MUST READ: NYT on NK Counterfeiting
The New York Times has a very extensive article on North Korea’s counterfeiting operations:
By 1984, as North Korea’s planned economy began to fall apart, Kim Jong Il, who by that time was effectively running much of the government, issued another directive, according to the North Korean specialist, who told me he has obtained a copy of the document. It explained that “producing and using counterfeit U.S. dollars” was a means, in part, for “overcoming economic crisis. The economic crisis was twofold: not only the worsening conditions among the general population but also a growing financial discontent among the regime’s elite, who had come to expect certain perquisites of power. Counterfeiting offered the promise of raising hard currency to buy the elite the luxury items that they had come to expect: foreign-made cars, trips for their children, fine wine and cognac.
….Yet Kim Jong Il, defying all expectations, managed to cling to power.
“How this was happening was perplexing, given the huge trade gap, even with adjustments for aid flowing into the country,” [David] Asher [former head of the North Korea Advisory Group] recalled. “Something just didn’t add up. It didn’t account for why Kim was driving around in brand new Mercedes-Benzes or handing out Rolexes at parties and purchasing truly large quantities of cognac.
That’s what I’m talking about — attacking the “palace economy” so that the elite suddenly finds that its basic needs are going unmet. My hope is that a sudden shock would force the regime to triage large enough numbers of people out of the circle of privilege that they’d rebel and destabilize the regime. If in fact we’ve already cut off 40% of the regime’s foreign exchange, it would seem we have reasonable prospects for success (on top of everything else, we’re about to change the printing plates again).
We also seem to know a lot about how the notes are printed:
Today, on Changgwang Street in Pyongyang, the capital of North Korea, there is a barricaded compound of government buildings. Judging from satellite photos, these are unremarkable, rectangular structures that suggest no special purpose. Yet according to a North Korean specialist based in Seoul whom I spoke with recently, and who has interviewed many high-ranking North Korean defectors, including Hwang Jang Yop and Kim Duk Hong, these buildings are the home of Office 39, a government bureau devoted to raising hard currency for Kim Jong Il. (The specialist was granted anonymity because of the sensitivity of relations between North and South Korea.)
….[T]he regime obtained Swiss-made intaglio printing presses and installed them in a building called Printing House 62, part of the national-mint complex in Pyongsong, a city outside Pyongyang, where a separate team of workers manufactures the supernotes.
We have indicted — even jailed — the leaders of other nations for racketeering before. We’ve also indicted other people for counterfeiting and conspiracy for dealing in North Korean supernotes. Foreign sovereign immunity doesn’t look especially good as a defense for a few reasons: first, the exception for states listed as sponsors of terrorism; second, the holding that such acts as drug trafficking are not immunized “official acts;” and third, the fact that Kim Jong Il, like Noriega before him, is the commander of the armed forces, but not officially the leader of his country (his dad’s corpse is). Nor is Kim Jong Il recognized as North Korea’s leader by the United States, which is a discretionary act on our part.
Hey, I’m just saying….