How North Korea works around sanctions
US and UN trade sanctions have failed to stem Pyongyang's money-making labor exports, where workers toil largely under the radar in China, Russia and beyond
While the United States and United Nations impose sanctions on North Korean trade, measures aimed at forcing the isolated nation to give up its nuclear and missile programs, there is one important money-spinning industry that keeps Pyongyang afloat: labor exports.
The US Countering America’s Adversaries through Sanctions Act (CAATSA), signed into law in August 2017 by President Donald Trump, theoretically imposes sanctions on all companies and individuals that employ North Korean workers. But that’s not stopping Pyongyang’s deliberate policy of exporting labor.
Of the estimated 100,000-200,000 North Koreans now working abroad, an estimated 80% are based in China and Russia, according to US-based think tank C4ADS, or Center for Advanced Defense Studies.
The figure has grown substantially since 2012, when an estimated 60,000-65,000 North Koreans were believed to be working overseas, according to C4ADS. The rise in labor exports points to their importance in keeping North Korea afloat as sanctions on other trade sectors pinch its foreign currency-earning exports.
C4ADS recently released a comprehensive report mapping North Korea’s labor exports, which estimates Pyongyang earns between US$1.2-US$2.3 billion annually from the trade. Most of their employers are not openly known, the report said.
In China, North Koreans are known to work on construction sites, in garment factories and state-run restaurants, while those in Russia were first employed in logging camps in Siberia but are now engaged in a wide range of industries across the country.
The issue has come to new light as the US imposes punitive measures against Chinese and Russian agencies, companies and individuals recently identified as helping North Korea to evade the trade sanctions.
Last week, the US Treasury Department announced sanctions against Russia’s port service agency and the China-based Dailan Sun Moon Star International Logistics Trading Co Ltd for aiding North Korean ships and selling alcohol and tobacco to Pyongyang in violation of American sanctions.
C4ADS estimates the number of countries that employ North Korean workers ranges between 16 to 60, underscoring the opacity and uncertainty surrounding Pyongyang’s deployment of workers abroad. But it is clear that North Koreans work in countries well beyond its immediate neighbors China and Russia.
For instance, following last year’s assassination of Kim Jong-nam, the estranged half-brother of North Korean leader Kim Jong-un, at Kuala Lumpur’s international airport, Malaysia sent back around 1,000 North Korean workers who few even knew were in the country.
Most of the North Koreans were employed in coal mines and construction sites in the Malaysian state of Sarawak on the island of Borneo. Reports at the time said they were employed in Malaysia under an official agreement reached between the two governments.
A defector-led outfit, the North Korea Strategy Center, had earlier claimed that 90% of the Malaysia-based workers’ wages were being paid directly to the North Korean government. It was unclear how much the workers actually received.
The Middle East is known to be another important destination for North Korean construction workers. Last September, however, Qatar and Kuwait announced that they would stop renewing the visas of thousands of North Koreans after pressure from the US and the imposition of new UN Security Council sanctions.
At the time, about 1,000 North Koreans were in Qatar and 3,000 in Kuwait. Most of them are expected to leave when their visas expire later this year.
Last December, Poland also decided to end its use of cheap North Korean labor in its shipbuilding industry. An estimated 500 North Koreans worked in Poland before the ban came into effect. In March this year, Singapore revoked all the work permits it extended to North Korean citizens.
It all shows that the US has had some success in pressuring certain countries to stop employing North Korean workers. But as long as China and Russia continue to employ large numbers of North Koreans, US sanctions are unlikely to have any significant impact on the amount Pyongyang earns from labor exports.
The exact terms and conditions under which North Koreans work in China and Russia is unclear. The US State Department’s Trafficking in Persons 2017 report describes labor camps in Siberia filled with North Korean workers toiling in “slave-like conditions” and that the money they earn goes more or less straight into Pyongyang’s coffers.
North Korea’s labor exports to Russia began on a large-scale in 1967, when then Soviet leader Leonid Brezhnev and then North Korean president Kim Il-sung reached an agreement to bring manpower to sparsely populated eastern areas where few Soviet citizens would be willing to work.
Those labor exports survived the collapse of the Soviet Union in 1991 and today there are an estimated 30,000 North Korean workers in Siberia and the Far Eastern Federal District of Russia.
North Korea expert Andrei Lankov painted a somewhat different picture in a June 2017 article for the Carnegie Moscow Center, in which he described conditions in the logging camps in Siberia as “far from idyllic” but also noted that the North Koreans there earned much more than they ever could at home.
Lankov wrote that North Koreans working in Russia have to surrender on average between US$500 and US$900 to the Pyongyang government per month, while keeping only US$150 to US$300, still significantly more than the US$50-70 they would earn if working in North Korea.
Conditions for North Koreans working in China are likely similar. The first large-scale influx of North Korean labor began in 2012, when the Chinese government agreed to accept 40,000 workers on “industrial training visas.”
Today, at least twice as many North Koreans are believed to be working in China, with or without visas. They are said to be favored by employers because they are disciplined, hard-working, never go on strikes, and accept wages well below the average in both China and Russia.
According to the C4ADS report, many of the workers in China are women employed either in the garment industry, in small-scale factories or as waitresses and entertainers in 83 North Korean restaurants scattered across 22 Chinese cities.
C4ADS estimates North Korean restaurants in China alone – there are many other similar eateries situated in South and Southeast Asia – generate as much as US$10 million per year.
The money is reportedly transported back to Pyongyang in bulk cash shipments over the border, meaning there are no bank transactions or other paper trails for sanctions enforcers to track.
The restaurants are known to be run by Office 39, a North Korean government bureau tasked with generating hard currency for the ruling elite as well as the country’s weapons of mass destruction programs.
Labor exports are thus a vital source of income for Pyongyang that have only been marginally slowed by CAATSA and UN sanctions. China and Russia both claim to uphold the trade-curbing measures, but as long as there is demand for low-paid North Korean workers, the largely unseen trade is likely to continue.