Fog
lifts on Myanmar-North Korea
barter By Bertil Lintner
BANGKOK - With the Middle East and North
Africa in turmoil, North Korea risks losing some
of its oldest and most trusted customers for
military hardware. Pyongyang has over the years
sold missiles and missile technology to Egypt,
Libya, Yemen, the United Arab Emirates, Syria and
Iran, representing an important source of export
earnings for the reclusive regime. The growing
uncertainty among those trade partners could
explain why North Korea is now cementing ties with
a client much closer to home: military-run
Myanmar.
In April 2007, North Korea and
Myanmar resumed diplomatic relations. Those ties
were after North Korean agents planted a bomb in
the then capital of Yangon in October 1983,
killing 18 high-ranking South Korean officials who
were on a visit to the
country. Only days after the
restoration of diplomatic ties, a North Korean
freighter, the MV Kang Nam I, docked at
Thilawa port, 30 kilometers south of Yangon.
Officials claimed at the time that the
ship docked to seek shelter from a storm. However,
two local reporters working for a Japanese news
agency were turned back and briefly detained when
they went to the port to investigate, indicating
that there could have been other, more secret
reasons for the Kang Nam I's arrival.
The same ship was put on global radar in
June 2009 when it was pursued by the USS John S
McCain and then reversed course. It was
believed that it was on its way back to Myanmar
with more unspecified cargo. Military observers
tied the Kang Nam 1 incidents to the
arrival of another North Korean ship, MV Bong
Hoafan, at a Myanmar port in November 2006
before the resumption of diplomatic relations.
Curiously, it was also reported to have been
"forced" to seek shelter at a Myanmar port because
of "adverse weather conditions".
An Asia
Times Online investigation has found that those
were not isolated incidents. Shipping records from
Myanmar show that North Korean ships have been
docking regularly at Thilawa and Yangon ports for
almost a decade. Even the ill-fated Kang Nam
1 had docked in Myanmar long before the 2007
and 2009 incidents. The ship made its first voyage
to Myanmar in February 2002, carrying what was
declared as "general cargo," according to the
shipping records.
North Korean shipments
are almost invariably specified as "general goods"
and sometimes "concrete", but both in and outgoing
cargo is usually handled by Myanmar's Ministry of
Heavy Industry 2, which supervises the country's
defense industries, the armed forces' Directorate
of Procurement, and the military's own holding
company, the Union of Myanmar Economic Holdings
(UMEH).
When the MV Bochon, another
North Korean ship, arrived at Thilawa in October
2002, the Myanmar military's high command sent a
document marked "top secret" to the port
authorities, requesting them to clear the entire
docking area for "security reasons". They were
also advised, according to the shipping records,
that some "important cargo" would be offloaded
within 36 hours.
When the MV Chong
Gen approached Thilawa on April 12, 2010, it
asked for permission to fly a Myanmar flag instead
of its North Korean one, according to the shipping
records. The captain also requested a Myanmar SMC
card (smart media card) for a mobile phone, along
with coastal charts. These were odd requests for a
ship that was officially carrying 2,900 tons of
cement and 2,105 tons of "general goods" from the
North Korean port of Nampo.
Bizzare
barter Indeed, the requests made by North
Korean ships traveling to Myanmar have often been
outright bizarre. MV Du Man Gang appears to
be one of the most regular North Korean visitors
at Thilawa. On one of its many trips to Myanmar,
in July 2009 it asked for 150 crates of Myanmar
brandy. In March 2010, when another North Korean
ship, the MV Kan Baek San, arrived in
Myanmar, the North Korean ambassador asked for an
unspecified quantity of Myanmar vodka to be sent
to the ship, according to the shipping records.
The involvement of North Korean diplomats
in these shipments is otherwise more convoluted.
In September 2009, the MV Sam Il Po docked
at a smaller terminal in Yangon and both the North
Korean ambassador Kim Sok Chol and defense attach้
Kim Kwang Chol were present to inspect the cargo
along with Lt Col Thein Toe from the Myanmar
military. The unspecified cargo was received by
UMEH, which in return supplied 1,500 tons of rice
which was taken back to North Korea.
That
was not the only incident when North Korean
freighters returned with Myanmar rice. The MV
So Hung arrived in November 2008 with 295 tons
of material for the Ministry of Defense and left
with 500 tons of rice. When the MV Du Man
Gang docked in July 2009 it left with not only
brandy but also 8,000 tons of rice. In June 2010,
the MV An San arrived with 7,022 tons of
what was alleged to be "concrete" and left in July
with 7,000 tons of rice.
All this seems to
confirm what diplomatic observers have long
suspected: that Myanmar and North Korea, two
countries with limited access to bank and other
international financial trade facilities, are
engaged in barter trade. Myanmar's ruling generals
want more weapons but often don't have the foreign
funds handy to pay for them - or at least they
don't want such transactions to show up in their
bank records. North Korea, meanwhile, is starved
for food and likewise lacks the finances to pay
for imports.
When money is involved in
North Korea-Myanmar trade, transactions are always
done in cash and thus untraceable. Like all other
ships, North Korean ones have to pay port fees in
Myanmar. The MV Du Man Gang, for instance,
asked to pay US$30,994 in cash rather than make a
bank transfer. Other ships have made similar
requests which has led to speculation about the
kind of currency the North Koreans, notorious for
counterfeiting US dollars, may be using.
Large quantities of counterfeit US notes
have recently shown up in areas around Myanmar. In
July and August 2009, a customer tried to change
U$10,000 in fake notes at the State Bank of
India's main office in Imphal, Manipur. The fake
bills were all of the US$100 denomination and of
excellent quality, according to sources. It was
the first such incident in Manipur. Although it is
not clear whether the bogus notes were printed in
North Korea, Imphal is located just over 100
kilometers from Moreh, an Indian town opposite
Myanmar's Tamu where a virtually unregulated
border trade is booming.
Trade between
North Korea and Myanmar is also apparently being
done through front companies. In June 2010, the
North Korean freighter MV Ryu Gong arrived
with 12,838 tons of what was also described as
"cement". While the shipment was handled by the
Ministry of Heavy Industry 2, the stated recipient
was a little-known company known as Shwe Me, or
"black gold" in Myanmar. Port documents show
that the company has nearly a million US dollars
in assets but what it actually intended to do with
all that cement is unclear. Just as puzzling is
the involvement of Singapore-based shipping
companies, which handle most of the cargo's
logistics and operate under innocuous sounding
names including words like "maritime" and
"services". One of the companies has a distinct
Korean name but is actually based in Singapore.
Port records point to a brisk trade
between North Korea and Myanmar, all of which is
handled by Myanmar's military rather than
civilian-owned private companies. In August last
year, then prime minister and now president Thein
Sein visited Pyongyang. According to the official
Korea Central News Agency, he said that "the
government of Myanmar will continue to strive for
strengthening and development of the friendly and
cooperative relations between the two countries."
With those intentions publicly
well-stated, Myanmar may well be on its way in
overtaking Egypt, Libya and other traditional
military trading partners in the Middle East and
North Africa as North Korea's main market for its
military hardware.
Bertil
Lintner is a former correspondent with the Far
Eastern Economic Review and the author of several
books on Myanmar. He is currently a writer with
Asia Pacific Media Services.
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