How does North Korea finance a nuclear weapons program? | DW Documentary

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He has inherited the perfect pyramid scheme. Where all citizens in a whole country are included in the scheme.

👍︎︎ 7 👤︎︎ u/HelenEk7 📅︎︎ Jun 02 2021 đź—«︎ replies
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North Korea is like Game of Thrones but without the dragons. It’s an aristocratic society, and it’s capitalist. And everything is geared to make sure that there's as much cash for Kim as is possible. In capitalism, money is the lifeblood flowing through the veins. It's no different in North Korea. Bureau 39 is involved in everything that makes money for North Korea: Selling arms, smuggling of drugs, counterfeiting of US bills. This is about hundreds of millions of dollars a year. I, too, did everything. All we were told was ? Make dollars! North Korea. A pariah state largely isolated from the rest of the world. A dictatorship shrouded in mystery. Every day, the country's state-run media praise the heroic deeds of the Supreme Leader. Time seems to stand still here. In troop numbers, North Korea has the fourth largest army in the world. For three generations, the Kim family has ruled the country by divine right — and with an iron fist. North Korea's military arsenal is outdated — but contains nuclear weapons ? earning the country severe sanctions. How does the regime manage to survive? And how have the Kims amassed enough money to threaten the world with the most powerful weapon of all ?? On the other side of the world, in the Netherlands, a history professor is working on answers to these questions. Remco Breuker from the University of Leiden has been studying the enigmatic country and its rulers for years. He says our image of North Korea is mistaken. North Korea isn’t what it tells us it is. Just look how the country functions at the highest level. What’s the main goal of the government, of the regime I should say? It’s to make money. It’s to make cash for Kim. What intrigues me personally is how North Korea manages to make money. One of the questions we were stuck with is: where does the money go? How much money does North Korea make? For the leadership in Pyongyang, questions like these are dangerous. The North Korean regime sent a letter of indictment under my name to the Dutch government, charging me with three capital crimes. The worst of the three was the accusation that our research - my research because it was in my name - damaged the supreme dignity of the supreme leader. This sounds like a funny crime, right? Damaging the supreme dignity of somebody. In North Korea it carries the death penalty. A threat not to be taken lightly. Remco Breuker’s investigations threaten to disrupt North Korea’s sources of hard currency. The country's first nuclear bomb tests in 2006 prompted its international isolation. Without legal sources of income, the regime took to raising money illegally. New York. The seat of the United Nations. It's here that the UN has imposed nine rounds of sanctions against North Korea — and also where its global activities are monitored by an international panel of experts. The group consists of eight members, including former intelligence, military and financial experts. For their own safety, they work away from the public eye. Only the coordinator, Hugh Griffiths, is willing to speak on camera. The sanctions have a tremendous impact on one level on North Korea. It means that their economy can’t flourish in a way it would if they were able to sell their largest foreign currency earning commodities legitimately. So, they can’t ship coal legitimately; they can’t ship iron ore legitimately; they can’t ship zinc legitimately. Foreign currency is very important to any country, no matter how autarkic its economy is. You need foreign currency to buy the goods that are essential for your population or your elite group. So foreign currency is pretty essential to North Korea’s survival. The question is: what’s more important to the North Korean leadership — developing their nuclear and ballistic missile program or seeing their economy flourish? The regime opted to go for the bomb. In 2005, it officially revealed that it had nuclear weapons — as protection, it said, against attacks from foreign powers — specifically, the United States. Pyongyang — home to the government, and to the country's elite. Shiny new apartment blocks line spotlessly clean showcase avenues. This is where Pyongyang’s upper class resides. The city is home to 3 million people — but only those who are considered loyal to the regime live here. Anyone wanting to enter the capital from the outside needs a permit. Seong Kyun-chul works at Pyongyang’s Economic Research Institute. He's authorized to talk to journalists - about the sanctions, for example. It’s impossible to sanction a country completely. Even now we trade and obtain foreign currency. Sanction us as much