Joseph V. Micallef is a best-selling military history and world affairs author, and keynote speaker. Follow him on Twitter @JosephVMicallef.
The export of slave labor by the North Korean government has been extensively documented in the international press. These exports represent both human rights and nuclear proliferation issues.
Not only were North Korean workers being subjected to inhumane and often barbaric living conditions, but the money they earned, 70 to 90 percent of which was being confiscated by Pyongyang, was an important source of funding for the North Korean government and, in particular, for its nuclear weapons development program.
Such labor exports have been occurring since the late 1940s. Starting in 2012, however, they began to increase dramatically. According to the U.S. Department of State, there are 100,000 North Korean workers in forced labor overseas, 80 percent of them in either Russia or China. It's estimated that as many as 60 countries have used North Korean forced labor at one time or another.
The U.S. Mission to the United Nations has estimated that these workers generate between $1.2 and 2.3 billion in funds for the North Korean government. That amount is roughly equivalent to the total value of North Korean exports in 2016. Other estimates have placed the total as high as $3 billion.
The practice was specifically condemned by several UN Security Council resolutions. Use of such slave, or forced labor, was to be phased out by the end of 2019. Anyone facilitating the practice would be subject to sanctions by UN member states.
In addition, the Countering America's Adversaries through Sanctions Act (CAATSA) also imposed mandatory sanctions on companies and individuals that employ North Korean workers under conditions of forced labor.
In an explosive new study, Dispatched: Mapping Overseas Forced Labor in North Korea's Proliferation Finance System (Dispatched), the Center for Advanced Defense Studies has concluded that the export of North Korean labor involves both high value professional and skilled workers as well as manual laborers, and that it is facilitated by and is part of a broader web of foreign companies, some of which are North Korean owned or controlled, operating outside of the DPRK.
The Center for Advanced Defense Studies is a Washington, D.C.-based think tank that relies on open source information to report on global conflict and transnational security issues. The Center goes by the acronym C4ADS. Recently I spoke with Jason Arterburn, an analyst at C4ADS, and the principal author of Dispatched.
JM : In Dispatched, you cited estimates from several different organizations that placed the number of North Korean forced laborers at between 50,000 and 150,000. Based on the evidence you reviewed in your study, do you have your own estimate on the number of North Korean forced laborers overseas and the amount of revenue they are generating for Pyongyang?
JA: We do not have a conclusive estimate on the number of North Korean forced laborers overseas or the amount of revenue they generate. We focused our research and analysis on the corporate and financial networks of implicated companies.
JM: You were among the first to cite the role of highly skilled workers among North Korea forced laborers. What percentage of these workers would be considered highly skilled and do you have an estimate for the financial contribution they represent?
JA: Because we do not have a conclusive estimate for the number of North Korean forced laborers abroad, we also do not have an estimate for the proportion of workers that work in high-skilled occupations. But we do know that North Koreans who work in I.T. jobs abroad generate an outsized amount of revenue for the Kim regime, reportedly as much as $100,000 per worker per year.
JM: In your study, you gave examples of North Korean workers operating on various freelance labor websites. How pervasive is this issue? Are these workers operating from North Korea or are they laborers abroad? Are they disguising their North Korean links?
JA: In our research, I was actually surprised at how often people and companies did not hide their association to North Korea on official corporate documents. For example, in the Vietnam case you reference, we saw that a person named Kim Jong Gil listed his nationality as North Korean on a business registry filing for a company registered to the address of a DPRK restaurant in Hanoi. When we examined the broader corporate network, we also saw that Vietnamese nationals appeared to operate associated freelance profiles.
This is an important point: the Kim regime's illicit commercial activities abroad do not only rely on DPRK nationals, who nevertheless are disproportionately the targets of law enforcement and regulatory action related to North Korea. As we show in our report, regulators who take a network view of North Korea's overseas commercial activity can start from a person or business that is explicitly connected to North Korea, like a DPRK restaurant, and then identify the local commercial facilitators through which the Kim regime engages the global economy.
JM: In Dispatched, you cited the fact that many of the companies that were importing North Korean laborers in Russia and China had the same addresses and often were linked to the same people. North Korean government owned restaurants in China, for example, often functioned as a hub for other front companies. You also noted that, many times, these companies had similar names to sanctioned North Korean companies.
Do you believe that many of the companies importing North Korean labors are in fact owned or controlled by the North Korean government?
