In 1975, Japan’s External Trade Organization (JETRO), conducted a study that found North Korea with a $600 million trade deficit to Western countries. It paved the way for North Korea to become the first country in the Communist Bloc to default on its debts to the West, which refuted the then-common supposition that Communist countries repay their debts and make good borrowers.
After Western companies discovered that trading with North Korea was more trouble than it was worth, Pyongyang had to invent new ways to earn hard currency. One of the ways in which the regime earned foreign exchange was through the illicit activities of diplomats, which was convenient for Pyongyang since North Korean embassies were scattered across the world as a result of the inter-Korean competition for votes in the United Nations during the 1960s and 1970s.
“North Korea has, for a long time, had an embassy self-financing policy, whereby different parts of the system are expected to raise funding for their own operations, and contribute some money back to Pyongyang alongside that,” Sheena Greitens, an Academy Scholar at the Harvard Academy for International & Area Studies and a Non-Resident Senior Fellow at the Brookings Institution, tells NK News.
One region in particular became a hotbed for such shenanigans. In October 1976, North Korean diplomats in four Nordic countries (Finland, Sweden, Norway, and Denmark) were caught smuggling duty-free cigarettes and liquor.
Taxes for these products were exorbitant in the four countries by contemporary standards. A bottle of vodka or whiskey cost about $16, and a pack of cigarettes, $2. Using the high taxes in northern Europe and their diplomatic immunity to their advantage, the North Korean envoys most likely thought they could make a quick buck for The Center (the elite in Pyongyang) and in the process, improve their own reputation in the Korean Workers’ Party.
SOME HASHISH WITH YOUR DANISH?
In early 1976, North Korean diplomats asked Danish officials for permission to import 2.5 million cigarettes “for personal consumption.” If the North Korean embassy staff of four smoked three packs a day, this supply would have lasted 28 years. The request was understandaby denied.
North Korean diplomats asked Danish officials for permission to import 2.5 million cigarettes “for personal consumption
But it wasn’t just smokes and booze that North Korean diplomats were slinging.
In 1976, as Professor Andrei Lankov described in his book North of the DMZ, Danish police noticed a Mercedes, with a diplomatic license plate, frequently parked outside of a Copenhagen jewelry shop. The police had suspected the shop’s owner was involved in criminal enterprises. After Danish authorities discovered the Mercedes belonged to the North Korean embassy, two of the North Korean diplomats were caught handing 325 pounds (147 kilograms) of hashish to local drug dealers. In short order, the entire embassy staff was expelled from the country.
A Danish newspaper, Politiken, said at the time that North Korean dictator Kim Il Sung “either sent us the students who flunked the exams of his spy school or he considers Denmark a kind of Disneyland where anybody can do as he pleases as long as he is protected by diplomatic immunity.”
Even the Danish Communist Party disapproved of the illicit activities of their Korean comrades. The Danish communist newspaper, Land and Folk, said that the North Korean diplomats “definitely harmed their own country and cast a shadow on its reputation.”
After news of the expulsion of the North Korean diplomats spread, authorities in Norway, Finland, and Sweden quickly investigated their own North Korean embassies as they had already suspected that the North Koreans were involved in criminal enterprises.
The North Korean ambassador in Norway and his embassy staff were caught smuggling 4,000 bottles of liquor and 140,000 cigarettes into the country
They were correct. The North Korean ambassador in Norway, Kil Jae Kyong (and his embassy staff) were caught smuggling 4,000 bottles of liquor and 140,000 cigarettes into the country. In Finland, details about the amount of cigarettes and liquor that the North Korean diplomats brought onto the black market were kept secret, but North Korea’s diplomats there were also ordered to leave. However, they didn’t go quietly. Before they left Helsinki, the envoys found time to assault a Finnish film crew who attempted to speak with them.
“Official North Korean rhetoric insisted that these were instances of individual misbehavior rather than a matter of state policy, and that it had punished the handful of offenders,” Greitens said in her 2014 report for the Committee for Human Rights in North Korea. “Other evidence suggests that North Korea did not punish the diplomats, and in some cases re-posted them elsewhere – sometimes with an apparent promotion.”
In Sweden, the situation was more complicated. According to Ture Holmblad, Sweden’s Security Police Inspector at the time, authorities in all four countries had planned simultaneous raids, but the Danes went ahead on their own. Thus, North Korean diplomats in Stockholm destroyed much of the evidence linking them to criminal activities. While they were never formally expelled from Sweden, the five North Korean envoys decided to leave on their own accord. Five Swedish businessmen accused of selling cigarettes and liquor to the North Korean diplomats took the brunt of the punishment and were arrested.
As Lankov describes in North of the DMZ, Sweden was the only Nordic country which had real economic interests in North Korea during the 1970s as they sold a large amount of equipment to the North Koreans. Expelling North Korean diplomats from Stockholm would have been a severe blow to diplomatic relations between the two and any hope of recovering money from the North Koreans would have been lost.
In a matter of 5 days, 17 North Korean diplomats had left (mostly by force) their posts in the Nordic and returned to Pyongyang.
FINANCING NORTH KOREA’S GLOBAL PUBLICITY CAMPAIGN?
What exactly North Korea did with their profits remains unknown.
Danish officials speculated that the North Korean diplomats did not use the money from their smuggling operations in northern Europe “for personal gain” as the North Korean ambassador and his staff appeared to live “very frugally” in the suburbs of Copenhagen. The embassy and the ambassador’s residence looked to be in bad shape with several broken windows left that way for months.
Rather than repairing broken windows, the North Korean diplomats may have used the money to finance a global publicity campaign based on the personality cult of Kim Il Sung.
“There are reports that Kim Jong Il encouraged these activities in the 1970s to raise money for campaigns to glorify his father’s leadership,” Greitens tells NK News.
“There are reports that Kim Jong Il encouraged these activities in the 1970s to raise money for campaigns to glorify his father’s leadership”
There are also reports that some of the money from North Korea’s smuggling operations in northern Europe went to fund terrorist training camps in the DPRK.
“A substantial part of the black-marketing and narcotics trade went to support a recruiting and training program for international terrorists,” reads a January 24, 1977 article from the Sydney Morning Herald.
A November 19, 1976 article in the Milwaukee Journal summed up North Korea’s smuggling fiasco in northern Europe quite concisely, “For Kim Il Sung, this episode has to be quite embarrassing. He has always sold himself worldwide as the ‘great leader’ of the Korean people. In this case, the leadership, or lack of it, is plainly showing.”
In 1975, Japan’s External Trade Organization (JETRO), conducted a study that found North Korea with a $600 million trade deficit to Western countries. It paved the way for North Korea to become the first country in the Communist Bloc to default on its debts to the West, which refuted the then-common supposition that Communist countries repay their debts and make good borrowers.After Western
Benjamin R. Young is an Assistant Professor at Dakota State University. He holds a Ph.D. from George Washington University, and focuses his research on modern Korea, Cold War international history, and Marxism in the Third World.