as you like. We will advance of our own accord. We will turn our competitiveness into a sword through our sacrifices — and we will progress bravely. The sanctions that have been put on North Korea are extremely strict. I mean, there's probably not been a country that has been sanctioned more diversely, more strictly. At the same time, they're no longer working. There is a huge problem with our North Korea policy and using sanctions to try and have the regime modify its behavior, because we're not sanctioning the one entity that earns most of this money that keeps it afloat financially, that keeps it alive. Many high-ranking defectors from North Korea talk about a secret government department that’s said to administer the regime’s secret funds. Kim Il-sung and his son Kim Jong-Il reportedly set it up in the late 1970s and equipped it with wide ranging powers. Its tasks: using clandestine hard- currency transactions to secure an independent power base for the Kims, while also raising money for the nuclear bomb ? and the leaders’ personal luxury. Its name: Office 39. Only 200 kilometers to the southeast: Seoul. South Korea’s hypermodern capital — and one of the ten most expensive cities in the world. Around 25 million people live in the metro area — about half the population of South Korea. Among them, most of the 30,000 people who managed to flee from North Korea to start a new and hopefully anonymous life in the megacity. Koh Young-hwan used to be a North Korean diplomat. He escaped in 1991. He went on to become deputy director of South Korea’s Institute for National Security Strategy, which employs North Korean defectors to gather valuable information. Few people know more about the Kim dynasty's workings. Legend has it that when Kim Jong-il came to power, he renamed the Finance Department of the Worker’s Party Central Committee. It was now called "Office 39", because it was located on floor 3 in room 9. Another story says that it was March 9 when Kim Jong-il issued an order to set up such a bureau. Either way: to this day, Office 39 is the department that collects and manages the Kim family's secret funds. Talk to any prominent North Korean exile and they all tell you that Bureau 39 is absolutely crucial in earning revenues for the North Korean regime. It’s absolutely vital. Take it away, everything collapses. Here in New York, the United Nations impose and monitor the sanctions against North Korea. An entity as important as Office 39 surely ought to be at the top of proscribed organizations. Office 39 is normally talked about by North Korean defectors. We don't really see Office 39 in our investigations. Instead, we're looking at the North Korean banks and the shell companies that traditionally operate overseas in third countries to generate foreign currency. And then that money is sent back to North Korea. Office 39 is never mentioned in official documentation. But its money-raising activities span the globe. Angkor Wat in Cambodia. A World Heritage site. Over two and a half million people visit the ancient Buddhist temple complex every year. Selfies for the tourists, hard currency for Cambodia. Tourism is by far the largest sector of the economy here. Angkor Wat’s operating company earned more than 100 million dollars in 2018. A lucrative business — and one that North Korea is cashing in on. Right next to the entrance to the temples is a museum that opened in 2015. At its heart is a 3D painting depicting the history of the Khmer Empire in monumental images. Throngs of tourists are guided through here every day. The painters are from North Korea. We had 63 painters. They took one year and four months to paint it. Who constructed the museum? Was it the Cambodians or the North Koreans as well? The North Koreans as well. The North Koreans constructed the museum. Circumventing UN sanctions, North Korea not only built the complex but also financed it. In return, Pyongyang pockets all the takings for the first ten years. After that, profits will be shared 50-50. The North Korean director didn't want to appear on camera. But he did tell us that the museum makes about 7 million dollars a year in entrance fees — a figure he expects to treble in the near future. In the evening, after the museum closes, the North Koreans throw another set of doors open for the tourists. With cameras not welcome inside the restaurant, we film in secret. Hello! Reservation? Yes, we made a reservation yesterday. The tables are almost always fully booked. Can we sit near the stage? No, reserved. The menu boasts North Korean specialties such as cold noodles and sea cucumber. The prices are surprisingly high by Cambodian standards, with main courses costing up to fifty dollars. The restaurant is especially popular among tourists from China and South Korea. Most of the young women who work here are art students from Pyongyang. They live and sleep above the restaurant — and in many cases are not allowed to leave