by Felix Abt
This was because he had trouble backing up his VIP image with business acumen. Then came the day when the young lad launched the bank’s opening ceremony at the Yangak Hotel. None of the foreign business people in Pyongyang, or at least the ones I knew, got an invitation, but I knew that the British ambassador got one and showed up with a delay. He must have had something incredibly urgent that day—certainly more important than a minor bank’s grand opening.
Most North Korean media outlets, along with a few foreign newspapers, published stories on this event. But their pieces read more like celebrity hype heavily doctored by the company itself. My peers and I had never been contacted by the psychiatrist-cum-banker, and we also didn’t know anybody who was dealing with it. The next developments came as no surprise. Just over a year later, the bank’s name board was quietly removed from its offices. At the hotel where it was based, the receptionist flatly exclaimed to me, “The bank is closed!”
After his banking business flopped, Dr. J.H. moved from business into, dare I say it, North Korean politics when he became chairman of the International Kim Il Sung Foundation. In an interview with KCNA in October 2007, he was quoted as saying: “No prize in the world is as prestigious as the ‘International Kim Il Sung Prize.’ As chairman of the International Kim Il Sung Foundation, I will make every possible effort to carry out the noble cause started by the President, deeply aware of the mission I have assumed before the times and humankind.” He was, in essence, taking on the world-riveting task of promoting “Kimilsungism” and Juche.
The dream of this psychiatrist-turned-tycoon—that is, striking business gold in North Korea—has not yet come true. My sincere wish for him is that this will, some day, help him make his business dreams in North Korea come true.
Another colleague I worked with was Dr. TM, who was strangely a Juche sympathizer despite also working as an economic historian, lecturer and business consultant based in Seoul since the late 1970s. Earlier, he was a British parliament candidate for the now-defunct Liberal Party, a prominent group that espoused laissez faire economics until it closed in the 1980s. He’s also an expert on the chaebol, or South Korean conglomerates.
Nobody would believe this Cambridge-educated economist found a belief in socialism and Juche. But his “sympathies” were merely a form of opportunism to get him better business deals. During a ribbon cutting ceremony in Pyongyang with the Minister of Foreign Trade, pictured above, the North Korean dignitaries and foreign guests all wore Western suits. Dr. TM however, was the only exception, wearing a dark North Korean “Mao-style” cadre suit with a Kim Il Sung pin, a show of solidarity with the Great Leader’s ideology.
North Koreans have various names for this outfit, such as “People’s dress” or “Combat Uniform.” Occasionally foreign businessmen donned these outfits like Dr. TM, although I never wore them. On the other hand, maybe he did not sympathize with Juche, but was simply trying to gain the trust of his North Korean colleagues to find better business opportunities. Only he knows the answer as to why he dressed like this, but it only raises more questions.
Once I asked a senior security official what he thinks when he sees foreigners strutting around in these outfits. “We appreciate it if they mean it sincerely,” he answered. “But nobody can fool us and we know when somebody puts up a masquerade.” Obviously, Dr. TM’s opportunistic dream was far from the hopes of North Koreans, who wanted true believers to wear these uniforms. These “fashionable” foreigners weren’t terribly hurt by that prospect, though, because North Koreans don’t even entertain a foreigner’s antics unless they are useful. The locals just gaze at them with a giggle.
The virtue of engagement
In North Korea you will always be confronted with the subject of human rights. While it is a serious issue, North Korea’s foes are equally guilty of using rights rhetoric as a political tool to further isolate and corner the regime. Such a draconian stance, strongly advocated by the U.S., usually backfires.
Isolation shuts out information and ideas and makes people unable to eventually choose the way they want to live. The countless definitions and interpretations of human rights and their abuses lead any approach to this matter to a Reductio ad absurdum. Consequently, stricter definitions and interpretations would imply the prohibition of engagement with most if not all nations on earth, including the U.S.—the world’s loudest champion of human rights. In short, it is engagement, and not isolation, that can lead to the improvement of the human rights situation.
