The Defector’s Tale: Inside North Korea’s Secret Economy

Following the collapse of the global socialist market in the early 1990s, an unexpected thing happened on North Korea’s road to financial oblivion: The same economy that cannot produce a usable toothbrush is now armed to the teeth with nuclear weapons. I say this as someone who knows, having been involved, however obliquely, in providing the funds that made the atom splitting possible. There is much I still don’t know about my native land, but this much is clear to me: This central riddle of North Korea—advanced technology within abysmal backwardness—is wrapped in the mystery of its economic structure, and compounded by the enigma of Kim Jong-il’s opaque motives. My own involvement in the North Korean economy leads me to believe that an economic corpse has been able to produce such nuclear achievements by creating what is essentially a secret, invisible, firewalled financial system scavenging off the West, which Kim created to compensate for the collapse of the normal or “People’s Economy” of North Korea.

To advance understanding of Pyongyang, the West will have to depend, at least for the time being, on oral histories such as my own. This hidden financial system I’m referring to has no written records; most of the documents that tell the story—receipts, bank transactions, and the rest—are destroyed annually by Kim’s direct order (less to prevent outside audit than for fear that North Korean citizens might learn what was done with all the money secretly generated while they starved). Yet this same private financial network, which belongs exclusively to Kim and the elite ruling class, produces, by my estimates, fully two hundred times the foreign cash revenue of the Cabinet-run People’s Economy. This unseen and unnamed military and industrial complex was created solely to service Kim’s interests and obsessions, including the development of nuclear weapons. I will employ the phrase “Royal Court Economy” to describe it in the pages that follow.

As a former subject of that court and one of few who can speak credibly about the inner circle of North Korea, I occupied a specific corner of the Royal Court Economy. As a “revolution fund” manager, I was hired to “catch the dollar in the air,” to raise hard cash through the international insurance system for Kim’s personal whims and his nuclear dreams. Externally I had a more bland identity—as the Singapore representative of North East Asia Bank.

My position afforded me transcendent status and privileges by North Korean standards, and yet I found myself becoming ever more critical of the North Korean regime and ever more psychologically removed from my job and my commitment to the Kim Dynasty. Perhaps it was my exposure to the wealth of Singapore when I was stationed there. Or perhaps it was Kim Il-sung’s 1992 poem “A Song in Praise of the Bright Star,” in which he described his progeny as a new sun. Or perhaps it was Kim Jong-il’s own words: “Our people are a good people.” I understood exactly what he was saying: “You are obedient. You are passive. You are good slaves.”

I am not a hero, but I wasn’t a very good slave either. And perhaps my silent disgust was noticed; in 2003, suspicion of leaking classified information to foreigners fell on my Singapore office. I don’t know if the accusation was true, much less the content of the alleged leaks, yet when I returned to Pyongyang to give the president and vice president the usual percentage of my commissions, essentially the routine beak-wetting of criminal enterprises after a successful deal, they both unexpectedly waved away my envelopes full of cash saying, “Please give this to me at some other time.” At that moment, I recognized the risk of staying within the North Korean system was to risk “destruction for three generations,” the price exacted for disloyalty to Kim and his inner circle. My family and I defected in Singapore to the alien world of the West.

Kim Kwang Jin, a non-resident fellow of the Committee for Human Rights in North Korea (HRNK) and a senior fellow at the Institute for National Security Strategy in Seoul, South Korea, wishes to thank Ethan Gutmann at the Foundation for Defense of Democracies for his contributions to this article and HRNK for research support.