the premises for years. Every evening at the same time, they change their outfits and get ready for the big show. There are 130 North Korean restaurants like this worldwide - three of them in Cambodia. They’re believed to make several million dollars a year. But the waitresses don't get paid a cent. The big bucks — western hard currency - flow directly into the regime's secret coffers. Just one example of North Korea's systematic exploitation of its own population. North Korean workers are deployed around the world. Even in the European Union — such as here in Poland. We found North Korean work brigades on a building site. They were promised good wages and decent working conditions - only to be treated like slaves. In the evening, after a 12-hour shift, the workers are bussed back to their hostels. They’re monitored around the clock by North Korean agents. One of them, however, decided to talk to us. So no problem coming here on your own? No, on Sundays we can go out alone. What would happen if you got caught? They'd accuse me of this and that, and I'd be interrogated by North Korean State Security here in Poland. If they were not satisfied, they'd send me back to Pyongyang for further interrogation. And I might even get put in prison. So you have a job here? I came here to make money. But no matter how hard I work, I can't make any money. The working conditions are miserable. I have no freedom. We have to spend our lives crammed together in groups. You're probably aware that they keep almost all of our wages. We only get a fraction. I'm in my thirties, and my wife and daughter are at home. I earn next to nothing, but I have to do this for them. I have no choice. Modern-day slavery ? as North Korea sends well- trained workers to Poland to toil away in shipyards and on construction sites. The workers' families are effectively held hostage in North Korea. If a worker flees, their relatives back home will often face severe punishment. The workers are paid just 90 euros a month — the rest goes to the regime, as it cashes in for Kim. Largely unnoticed by the international community, North Korea has sent laborers all over the world — believed to number up to 150,000 in all. About 40,000 of them are in Russia, and up to 100,000 in China. North Koreans also work in Kuwait, Malaysia, Cambodia, Mongolia, Oman, Qatar, the United Arab Emirates and in a number of African countries. The UN has become aware of this income for Pyongyang — and is determined to drain the sources. Experts estimate that the regime makes up to 1 billion dollars a year this way. How- and wherever money is earned, it ends up at Office 39. It conducts money transactions with absolute authority. Defectors say the office is directly controlled by Kim Jong-un, and manages the leadership’s secret accounts: what's called the "palace economy." But where exactly in Pyongyang is Office 39 located? And just how many millions flow into its coffers? When we ask the North Korean official, he and his interpreter feign ignorance. I don't understand the question, but perhaps you know more. Have you ever heard of “Floor 39”? ? 39th floor? Are we talking about high-rises? Office 39 is one of the best-kept secrets of the Kim regime. Only North Koreans who’ve escaped are able to talk about it openly. Seoul. At a secret location, we meet a man who used to work for the office. He was based in China. His task: Smuggling foreign currency. Then he escaped. His position was so important that the North Korean regime has threatened to kill him. Afraid of being identified, he had plastic surgery to alter his face. And even then, he’s only willing to be filmed from behind. North Korea ostensibly has a planned economy. This means that the state takes care of supplying the population with food and other goods. But in North Korea this system has been largely abandoned. The supply of food and goods for daily use has as such collapsed. As a result, the majority of the North Korean population has to be self-sufficient — and resort to the black market. To understand Office 39 and the capitalist structures in place in North Korea, it’s important to understand its history. In 1991 the world's biggest communist country, the Soviet Union, was dissolved — and North Korea lost one of its most important trading partners. While many formerly communist states now switched to a market economy, the Kims continued to further isolate themselves. In 1994 - the year Kim Jong-Il succeeded his late father — a devastating famine descended on the country. During the great famine in the mid-90s many North Koreans starved to death. The public distribution system collapsed. Witnesses described seeing mountains of dead bodies in the streets. Anywhere between one and three million North Koreans died. So, what happened is that North Koreans now knew that if they wanted to survive, they could no longer trust or rely on the state. And it was the rural population, in particular, who had to be self-sufficient. Black markets started to emerge — known as "Jangmadang". Today, there are an unknown number of these markets throughout the country. 