Last week, the Swiss government announced that it had blocked an attempt by North Korea to buy $7.24 million worth of ski lifts, plus “golf, horseback riding and water sports” gear. That this transaction was beneath even the Swiss is saying something; historically, Switzerland was to kleptocracy what post-war Cambodia was to underage pederasty. Switzerland is near the top of any list of countries suspected of hosting North Korean slush funds that are variously estimated to be worth between $1 billion and $4 billion. Throughout the duration of a famine that, according for former USAID Administrator Andrew Natsios, killed up to 2.5 million people, the Swiss sold Kim Jong Il $2.4 million worth of watches a year. Swiss suppliers sold the North Koreans their very own U.S. mint for printing perfect counterfeit $100 bills. More recently, Geneva-based Kempinski Hotels won the right to operate the Ryugyong Hotel, a vacant shell that was just glassed over for a cost of $180 million. In an unfortunate choice of words, Kempinski’s CEO promised that, when finished, the Ryugyong would be “a money printing machine,” but an escalation in North Korean war threats forced Kempinski to withdraw from the project. The estimated cost of the Ryugyong now totals $750 million, almost four times the annual budget that the World Food Program just authorized to feed 2.4 million North Koreans.
Because North Korea is North Korea, it protested that the Swiss government’s blocking of the ski lift sale was a violation of the U.N. Charter under the compulsion of “U.S. high-handed practices.” This reminds me to remind you that the Korean language actually has a word for “chutzpah,” and also, that this shouldn’t surprise you. As an aside, I can’t recall any other time in my lengthy study of North Korea that I’ve seen the “North Korea’s Skiers’ Association” this upset.
Do you know who didn’t comment on this story? Katharina Zellweger, that’s who. Zellweger led the Swiss Agency for Development and Cooperation from 2006 to 2011. SADC, the Swiss government’s overseas humanitarian aid agency, is one of those NGOs that didn’t withdraw from North Korea years ago over North Korea’s use of food, including food aid, as a weapon against its disfavored political castes. In May, Reuters quoted Zellweger’s criticism of sanctions that caused European banks to shun transactions with the Foreign Trade Bank of North Korea, which, according to the Treasury Department, serves as “a key financial node in North Korea’s WMD apparatus,” to “facilitate transactions on behalf of actors linked to its proliferation network.” A new U.N. Security Council resolution recently reaffirmed a ban on the export of luxury items to North Korea, and also requires states to sanction entities involved in proliferation or the evasion of sanctions.
Unfortunately, the FTB is also the bank that foreign NGOs use to transfer hard currency into Pyongyang, and in May, the sanctions at least temporarily threatened to affect SADC’s operations by requiring them to carry cash into North Korea in duffle bags. (Never mind why a humanitarian NGO needs hard currency to spend in North Korea while feeding hungry North Koreans, although I admit to being more than mildly curious about that). According to the Chosun Ilbo, the North Korean government requires U.N. agencies to use the FTB. If North Korea also requires the same of NGOs working with the U.N. World Food Program, as SADC does, that’s a significant omission from the reporting of how sanctions have impacted humanitarian work in North Korea.
U.N. Security Council 2094, the Treasury Department’s sanctions regulations, and E.U. sanctions regulations all include waivers or exemptions for humanitarian aid. Section 207(d) of H.R. 1771, a tough, bipartisan sanctions bill pending in the House of Representatives, directs Treasury to authorize a responsible foreign bank to provide financial services for humanitarian and consular operations in North Korea.
This still isn’t the most important missing piece of this story, however. By an exquisite and tragic coincidence, SADC’s annual budget for North Korea is 7.2 million francs, or $7.84 million, just slightly more than what Kim Jong Un would have squandered on just this one wasteful purchase. This certainly begs a few questions. For one, can you imagine all the good SADC could do for North Koreans if Kim Jong Un would donate that $7.24 to SADC instead of blowing it on high-end sporting goods? And why does Kim Jong Un insist on using food aid recipients as human shields for the financing of proliferation? Also, why should foreign donors contribute to aid programs whose budgets are dwarfed by North Korea’s spending on weapons and luxury items (many of the latter purchased from European suppliers with slush funds in European banks)? Finally, why shouldn’t those funds be confiscated from the European accounts of a government that prioritizes luxuries over feeding its people?
These may not be questions you would expect from the leader of an aid agency working in a country led by a ruthless, vindictive, and thin-skinned regime, but they are important to any honest examination of why the North Korean people need humanitarian aid in the first place. Any criticism that leaves them unexamined deserves to be dismissed as disingenuous.
