North Korea privatizing illicit economic activity

A growing black market economy in North Korea is increasingly allowing private citizens to engage in illicit activity that funnels hard currency to the regime, a US-based group said Tuesday. In a new report, the Committee for Human Rights in North Korea (HRNK) pointed to mounting evidence that Pyongyang's notorious monopoly on such activity is loosening. And while the activities are still benefiting the ruling elite, "these trends matter because they suggest a growing gap between state and society in North Korea," according to the Washington-based group. The reclusive regime has been involved in transnational criminal syndicates for four decades, operating networks that traffic narcotics and amphetamine-type stimulants, counterfeit currency, endangered species products and fake goods from cigarettes to brand name shoes, HRNK said. But by 2005, in part due to pressure by Western governments, regime-sponsored illicit operations had shifted to smaller-scale efforts that made less profits for those in power -- or at least less visible profits. "Much of the illicit activity in North Korea has become decentralized and partially privatized, operating in a hybrid space between public and private, in relationships where politically powerful people protect and benefit from the activities of those involved in illicit trade," said the report, compiled by Brookings Institution senior fellow Sheena Chestnut Greitens. HRNK co-chair Andrew Natsios, a former head of the US Agency for International Development, said a "criminal" market economy was taking shape and that the report was "very useful in understanding the perverse transformation of the country going on right now." The report also surveyed North Korea's hard currency income and pointed to eight major sources of cash for Pyongyang, including the official Kaesong industrial park, north of the demilitarized zone, in which South Korean businesses operate with northern labor. In addition to illicit activities like drugs and counterfeiting, trade -- both legal and black-market -- with neighbor China is another currency earner for Kim Jong-Un's regime, as is tourism, labor export, remittances from ethnic Koreans, the "informal taxation" of mobile phones, and arms sales.