The state takes over smuggling, violating sanctions and threatening livelihoods
(image: shutterstock/Apik)
The widespread smuggling which has long been a means of livelihood for many ordinary citizens has been replaced by what is known inside North Korea as “state smuggling.”
While illegal trade has long been practiced by state authorities, the scale has grown significantly since the borders were reopened in August 2023 after the pandemic.
What has effectively happened is that instead of individuals resuming their cross border trading, the state has moved in and taken over their businesses.
The scale has accordingly increased. Smuggling has massively ramped up this year with a trade in sedans and trucks and other vehicles, reportedly to the tune of hundreds of units each month.
Recently, for example, it was reported that over 100 large Chinese-made trucks, excavators, and sedans were brought across the border in one consignment at crossing points in Kimjongsuk and Kimhyongjik counties in Ryanggang Province.
Prior to this, from early to mid-April, more than 200 sedans, cargo trucks, and excavators were brought in, and in March, a large volume of transport equipment including sedans and buses, as well as household appliances and industrial goods, was also smuggled in.
The actual owners of these smuggled goods are members of the wealthy donju class.
Since the pandemic, goods can only be imported by border-area trade bureaus and trading companies that are strictly controlled and inspected by state authorities. Yet the donju, who have emerged as a powerful new class, secretly supply export goods to these organizations or lend them operating funds, thereby leading state smuggling from behind the scenes.
However, the large bribes required in this process have become a significant burden for the donjus involved. For instance, when importing a single sedan via state smuggling, the donju must cover all costs, with bribes distributed to customs officers, State Security Department agents, and Public Security agents.
These bribes provide living expenses and rations for the government agents, but they must in turn pass on a portion to senior officials in their respective organizations. It is a complex web of payoff and corruption.
In this way, state smuggling has evolved beyond a means to curb individual smuggling. It is now a system in which the state actively leads and monopolizes the operations.
This monopoly by the authorities also functions as a strategic tool for regime maintenance and monopolization of foreign currency. In essence, state smuggling has become a mechanism for propping up the regime and revitalizing the economy.
Through these activities, the state secures foreign currency, procures materials needed for construction projects in Pyongyang and other key regions, and deftly circumvents international sanctions.
The new system, however, poses a serious threat to many people by depriving them of their means of livelihood.
Until recently, residents in the border regions survived by engaging in small-scale smuggling of food, daily necessities, and medicine. But as the state-led smuggling system has become firmly established, they have lost this lifeline.
The crackdown has led to skyrocketing prices and shortages of essential goods. Meanwhile, the donju and agents of the State Security Department and Ministry of Public Security monopolize enormous profits, further deepening economic inequality.
Another consequence, probably intended, is the blocking of the inflow of external information and outflow of internal information.
The foreign currency and goods secured through state smuggling are being heavily funneled into national projects, such as the construction of 50,000 new homes in Pyongyang.
Meanwhile, ordinary citizens continue to suffer from severe poverty and hardship amid a lack of essential goods and runaway inflation.
At the same time, the new trade violates international sanctions.
North Korea has been under UN sanctions since 2006 over its nuclear and missile development. Additional restrictions were imposed in 2017 on the import of refined petroleum and crude oil. The UN Security Council has specifically banned the import of vehicles and heavy equipment to curb North Korea’s military and nuclear ambitions.
Smuggling activities carried out under the direction of the North Korean authorities are a flagrant violation of these international sanctions.
“There’s a very real possibility that vehicles and heavy equipment smuggled into North Korea are being diverted for military use, not just construction,” one expert said. “The international community must establish a more rigorous and specific monitoring system.”
Sewon is the North Korean-born founder and CEO of NK Times, a Seoul-based media outlet focused on North Korea. Drawing on his personal experience living there, he strives for transparency and accuracy in reporting, working to inform readers worldwide about the realities of North Korea.
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