North Korea’s Masters of Money

From The Great Successor: The Divinely Perfect Destiny of Brilliant Comrade Kim Jong Un, by Anna Fifield (PublicAffairs, 2019), Kindle pp. 147-148:

Private property ownership is still technically illegal in North Korea, but that hasn’t stopped the emergence of a vibrant housing market. Sometimes people lease out the right to live in the apartments assigned to them by the state; at other times, masters of money sell the apartments they’ve been allocated in these new developments for substantial profits.

As a result, real estate prices have soared, with prices in Pyongyang increasing as much as tenfold. A decent two- or three-bedroom apartment in the capital costs up to $80,000, but a luxury three-bedroom apartment in a sought-after complex in central Pyongyang can fetch $180,000. It is an unimaginable sum in a country where the official government salary remains at about $4 a month.

Another reason for the real estate boom is the almost complete lack of a banking system. The masters of money can’t stash their cash in an interest-bearing account or investment fund, so they channel it into bricks and mortar.

Ri Jong Ho’s entrepreneurial good fortune began in the mid-’80s, when he began working for Office 39. By earning money for Kim Jong Il’s slush fund, he was enabling the Dear Leader to buy all that cognac and sushi. That made Ri an important person to the regime, and he lived a good life as a result.

His last job was in the Chinese port city of Dalian, not far from the border with North Korea, where he was the head of a branch of Taehung, a North Korean trading company involved in shipping, coal and seafood exports, and oil imports. He had previously been president of a ship-trading company and chairman of Korea Kumgang Group, a company that formed a venture with Sam Pa, a [notorious] Chinese businessman, to start a taxi company in Pyongyang. Ri showed me a photo of him and Pa onboard a private jet to Pyongyang.

As head of the Dalian branch of the Taehung export business, Ri would send millions of dollars in profits—denominated in American dollars or Chinese yuan—to Pyongyang. In the first nine months of 2014, until his defection in October that year, Ri said he sent the equivalent of about $10 million to the regime. Despite all the sanctions, the US dollar is still the preferred currency for North Korean businessmen since it is easiest to convert and spend.

It didn’t matter that there were supposedly stringent international sanctions in place. Ri’s underlings simply handed a bag of cash to the captain of a ship leaving from Dalian to the North Korean port of Nampho or gave it to someone to take on the train across the border.

But Uncle Jang’s downfall at the end of 2013 spooked many masters of money, including Ri. He and his family escaped from Dalian to South Korea and then eventually to the United States.

He clearly made a tidy sum of money for himself on the sidelines of his official job. The family lived a comfortable life in the Virginia suburbs. But even in the United States, Ri was cagey about meeting me and careful about what he said. “There are so many other stories, but I can’t tell you all them. Do you understand?”

He gives occasional public speeches about the North Korean regime—and much more private advice to the American government—while his children work on their English and study to go to an American university. They want Ivy League or, failing that, Georgetown.

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Filed under China, economics, education, industry, Korea, migration, U.S.

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