Even these questions fail to plumb the depth of North Korea’s financial depravity. Two weeks ago, the World Food Program appealed to donor nations for another $98 million to feed North Korea’s can’t-haves. By contrast, according to South Korean government estimates, in 2012, North Korea spent $1.3 billion on its missile programs alone. Had Kim Jong Un’s fiscal priorities been otherwise, that money could have bought 4.6 million tons of corn, enough corn to eliminate North Korea’s food deficit … for four or five years.
I emphasize that this $1.3 billion–a figure that looks like “$1,300,000,000″ when aroused to its full digital amplitude–includes just one year’s missile budget. It does not include what North Korea spent on its nuclear weapons programs, its conventional forces, or, say, the $1.5 million in used MiGs that it tried to buy from Mongolia. It does not include Pyongyang’s new dolphinarium, or the fitness center that serves as a distant-second line of defense against an outbreak of obesity. It does not include the cost of remodeling this palace, the $1,600 spent on Ri Sol-Ju’s Christian Dior handbag, or any of the other couture d’impératrice that brought on spasms of homoerotic simpering from the shallow end of the press pool last year.
Historically, discriminating North Korean tyrants have preferred European brands. With occasional exceptions, such as the blocked sale of two Azimut-Benetti yachts from Italy (price, $4.4 million) Europe has seldom hesitated to sell them. In 2010, Kim Jong Il distributed 160 Mercedes-Benz sedans to his cronies at once; the following year, he imported over $3 million worth of European cars. During a visit to China, he rode in a $400,000 Maybach (though it gives me a certain ghoulish satisfaction that he rode to Hell in a ’76 Lincoln). Most infamously, he is said to have spent $720,000 a year in Hennessy cognac. Before his death, his son and successor was spotted wearing a Swiss watch worth $78,000.
Another NGO that was quoted by Reuters criticizing the effect of the sanctions on the Foreign Trade Bank was German NGO Welthungerhilfe, whose annual report for 2012 indicates that it spent 3,235,607 Euros, or approximately $4,300,000, on feeding North Koreans last year. What North Korea tried to spend on yachts in 2010 could have covered Welthungerhilfe’s budget for a year. What North Korea tried to spend on ski lift equipment could have covered Welthungerhilfe’s 2012 budget for nearly two years. Welthungerhilfe’s specific complaint involved delays in a series of cash transfers that were collectively worth less than the cost of one of Kim Jong Il’s Mercedes-Benz limousines.
To be fair, North Korea’s palace procurers undoubtedly purchased some of these luxuries in China without the direct knowledge of the European suppliers, but in other cases, the North Koreans purchased the goods directly. North Korea’s preference for European goods is also financially convenient; it’s a way to use trade to move (read: launder) the billions of dollars that North Korea’s rulers have stashed away in Europe’s banks, and then ship it home through Chinese ports, where customs inspections are notoriously lax.
North Korea is sometimes referred to as a “starving nation,” this isn’t really true, of course. North Korea is a nation with many starving people, but its government has more than enough cash to feed every one of them. It chooses not to feed them. It even reduces its commercial imports of food when it receives foreign food aid. The inescapable inference is that North Korea chooses to feed the people it deems useful, and chooses not to feed–or let anyone else feed–the expendable ones, who survive largely on food that is pilfered from collectives or government stocks, grown on hidden plots, or smuggled into North Korea and sold in a spreading network of markets that the regime sometimes tolerates. If some foreigners help to feed the non-expendables, that just leaves more money to buy nukes and swag from other foreigners.
Why does North Korea make these choices? Some of the answers are only knowable to psychopaths–even an abject moral imbecile can’t defend them and won’t try–but one of them is “because it can.” North Korea can make these horrible choices in part because European governments–democracies whose regulatory bureaucracies are influenced by public opinion and the words of influential NGOs–have been far too lax, for far too long, in limiting North Korea’s access to European bank accounts and European luxuries. Neither Switzerland nor the E.U. nations can immunize themselves against charges of abetting North Korea’s misery by contributing humanitarian aid that is, when compared to this tragic squandering of wealth, infinitesimal. A principled enforcement of U.N. sanctions would do the North Korean people far more good than feel-good gestures and unspoken truths.
[Correction: A previous version of this post referred to "Switzerland and other EU nations," incorrectly implying that Switzerland is an EU member state. It is not. Thanks to Marc for calling my attention to the error.]