Target Markets: North Korea's Military Customers in the Sanctions Era

98 Pages·1.817 MB·English

by  Andrea Berger

Whitehall Paper 84

Target Markets
North Korea’s Military Customers in the Sanctions Era

Andrea Berger

www.rusi.org
Royal United Services Institute for Defence and Security Studies
Target Markets: North Korea’s Military Customers in the Sanctions Era
Andrea Berger
First published 2015
Whitehall Papers series
Series Editor: Professor Malcolm Chalmers
Editors: Adrian Johnson and Ashlee Godw in
RUSI is a Registered Charity (No. 210639)
ISBN 978-1-138-65493-8
Published on behalf of the Royal United Services Institute for Defence
and Security Studies
by
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Contents

About the Author
Acknowledgements
Acronyms and Abbreviations
Note on Sources
Introduction
I. North Korea in the Global Arms Market
II. North Korea’s Contemporary Defence-Export Industry
III. Resilient Customers
Syria
Iran
Uganda
Democratic Republic of the Congo
Burma
Cuba
Armed Palestinian Organisations and Hizbullah
Liberation Tigers of Tamil Eelam
IV. Reluctant Customers
Ethiopia
Yemen
V. Ad Hoc Customers
Republic of the Congo
Tanzania
Eritrea
VI. Know Your Customer
Conclusion: Remaining Seized of the Matter
Appendix A: North Korean Brochure for AT-4 Anti-Tank Missile
Appendix B: Brochure for Gafat Armament Industry
About the Author

Andrea Berger is the Deputy Director of the Proliferation and Nuclear Policy programme at the Royal United Services
Institute, where she is also a Senior Research Fellow. Her research focuses on non-proliferation, arms control and
sanctions policy, and she takes special interest in the operations of proliferation networks. Andrea has worked
extensively on North Korean nuclear issues, having led RUSI’s engagement with the Korean Workers’ Party, Korean
People’s Army, and the DPRK Ministry of Foreign Affairs over a number of years, both in London and Pyongyang.
Prior to joining RUSI, Andrea worked in non-proliferation research at the International Centre for Security Analysis.
She has also worked for the Government of Canada in a number of analytical capacities, latterly in the Department of
Foreign Affairs, Trade and Development.
Acknowledgements

I am immensely fortunate to have benefited from the insights and expertise of many officials and experts over the course
of researching and writing this Whitehall Paper. Foremost amongst them is Malcolm Chalmers, who gave me the
opportunity to pursue this longstanding interest, unaware that he would have to endure animated, near-daily accounts of
my findings in the months that followed. His constant guidance was indispensable to this study. Caroline Cottet and
Michele Capeleto generously provided assistance with my early research. Joshua Pollack, Thomas Plant and Adrian
Johnson offered thoughtful and detailed feedback on initial drafts of the manuscript, for which I am endlessly grateful.
Many others also contributed their insights through private conversations or interviews, helping to shed light on a subject
about which information is so sparse.
Sincerest gratitude is similarly owed to Ashlee Godwin, who tirelessly managed an often intercontinental editorial
process to prepare this manuscript for print. My final thank you is reserved for the first person who read this paper,
whose input was invaluable.
Acronyms and Abbreviations

CIA Central Intelligence Agency
CNC Computer numerically controlled
DDI Directorate of Defence Industries (Burma)
DPRK Democratic People’s Republic of Korea
DRC Democratic Republic of the Congo
FDLR Democratic Forces for the Liberation of Rwanda
FNLA National Front for the Liberation of Angola
IRGC Iran Revolutionary Guard Corps
ITAR International Traffic in Arms Regulation
KCNA Korean Central News Agency
KOMID Korea Mining Development Trading Corporation
KPA Korean People’s Army
MANPADS Man-portable air-defence systems
MaRV Maneuverable re-entry vehicle
MLRS Multiple-launch rocket system
MTCR Missile Technology Control Regime
NPT Nuclear Non-Proliferation Treaty
ONI Office of Naval Intelligence (United States)
P5 Permanent five members of the UN Security Council
PLO Palestine Liberation Organization
PSI Proliferation Security Initiative
R&D Research and development
RoC Republic of the Congo
SBIG Shahid Bagheri Industrial Group (Iran)
SIPRI Stockholm International Peace Research Institute
SSRC Scientific Studies and Research Centre (Syria)
UAE United Arab Emirates
UK United Kingdom
UN United Nations
US United States
WMD Weapons of mass destruction
Note on Sources

