Nuclear Weapons 271 - The North Korean Situation - Financing addendum
My last four blog posts were about the situation in North Korea. I covered aspects of North Korean government, our history with North Korea, current diplomacy, international aspects, our attempts to gain the assistance of China in ending the North Korean nuclear program, a review of the North Korean nuclear program, and an overview of the North Korean submarine fleet and its threat. Today, I am going to talk about the ways that North Korea, a very poor country, has managed to pay for its development and manufacture of weapons.
North Korea has a tiny gross domestic product when compared to South Korea. It is estimated that the North Korean GDP is about $30 billion which is a little over 2% of the South Korean GDP. However, North Korea does spend as much as one-fourth of its GDP on the development of weapons. There are at least six ways in which North Korea has managed to obtain the funds that it requires for weapons development.
China is North Korea’s biggest trading partner. The US Central intelligence agency estimates that about three-fourths of North Korea’s trade is conducted with China. There are other estimates that placed the amount of trade between the two Asian countries at an even higher level. While it is true that China has the ability to severely cripple the North Korean economy by closing off the current supply of food and energy, to do so would have grave consequences for China. If the North Korean economy collapsed, millions of refugees would flood across the Chinese border. China would not be able to deal with the refugees without severe impacts on its own economy and society.
North Korea provides North Korean citizens as slave laborers for China and Russia. This human trafficking brings in significant resources. Kim Jong-Un’s direct involvement in this practice provides him with foreign currency which he uses to bribe powerful members of the North Korean government to support him.
North Korea has extensive mineral reserves including deposits of magnesite, zinc, tungsten, iron, and coal. While North Korea lacks the electricity and equipment to efficiently mind these minerals, the North Koreans have formed mining partnerships with China, Canada, Egypt, Brazil, and South Korea in order to exploit their mineral wealth. Kim Jong-U involvement in these projects also provides him with foreign currency that he can use to bribe government officials.
North Korea has been involved in the manufacture and international sale of illegal drugs as well as the sale of versions of legal drugs such as Viagra illegally manufactured in North Korea. As with slave labor and minerals, Kim Jong-Un is directly involved in this drug trade which provides him with more foreign currency.
North Korea also sells weapons to other nations. There are extensive North Korea arms deals with countries in Asia, Africa, and the Middle East. Some experts state that North Korea has been involved with Iran in nuclear weapons development. Beyond the sale of weapons and weapon systems themselves, North Korea has also been involved in the construction of military and security facilities in other countries.
Finally, it has been reported that last year North Korea was involved in an eighty million dollar cybertheft of money from the Bangladesh account at the New York Federal Reserve. Law enforcement officials in the United States believe that China assisted North Korea in this theft. There are also reports that some Chinese financial firms are serving as conduits for illegal currency transfers to North Korea.
It would be wise for the major powers to find ways to cripple these sources of funding for the North Korean weapons programs, especially with regard to nuclear weapons development.
North Korean 1000 won note:
