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How engaging the wrong North Koreans set back openness, reform & peace

South Korea’s social-nationalist government, joined by too many Western academics of the sort who bask in its generosity and fear the withdrawal of it, has re-embraced the “Sunshine” hypothesis. This hypothesis equates nearly all economic “engagement” with North Korea’s military-industrial complex — also known as “the Democratic People’s Republic of Korea” — with economic openness, and economic openness with political openness, disarmament, prosperity, and peace. The Western exemplar of no-questions-asked engagement is the NGO and media darling known as Choson Exchange. In 2015, Choson Exchange offered business training to (among others) the vendor of a blood-purifying, cholesterol-stripping ring, and to the “head of the technology and trade research department at the DPRK Academy of Sciences.” The latter entity turns out to be the parent organization of the Academy of Defense Sciences, a/k/a the Second Academy of Natural Sciences. For those of you who don’t follow Treasury Department designations or the work of the UN Panel of Experts, that is the agency that runs North Korea’s WMD programs.

A syllogism that strings together so many frail non-sequiturs into Sunshine’s preposterous hypothesis — that we can best cajole Pyongyang into reforming, disarming, and abandoning its existential goal of unifying Korea under its own control by subsidizing its censors, its secret police, and its military-industrial complex — could not withstand the tensile stresses of logic or history. Or parody.

Sunshine has withstood none of these things; nor have the principles of the engagers themselves, which melted under the hot light of the minder’s microscope. Thus, Pyongyang exploited engagers’ good intentions or malleability of principle, and so Nigel Cowie, who was once prominent among European investors lobbying for engagement and against sanctions, co-founded a bank that was later designated for proliferation financing. Egypt’s Orascom Telecom joined forces with a sanctioned North Korean bank to set up a heavily censored cell phone network, and then lost a fortune in shareholder assets when Pyongyang effectively confiscated half a billion dollars in revenue. Pyongyang’s foreign investors always leave their money behind eventually (though more always come).

There is more evidence that engagement strengthened Pyongyang’s censorship than evidence that it catalyzed openness. More than a decade ago, a Syracuse University program taught Pyongyang digital watermarking, a technology suspiciously similar to what the Ministry of State Security now uses to trace electronic samizdat. The Pyongyang University of Science and Technology wanted to teach young North Koreans about information technology to break down their isolation, but may have unwittingly set up a prep school for the hackers who defraud foreign banks and give the long arms of Pyongyang’s censors a global reach. The Associated Press, which once promised to open North Korea to the world, instead partnered with the Propaganda and Agitation Department, which controls North Korea’s heavily censored state media. AP’s Pyongyang bureau became an outlet for North Korean propaganda, yet could not even report on a building collapse or a hotel fire within minutes of its bureau. This month, it could not even report on a fire at PAD television studio that was reported by the Daily NK.

Pyongyang even coopted humanitarian aid workers to serve its most inhumane policies. The Swiss Agency for Development and Cooperation, which like other aid groups working in North Korea, doubles as an anti-sanctions lobby, financed what may well have been an anthrax factory. Some individual aid workers became willing propaganda tools. Those who deviated from its narrative were expelled or taken hostage. Even well-meaning South Koreans who now want to help the North with something that sounds as benign as “reforestation” ought to check Google Maps before they plant trees on land that desperately hungry North Koreans cleared to grow food, and that the state has since seized to regain control over the food supply.

Two decades of engagement ought to have paid at least some significant dividends in reform, openness, or disarmament. Where, then, are the pilot projects demonstrating Pyongyang’s willingness to experiment with relaxing the isolation of its workers, paying them full salaries, or offering them safe working conditions? (Please don’t try to say that Kaesong was that experiment.) You would even think engagement would have slipped the fenced boundaries of Kaesong or the closed city of Pyongyang to open a few convenience stores, food markets, and pharmacies in woebegone villages across South Hamgyeong and Ryanggang Provinces. Or that it would now be possible for separated North and South Korean families to send each other letters, or call each other on their cell phones. Or that the proceeds of Pyongyang’s exports might be paid to reputable aid agencies involved in feeding the hungry and healing the sick, or at least paid in kind as bulk food imports. Or that the Red Cross might have quietly opened a few clinics in its prison camps.

You laugh, which is itself a confession of Sunshine’s futility. But there is far more evidence that trade with Pyongyang’s military-industrial complex sets back reform, openness, and peace than evidence that it advances us toward those goals. Instead, by controlling the terms of engagement and trade, Pyongyang used them to preserve its political control, to maintain the isolation of its subjects, to terrorize those beyond its borders, and to deceive us about its own intentions.

