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North Korea: Witness to Transformation

STTB: Russia, Blackwater, and Rumsfeld

by | July 23rd, 2014 | 06:28 am

One aspect of Russia’s pivot toward North Korea is the promotion of the Russian ruble as an alternative settlement currency to the US dollar. Virtually all North Korean trade is conducted in Chinese yuan, US dollars or barter. Most imports are denominated in yuan, while exports are primarily settled in dollars. The latter may reflect the fact that the prices of the raw materials that North Korea exports are quoted in dollars, or it could reflect a preference by the North Koreans to get paid in the currency most widely accepted globally.

One can imagine a coincidence of interests in this regard. Stung by tightening sanctions due to their actions in Ukraine,  the Russians have an interest in getting off the dollar standard and out of financial channels controlled by the US and Europe. For the North Koreans, existing and prospective financial sanctions create similar incentives to get out of the dollar and US Treasury supervision of dollar clearing by US-based banks. With recent bilateral trade running in the rough vicinity of $100 million, even if the two countries could achieve the ambitious goals set out in Steph’s post, this initiative would seem to be more of a symbolic move aimed at tweaking the West, or the creating of an avenue for sanctions evasion, than a serious contributor to economic development.

Remember Blackwater? The private security firm (now branded as Academi as part of Constellis Holdings) achieved infamy in Iraq with several of its employees once again facing trial in Washington for their involvement in a 2007 incident that left 17 Iraqi civilians, including a 9 year old boy, dead, and contributed significantly to an upsurge of anti-American sentiment in Iraq.

The New York Times story linked above mentions in passing that the State Department hired the firm to protect North Korean asylum seekers in Shenyang, China.

Huh? Did the State Department bother to tell the Chinese? The usual visual for a Blackwater story (see, for example, the Times piece) is a big white guy in camo and wrap-around shades toting an assault rifle. I’ve been to Shenyang, and I can assure you that large Americans walking around in camo shades with unconcealed firearms would stand out. Mightily.

Speaking of Iraq, some of you may recall that our former Secretary of Defense, Donald Rumsfeld, lives around the corner from me. Maybe not for much longer. According to the Washington Post, Rumsfeld has put up his house for sale, with an asking price of $4.5 million. While it does not look particularly grand from the outside (unlike the French ambassador’s residence across the street which really is magnificent), according to the Post it is more than 5,000 square feet, has seven bedrooms, 6.5 baths, and a pool.