N. Korea’s Sanctions-Busting

Recently, signs have emerged that North Korea will shrink its diplomatic network. Outposts in Angola, Hong Kong, Spain and Uganda are among “as many as a dozen” missions – a quarter of North Korea’s network of around 50 – that are allegedly slated for closure. As well as assuming more traditional diplomatic functions, North Korea’s missions have played a wider range of roles in support of the country’s national interests, and have grown in importance as Pyongyang struggles with economic isolation and the extensive UN sanctions regime.

As I outlined in a RUSI report published last year, North Korea’s embassies, consulates, trade offices and representative missions to international organisations – and the diplomats and intelligence officers that reside there – have played key roles in procuring technology for, and funding, Pyongyang’s nuclear, missile and military programmes. The closure of these missions likely reflects both a tactical-level evolution in North Korea’s sanctions-busting efforts as well as shifting geopolitical realities, with more strategic-level implications for the UN sanctions regime.

From the Missions to the Missiles

North Korea’s missions have been key nodes in its sanctions-busting efforts, providing the skeleton of a near-global presence that has been used extensively to undertake and support operations. These sanctions-busting roles have fallen into three main categories. First, the missions and the diplomats stationed there are involved in revenue-raising and – given that the revenue raised likely benefits North Korea’s weapons programmes – “proliferation financing”.

This has included trade in sanctioned commodities, with diplomats supporting sanctioned coal and vanadium exports. Diplomats have also run overseas businesses and raised revenue by leasing diplomatic real estate or even by abusing diplomatic alcohol allowances. One of the most prevalent revenue-raising activities for North Korea has been arms sales. Representatives of North Korea’s arms-dealing entities have frequently been accredited as diplomats.

Second, Pyongyang’s diplomats have acted as buyers, procuring a wide range of sanctioned goods for import to North Korea. Most concerningly, embassies and diplomatic networks have long procured technology for the country’s weapons programmes, with the embassies in Beijing, Berlin and Moscow being particularly active in this regard. In Moscow, a member of the Office of the Commercial Counsellor – a diplomat named O Yong Ho – sought to procure a range of goods for North Korea’s missile programmes, including aramid fibre, manufacturing equipment, a spinning nozzle, chemicals and stainless steel used in missile fuel production and the construction of submarine hulls. In 2018, a senior German intelligence official noted that the embassy in Berlin had been repeatedly used to acquire missile and nuclear-related technologies, many of which were so-called dual-use technologies of utility in civil and weapons programmes.

Diplomats have also been involved in the procurement of intangible technologies – sensitive knowledge, information and even weapons designs. In 2011, representatives from North Korea’s Belarus Trade Office were caught in a sting operation seeking sensitive missile-related information in Ukraine. Additionally, in 2019, O Yong Ho procured CAD drawings for a Russian cruise missile. Diplomatic procurement efforts also involve much more benign goods – sanctioned luxury items and other commodities – which are scarce in North Korea and help maintain the court economy.

North Korea’s missions have been key nodes in its sanctions-busting efforts, providing the skeleton of a near-global presence that has been used to undertake and support operations

Third, the missions and their occupants have provided support to North Korea’s overseas business networks through providing use of bank accounts, hosting banking representatives, moving funds and even providing logistical support. As the UN Panel of Experts that monitors North Korea sanctions implementation noted in a 2017 report, Pyongyang’s missions “open accounts that, in effect, perform the services that a financial institution would”. Elsewhere, diplomats have smuggled gold and precious metals as a means of moving funds. Missions have also been closely connected to North Korea’s shipping networks.

Missions Slated for Closure

Personnel based at two of the missions slated for closure – those in Angola and Uganda –have been heavily involved in sanctioned activities. More recently, North Korea’s relationship with Angola – which dates to the early 1970s – has seen the embassy in Luanda host Pyongyang’s arms dealers. Two diplomats, who were concurrently acting as representatives of North Korean arms dealer Green Pine Associated Corporation, travelled from Angola to Sri Lanka multiple times to discuss Pyongyang’s refurbishment of naval patrol vessels between 2014 and 2016. One of these Green Pine representatives concurrently negotiated contracts, sourced parts and oversaw the refurbishment of the Angolan navy’s own patrol boats. North Korean business in the country also went beyond military equipment. The UN-sanctioned entity Mansudae Overseas Projects undertook 56 construction projects in Angola up until 2015, including the mausoleum that holds the remains of the country’s first president.

According to the UN Panel, a Military Attaché and diplomats based at the embassy in Kampala, Uganda, oversaw North Korean training of Ugandan air force pilots, technicians and police between 2017 and 2018. Showcasing how North Korean diplomats operate transnationally, the Attaché – a Colonel in the Korean People’s Army – was described in correspondence as the representative of the North Korean armed forces in “Uganda and East Africa” and offered neighbouring South Sudan “Presidential Guard and special forces training” and “tank crew training” while based in Kampala.

