When Ju Song Ha was teaching high school in Chongju, a farming town in northeastern North Korea, classes ended at 2 p.m.—and then the students got to work. Ju marched the teens into fields blooming with pink and white flowers. Working in pairs, one student cut into the bulb of a waist-high plant and the other scraped the sticky white resin into a cup supplied by the North Korean government. They worked four or five hours each afternoon among those plants that, by North Korean government fiat, are known as white bellflowers. In fact, they were poppy plants—and the students were harvesting that year's heroin crop for Dear Leader Kim Jong Il.
Much may be mysterious about hermetic North Korea, but some facts are well known. Kim has weapons-capable missiles and a million-strong army breasting the 38th parallel. He has the material for nuclear weapons, might have several nuclear bombs, and threatens to destroy Seoul—South Korea's capital—if anyone tries to forcibly take them away. Beyond the security threat North Korea poses to its neighbors militarily, however, is another clear and present danger: Kim Jong Il props up his destitute failed state with international criminal enterprises that would be the envy of any Mafia don.
Missile sales to other rogue nations constitute just a fraction of Kim's legal, if questionable, operations. His country is also a hotbed of counterfeiting and car smuggling. Perhaps the biggest money-spinner, though, is drugs—chiefly the manufacture and export of heroin and methamphetamines. North Korea supplies drugs to Russia and China, South Korea and Taiwan. Meth manufactured in the Democratic People's Republic of Korea (D.P.R.K.) accounts for a third of all such drugs sold in Japan, according to an expert on the trade—which puts their street value at $3 billion. Since 1997, Japan has seized almost 1,500 kilos of methamphetamines believed to have originated in the North. "I don't doubt that this is only a very tiny tip of the iceberg," says Takahiko Yasuda, director of Japan's National Police Agency's drug control division. On the streets, Japanese authorities easily recognize North Korean contraband because the quality is superb and the packaging impeccable. Japan's druggies have come to depend on that. "North Korean drugs?" says Tsuko, a recovering drug addict in a Tokyo rehab center. "They've been around for at least 20 years."
And for more than two decades the world has let Kim get away with it, despite serial busts of North Korean diplomats acting as well-dressed mules and regular seizures of heroin and methamphetamines in North Korean packing crates labeled honey or kidney beans. The reason: the North's military belligerence and more recently its nuclear capabilities and missiles were greater worries. But as the U.S. and its allies look to rein in Kim's A-bomb program, it is becoming increasingly hard to shrug off his country's drug trafficking as little more than a bad habit.
The U.S., seeking ways to pressure Kim to disarm, is debating international economic sanctions, measures that could include going after his rackets. In recent weeks, members of U.S. President George W. Bush's Administration have started to make a connection between the North's criminal commercial activities and the country's nuclear weapons development, laying the first bricks in a foundation of justification and support for the interdiction of North Korean shipping. Two weeks ago, Andre Hollis, U.S. Assistant Secretary of Defense for Counternarcotics, told a congressional committee that "North Korean officials may be using illicit trading activities to provide much-needed hard currency to fund its army and weapons-of-mass-destruction programs." Meanwhile, U.S. Secretary of State Colin Powell said in the Senate that any rapprochement with a North Korea that "thrives on criminality" would have to address both nukes and Kim's shady dealings.
For the record, Washington officials point out there's no direct evidence to link Kim himself to the drug trade—that it's possible ordinary criminals or a rogue military organization are slanging dope on their own, without formal state direction. But statements from people who have fled the North and an array of circumstantial evidence paints a more likely picture: the North is a narco-state in which all aspects of the drugs operation—from schoolchildren toiling in poppy fields to government-owned processing plants to state-owned cargo ships and trading companies—are controlled by Kim. "Kim Jong Il and his coterie own everything in North Korea," says Nick Eberstadt, an expert on North Korea's economy at the American Enterprise Institute in Washington, D.C. "This is the most perfectly totalitarian society ever created."