This Whitehall Paper draws upon an array of sources. Information on contemporary North Korean activity is not easy to
obtain, particularly regarding military relationships and arms sales since 2006, with both customer and supplier eager to
hide the existence of a contract or delivery. The DPRK and its customers have adapted to the UN arms embargo
imposed against North Korea in 2006 and strengthened in 2009. To circumvent sanctions, they rely upon complex
logistical and financial networks. Amongst other tactics, they lengthen the chain of brokers and intermediaries involved
in a transaction to mask North Korean involvement, conceal illicit goods in containerised shipping, and engage in barter
deals that evade due-diligence procedures in the global financial system. While sanctions have undoubtedly made life
more difficult for North Korea’s arms exporters and their clientele, their responses have complicated the international
community’s ability to detect sanctions-busting activity.
As a consequence, relevant information is scattered between media reports, declassified or leaked documents,
government statements, UN reports, defector testimony and open-source imagery. This study brings that disparate
information together, and makes every attempt to corroborate it. Substantiation is not always possible and subjectivity is
therefore often unavoidable. As a result, this author makes clear where a particular assessment rests on a single source or
where subjectivity as to the reliability of the information is used. Where an allegation appears particularly questionable, it
is either introduced as such or omitted entirely.1
A disproportionate amount of the information used to support the claims in this paper is of Western origin. Few
governments see countering North Korea’s arms trade as a top priority. The US devotes by far the most resources and
attention to this issue, as it is largely seen as a response to the North Korean nuclear problem. This is in line with the
US’s activeness within the non-proliferation arena generally. Other Western nations as well as countries like South Korea
and Japan recognise it as important and actively engage with the issue where and to the extent possible, but are
ultimately unable to devote comparable resources to addressing it. Elsewhere, few governments give attention to
countering North Korean arms sales at all. Credible information on sanctions-relevant activity is thus primarily offered in
US and Western sources. The author’s limited access to translation resources has expanded this study’s reliance on
English-language material (though not necessarily from Western nations). As a result, it is hoped that future scholarship
on the issue of the North Korean arms trade will be forthcoming from experts with access to a wider range of foreign-
language resources.
In an effort to counteract any inherent bias and corroborate the disparate information presented in this study, the
author has conducted extensive interviews with former and serving officials, military officers in countries of concern,
experts around the world, and a businessman who has engaged in arms trade with North Korea. These interviews and
conversations were conducted on a strictly not-for-attribution basis. While all of the conversations and interviews
conducted by the author contributed to the thinking and analysis within the study, only some are directly cited in the text.
Given the sensitivity of the subject and the small size of the community working on North Korean weapons sales and
sanctions policy, the author has taken extra care to anonymise any interviewees that are directly referred to. Their
affiliations and locations are described in general terms below, and each interviewee has been assigned a letter that is
used for reference throughout the study:
• Interviewee A is an expert specialising in the former Soviet Union
• Interviewee B is an expert specialising in the defence industry in Russia
• Interviewee C is an arms dealer with experience in trading with North Korea
• Interviewee D is a former official working on North Korea for a Western government
• Interviewee E is a serving official working on North Korea for a Western government
• Interviewee F is a foreign official working in Yemen
• Interviewee G is a military officer in Yemen
• Interviewee H is an expert specialising in Yemen’s security policy
• Interviewee I is an expert specialising in Yemen’s security policy
• Interviewee J is an Asian former official specialising in North Korea.
Note
1 Reports that Zimbabwe has struck a deal with North Korea to trade uranium for arms is one example, though it is widely believed
that Zimbabwe under Robert Mugabe is a customer of weaponry from Pyongyang. See Itai Mushekwe, ‘Zimbabwe in “Arms for
Uranium” Pact with North Korea’, Nehanda Radio, 19 September 2013, <http://nehandaradio.com/2013/09/19/zimbabwe-in-arms-
for-uranium-pact-with-north-korea/>, accessed 23 October 2015.
INTRODUCTION