400 of them are even officially licensed, providing tax income for the regime. Most of the buying, selling and bartering here involves food and goods from China. All manner of currencies are accepted, especially U-S dollars and Chinese yuan. China and North Korea share a border that is more than a thousand kilometers long. But over 80 percent of that border is not even secured with barbed wire. People in the border region are subject to little control by the state — and they enjoy substantial trade with China. This trade is the basis for the black market in North Korea. The biggest beneficiaries from the informal economy are government officials in Pyongyang. Because of their loyalty, although mainly out of financial self-interest, the regime permits them to trade. And over the years, they’ve become wealthy. They sell luxury goods, smuggle raw materials and invest in real estate. They're called Donju — "masters of money" — and enjoy the luxury and freedom afforded to them by the regime. But that loyalty comes at a price. Many Donju hold senior government positions, including at Office 39. Like this man, who's been living in hiding in Seoul since he fled the north. While growing up in the 90s, he capitalist structures. Before his escape, he was responsible for exports — likely the office's most profitable business. Fearing reprisals from the regime, he likewise does not wish to be recognized. My position and rank within the organization was “management employee”. I was in charge of foreign trade. Were there departments that did trade with Europe? Sure — a lot of them, in fact. Hamburg, Germany. Until a few years ago, the North Korean state insurance company KNIC had a branch in an innocuous-looking apartment block in the city. From here, six North Korean officials made deals with major European insurers. Office 39 has a department for foreign insurance policies. This department conducts insurance fraud. For example: they used to re-insure Russian MI-8 helicopters that were nearing the end of their operational lives. In concrete terms, this department signed contracts with large European insurance firms. Initially, they would pay the insurance premiums of, say, five thousand dollars a month. But eventually, the helicopters were blown up or set on fire to collect the insurance sum. And that amounted to maybe two million dollars. Just one case among many. In 2015, the European Union added the KNIC to its sanctions list — accusing the company of co-financing Pyongyang's nuclear weapons program via Office 39. Experts estimate that wrecked helicopters and similar tricks helped the Kim regime rake in several hundred million dollars. North Korea uses its global network of embassies to ferry money back to Pyongyang. Government officials enjoying diplomatic immunity transport the money in cash in their flight baggage — a simple but efficient way of ensuring the funds keep on flowing. The North Korean embassies have a diplomatic function, but that's often mainly ceremonial. But their true function is financial. It's also illegal, mainly. North Korean diplomats are basically cash carriers for Kim. They are entrepreneurs, they are businessmen. They may be drug lords, they may be weapons smugglers, but they carry a diplomatic passport. So you can’t touch them. Providing military supplies, training, and much of that has been done through North Korea's embassies, particularly in Africa and the Middle East. So out of all the countries in the Middle East, currently the Syrian Arab Republic has the greatest levels of prohibited cooperation with North Korean military entities. Hafiz al-Assad, the father of the current Syrian dictator, had been on friendly terms with then North Korean leader Kim Il-sung since the 1960s. Pyongyang supplied Syria with military personnel as well as weapons and ammunition in its wars against Israel. An important source of income — which exists to this day. Using tactics resembling those of 18th century pirates, Office 39 operates cargo ships under false flags and fake names. According to the UN, this has enabled North Korea to send large quantities of weapons and military equipment to Syria. Between 2012 and 2017, it says, at least 40 shipments with prohibited cargo from North Korea passed through the Suez Canal. But then, the UN managed to have one of the deliveries intercepted. So, we found something, cargo on its way to Syria. These were acid resistant tiles and valves, which could be used in chemical weapons development. But also, missile fuel is highly corrosive. And such tiles could be used for ballistic missile programs as well. The bill of lading clearly gave us an address in Syria, an established front company for Syria's Scientific Studies Research Center, the SSRC, which is responsible for both Syria's