There is less evidence of sanctions-busting activities by the North Korean Consulate in Hong Kong, a third mission which currently looks slated for closure. However, the axis between the city and Macau has seen significant North Korean connections over the years. North Korea long sought to open a trade office in Hong Kong and to commence Air Koryo flights to the city while it was under British rule and prior to the Consulate opening in 1998. More recently, as research by RUSI’s OSIA research group has noted, Hong Kong and businesses there have been a crucial node in the networks undertaking illegal oil shipments to North Korea. The role of Hong Kong businesses in selling high-end chips as part of Russia’s illicit supply chains for military electronics also suggests that North Korea could usefully shop in the city.

Adaptation in North Korea’s Networks

Given the range of sanctions-busting activities that North Korean embassies have conducted, the closure of as many as a dozen missions at once is surprising. These steps come as Pyongyang is reopening to the world following nearly three years of Covid-19-induced border closures. They showcase adaptation in North Korea’s sanctions-busting networks in real time – a result of several shaping factors.

The decision may have a cost-saving rationale. North Korea’s missions are allegedly self-financing, raising hard currency to cover their own operations and sending all surpluses back to Pyongyang. Perhaps these specific missions are not as profitable as they once were. Indeed, both the Angolan and Ugandan governments have taken steps to reduce their connections to North Korea since the mid-2010s. In early 2020, Angola repatriated almost 300 North Korean workers, many of them working in the medical sector. Uganda allegedly cut military ties with Pyongyang around 2016, but subsequent reports suggest cooperation continued past that date.

Other diplomatic missions and actors can likely pick up the slack when these missions close, and potentially in a more cost-effective way. Nearby remaining missions may be designated by Pyongyang to provide coverage for business activities in these jurisdictions, just as the mission in Rome will provide diplomatic coverage in Spain following the closure of the mission in Madrid. North Korea’s diplomatic arms dealers in Africa already operate across borders, and representatives may be tasked to widen their remit.

The open violation of the sanctions on Pyongyang by Russia could have a serious knock-on effect for the sanctions regime more broadly

Other actors – those without diplomatic accreditation – may also pick up the slack. Indeed, diplomats may have a declining importance in North Korea’s sanctions-busting. Previously, as states around the world became hostile to North Korean business activities, diplomatic networks became more important. Diplomats had several “competitive advantages” over private individuals, largely stemming from the immunities and privileges afforded by the 1961 Vienna Convention on Diplomatic Relations. Diplomats cannot be arrested, and diplomatic properties and vehicles cannot be searched.

However, efforts to recognise and address diplomatic sanctions-busting have intensified since 2016. Despite far-from-universal sanctions implementation, North Korea’s missions now likely attract interest from South Korean, Western and other intelligence agencies around the world. The use of local or third-country nationals, or indeed third-country passports obtained by North Koreans, could provide Pyongyang with less obvious means of conducting business than using diplomatic cover.

Concurrently, newer sanctions-busting opportunities are likely more profitable than those facilitated by the missions. Although Pyongyang is not in a position to be picky over its revenue streams, the $1.7 billion of cryptocurrency stolen by North Korea-linked hackers in 2022, and the millions that can be gained remotely through IT outsourcing, likely far eclipse the amounts that can be generated by small-scale arms sales or construction contracts in sub-Saharan Africa.

Indeed, recent geopolitical shifts may also provide more bountiful opportunities. North Korea’s normalising relationship with Russia, its alleged transfer of hundreds of containers of weaponry to support Moscow’s war in Ukraine, and the potential for other commercial opportunities may see North Korea’s diplomacy and energy more focused on this relationship. The open violation of the sanctions on Pyongyang by Russia – a UN Security Council permanent member which voted for the measures – could have a serious knock-on effect for the sanctions regime more broadly and its implementation around the world.

Tactical Adaptation and Strategic Gloom

Beyond their overt diplomatic function, North Korea’s missions and diplomats are persistent participants in – and coordinators holding together – the dark sanctions-busting economy that has kept the Kim regime afloat through almost two decades of sanctions.

North Korea’s closure of many its missions reflects both tactical and strategic-level developments. The closures represent the tactical adaptation of North Korea’s networks, with the missions in question likely not as profitable as they used to be, and with new and more “remote-working” sanctions-busting operations perhaps proving more lucrative.

However, strategic-level developments – notably Russia’s willingness to re-engage with North Korea – also help to account for Pyongyang’s declining need for these assets. The economic benefits of Russia’s arms purchases and broader re-engagement could far surpass the meagre revenue that can be raised through the missions slated for closure. Concerningly, this shift – and North Korea’s changing diplomatic priorities – also reflects a gloomy outlook for the UN sanctions regime.

Daniel Salisbury is a Senior Research Fellow at the Centre for Science and Security Studies (CSSS) within the Department of War Studies at King’s College London. He is currently undertaking a three-year research project on arms embargos as part of a Leverhulme Trust Early Career Fellowship.