North Korea’s first nuclear test in October 2006 confirmed the fears of those who had watched it withdraw from the
Treaty on the Non-Proliferation of Nuclear Weapons three years earlier: Pyongyang was steaming ahead on a quest for a
deliverable nuclear-weapons capability. The UN Security Council reacted swiftly to the development, acknowledging
that other approaches – including the so-called ‘Six-Party Talks’ between North Korea, South Korea, Japan, the US,
China and Russia – had not succeeded in preventing it. ‘All of us find ourselves in an extraordinary situation, which
requires the adoption of extraordinary measures’, Russia’s representative on the Security Council noted.1 The US agreed
that it constituted ‘one of the gravest threats to international peace and security that [the Security] Council has ever had to
confront’.2 China called the move ‘brazen’, a term it reserves for its harshest condemnations.3
Amongst the extraordinary measures enacted by the Security Council in Resolution 1718 (2006) was an arms
embargo. Member states were prohibited from importing from the Democratic People’s Republic of Korea (DPRK), the
official name for North Korea,4 any weapons of mass destruction (WMD) or related materiel, or major conventional
weapons systems.5 The Resolution also set out that member states should prevent any transfer ‘from the DPRK by its
nationals or from its territory, of technical training, advice, services or assistance related to the provision, manufacture,
maintenance or use’ of the weapons mentioned above. In a similar vein, member states were forbidden from selling to
the DPRK any of these same or their related materiel or services.6
When North Korea unsuccessfully attempted to launch a satellite using long-range ballistic-missile technology in
April 2009 and tested a second nuclear device in May 2009, the UN Security Council tightened the arms embargo
against the country. Resolution 1874 (2009) extended the embargo to include all arms and related materiel and services,
though an exception was made for sales of small arms and light weapons to North Korea.7 Nevertheless, weapons-
related exports by Pyongyang were henceforth prohibited by international law.
Conventional arms trade was targeted by the UN Security Council in response to successive North Korean nuclear
tests for a number of reasons. In part, an arms embargo was simply one of the available tools for punishment, alongside
restrictions on luxury goods, travel bans for North Korean officials and asset freezes. To a larger extent, however, the
arms embargo was a means of achieving two things: first, reducing revenue sources for the regime, particularly for its
nuclear and missile programmes; and second, disrupting North Korea’s broader proliferation network.
France’s representative to the Security Council highlighted the first objective during his remarks on the passage of
Resolution 1874 (2009). The resolution, he said, is designed to:8
[L]imit North Korea’s capacity to advance its banned programmes, in particular by cutting off the financial
resources originating from another destabilizing activity – the spread of weapons throughout the world – by
blocking the financial networks that fuel those programmes, by extending the embargo to products that feed it,
and by adopting sanctions against the persons and entities involved.
His assertion, and that of the Security Council as a whole, is premised on the fact that North Korea’s nuclear and missile
programmes draw to some degree upon those domestic coffers that are filled by overseas arms sales. Some North
Korean entities, such as the Second Economic Committee, are actively involved in both activities. In addition to being
‘responsible for overseeing the production of North Korea’s ballistic missiles’, the Second Economic Committee also
directs the activities of the nation’s primary arms dealer overseas, the Korea Mining Development Trading Corporation
(KOMID).9 Curbing defence-export revenue streams can thus limit the resources available to entities responsible for
pursuing nuclear-and missile-related procurement and production. In this sense, the volume of revenue that North Korea
generates through weapons-related sales overseas is an important metric for the sanctions regime’s success.
Inhibiting conventional arms sales can also help disrupt and undermine the North Korean weapons-export
apparatus itself – a second objective of the arms embargo. In an era where foreign revenue generation has been
prioritised by the North Korean regime, smaller multi-role entities may wither without overseas arms sales to sustain
themselves. In addition, most of Pyongyang’s military customers allow representatives or offices of North Korea’s key
arms-dealing entities to operate from their territories. Eroding the networks that North Korea draws upon to facilitate
arms sales to foreign customers, and reducing the number of territories from which those individuals and entities are able
to easily operate, could similarly increase Pyongyang’s difficulties in sourcing goods and components for its nuclear and