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A new report issued this week by the Committee for Human Rights in North Korea (HRNK) provides valuable insight into how North Korea’s brutal regime generates hard currency while under international economic sanctions.


Illicit:  North Korea’s Evolving Operations to Earn Hard Currency, by Sheena Chestnut Greitens of the Brookings Institution, describes in detail how the Kim regime benefits from criminal enterprise to earn desperately needed hard currency.  North Korea produces high quality counterfeit U.S. currency and products such as fake pharmaceuticals and cigarettes.  The country has also become a focal point for trade in products derived from endangered species.  The report also notes how North Korea has become a growing factor in the international drug trade, cultivating poppies for heroin production and becoming an increasingly significant source for methamphetamines.  Production has also led to rising problems of drug abuse inside North Korea.


The report describes how illicit economic activity has changed as the regime has become more tolerant of private markets.   While many of these illegal activities were conducted by state agencies in the past, the report notes how in recent years individuals and private businesses have played a more important role.  North Korea’s government and ruling elite have adapted to changing conditions, taking a share of the profits through “loyalty taxes” on the illicit enterprises.


The growing role of private markets or jangmadang has in many ways been positive for North Koreans.  They arose in the wake of the great famine and have enabled some individuals to establish small businesses that have alleviated their economic hardship.  They also have provided opportunities for exchanging information and challenging the regime’s media monopoly.  While they are largely tolerated by the regime, they remain in a legal gray zone and subject to periodic crackdowns.  But as Illicit documents, new challenges have developed along with them.


Read the report here.


Lindsay Lloyd is Program Director for the Freedom Collection.