In recent years big business started to make human rights an issue of good corporate citizenship. CR, a corporate responsibility magazine, even publishes its yearly ranking called “100 Best Corporate Citizens.” In 2012, the magazine put IBM and the pharmaceutical giant Bristol-Myers Squibb at the top of the list.1 My former employer, ABB, was one of the initiators of the “Global Business Initiative on Human Rights” and motivated other multinational groups, General Electric, Unilever and Coca Cola, to join it.
In a brave move for multinational corporations, it also became a member of Amnesty International. And it announced on its website: “Based partly or wholly on human rights considerations, ABB has not taken any business with North Korea and Myanmar for several years.”
Is it a serious violation of an ABB employee’s human rights when he is taken hostage by a country and put into prison by a government for no valid reason? For the president of Switzerland who called it a “serious crime” the answer was yes. For the ABB Group’s American chief executive, however, it was a “no.” I find it outrageous that a multinational company does not agree with all those who believe that innocent people should not be jailed. In legal-rational democracies this is a universally accepted rule.
Two Swiss ABB employees were indeed taken hostage in Libya, one of whom, the ABB country director, was put into jail without trial.2 The imbroglio began when Libya’s now-deceased premier, Muammar Gaddafi, was angered by the arrest of his son Hannibal in Switzerland on charges of bodily harm, threatening behavior and coercion of his staff. Hannibal had a history of violence in the U.K., Denmark and Gaddafi’s Libya had, according to Amnesty International, a long history of “human rights violations committed in the 1970s, 1980s and 1990s.” But the dictator wanted revenge.
Obviously, the ABB Group CEO considered all this as benign when he announced in a Swiss newspaper that ABB would continue to do business with Gaddafi’s Libya after the release of the hostages. Human rights were no issue here when he explained his decision to the Swiss newspaper “Der Sonntag”3 that there is “no need to change the business policy towards Libya as this was a dispute between Switzerland and Libya in which ABB was all of a sudden caught by chance.” There is a lot of hypocrisy involved in the behavior of “good corporate citizens” they claim they want to be.
The dreams of being at the same time good corporate citizens and well performing companies, including in oil-rich Libya, have evidently collided here. They have highlighted the dilemma businesses are faced with when Western politicians stigmatize, at will, countries they consider their enemies. That includes North Korea, despite freely courting Gaddafi’s Libya at that time.
Another mining company slammed the door on a delegation of North Korean mining customers who visited Sweden in November 2009. That was surprising because Sandvik, as it was called, was nevertheless eager to sell mining equipment to the country. I had been representing the business in North Korea beforehand. But the company demanded, like others, to be removed from the sponsoring list of the Pyongyang Business School.
These companies have switched from their commercial core business to trying to clean up the more political business of protecting human rights in North Korea. But they aren’t giving much thought to human rights in the rest of the world—such as Saudi Arabia and Zimbabwe, where many of them operate.
And, to add one problem that every executive sighs over, corruption is an issue that business people must deal with both in emerging markets and in developed countries. In a per
fect world, it wouldn’t be a problem. The Korea Friendship Association (KFA), placed under North Korea’s Committee for Cultural Relations with Foreign Countries, claimed on its website that North Korea is home to no corruption, whereas Transparency International (TI) believes, according to its 2011 Corruption Perceptions Index, that Somalia and North Korea are the world’s most corrupt nations.
While KFA’s dream is, without a doubt, too good to be true, TI was excessively harsh. I have done business in Africa, the Middle East and Asia, but have never found North Korea to be the worst in this regard.
The main lesson my experience taught me is that, all over Africa and Asia, civil servants were underpaid and needed to find side sources of income. North Korea is very much the same: its people remain economically cornered and sanctioned to the bones by foreign powers, and as long as it does not carry out meaningful economic reforms, the country’s ability to pay its civil servants will be hampered.