North Korea’s trade with China involves the production of minerals, seafood, and textiles using cheap domestic labor. These goods are sold to China by trading companies affiliated with state institutions who later distribute the revenues to the rich and powerful of Pyongyang. The profits of the trading companies in Chongjin likewise go to Pyongyang’s elite. When trade halts due to sanctions, the common people become unemployed and experience reduced cash incomes, but the elite of Pyongyang are more seriously affected as the system of exploitation itself ceases to function. [Rimjin-gang]

In fact, most North Korean trading companies are fronts for specific government entities — a useful fact for the precision of our sanctions targeting. For example, the Reconnaissance General Bureau, or RGB, is responsible for Pyongyang’s terrorism, its assassinations of its critics abroad, the abduction of defectors, many of its cyber attacks, and the sinking of the South Korean warship Cheonan, which killed 46 sailors and could have plunged Korea into war. To pay for its operations, it runs an extensive global network that launders the proceeds of selling weapons, military radios, cybercrime, and exports of seafood, which should be the North Korean people’s protein supply, through banks such as Korea Kwangson Banking Corporation. Some of the same operatives involved in laundering its money have infiltrated the UN aid agencies that should be feeding North Korea’s poor, presumably to help Pyongyang manipulate the agencies’ distribution of aid, to frustrate monitoring, or to influence the agencies’ misattribution of the causes of hunger. By doing so, Pyongyang frustrates calls for it to import more food, distribute it fairly, or institute land reform.

Pyongyang also sells coal to fund its WMD programs and buy parts for its nuclear and missile programs. It funnels some of the proceeds from Mingzheng International Trading Company through its Foreign Trade Bank, which the Treasury Department designated in 2013 for serving as “a key financial node in North Korea’s WMD apparatus.” Paeksol Trading Corporation sells coal and iron ore to fund the RGB, the military, Bureau 39 (North Korea is perhaps the world’s only government with a dedicated money-laundering agency), and the Munitions Industry Department, or MID, which develops the North’s ballistic missiles. Another coal exporter, Daewon Industries, may also be subordinate to the MID. The General Bureau of Atomic Energy, which runs Pyongyang’s nuclear program, profits from its vanadium exports through front companies called Dandong Rich Earth Trading Company and Korea Kumsan Trading Corporation.

The same trade networks that export Pyongyang’s coal, iron ore, and other mineral products procure and import materials used in its WMD programs. The FTB also “provided key financial support to” another North Korean bank to buy “dual-use equipment,” and “facilitated millions of dollars in transactions that have benefited … North Korea’s premier arms dealer,” the Korea Mining and Development Trading Corporation, or KOMID, which launders its revenue through the Tanchon Commercial Bank, among others. Namchongang Trading Corporation is the procurement front for the General Bureau of Atomic Energy. The Korea Kuryonggang Trading Corporation buys WMD materials from Russia for the Second Academy of Natural Sciences. Korea Tangun Trading Company is another of its procurement fronts.

The army, whose border guards keep people in and information out, funds itself by selling seafood and coal, the latter through a front called Songi Trading Company. For years, the internal security forces have also funded themselves through their own cross-border trading companies. The Ministry of State Security, which runs most of North Korea’s political prison camps and catches defectors in China, takes kickbacks from seafood smuggling. Its front company, the Shinheung Trading Company, sells seafood, iron ore (through a front called Tumen Xinhuan Goods Trading Company), cigarettes, “tiger bone liquor,” and quack cancer cures. It imports luxury goods from Japan and has been linked to cyber attacks. An MSS official, Ri Won-ho, has worked in both Egypt and Syria while selling weapons for KOMID. Another MSS official, Jo Yong-chol, sells arms for KOMID in Syria, where the UN has implicated North Korea in helping Assad make and use the chemical weapons that kill Syrian children. In North Korea, the MSS “engages in torture and inhumane treatment of detainees during interrogation and in the country’s network of political prison camps,” including “beatings, forced starvation, sexual assault, forced abortions, and infanticide.”

The Propaganda and Agitation Department, which controls the heavily censored state media, earns money by renting equipment and office space to foreign news bureaus like the AP’s, and by collecting royalties from foreign news organizations for the use of its photographs and “news” reports. Since 2005, its agent who collected its royalties in South Korea has been the same man who is now the South Korean President’s Chief of Staff.

North Korea’s IT industry, which operates in Russia, China, and elsewhere, finances the state’s WMD programs through bank fraud; attacks banks, newspapers, and nuclear power plants in South Korea; and hacks film studios and government agency websites in the United States. One IT company, China Silver Star, runs several teams of developers in both countries and “is associated with” the MID. The Korea Computer Center earns foreign currency for the MID at locations in Germany, China, Syria, India, and the Middle East. North Korea’s intelligence services train and employ programmers, send them abroad to earn money from clients around the world, and also use two front companies, Korea Expo Joint Venture and Chosun Expo (originally a North-South joint venture), to hack into banks to steal money, and to hack into our movie studios. As with other North Korean workers abroad, the programmers keep very little of their own salaries and hand the bulk of their pay over to the government.

