- Reuters/KCNA KCNA
North Korea has for decades managed to conduct costly nuclear and ballistic missile development projects while under some of the strictest and most widely endorsed sanctions.
Now Kim Jong Un could be within a few years of completing a credible intercontinental ballistic missile the US would struggle to defend against.
Despite the UN and key players like China and the US consistently voting in favor of sanctions on North Korea, the regime still finds a way to slip around them.
Much like its nuclear warheads and missiles, North Korea’s sanction evasion techniques are “increasing in scale, scope, and sophistication,” according to a recent UN report, which also says UN member states’ implementation of sanctions remains “insufficient and highly inconsistent.”
Experts have told Business Insider that while some countries, like China, may have political interests in keeping the Kim regime from collapsing without trade or prosperity, other countries are fooled by North Korea’s intricate and effective network of front companies and tricks.
- REUTERS/Jason Lee
One tactic North Korea has used for shipping missile components and military equipment is sailing under false flags.
Though it’s illegal to trade military goods with North Korea, in August, a North Korean ship, the Jie Shun, was seized in Egypt carrying tens of thousands of North Korean-made explosives while sailing under a Cambodian flag.
For small Asian countries that cannot afford arms and equipment from China and can’t get past US and European arms regulations, North Korea offers cheap, accessible gear.
Even if the smaller countries had the means to search every ship and track goods that have both civilian and military applications, for a country like Malaysia, North Korea can be a valuable partner, while the false flags keep authorities guessing and off the trail.
- Flickr/Matt Paish
But earning money illicitly works only if you can move it – and North Korea needs to move a lot of money to fund its missile program under tight economic sanctions.
North Korea injects uncertainty into its banking system by using facilitators “well-trained in moving money, people, and goods, including arms and related materials, across borders,” according to the UN report.
The UN said North Korea worked with non-national facilitators with “varying degrees of complicity,” suggesting some could have been blackmailed.
North Korea employs numerous front companies for agents and foreign banks to move money through that leave little to no paper trail to the regime, and when that won’t do, it holds large reserves of foreign cash.
But even the most well-intentioned states sometimes fall victim to North Korea’s trickery.
A recent joint report from Arms Control Wonk and Reuters found that the regime used a system of false addresses and fake names to trick countries into accidentally doing business with it. Taking advantage of their shared Korean language, North Korean businesspeople sometimes take the same names as South Korean businesspeople. Addresses that refer to North Korea as the “Korean Republic” rather than the Democratic People’s Republic of Korea, or “PY city” instead of Pyongyang, only add to the confusion.
If merchants aren’t careful, they could place an order with the wrong Korea and have it filled by the opportunistic Kim regime.
Money to burn
The money made from beating sanctions seems to go to North Korea’s expensive missile programs, lavish parties, and palaces for Kim and his inner circle. Meanwhile, the World Food Program provides tons of food aid to North Korea and estimates that 70% of its citizens are food insecure.
North Korea is estimated to have spent $1.3 billion on its rocket program in 2012. In addition to funding the country’s military, Kim maintains expensive tastes and multiple compounds and private airstrips. In 2013, North Korea imported $644 million worth of luxury goods, according to Yoon Sang-Hyun, a South Korean lawmaker.
Kim Jong Il, the leader’s father, was said to have spent 20% of the nation’s budget on things like Omega watches and Martell cognac.
North Korea’s ability to beat sanctions and support one of the world’s most hostile regimes shows the impotence of UN resolutions without real political will behind them. For every time North Korea is caught flouting sanctions, there’s no way to know how many times it has slipped past them secretly – or who is keeping those secrets.