Defections may not foretell N. Korea’s collapse (but they could help induce it)

The defection of North Korean Deputy Ambassador Thae Yong-ho two weeks ago has tolled a ghoulish vigil in which bloggers, op-ed writers, and academics have speculated about the longevity of His Porcine Majesty. Some of them still read a long lifeline on his palm. South Korean President (and master troll) Park Geun-hye, on the other hand, sees “serious cracks” in the regime and says that the cohesion of the oligarchs is “collapsing.”

“The North Korean regime is taking no account of the people’s lives, while it oppresses the people with continuous rule by fear,” she said. “Recently, even the elite in the North is collapsing and high-profile figures are increasingly escaping their homeland and defecting to foreign countries. As the signs of serious cracks emerge, the regime’s instability is growing.” [Joongang Ilbo]

Park has several advantages over the rest of us. She probably has a good idea of what the seven North Korean diplomats who’ve defected this year — plus any other senior defectors we don’t know about yet, and those who defected in recent years — have said in their NIS debriefings. She probably has some idea of what the NIS found in their laptops and cell phones. Of course, it’s possible that she and the NIS are sexing up or spinning those reports, so the rest of us do what we do best — we speculate.

Christopher Green insists that Thae’s defection means “nothing” for the regime’s stability because Thae isn’t central to the regime’s power structure, other defections didn’t shake the regime’s stability before, and the psychological impact on the proles will be slight. Andrei Lankov acknowledges that the rise in high-level defections is significant, wisely doesn’t claim to know whether the regime will collapse in months or years, but less wisely, is very certain that the defections have nothing to do with sanctions. In an article that’s worth reading for its opening anecdote alone, Mark Fitzpatrick posits that “[s]uch defections reflect fissures in the regime,” but questions whether they “may also signal an impending regime collapse.” John Lee offers the most bearish interpretation of Kim Jong-un’s future, writing that North Korea “is just a spark away from an uncontrollable conflagration.”

In no particular order: I share Lee’s hope, but not his predictive confidence. Green’s is a dangerously tendentious prediction for uncertain times, and as we’ll see below, it didn’t take long for events to supersede it. I can’t quite reconcile Fitzpatrick’s view with itself; a regime like North Korea’s can’t be both riven by fissures and stable. I’ll meet Andrei halfway and admit that multiple factors are probably contributing to the recent defections, including the fear of political purges, self-interest outweighing a decaying ideology, low pay, lack of confidence in regime leadership, concern for their children, the loss of income from sanctions and South Korean diplomatic pressure, and officials’ fears that Pyongyang will hold them responsible for the loss of that income or for the defections of colleagues. Other analysts and South Korean officials think sanctions are also a factor, and the coincidence of events suggests that they’re right:

Both experts said that the implementation of recent UN Security Council sanctions may have been one determining factor in understanding the recent flurry of diplomatic defections.

Jeong said the salaries of DPRK diplomats are not high, meaning many of them have to make ends meet by sharing apartments, for example. And such personal economic difficulties may have pushed some of them to defect, he said.

“As the international community has strengthened sanctions against the North and surveillance of North Korean diplomats has increased, they can no longer make foreign currency as they did in the past,” Cheong said, citing old tactics such as the selling of counterfeit cigarettes or liquors.

Heightened pressure from the North Korean regime may have also driven them to the brink, the Korea University professor said.

“Kim Jong Un has had trouble in securing government funds after (the latest) sanctions, making the North’s foreign economic activities hard,” said Lim. “So, he has increased the pressure on diplomats abroad in charge of funds management.” [NK News, Dagyum Ji]

But if much of the conventional wisdom still predicts stability, conventional wisdom has a poor predictive history.

[Everything is absolutely fine.]

Most experts thought the regimes in East Germany, Romania, Albania, Libya, and Syria were as stable as Lehman Brothers, right up to the moments when each of those “stable” regimes fell. Most Sovietologists failed to predict the collapse of the East Bloc and the Soviet Union. Status quo bias is a powerful thing. The conventional analyst who predicts that the status quo will go on looks smart every day — until the day when he suddenly doesn’t. The unconventional analyst who predicts doom looks like a lunatic every day until the day when he suddenly looks like a prophet. The only day history remembers is that last one.