JA: Not in all cases. Our analysis found that, according to Russian business registry filings, many companies authorized to hire North Korean workers in Russia had owners or shareholders that were explicitly North Korean. But more often, we saw that implicated companies were owned and operated by locals. In that sense, Dispatched extends findings from our previous reports on North Korea showing that the Kim regime relies on networks of commercial facilitators abroad to access the global economy.
JM: Is the turnover being generated by those companies that are North Korean owned or controlled already included in the $1.2 to 2.3 billion cited by the U.S. government as the revenue that is being generated by the export of forced labor or is it in addition to it?
JA: To my knowledge, the figure represents the revenue generated by North Korea's overseas forced laborers.
JM: Do we have any estimate of what additional revenue is being funneled to Pyongyang from this network of controlled foreign companies?
JA: We did not attempt to calculate the total amount of revenue that implicated commercial networks generate for the Kim regime. We did, however, show that North Korea's overseas labor operations extend from the same networks that are involved in North Korea's broader portfolio of overseas commercial activities. For example, we show that the Dandong-based Liujing Hotel and Shenyang-based Chilbosan Hotel, both of which had DPRK restaurants, were part of the same network of people and companies as Dandong Hongxiang Industrial Development Co., Ltd. (DHID).
The US Department of Treasury's Office of Foreign Assets Control sanctioned DHID in September 2016 "for acting for or on behalf of [the U.S.- and UN-designated] Korea Kwangson Banking Corporation" to provide "financial services in support of WMD proliferators." Its director, Ma Xiaohong, who is also the sole director and owner of Dandong's Liujing Hotel, was both criminally charged by the US Department of Justice and sanctioned by OFAC for assisting the DPRK in its weapons procurement operations.
JM: You paint a picture of a very broad, sophisticated network of foreign companies, many of which are owned or controlled by Pyongyang, which are being used both to generate revenues by "selling a range of products in the licit global economy," as well as being used to source materials and technology needed for North Korea's nuclear weapons development program or train personnel involved in that program. At the same time, many of these companies are employing North Korean slave laborers.
How many different companies are we talking about?
How should the US go about dismantling these business networks?
Is it even possible to do this without the support of Moscow and Beijing?
JA: I do not intend to suggest that the companies involved in DPRK overseas labor are all owned or controlled by Pyongyang. While business registry filings show that some indeed are, the majority appear to be local companies with an economic incentive to employ North Korean workers or, in some cases, abet the Kim regime in broader commercial or criminal activities. The U.S. government has broad legal authorities under CAATSA to take unilateral action against implicated companies. But the international community also has its own legal authorities to take action against implicated individuals and companies because those people and companies are often involved in other activities that violate UN sanctions, which we detail through case studies in our report.
JM: Russia and China both have economic reasons for employing North Korean workers, in addition to the role these workers play in financially supporting North Korea's government. Are you seeing any evidence that either country is moving to reduce the numbers of such workers in compliance with UN resolutions?
JA: In the fall, we saw Russian and Chinese reporting that authorities in both countries were preempting UN obligations and repatriating workers before the December 2019 deadline. But more recently, local reporting has suggested that North Korean workers may be continuing to return to Russia and China. For example, Russian media reported last week that Putin had ordered the Russian Ministry of Labor to extend employment contracts of DPRK workers, and Radio Free Asia reported that North Korean workers were returning over the border into China last April.
JM: You cited the testimony of a North Korean defector that the North Korean government operates many facilities in China that are used to train North Korean programmers and that these facilities are also used to generate hard currency through commercial I.T. work as well as stage cyber scams and offensive cyber operations.
Do you have sense of just how extensive this network is and how many people are employed by it?
Is there any evidence of similar Pyongyang organized networks in other countries?
JA: At this point in our research, we do not have a sense of how extensive I.T. networks might be, but this is an important area for future research. Non-English language media has long reported that DPRK laborers have worked in local I.T. industries across a number of jurisdictions. I.T. workers reportedly work under the same draconian conditions as their counterparts in low-skilled occupations, but they pose an outsized proliferation finance and security risk and therefore deserve renewed attention.
I.T. workers make it particularly clear that North Korea's overseas labor program is both a proliferation finance and a human rights issue, which raises a number of complex ethical questions but also empowers law enforcement and civil regulators to wield a broad range of legal authorities against target networks.
JM: Thank you.
Jason Arterburn is an analyst at the Center for Advanced Defense Studies in Washington, DC. He received his undergraduate degree in Economics and Interdisciplinary Security Studies from the University of Alabama, and a Master's in China Studies from Peking University. He speaks Mandarin.
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