Indeed, as North Korean officials keep getting busted around the world, it's hard to point the finger elsewhere than their government. In a string of arrests and detentions dating back to 1977, more than 20 of the country's diplomats, agents and trade officials have been implicated in drug-smuggling operations in more than a dozen countries, among them Egypt, Venezuela, India, Germany, Nepal, Sweden, Zambia, Ethiopia and Laos. North Korean vessels now even appear to be shipping drugs between third-party states. Australian police in April staked out a spot near the sleepy tourist town of Lorne, shadowing three visitors from Southeast Asia believed to be waiting for a drug shipment when, to their amazement, they saw a dinghy hauling 50 kilos of heroin allegedly from a 4,000-ton cargo ship hugging the shoreline. The ship bore a Korean name, Pong Su. After a dramatic four-day chase, Australian special forces slid down ropes from a helicopter and arrested 30 North Korean crew members, one of whom is a member of Kim's Korean Workers' Party. On the beach near Lorne, police found a drowned crewman and a desperate North Korean snuffling around in the bushes—where 75 additional kilos of heroin had been hurriedly buried.
Australia hadn't encountered North Korean drug smuggling before. Its police say the heroin comes from Southeast Asia's Golden Triangle—suggesting that Kim, or one of his minions, sent a 4,000-ton freighter to the southernmost edge of Down Under to deliver someone else's smack.
That's how far—literally—he will go to keep his dirty dealings rolling. And to understand how Kim runs that business, you have to enter his weird world. There's no better place to start than at Bureau 39.
Central Committee Bureau 39 of the Korean Workers' Party is housed in a corner of a six-story, rectangular concrete building within a stiffly guarded Party compound in the heart of Pyongyang, not far from the Koryo Hotel, where many of North Korea's esteemed foreign guests stay. Kim Jong Il's office is in a nearby building. Established soon after the Stalinist regime started a drive in 1974 to raise foreign currency to further the glorious revolution, Bureau 39 is among the most secret sites in a battened-down land. It is the headquarters for almost all the North's foreign-exchange-earning businesses, from legal sales of exotic mushrooms and ginseng to drug running, car smuggling and counterfeiting.
Around the globe, Bureau 39's tentacles have such names as Daesung Chongguk—a trading company with nine overseas subsidiaries involved in legal trades in machinery and textiles—Golden Star Bank in Vienna, and Zokwang Trading Co. in Macau. Their earnings flow to Bureau 39, and hence, according to former North Korean officials, the money is at Kim's fingertips. "If you cut off Bureau 39," says Kim Dong Hun, a former North Korean business operative who defected in 1997, "you can kill Kim Jong Il. Kim can't exist as leader of North Korea without it."
Before he jumped ship, Kim Dong Hun was a senior official at Chosun Ongryook Trading Co., a North Korean importer-exporter of legitimate goods such as kitchen equipment. Friends at Bureau 39 approached him in the late 1980s and asked if he would trade drugs on the side. "They told me it was a secret and I couldn't leak a word of it," he recalls. They advised him to consider the drug trading "more important" than his regular job.
Kim soon found himself in hotel rooms accepting stacks of banknotes in black briefcases from members of the Japanese yakuza. He also took trains into China with a white powder, probably heroin, buried beneath dried squid in cardboard boxes. In all, Kim figures he earned the D.P.R.K. almost $1 million from drugs over six years, and he admits to skimming off a portion for himself to buy fancy cars. He knows exactly where the rest of the money went—to Bureau 39. "If it goes to Bureau 39," he says, "it is the same as sending it to Kim Jong Il."
Drug trafficking is just a part of commerce that keeps the Dear Leader in sunglasses and boiler suits. Other profitable ventures are car smuggling and counterfeiting. State-owned companies—there are no other kind—snap up used automobiles from Japan, where strict emission controls make them quickly obsolete, and roll them across the border to China to satisfy the mainland's raging demand for foreign makes. Counterfeiting is equally lucrative. North Korea uses presses from central Europe to churn out crisp $100 bills, ships them out through courier or uses them to pay part of its import bills. As with its methamphetamines, the North's greenback quality control is impressive. "They're the best in the world at it," says Balbina Hwang, a policy analyst at the Heritage Foundation in Washington, D.C.
