By Mike Nartker
Global Security Newswire

WASHINGTON — Since the late 1970s, North Korea has produced and trafficked millions of dollars worth of heroin and methamphetamines throughout Northeast Asia to gain badly needed hard currency to help fund its military, a high-ranking North Korean defector told a Senate Governmental Affairs subcommittee yesterday (see GSN, May 16).

Two North Korean defectors — a former high-ranking official and a missile engineer testifying under the alias Lee Bok Koo — appeared before the Financial Management, Budget and International Security Subcommittee.  They said North Korea has raised money through illicit export programs, which include trade in counterfeit currency and arms sales, as well as drug exports.  U.S. officials and experts told the committee that the funds gained through these illicit exports are channeled into Pyongyang’s military efforts, including its WMD programs.

“North Korea is essentially a criminal syndicate with nuclear bombs,” said subcommittee Chairman Peter Fitzgerald (R-Ill.).  “The role of a government is to protect its citizens from criminals.  But, in the case of North Korea, it appears the government is the criminal,” he said.

Every month, North Korea produces one ton each of heroin and methamphetamine, said the former high-ranking North Korean official, who testified behind a screen after entering the chamber wearing a black hood to protect his identity.  North Korea began its heroin production efforts in the late 1970s and stepped up its program in the late 1980s when a local province party committee established an experimental poppy farm near the town of Yonsah in the Hamkyung Province, the former official said.  Later, poppy fields were cultivated at several other collective farms throughout North Korea, with the entire crop going to the regime to be processed into heroin, he said.

In late 1997, Pyongyang ordered that all North Korean collective farms had to allocate 25 acres each to poppy production beginning in 1998, the former official said.  U.S. satellite imaging missions over North Korea in the mid- and late-1990s, however, could not detect wide-scale poppy production, said William Bach, director of the of the Office of African, Asian and European Affairs in the U.S. State Department’s International Narcotics and Law Enforcement Affairs Bureau.  The former North Korean official said he was “flabbergasted” that the United States had been unable to detect the extent of North Korea’s poppy production.

All poppy plants produced since the late-1990s in North Korea are sent to a pharmaceutical plant in Chungjin City to be produced into heroin under the supervision of as many as eight Thai drug experts, the former official said.  “This is all done under the direct control and strict supervision of the central government,” he said. 

In addition, North Korea began in 1995 to import significant quantities of ephedrine, a crucial ingredient in methamphetamine production, Bach said.

After production, North Korean heroin is packaged into boxes containing 330 grams of the drug and marked with a Thai label, the former official said, adding that methamphetamine is packed in 1-kilogram boxes with no label.  The drugs are then exported throughout Northeast Asia, including China, Hong Kong, Russia and the “major market” of Japan, for up to $15,000 per kilogram, the former official said.

In addition, there are also reports that North Korea is re-exporting heroin produced in Southeast Asia, Bach said.

“North Korea must be the only country on Earth to run a drug production-trafficking business on a state level,” the former official said in his prepared testimony.

Since 1976, there have been at least 50 arrests and drug seizures involving North Koreans in more than 20 countries, Bach said.  A number of the arrests involved either North Korean diplomats or intelligence agents, according to a fact sheet prepared by the Congressional Research Service.  There are no reports, however, of North Korean heroin and methampheatmine exports making their way into the United States, Bach said.

Missile Trade

In addition to its illegal drug exports, North Korea has also pursued a vigorous ballistic missile export program, according to Lee, the former North Korean missile scientist who also testified behind a screen to protect his identity.  He described for the subcommittee one such export that he was personally involved with — the transport and demonstration of a missile guidance vehicle to Iran.  In exchange, North Korea received 220,000 tons of crude oil, he said.  After the trip to Iran, Lee said, North Korea increased its production of the demonstrated missile guidance vehicle, with nine of them ultimately being exported to Arab countries. 

Lee also said North Korea’s missile program is “entirely dependent” on foreign imports, with almost 90 percent of missile-related items being smuggled in from Japan.  Involved in the smuggling effort is the General Association of Korean Residents, which represents Koreans residing in Japan, Lee said.  The group uses a passenger ship to smuggle in missile-related items, he said, adding that such shipments arrive every three months.

The association has denied such allegations, saying it only transports supplies and humanitarian aid to North Korea.

“The General Association of Korean Residents has never once been involved in such activity,” association officials told Agence France-Presse today.

Where Does the Money Go?

The capture last month of a North Korean vessel attempting to smuggle 50 kilograms of heroin into Australia “heightens concerns that North Korean officials may be using illicit trading activities to provide much-needed hard currency to fund its army and weapons of mass destruction programs,” said Andre Hollis, deputy assistant defense secretary for counternarcotics.

The income Pyongyang receives from its illicit export programs far outweighs any it receives from legitimate exports, according to Larry Wortzel of the Heritage Foundation.  Citing media reports, he told the subcommittee that in 2001, North Korea’s legitimate exports totaled $650 million, while estimates of its income from drug and missile sales ranged from $1 billion to $1.5 billion.

According to Nicholas Eberstadt of the American Enterprise Institute, an apparatus of the North Korean Workers’ Party known as Bureau 39 oversees much of Pyongyang’s illicit narcotics trade.  This would suggest that the hard currency obtained through such exports would be directed to Pyongyang’s top priorities, including WMD-related research, Eberstadt said. 

Another concern is that the same network of North Korean officials currently involved in illicit narcotics and counterfeiting operations could also distribute nuclear materials throughout the world, Wortzel said.  “North Korea’s behavior would be much more deadly if, instead of drugs and counterfeit money, Kim Jong Il was shipping weapon-grade nuclear material or nuclear weapons to terrorists and other failed states,” he said.

While North Korea’s illicit exports do pose concerns for the United States and the international community as a whole, stopping them will not necessarily have an impact on North Korea’s WMD programs, said Robert Gallucci of Georgetown University.  If North Korea has placed a high value on the acquisition of fissile materials, as is currently believed, then the lack of income from illicit trade practices will not stop its efforts, he said.

“Moreover, there is no reason to believe that Pyongyang would not also make brutal trade-offs against the need of the civilian sector to fund the nuclear weapons program,” Gallucci said.

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