, and found out later that some was produced in North Korea,” he said, adding that this was discovered after the animations had aired on TV.

An official at the Seoul Animation Center verified some of what the Dutchman said, confirming that Walt Disney’s outsourcing to Asia was true, and that’s precisely how South Korea’s animation industry took off.

The news of a burgeoning animation industry in North Korea comes as a surprise to many who are used to hearing mainly about food scarcity, human rights violations and the regime’s nuclear ambitions.

People in the North Korean IT industry are given far more freedom than regular people in traveling abroad. They freely travel to “learn new skills,” Tjia said, showing a group photo with North Korean IT engineers in Europe.

Apart from animations, he added, North Korea is also keen on developing computer games, cell phone applications and banking systems for clients from the Middle East.

Cell phone applications, in particular, were devised even though not a single cell phone was available in Pyongyang.

“They made them to target European clients,” he said.

Yet for some the emergence of North Korea as an animation producer isn’t without alarm.

One European diplomat at the venue expressed concern over security, raising the possibility that the IT business with Europe could empower North Korea to become a cyber attacker.

North Korea already has a record of carrying out cyber attacks against South Korean websites, the most recent of which took place last July.

“They (North Koreans) say they are capable of producing computer viruses,” Tjia said, and he has seen anti-virus programs made by the North. The chief of the South’s National Intelligence Service was quoted last year as saying that North Korea had a force of 1,000 hackers who could engage in cyber warfare. He also said the North had “remarkable” cyber skills to carry out a massive attack on the South.

Read the full story here:
North Korea emerges as animation producer
Korea Times
Kim Se-jeong
11/1/2010

According to Good Friends:

Hyesan City police officers in the Ryanggang Province are still doing well amidst North Korea’s economic chaos which has been further exacerbated by the government’s recent currency reform. Illegal trade in Hyesan, which is close to the national border, is rampant and particularly connected to the sale of drugs as well as rare metals, such as gold, silver, copper, iron, et cetera that are under tight government control. While some smuggling operations are managed by individual venders, most are large-scale enterprises. Bribery has thus become customary since sending and receiving prohibited items requires the aid of police or security officers. As a result, obtaining such positions in Hyesan has become very competitive; in particular, many Ryanggang Province officers have been applying for transfers, with bribes being exchanged in the process.

In order to become police or security officer in Hyesan a candidate must offer a bribe of at least one million won in the new currency. This may be a large sum of money; however, it’s only a matter of time before officers recoup their investment by taking in bribes from the smugglers. A smuggling or drug case that may be considered big in other regions can be resolved fairly easily if the right security officials are involved. Last September, a reputed drug trafficker who was arrested on drug related offenses was released within days after being declared innocent of charges. Although an order for intensifying drug regulations had been issued across the country, money clearly had priority.

Such corruption is encouraged by a society-wide permissiveness that doesn’t make a big deal out of anything unless it has to do with ideology issues. Simply speaking, if an incident is not “related to espionage,” then it is not a big deal. Rather, releasing culprits in exchange for money is regarded as a way of surviving during difficult times. Since corruption has become routine, neither officers nor smugglers seems to have a sense that what they are doing is wrong. The same goes for the people at large. For example, although officers are prohibited from possessing and riding personal motorbikes, those who do not own their own are often looked down upon by citizens; they believe that such officers must be slow-witted for not having one being in the position that they are. Along with the jeering is a healthy dose of envy.

If the officers take bribes from smugglers to look the other way, the wives of officers use their husbands’ status to actually join in the fray. They send articles to and receive prohibited items from China; they money they earn from such smuggling activities actually surpass the amount their husbands earn through bribes. Even if the wives are caught, the husbands step in to make the problem go away. The money a husband-wife team earns in this way surpasses the imagination of ordinary people. In Hyesan, there is a saying that only police officers have withstood the currency reform tsunami without breaking a sweat. Others say that “all the laws enacted by the government only serve to fill the bellies of the police officers.”