But prediction is a fool’s errand. Great events often start with infinitesimal and unpredictable ones — an official’s misunderstanding of an order, or the courage of one forgotten man in a crowd. Wise analysts do not predict such things. At most, they interpret a regime’s political and financial health from whatever vital signs are known. Once, the North Korean regime had a very strong political body. Since Kim Il-sung’s death, that body has decayed steadily. We don’t know enough to diagnose the disease or assess the progression of the atrophy, but defections by diplomats, like the desertion of soldiers, are contrary to the protagonists’ interests in normal times, and are not normal events. They suggest that the regime is unhealthy, but they are only symptoms. In North Korea, most of the vital signs are unknowable. Even then, they can’t predict when some infection kills a vulnerable host. 

Sometimes, it is easier to alter the course of history than it is to predict it.

The view that comes closest to my own is that of Stephan Haggard, who thinks that the recent defections could cause a financial crisis, which could lead to regime collapse. Haggard points to reports claiming that some of the defecting diplomats and officials have taken tens of millions of dollars with them — amounts which may seem small by most nations’ standards, but which are indispensable to Pyongyang when it’s under rising pressure from U.N. sanctions, the loss of its Kaesong income, and complaints that its labor exports violate the rights of the workers. The reports, however, are anonymously sourced, and they’ve been inconsistent about what (if any) amounts the diplomats absconded with.

Whatever the amounts, however, I agree that these defections could cause a financial crisis in Pyongyang. I just agree for a different reason.

A North Korean diplomat stationed in Russia defected last month, a local source said Thursday, amid a series of defections from the communist country to seek a new life in South Korea.

The diplomat from Pyongyang’s trade representatives under its consulate general in Vladivostok could have possibly defected with family, according to the source who asked not to be named. [….]

The diplomat is known to have been in charge of covering trade issues while sending necessary goods back to North Korea, according to the source. [Yonhap]

Following Yonhap’s report, New Focus International confirmed what I’d suspected — that North Korea’s former trade representative in Vladivostok was not only a purchasing agent for Pyongyang but a Bureau 39 fund manager. Vladivostok isn’t in Europe, so I’ll assume he isn’t the same person as the Europe-based slush fund manager whose defection was also recently reported (perhaps that person was the Bulgaria-based diplomat referred to here). Another Moscow-based trade rep defected in July. Then, there’s the recently reported defection in China of the man who controlled North Korea’s slush funds in Southeast Asia. All told, Seoul says at least seven North Korean diplomats have defected this year alone. Separately, “informed sources” have told Yonhap that ten North Korean diplomats defected in 2015, including another Bureau 39 fund manager based in Singapore. This doesn’t include the colonel in the Reconnaissance General Bureau who defected last year, the high-ranking North Korean banker who defected two years ago, or the diplomat based in Ethiopia who defected in 2013.

Pyongyang’s response to the defections — recalling diplomats to punish them for the defection of colleagues, recalling the families of diplomats back to Pyongyang, dispatching more security agents to surveil diplomats, and reshuffling or recalling embassy staff — risks pushing other diplomats to the breaking point.

If most of these reports of defections are roughly accurate, the NIS, CIA, and Treasury probably have a more complete map of Kim Jong-un’s bank accounts, assets, and financial networks around the world than at any time in North Korea’s history. (Ironically, Thae Yong-ho, who was posted in the capital of a U.N. Security Council member and U.S. ally with a strong regulatory and legal system, may be the least likely of these men to contribute much to that map, beyond the financing of his own embassy.)

So far, the Obama administration has abstained from taking any public action to block those funds. Its increasingly apparent failure to do this has already attracted criticism in the media, and the more Kim Jong-un provokes in the coming months, the louder that criticism will become. It’s certain to come up at a now-overdue briefing to Congress on the implementation and enforcement of the new North Korea sanctions law. The more attention Kim Jong-un attracts, the more likely it is that Congress will demand hearings on what Treasury has done to enforce the law. Knowing this should make some bankers very nervous.