PIIE Blog | North Korea: Witness to Transformation
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
Subscribe to North Korea: Witness to Transformation Search
North Korea: Witness to Transformation

Drug Trafficking Supply Chains

by | February 21st, 2014 | 06:15 am
|

In the “right to food” section of the recently released report by the United Nation’s Commission of Inquiry on Human Rights in North Korea (download here), the Commission addresses the issue of whether the North Korean government used the resources at its disposal to address its food needs, and cites my testimony to establish that it clearly did not.

But the Commission also notes in passing (paragraph 658 of the full report) that the North Korean government engaged in a variety of legal and illegal activities to earn foreign currency, but the proceeds from these activities were “not used to purchase food, medicine or other goods, which the population urgently needed during the famine. Instead, it was channeled into parallel funds that are outside the regular government budget” to be used at the leader’s discretion, mainly for the upkeep of the elite. The report then goes on to describe some of these activities, including drug trafficking: one witness, a former state security agent, testified that:

“He knew of SSD agents who traded weapons and drugs with Chinese merchants. The agents obtained the weapons and drugs from state drug factories and depots in the DPRK. The witness has direct knowledge of the trafficking of the narcotic drug methamphetamine, which was formally authorized by central level authorities…Another witness, a former manager of a state company, recalled that the central level of the Workers’ Party provided the witness’s company with instructions to grow and trade opium in order to generate foreign currency.”

The role of illicit activities in funding the state is an issue of ongoing concern. Steph Haggard recently reviewed an article by Justin Hastings, “The economic geography of North Korean drug trafficking networks” that applies value-chain analysis to North Korean drug trafficking activities. Hastings makes the argument that the nature of North Korean drug trafficking activities changed in the mid-2000s, going from a model in which the state centrally controlled a vertically integrated system that produced drugs and used existing state assets to distribute them to far-flung corners of the globe as described by the Commission of Inquiry, to a decentralized system in which state actors participate in a complex set of relational transactions that has had the effect of both disbursing production activities within North Korea, while at the same time concentrating cross-border engagement on nodes within North Korea’s immediate vicinity, particularly Northeast China.

As with many things North Korean, Hastings does not have a smoking gun which would allow him to definitely specify and date the North Korean government’s alleged shift from supporting drug trafficking as a matter of state policy, to cracking down on it which encouraged the shift to the more complex networks observed today. But the circumstantial evidence would date this to somewhere around 2004 to 2007.  As Steph Haggard and I observed in a paper published in Political Science Quarterly on the North Korean prison camp system, this period coincided with changes in the North Korean legal code which greatly broadened the definition of “economic crimes” and signaled a shift toward a more conservative approach to governance.

But it is also notable that data in papers by Sheena Chesnut Greitens and Ben Sovacool  suggest that there have not been documented cases with official state involvement since 2000 (though many would argue that the Pong Su case fits the bill, regardless of what the Australian government concluded). And the Pong Su and some of the other cases of diplomats involved in trafficking probably involved drugs that did not originate in North Korea but rather the North Koreans were exploiting state assets to act as couriers of drugs produced elsewhere. The model in these cases might be less supply-chain than simple opportunism.

That said, it is interesting that Hastings finds that the networks that currently exist, appear to have emerged out of relational ties based on family, ethnicity, and long-standing business relationships, similar to what Steph and I found for legitimate commerce across the DPRK-China border. In an environment characterized by the absence of property rights protection and rule of law, who one deals with comes down to trust and the ability to apply extralegal sanctions, regardless if one is transacting apparel or crystal meth. Indeed, one of Hastings’ more curious findings, again consistent with our previous work on the rise of market activities in North Korea, was as the central government was getting out drugs, many low- and mid-level officials found it advantageous to enter the business, as their positions gave them privileged positions to trade in not just apparel, but ice as well. The upshot is that what was a centrally directed effort to raise money for the political elite has morphed into corrupt decentralized gangsterism that ironically poses a greater threat to both the North Korean public and the country’s immediate neighbors.

 

Comments (1)

After watching the droll amateur musicians, I didn´t expect something with the article above and spared my time.

Roland February 21, 2014 | 9:05 am

Reply

Leave a Comment

All fields are required; your email address will remain private and will not display. Please see guidelines for comments in our Comment Policy.

*