The North Korean Economy

This piece in The Times has an interesting little list of the ways in which the N Korean State tries to make its money.

Something additional from personal experience. Way back when in the mid-1990s, N Korea still had preferential transport rates on the Russian railways. Some sort of hangover of socialist solidarity and all that (don't ever underestimate the sluggishness of bureaucracies to deal with geopolitical changes).

So, we as metal traders were approached by some N Koreans with a plan. Buy up some aluminium using a N Korean state letter of credit, use the cheap railway rates to get it from the Urals to Japan, then sell the metal and share the profits. Our job was to find and buy and then sell the metal.

All of this is entirely legal by the way, at least in that time and place (I have a feeling that it still would be actually).

Fine, so that's what we do. First there was the meeting with the three Generals who had to approve the deal. Somewhat frustrating but most amusing to try and explain the way that capitalist contracts worked to them (their minder, the original go between, knew what was going on but they did not).

Six, seven weeks later, profit made, I collect the money from the bank and wander into the North Korean Embassy in Moscow (yes, the foyer really does have a huge mural of Kim Il Sung on a mountain top) and hand over their $10,000 part in cash. Yes, even that bit was legal.

Now, how that money was shared amongst the players I have no idea, whether it went on to the State coffers or not etc.

So, we're all sitting around having a cup of tea and up comes the idea, why don't we do this again? We try, but the bank simply wouldn't issue a letter of credit. Yes, Standard Chartered in Singapore, up to then the bank handling this sort of trade for the N Korean State, refused to stand by the creditworthiness of the State. When a country, a country mark you, is considered not good for $250,000 then you know there's a problem.

So, that was the end of that, except for one little final detail. We're rather glad they couldn't come up with the money for if they had, then our shipment would have arrived in Kobe just at the time of the earthquake. It took people a year to get their money back for things stranded by that and believe me, I really would not have been happy owing the N Koreans $250,000 for a year. I rather doubt I would have been able to stay (alive at least) in Russia if that had been the case.

Just a little bulletin from the wild east of a decade ago.