New Zealand ranked number one on TI’s index, a potentially false victory that raises questions over the credibility of North Korea’s placement on these corruption lists. Is it really possible that New Zealand is the world’s cleanest country when, on the same day TI published its findings in 2011, the country’s Dominion Post ran a front page story titled “Economy’s NZ$7 billion black hole”?
The piece reported on missing cash that was equivalent to one-quarter of North Korea’s GNP. It alleged that “Cash trade jobs, crimes, wages under the table and online trading are costing the Government more than $7 billion a year in lost tax.” Revenue Minister Peter Dunne even told the reporter, “There is a vast underground economy in New Zealand, always has been: mate’s rates, cash jobs, jobs in kind, all of those sorts of things which are very hard to track down.”
In the PwC global economic crime survey for 2011, almost half of the New Zealand companies said they were victims of fraud in the previous year. New Zealand has more fraud than Australia and the USA. The country has been leaping among the global rankings for fraud from eighth place in 2009, placed out of 54 countries, to fourth place in 2011, in an even greater pool of 78 countries.
Moreover, a Justice Ministry paper revealed in December 2011 that more than 1,000 New Zealand companies or limited partnership arrangements have been “implicated in serious offending overseas over the past five years” including “trafficking of illegal drugs, people and illegal arms, money laundering and large-scale frauds.” The logic doesn’t add up. New Zealand has more than a thousand companies involved in illegal overseas business, whereas there are only a few dozen North Korean companies are engaged with the rest of the world.
Even in a worst case scenario, criminal New Zealand companies would vastly outnumber criminal North Korean enterprises. Can Pyongyang really be that evil compared to others on the list?
In an article entitled “The Black Hole of North Korea,” published in the New York Times in August 2011, Isaac Stone Fish cheerfully admitted that a story he had written about a drug “epidemic” in North Korea was based on talking to just one North Korean defector, who could have easily not been trustworthy. He confessed, apparently without any sense of guilt, “I painted a picture of the drug’s abuse for my article: part escape from the desolation of North Korean life, part medicine in a country with practically no healthcare infrastructure. Yet after months of research I have to admit that I have no idea what is actually happening inside North Korea.”
At least this journalist was brave enough to admit his ignorance. But others continue to make reckless assessments in their reports and books. Since many of these reporters have never visited, and the journalists who have gained access don’t see much, they wouldn’t really know for certain. Or, to quote The Guardian, “The lack of western sources in North Korea has allowed the media to conjure up fantastic stories that enthrall readers but aren’t grounded in hard fact.”4
1 http://www.forbes.com/sites/jacquelynsmith/2012/04/18/the-100-best-corporate-citizens/
2 http://www.thelocal.ch/page/view/267
3 http://www.aargauerzeitung.ch/wirtschaft/abb-bleibt-libyen-treu-reiseverbot-fuer-schweizer-mitarbeiter-11928016
4 http://www.guardian.co.uk/commentisfree/2012/jul/19/korean-conflict-time-nuanced-view
Chapter 6:
A Manchurian Candidate?
“Supreme excellence consists in breaking the enemy’s resistance without fighting.” — Sun Tzu, The Art of War
Back home, curious outsiders often asked me questions like, “Are you doing more than just business in North Korea? Why would any foreigner move to North Korea unless they were in espionage? Were you a spy?” It’s true that working in North Korea has the flair of a James Bond movie, with all its intrigue, women, and cars. In the 2002 flick Die Another Day, Bond even starts out captive in North Korea and escapes across the DMZ in a prisoner exchange. It was a fate that I, thankfully, didn’t meet.
To my surprise, no foreign intelligence agency asked me to snoop on the North Korean government. I didn’t understand why not. When I arrived in the early 2000s the U.S. had announced its firm intention to defeat the DPRK, a part of George Bush’s “Axis of Evil.” Washington seemed like it would use all available military, economic and psychological weapons to accomplish its goal—which included, according to the Bush administration, the exclusive right to pre-emptive strikes against what the U.S. called “rogue states.”
