Page 2 of 2 North Korea's golden path to
security By Bertil Lintner
the late North Korean dictator, Kim
Il-sung. The report came from a former Marcos
aide, and Munhwa Ilbo carried a copy of the
bank-account certificate on its front page. The
alleged gold bars were part of what a Japanese
army general had looted from Asia during World War
II, Munhwa Ilbo claimed.
That report was
never independently confirmed, but it nevertheless
reflects the mystique and speculation that still
surround North Korea's gold industry - and how
little the outside world actually
knows about it.
Financial pressures When the US
took action against Banco Delta Asia in Macau in
September 2005, labeling it a "primary
money-laundering concern" for North Korean funds,
very little evidence to substantiate the charges
was ever produced. North Korea lost $24 million
when the accounts it held with the bank in the
name of a front company, Zokwang Trading, were
frozen. Zokwang, which had been operating in Macau
for decades, also closed its office and relocated
to Zhuhai province across the border in China
proper.
The action against Banco Delta
Asia, a privately owned bank that the Macau
government later had to prop up to prevent it from
collapsing, was the second move against North
Korea's assets abroad. In a much less publicized
action, North Korea's only bank located in a
foreign country - the Golden Star Bank in Vienna -
was forced to suspend its operations in June 2004.
The Golden Star was 100% owned by the Korea
Daesong Bank, a state enterprise headquartered in
Pyongyang, and was allowed to set up a branch in
the Austrian capital in 1982.
For more
than two decades, Austrian police kept a close eye
on the bank, but there was no law that forbade the
North Koreans from operating a bank in the
country. Nevertheless, Austria's police
intelligence department stated in a 1997 report:
"This bank [Golden Star] has been mentioned
repeatedly in connection with everything from
money-laundering and distribution of fake currency
notes to involvement in the illegal trade in
radioactive material."
Eventually the
international pressure to close the bank became
too strong. Sources in Vienna believe the US
played an important behind-the-scenes role in
finally shuttering Golden Star's modest office on
12 Kaiserstrasse in the Austrian capital. Until
then, Vienna had been North Korea's center for
financial transactions in Europe and the Middle
East. Visitors to North Korea have noted that euro
coins in circulation in the country - the US
dollar is not welcome in Pyongyang - invariably
came from Austria. (Euro notes are the same in all
European Union countries, but coins designate
individual member countries.)
Last
October, in response to Pyongyang's nuclear tests,
Japan froze a dollar-denominated account that
North Korea's Tanchon Commercial Bank held with an
unnamed Japanese bank. The account had a balance
of $1,000 and had not been active for nearly a
decade, so the move was mainly symbolic: to
demonstrate to North Korea that it cannot use
banks in Japan for any deposits, big or small.
So it is hardly surprising that North
Korea is looking for new ways to manage and
maintain its international business interests and
for new partners when it is increasingly locked
out of most foreign countries. That is where
Thailand apparently comes into the picture.
In 2004, trade between Thailand and North
Korea for the first time overtook trade between
Japan and North Korea. Previously, a string of
North Korean-controlled front companies, managed
by the Chosen Soren, or the Pyongyang General
Association of Korean Residents in Japan, had
supplied North Korea with computers, electronic
goods and other vital items.
In 2003,
North Korea's total trade volume to Japan was just
over $265 million and fell even lower in 2004. At
the same time, trade between Thailand and North
Korea rose to more than $331 million in 2004.
Two-way trade between Thailand and North Korea
totaled $328 million in 2005, with Thai exports to
North Korea amounting to $207 million and North
Korean imports to Thailand totaling $121 million.
During January-November 2006 - the latest
statistics available from the Thai Customs
Department - trade totaled about $345 million,
with Thai exports accounting for $200 million and
North Korean imports $145 million. Thai imports of
gold and silver have pushed those trade figures
higher.
North Korea's trade with Thailand
grew mainly under the previous government of
Thaksin Shinawatra, who at one point proposed
signing a free-trade agreement between the two
countries. In August 2005, Thaksin was formally
invited by Kim Jong-il to visit Pyongyang. The
visit never materialized, and since Thaksin was
ousted last year in a military coup, the future of
Thai-North Korean relations is very much in doubt.
But gold and silver are highly fungible
and North Korea apparently has lots of the
commodities. It appears Kim Jong-il has for now
found at least one golden path around the
international sanctions imposed against his
regime's nuclear tests.
Bertil
Lintner is a former correspondent with the Far
Eastern Economic Review and the author of
Great Leader, Dear Leader: Demystifying North
Korea under the Kim Clan. He is currently a
writer with Asia-Pacific Media Services.
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