Nor should we overlook the appalling labor conditions North Korea uses to enrich itself by exploiting its enslaved people. Camp 15, the infamous political prison camp at Yodok, contains a small gold mine. Camps 14 and 18 mine coal, as did the former Camp 22. Camp 12 at Cheongo-ri mines copper. Even North Korean miners who are not (legally speaking) prisoners often still labor in “slave-like conditions,” which should not surprise us to hear about a state that enslaves more people than any other. Many of Pyongyang’s overseas business operations also rely on slave labor, by which workers are sent overseas to perform long hours of grueling labor, are isolated and watched constantly by minders, endure “meager food rations” and “poor living conditions,” and eventually see most of their wages confiscated by the state.

By now, a few of you will want to argue that I’m taking the State Department’s word for how bad these working conditions really are. Fine, then. Explain why a construction worker in Vladivostok set himself on fire and jumped off a building in 2016. Or why a group of between six and ten construction workers in St. Petersburg fled en masse that year. Or why 40 of them around the world died from various causes, including disease, suicide, or accidents, in 2016 alone. Or why the Siberian logging camps where North Korean loggers work store the frozen bodies of the dead until they can be shipped home in bulk. Or how it could have happened last May that five construction workers in the Russian city of Ufa, who were living in shipping containers heated with open buckets of burning coal, died of carbon monoxide poisoning. Or why a worker who escaped from a Polish shipyard is suing his former employer for enslaving him. Just this week, it emerged that another worker in Russia tried to flee and was caught and sent back to North Korea, where he’ll probably be sent to the gulag or shot. And of course, there is the example of the 12 young women who fled from a North Korean restaurant in Ningpo, China.

North Korea’s use of slave labor is also closely linked to its proliferation. Rungrado Trading Company sells missile parts to Egypt and rents North Korean slave laborers out to Polish shipyards and construction companies. Mansudae Overseas Projects Architectural and Technical Services built an arms factory in Namibia; working with a second front company, Qingdao Construction, it helps pay for the MID’s missile programs with money earned by building grandiose statues and political monuments in Africa with slave labor. Where is the evidence that the employers of this labor have demanded improvements in worker rights or safety? On what evidence should we believe that this form of engagement is really making North Korea a more humane place?

This is not an exhaustive list, of course. Pyongyang also imports luxury goods from Singapore, using banks that have been designated for arms dealing and proliferation financing. Its embassy in Turkey also imports luxury goods. That North Korea’s government ministries self-finance and self-procure through their own trading companies and illicit businesses abroad reflects what we’ve long known about the operations of its embassies. For years, these embassies have self-financed by selling drugs, endangered wildlife products, counterfeit cigarettes, and counterfeit currency.

This is not to argue that all of Pyongyang’s foreign trade is for proliferation or other illicit activities. Justice Department documents show that some of North Korea’s trade was for non-sanctioned items, like sugar and urea, which can be used to make either fertilizer or explosives. Those transactions were still illicit because they laundered money through banks that were blocked for proliferation financing. Pyongyang’s labor exports are now sanctioned, but construction work (other than for statues) and restaurants aren’t sanctioned activities, per se. The key point to understand is that this is how money laundering always works. By co-mingling the proceeds of “legitimate” or malum prohibitum activities with the proceeds of malum in se crimes, money laundering obscures the origin of the whole, co-mingled sum. That’s why U.S. law treats that entire co-mingled sum as subject to forfeiture, except where the illicit portion is so small as to suggest disproportionality under the Eighth Amendment (a moot point, given that North Korea has never entered an appearance in any of the dozens of civil and criminal cases against it in U.S. courts).

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In the early 1980s, most China experts hypothesized that it was in the shared interests of Americans and Chinese to embrace Deng Xiaoping’s embrace of capitalism. Many China “experts” have recently begun to confess error; too many North Korea “experts” still refuse to. Capitalism’s Chinese characteristics did not include political reform, but did include heavier censorship, ethnic cleansing in Tibet and Xinjiang, the repression of the Catholic Church and the Falun Gong, and expansionist hegemony in the South China Sea. Despite all the unfulfilled predictions of engagement advocates, Pyongyang has not credibly committed itself to disarmament or real reform. The inexplicably influential illogic of the Sunshine hypothesis must accept its rightful share of the blame for this. And until it does, Pyongyang will use our money to threaten peace, finance proliferation, harm the integrity of the financial system, and thus harm commerce everywhere else. It will use our money to censor and repress at home and abroad, to suppress the rise of a true market economy in North Korea, and to enforce the poverty and hunger of North Korea’s underprivileged. All of these things are directly contrary to our interests, and to the stated goals of the Sunshine Policy.

As long as Pyongyang can afford to pursue its byungjin policy of simultaneous profiteering and nuclearization, it will defer disarmament and real reform, and continue to exploit, threaten, and destroy innocent life to advance its political goals. That engagers lost sight of the ethical principles on which engagement should have been conditioned may be the greatest damage unconditional engagement has done. It taught us to overlook Pyongyang’s terrorism and slavery abroad, and its repression, starvation, and censorship at home. Engagement has not changed North Korea for the better. In North Korea, Kim Il-sung built a laboratory for highly refined human evil. His son and grandson made it a laboratory for how highly refined human evil uses our greed, or our best intentions, and the lure of a false peace to corrupt us.

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Photo credit: Choson Exchange