Intensifying international sanctions are dealing a serious blow not only to the North Korean economy but also to the regime's ability to earn hard currency, according to U.S. intelligence.


One defector who used to work for a North Korean trading company overseas said, "I was asked to come to the U.S. Embassy last week and was interviewed by acting ambassador Marc Knapper and other U.S. officials about the regime's secret funding activities."


The defector, who claims to maintain contact with North Koreans working for the overseas offices of Room 39, which handles leader Kim Jong-un's private coffers, added, "Sanctions against North Korea have led to a sharp decline in annual earnings at the eight companies run by Room 39 and I was told that the regime's finances were hit hard."


He said one trading company that sends hard currency to Room 39 is struggling with deteriorating business, with its income being reduced to 1/10. Another company that operates ships said it now merely runs 10 of its entire fleet of 40.


Other trading companies run by the Workers Party and State Security Department are apparently facing similar problems. A large number of North Korean trading firms have been put up for sale.


The regime is propped up by money raised via various agencies, trading firms and diplomatic missions around the world. North Korean laborers abroad also remit cash to the regime. Some of it is siphoned off by the party, but most of it goes to Room 39 and buys expensive cars, yachts, liquor, luxury clothes and gourmet food for Kim and favored officials whose loyalty he buys, often with watches and jewelry. He would face massive difficulties ruling his country if that source of money dries up.


It was Kim's relentless push to conduct nuclear and missile tests that caused the flow of money to dry up. International sanctions intensified with each nuclear and missile test, and when China joined the sanctions it was a killer blow.


Another North Korean defector who worked for the North's trading company said, "Since late last year, Chinese police and security officials have been investigating and conducting tax probes of trading companies doing business with North Korea. Both North Korean and Chinese companies are punished so the cross-border trade has come to a halt." Beijing has also refused to extend the visas of North Korean workers in China and is no longer issuing fresh work permits.


Kim Kwang-jin at the Institute for National Security Strategy said, "If sanctions against North Korea continue until next year, the regime's money flow will completely dry up."


Kim Byung-yeon at Seoul National University agrees. "International sanctions dealt a primary blow to Kim Jong-un's foreign-currency revenues and appear to be spreading to other agencies and markets," he said. If sanctions continue, experts say market traders will also be hit hard. Although there are no signs yet of panic hoarding, the economic situation is worsening day by day.


"Due to an acute shortage of foreign-currency earnings, even wealthy North Koreans are facing difficulties, and the real estate and construction markets, which were spurred by them, have tanked," the defector said.
Read this article in Korean

go to the home page to the top