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The North Korean Connection
U.S. Says Cash-Strapped Pyongyang Sponsors Heroin Production

By Douglas Farah and Thomas W. Lippman
Washington Post Foreign Service
Friday, March 26, 1999; Page A21

Last January, Interpol officials at Moscow's international airport spotted two North Korean diplomats arriving from Mexico, an unusual event because that impoverished Asian nation had little money for its diplomats to travel. An inspection of their luggage showed the two were carrying 77 pounds of cocaine, worth about $4.5 million, which they hoped to sell in Russia.

A few months earlier, Japanese police had seized almost $100 million worth of methamphetamines aboard a North Korean cargo ship. The cargo was discovered, according to a U.S. official familiar with the case, because the containers were labeled "honey," and "officials asked themselves why a country in the midst of a massive famine would be exporting food."

Isolated diplomatically, short of resources, facing widespread famine and desperate for hard currency, North Korea is rapidly expanding state involvement in the production and distribution of heroin and methamphetamines, in addition to a host of other criminal enterprises, according to U.S. and international drug officials.

U.S. concerns about North Korea's state-sponsored drug trafficking have been overshadowed by the West's preoccupation with North Korea's clandestine development of nuclear arms and its rapidly advancing missile programs.

"Everything can't be priority one or priority two or even priority four and five, you know, and narcotics is way down the list," said a U.S. official.

U.S. officials admit their information is sketchy because Washington has no diplomatic ties with Pyongyang, and they rely heavily on South Korean intelligence services. But anecdotal evidence such as the sudden jump in the past three years of arrests of North Korean diplomats and the accounts of defectors consistently say the illegal activities are carried out with the direct authorization of the North Korean government.

"The state is the mafia," said James Lilley, former U.S. ambassador to South Korea, adding that North Koreans routinely use their diplomatic pouch, immune to search, to ship drugs and other contraband.

A February report by the Congressional Research Service said "conservative estimates" of North Korea's criminal activity, "carefully targeted to meet specific needs," generated about $86 million in 1997 -- $71 million from drugs and $15 million from counterfeiting.

Requests for comment by North Koreans at the United Nations were not answered, but in the past North Koreans have insisted that any criminal activities were the work of individuals, not the state.

U.S. intelligence officials said that in about 1994 the government created the Korean Workers Party Bureau 39, a special office to generate hard currency that is under the direct control of North Korean leader Kim Jong Il.

At about the same time, officials said, North Korea shut down many of its embassies because of the financial crisis, and their remaining diplomats overseas were told they would have to start earning enough hard currency to pay the cost of operating their diplomatic posts and remit some home.

"So these poor guys are sitting there trying to spin gold from straw," said one official. "I suspect that is where you get some of the drug dealing."

In 1990, U.S. officials said, there have been at least 26 documented incidents of North Korean diplomats being arrested on drug trafficking charges, and many more involving other smuggled goods.

U.S. officials said much of the bureau money is channeled through the Kaesong Bank for hard-currency purchases abroad.

"These two offices, office 39 and Kaesong Bank, are Kim Jong Il's personal finance secretariat, [and the money is] basically discretionary income for Kim Jong Il to spend it on whatever the heck he wants to spend it on," said a U.S. official. "He can spend it on bicycles or Mercedes or watches."

The growing concern that North Korea is using drug trafficking proceeds to fund its weapons program and maintain its military, the fifth largest in the world, is leading many in Congress to question U.S. policy toward North Korea. At the behest of Congress, the Clinton administration asked former defense secretary William J. Perry to review all aspects of U.S. policy toward North Korea.

On March 5 senior House Republicans, including international relations committee chairman Benjamin A. Gilman (N.Y.), and Majority Leader Richard K. Armey (Tex.) wrote to Perry, saying, "Your report needs to clearly highlight the reality that North Korea has entered the illicit narcotic production and trafficking business, especially the production of opium and methamphetamine."

Sens. Charles E. Grassley (R-Iowa) and Jesse Helms (R-N.C.) last year demanded that the State Department include North Korea in its annual worldwide drug trafficking report. This year's report, released March 1, did, concluding that, in North Korea, "estimates of the area under poppy cultivation range from 10,378 acres to 17,300 acres and estimates of opium production range from 30 metric tons to 44 metric tons annually. This would yield from 3 to 4.5 metric tons of heroin, if all the opium were refined into heroin."

But Grassley, chairman of the Caucus on International Narcotics Control, said in an interview that the State Department's report was unsatisfactory.

"We want to know why, with the indications we are getting the North Korean government is implicated in drug production, there is not more of an effort to confront the issue." Grassley said. "We have got to stop ignoring drug trafficking and treating North Korea like a 'most favored rogue state' in the hopes they will unilaterally stop producing drugs."

The greatest concern, according to Barry R. McCaffrey, the Clinton administration's drug policy director, is methamphetamine production, which requires much less expertise and fewer precursor chemicals than heroin production.

U.S. officials trace the rise in methamphetamine production to 1997, after rains destroyed much of the opium crop.

"The target appears to be Japan and Thailand," McCaffrey said. "Meth is worth their attention as a technique to generate international cash, and it takes no skill."

Aid to N. Korea

North Korea has become the largest recipient of U.S. aid in Asia in recent years.

U.S. aid since 1994:

Purpose Amount

(in millions)

Fuel oil $79.5

Storage of nuclear material 27.0

Food aid 140.0

Tracking down U.S. servicemen 3.1

Total $249.6

In fiscal year 1999, North Korea is slated to receive 300,000 tons of wheat valued at $100 million.

SOURCE: Congressional Research Service

© Copyright 1999 The Washington Post Company

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