Because North Korea's manufacturing infrastructure is tiny, its government for years has gone to extraordinary lengths to obtain a supply of goods that could be sold overseas. To that end, the D.P.R.K. routinely shakes down its own desperately impoverished citizens. In the early 1970s, the regime began forcing its subjects to collect and contribute just about anything that could be sold abroad for dollars and yen, material referred to euphemistically as "loyalty foreign currency." At first, citizens donated gold and silver. These ran out quickly, so they foraged for mushrooms, clams, aralia shoots and the roots of wild ginger plants. Over the years, quotas have been instituted. University teachers today have to contribute at least $10 yearly, according to North Korean defector Ju Song Ha. The country's 200,000-250,000 political prisoners gather wild mushrooms, and old folks raise silkworms, pull out their threads and tithe them to the Dear Leader. All this is collected by Department No. 5—a branch of Bureau 39.
Few commodities are as convertible as gold, and that has lots of North Koreans combing rivers, particularly in Unsan, Hoichang and Yodok regions. They prospect with approximately 1.5-sq-m wooden frames covered with a woolen fabric, usually a winter coat, to sluice sand and gravel for gold particles, according to Lee Joo Il, a defector who is now a North Korea human-rights activist. Groups of three to five work together, processing up to two tons of sand in a day, producing 0.1-0.2 grams of gold. Once you've contributed a nugget or two to the government, you are allowed to shop at special stores run by Department No. 5, which stock hard-to-find consumer goods. Ten grams of gold gives you the right to buy a color TV, five grams a sewing machine. With 0.1 grams of gold you get a pair of nylon socks. You still have to pay in cash for the goods: the gold simply gets you in the door.
But drugs are the ultimate proof of loyalty. They cost little to produce, and make Kim the most money of all. According to estimates, North Korea has anywhere from 4,200 to 7,000 hectares under poppy cultivation. An anonymous North Korean defector testified to a U.S. congressional committee two weeks ago that in 1997 Kim ordered each of the D.P.R.K.'s collective farms to grow 25 acres of poppies.
Kim Young Chul, 34, was a cog in the North's drug industry in the late 1990s, working as a driver in a military unit. The poppies came from farms as large as 10 sq km in North Hamgyong and Yanggang provinces. Farmers extracted the resin and fashioned it into balls the size of oranges. "It would be wrapped in leaves and paper and taken to the factory in boxes to be boiled," says Kim. His job was to drive refined heroin to the docks of Chongjin, his hometown, a large port city on North Korea's northeast coast. "I'd pick it up and drive it to the harbor, and it would be taken out to sea to be picked up by ships heading for Singapore, Hong Kong, Cambodia and Macau." Kim says his unit sold between three and five kilos of heroin a month, earning about $3,000 a kilo; the money was deposited in Pyongyang banks controlled by Kim Jong Il, he says. "We never asked questions," says Kim, who defected to South Korea last year. "We thought we were showing our loyalty to Kim Jong Il. We thought he would use the money to improve our lives."
Methamphetamine production was expanded in the late '90s, partly to make up for a drought-induced slump in opium production but also to satisfy demand from Japan. Methamphetamine, a chemical product, is simpler to produce than heroin. But it also relies on the import of expensive raw materials such as the chemical ephedrine. In 1998, Thai police stopped an Indian shipment of 2.5 tons of ephedrine—also used in allergy drugs—bound for Pyongyang. A North Korean diplomat familiar with the case says the batch was seized because Thai customs officials were suspicious that a country such as North Korea would need so much cough medicine. The diplomat, who now lives in Seoul, says the Thais allowed the 2.5 tons through after six months of wrangling. Few people believed the compound was being used to solve a hay fever crisis in North Korea. "That was enough ephedrine to last North Korea 100 years," says a former North Korean diplomat.
The world has already been introduced to Kim Jong Il the saber-rattling tyrant, Kim the kidnapping megalomaniac, and Kim the brutal Stalinist strongman. Now, as worried nations continue to try to figure out how to persuade North Korea to give up nukes, Kim is taking on a new guise: the Al Capone of the Hermit Kingdom. As the Dear Leader, he can spend those narco-dollars—and fake dollars—however he wants, for the French wine or porno tapes he is reputed to enjoy—or, more chillingly for the rest of the world, to add a few more nuclear bombs to his arsenal. Not even Al Capone at the height of his power had the Bomb.