Desperate Times Require Desperate Measures



My colleague Steph Haggard has been writing most of the posts recently while I focused on some other professional obligations. So I thought that it might be a nice gesture to write a post that would make him happy. And while Steph is not one of those guys on the street corner with a sign saying “The End Is Nigh!” careful readers of this blog may have discerned that his assessment of North Korea’s economic distress is greater than mine. So, four stories that could be interpreted as signaling economic distress, with the usual caveat: don’t believe everything you read in the newspaper.

Fishing: This story is actually sort of sad. North Korea’s fishing fleet is increasingly dilapidated and the job is getting increasingly dangerous. So, if this story is to be believed, North Korea has thrown in the towel: after an intelligence briefing, Rep. Lee Wan-young of the Saenuri party announced that North Korea had sold $30 million of fishing licenses to China. It was unclear the duration of the licenses, but assuming it was an annual fee, the payments would amount to more than one-quarter of the DPRK’s annual fish exports to China. Presumably the logic is that the Chinese vessels are more efficient than the North Korean ones, so might as well take the cash, even if it reduces the local fleet’s catch.

Economic logic does not apparently extend to squid fishing, however. The Daily NK reports that the 200-day speed battle campaign (or whatever it’s called) is interfering with squid fishing and making people’s lives difficult. The story is pretty simple: squid fishing is more lucrative than factory work. But because of the 200-day speed battle campaign, people are under pressure to show up for work. So the bribe price to get off of work has gone up. And it’s not just the workers: according to the story by Cho Song Min, students are having to pay ever larger bribes to professors to get out of class. They’ve even had to start borrowing the bribe money from the donju to get out of class and onto the squid fishing boats! And I thought I had it tough as a student.

"And if you can't make money or steal it, just print it."

Smuggling endangered species: back in the 1990s, North Korea was formally cited by CITES (the Conventional on the Trade in Endangered Species) for smuggling items banned under the treaty.  A report written by Julian Rademeyer for the Global Initiative Against Transnational Crime documents 29 instances of North Korean involvement in rhino horn smuggling in Southern Africa over a 30-year period.  The most recent case was last year in Mozambique, so this does not appear to be a thing of the past. Most of the cases involve North Korean diplomats, or more precisely, North Koreans with diplomatic status.

Cybercrime: while rhino horn smuggling has been around for a while, cybercrime is of more recent vintage. A former senior researcher at the Korean National Police University’s Police Science Unit, Yoo Dong-ryol, now running the Korea Institute for Liberal Democracy says North Korea is generating more than $800 million annually through cybercrime, not a huge sum as cybercrime goes, but if accurate, a significant boost to the North Korean balance of payments, and a lot more lucrative than fishing. The method is really ingenious. First, create some malware that can be used to raid accounts. Then embed it in gambling software and recruit some third party nationals to open up gambling sites. The gambler goes onto the site, the malware infects the user’s computer and off you go to the bank: you make money off selling the software (and possibly running the site) AND you make money through the malware! According to Yoo, North Korea has set up such operations in Cambodia and South Korea.

(In a day or two I am going to release my updated medals forecasts for the Rio Olympics. I wonder what kind of action I can get on the over/under for the South Korean medal count?)

And if you can't make money or steal it, just print it. 

Counterfeiting: New reports have emerged of North Koreans counterfeiting US dollars and Chinese RMB, with fake currencies used to pay for Chinese products. At a conference last month in Seoul, North Korean refugees made a variety of claims of personal knowledge of the counterfeiting business. One, Kang Myung-do, now a professor at Kyungmin University, claimed that organized crime syndicates in Hong Kong and Macau were paying half of face value for the fakes. Like illegal drugs, the distribution mechanism for counterfeit currencies drives a substantial wedge between face and “wholesale” value of the currencies, and 50 percent revenue off the face value strikes me as a bit high. But who knows: my experience with counterfeiting is limited to watching To Live and Die in LA on video.

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