ballistic missile and chemical weapons development program. The chemical weapons produced in the SSRC’s labs have been used by Syrian dictator Bashar al-Assad against his own people for years. One third of all buildings in Syria have been destroyed. The regime in Damascus has been planning for the time after the civil war ends — and hopes to receive billions of dollars from international donors for the country's reconstruction. The armies of workers required are to come from North Korea — as formally agreed by the two countries at a meeting in June 2019 ? Here, too, Pyongyang is looking forward to a lucrative business. The money that's earned by Office 39 goes straight into the coffers of the leadership. It is used on one hand to provide luxury items; it is used to pay for the Mercedes Benz cars that somehow found their way into North Korea despite the sanctions. But it is also used, and this is probably more important, to deliver the best hackers you can train. As early as the mid-80s Kim Jong-Il started training the most talented children in terms of mathematical abilities and programming abilities to become cyber hackers. They are also good money earners. Ransomware, like the Wannacry virus for example, is considered to come from the North Koreans. It is the biggest cyberattack the world has ever seen. Hundreds of thousands of computers around the world in about 150 countries rendered useless. Now the US government is publicly placing the blame for that cyber-assault, uniquely dubbed “Wannacry”, squarely on Kim Jong-un's army of hackers. British intelligence officials and Microsoft had previously concluded that groups associated with the North Korean regime were responsible for the Wannacry hack. In Seoul, IT specialists have North Korean hackers squarely in their sights. Simon Choi works as a consultant for South Korean intelligence agencies. We've been following the activities of North Korean hackers for ten years now. In the past, they’ve been primarily attacking the South Korean Ministry of Defense and other government agencies. But since around 2015, it's become clear that their interest has shifted to international banks. North Korea has limited access to the internet — with only one thousand IP addresses available to the country. Many are used by North Korean computer specialists to attack other countries. Experts say that between 600 and 1,300 hackers are at work for the regime. An estimated two billion dollars may have been diverted by young, highly trained North Korean hackers to fund the country's nuclear weapons program. North Korea is changing. An impoverished communist state is now a country with a highly flexible shadow economy. And as with commercial companies, all that matters are American dollars — cash for Kim. The workers here are now slaving away not for the revolution, but for the wealth of their leader and his cronies — as the gap between rich and poor widens. While the population in Pyongyang enjoy constant growth in prosperity, the UN says that 40% of the rural population still suffer from malnutrition. In order to control its people, the regime employs old-school authoritarian rule. North Korea's underground economy, on the other hand, is 21st Century capitalist. Dandong, China. North Korea's gateway to the world — and a symbol of how futile the UN's efforts have been to dry up Kim's sources of cash. The “Sino-Korean Friendship Bridge” across the Yalu river has connected the two nations since 1943. Every day, trucks queue up in front of the customs checkpoint. It brings together smugglers, traders, and also the agents and entrepreneurs of Office 39 — all of them hoping to make a quick deal here. China is by far North Korea's most important trading partner. According to economics experts, it accounts for 90 percent of North Korea's export trade. Thousands of North Korean women are believed to work for textile manufacturers in the Dandong region. Posing as businessmen and equipped with hidden cameras we film inside one such factory. Chinese textile companies hire North Koreans because their wages are lower than those of the domestic workforce. These seamstresses work day and night, and often sleep on the company premises. Many are effectively locked up there for years, far away from their families. Together with a team of labor lawyers, trade experts and data specialists, Remco Breuker has been investigating whether European brands work with Chinese companies that directly or indirectly employ North Koreans. We found out different things. One of the things we were actually hoping to establish was the use of North Korean workers in Chinese factories. But what we found, really to our surprise, is that, yes, we do have North Korean workers, working under slave like conditions in China, but more than that, Chinese factories outsource to North Korean factories in North Korea. We have managed to prove a significant amount of North Korean slave labor in the