With that volatile environment, foreign intelligence agencies watching the DPRK should have been eyeing people like me who had access to high-level officials. I wondered what my “market value” would have been to these agencies, or put more bluntly, what rewards they would have offered in exchange for information. Of course, I never intended to sell my soul to any of them, which would have meant betraying close friends in North Korea.
It was a moral fiber that I built up from doing business in hostile environments in Africa, the Middle East and Asia. That was my way of staying sane when so much the world is suffering under the weight of poverty, with millions of people waiving any commitment to ethics just to make a meagre income.
Perhaps it’s an example of “survival of the fittest” in the rawest sense, a fierce competition in which the toughest and most conniving political players rise to the top while their honest counterparts are purged. As a foreign businessman, being honest and gaining the trust of locals who deal in a cutthroat business environment is the only way to make a living. That’s why working as a spy was out of the question.
Perhaps the intelligence agencies considered me unreliable, a loud figure among the business community in Pyongyang who could easily embarrass them publicly, or blow their cover. Or did they simply realize that I was not interested in being recruited? Maybe they had other intelligence sources, like North Korean defectors and missionaries working along the border. Those guys, of course, don’t quite have the access that businesspeople inside Pyongyang have. The Wikileaks revealed that every US diplomat was, to some extent, underhandedly gathering information when they met with expatriates in Seoul and Beijing.
The DPRK has been successful in shutting out foreign spies, suggesting that many of them simply don’t have access to the inner workings of the country. Rather, the intelligence picture is usually pieced together through interviews and defector stories. The Central Intelligence Agency, for one, is known to gather as much as 90 percent of its intelligence from media reports.
Of course, it’d be impossible from a CIA officer to actually gather information from inside Pyongyang. When the apartment of a senior official of a UN organization was renovated, she bluntly asked the Korean workers where the bugs would be planted. They equally matter-of-factly pointed to various spots in the flat, she later told me. When I made phone calls I sometimes jokingly said, “Hello to you and to everybody else who is going to enjoy our conversation.”
In at least one instance I heard, as a reaction, somebody giggling in the background. I was gleeful at this rather friendly human reaction. In the Western powers, on the other hand,
eavesdropping satellites and the sophisticated e-mail interceptors always remain silent. All North Koreans, moreover, have been systematically sensitized to the so-called threat of having contact with foreigners, and they were keenly made aware to avoid even harmless gatherings of them.
Intelligence in the dark
CIA directors and military commanders have predicted the imminent collapse of the DPRK, despite the regime surviving a famine, two transfers of power, the pursuit of nuclear weapons and a near-war with South Korea. 1996 the director of the CIA predicted North Korea’s collapse within 3 years;1 earlier that year, the U.S. Commander of the 7th Army in South Korea forecasted collapse within “a very short period.”2 Was this a matter of having access to shoddy information?
One of the most vociferous persons in announcing the imminent implosion was a senior U.S. military commander and self-proclaimed North Korea “expert.” He retired in the early nineties and fell into oblivion whilst the DPRK continued to exist till today. More recently, though, the regime added weapons of mass destruction to its arsenal, a deterrent that would ensure its enemies’ predictions would carry a devastating cost.
A European consultant who visited the DPRK several times, working with the Swiss Development and Cooperation Agency in Pyongyang, told me that he firmly believed every other expatriate was a spy. He did not give me his definition of the “expatriate” population. But if we lump all foreigners together into this label, while leaving out the Chinese, there would be approximately 500 residents (most of whom were diplomats). The Russian embassy, which was the country’s largest, counted about 100 people in 2005—a sharp decline as it was one tenth of the number in 1990. Diplomats were not busily engaged in the promotion of bilateral economic development plans, and rarely did they spearhead cultural exchanges. Some diplomats told me they were bored because they had nothing to do.