supply chain of some of the world’s leading clothing companies. Breuker's team took an especially close look at one Chinese textile company with the French name "Vent D'est" or "eastern wind". The firm's own website states that it “relies on low labour cost and abundant human resources". The list of customers reads like a who's who of international fashion brands. The Vent D'est website features this men's jacket — described as "Korean imported". The buttons bear the words: “Armani Jeans”. Using trade databases, Breuker's team analyzed Vent d'Est’s business dealings between 2013 and 2019. The databases use customs information, showing which goods are sent back and forth between firms in different countries. So, what happens is that China sends the material to make certain types of clothes to North Korea. One month later, they're shipped back in the same container. And then you have finished clothes. Those clothes are then shipped to, say, the Netherlands or to Germany or to America. And from there they are distributed to our stores. Between 2013 and December 2016, Vent d'Est sent around 10 million dollars’ worth of fabrics and raw materials to North Korea. During the same period, the company received finished garments worth almost 25 million dollars from North Korea. Customs classify textiles by so-called Harmonized System codes. A ladies' sweater, for example, will have a different HS Code than a pair of men's jeans. We take a look at HS Code 6201. It stands for men's anoraks and coats — including the Armani jacket on the website. Between 2013 and December 2016, Vent d'Est imported products with this code worth 12 million dollars from North Korea. The same code is also found with deliveries from Vent d'Est to Europe and the US. Among the customers: Diesel and Armani. Armani jackets that look exactly like the one on the Vent d'Est website can also be bought in Europe. This one costs 219 euros. It’s impossible to prove beyond doubt that garments like this one are made in North Korea. But at the same time: can it be ruled out? We asked the companies implicated to comment. Armani's response? "We confirm that Vent d’Est is one of our suppliers and as such is regularly subject to checks and inspections — the result of these checks being that no finished products are manufactured in North Korea. Like all our suppliers, it is also required to declare which subcontractors it uses and, where these are concerned, it is also the case that none are in North Korea." We also wrote to Vent d'Est. The company offered no explanation as to why and on what scale it trades with North Korea. One thing can be said for certain. Big-name fashion brands have their goods manufactured by a Chinese company that does business with North Korea — a country where workers have no rights. Where human life counts for little ? or nothing. And Breuker's investigation shows that this is far from an isolated case. Chinese firms use factories in North Korea to produce goods worth hundreds of millions of dollars. For years and years, we've heard testimonies from North Korean escapees who were in concentration camps that they been forced there to produce textiles for the export markets. For famous Western brands. And I think for the first time I've been able to corroborate that through an external source. So not through a testimony. In the same database, I've found the department, the bureaucratic department, that is responsible for managing the production of textiles for one of the concentration camps outside Pyongyang. It means that we not only buy clothes produced by forced laborers, maybe even slave laborers, we may even buy clothes in the Netherlands, in Germany, all through Europe, in America, that was made in concentration camps by people who will never see the light of day again. These are the kinds of camps that you don’t leave until you’re dead. That is just too horrific to put in words. And we are complicit. Hundreds of thousands of men and women secretly ensure the survival of the Pyongyang regime. Their futures are sacrificed for the luxurious lifestyles of the powers that be — and also for western consumerism and convenience. Kim Jong-un is perhaps not so much an unhinged dictator as a coolly calculating businessman who runs his country like a company. And Office 39 does plenty of business: with everything and everyone - including us.
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Channel: DW Documentary
Views: 2,335,356
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Keywords: Documentary, Documentaries, documentaries, DW documentary, full documentary, DW, documentary 2021, documentary, North Korea, Kim Jong Un, Office 39, Room 39, human trafficking, drug trafficking, counterfeit money, nuclear weapons, secret service
Id: ib9Z7lublQE
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Length: 42min 25sec (2545 seconds)
Published: Wed May 26 2021
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