North Korean House of Cards

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currency brought power. Access to foreign currency funding streams brought influence and independence. Allowing these funds to come into the regime unchecked created a potential problem for Kim’s ability to consolidate power. Therefore, by creating Office 38 to oversee and coordinate these various funding streams, Kim Jong-il exerted his control over a source of revenue that would become increasingly important at a time when support from North Korea’s traditional patrons, such as the Soviet Union, and other sources was declining. To create Office 38, Kim Jong-il used some of the infrastructure belonging to the KWP FSD. The centerpiece of the office’s apparatus was the Kwangmyongsong (“bright star”) General Corporation. This trade organization was the face of Office 38 and was responsible for deals ranging from food and raw materials to high-tech areas, such as information technology (IT) and biotechnology (BT). 396 As the Director of the Kwangmyongsong General Corporation and the Director of Office 38, Rim Sang-chong was able to travel incognito around the world, including to critical markets in the West. 397 The Koryo Bank was established to conduct the banking for Office 38 operations. Early on, Office 38 became responsible for procuring the daily necessities from foreign countries for Kim Jong-il and his family. In contrast to Office 39, where funds were primarily earmarked for Kim Jong-il’s power consolidation and gift politics, Kim treated the earnings generated by Office 38 as his own personal funds. Office 38 also became a channel for tapping into hostile western economies through their connections to South Korean businesses. As such, the office maintained a close working relationship with the intelligence bodies dedicated to operations against the South, namely Office 35. As Kim Jong-il became the Supreme Leader, the Party economy began to dwarf the state economy, surpassing it in terms of production, exports, and imports. 398 The infrastructure of Office 38 and 39 grew substantially, adding 396 The Kwangmyongsong General Corporation steadily grew in importance as South Korean administrations eased restrictions on North Korea. In 1996, South Korea secretly sent approximately 3,400 tons of flour (worth $986,000) to North Korea. This was a quiet deal arranged by South Korea’s Presidential Secretariat, despite the government’s policy at the time to suspend food aid to North Korea. An additional $4 million worth of food aid was given to Pyongyang later in 1996 with the financial support of several big business groups. Hyundai Group financed the first shipment, which was delivered to the Kwangmyongsong General Corporation. 397 Jang Yong-Hoon, “What Kind of an Organization Is North Korea’s Kwangmyongsong Guidance Bureau?” Yonhap News Agency, December 3, 2002. By the early 2000s, the Kwangmyongsong General Corporation was identified as existing under the Ministry of Trade. It is unclear whether it had been removed from Office 38 by this time. 398 Author’s interviews with several Pyongyang-watchers in Seoul with special knowledge of the North Korean economic system. Under Kim Jong-il, the Royal Economy accounted for nearly sixty percent of the economy by the late 1990s and 2000s. Ken E. Gause 183
numerous subordinate trade and foreign currency-earning entities, as well as finance, commerce, distribution, and service companies with overseas branches throughout Europe, China, and Southeast Asia. 399 Much of the modern industrial and revenue-generating infrastructure throughout the country was shifted from the state economy to the Party economy, including factories, trade units, and department stores. The funds they generated went into the Party coffers, which Kim Jong-il used to maintain the system. 400 Chart 6: Royal Economy Apparatus under Kim Jong-il Party Guard Command (Yun Jong-rin) Chongunsan Institute Chongunsan Trading Co. Kwangmyong Trading Co. Supreme Leader (Kim Jong-il) General Bureau 73 Rungra 888 Trading Co. Kim Kyong-hui Unha Trading Corp. Kyonghung Guidance Bureau Nagwon Guidance Bureau KWP Administrative Department (Jang Song-taek) No. 2 Guidance Bureau 727 Guidance Bureau Capital Construction General Bureau KWP Finance Department (Kim Hyo?) Bureau 8 Bureau 24 Pyongyang Information Center Sokyong General Trading Co. State Office 38 (Kim Tong-un?) Koryo Guidance Bureau Yangkakdo Guidance Bureau Ryukyong Guidance Bureau Kumgang Guidance Bureau Office 39 (Jon Il-chun) Daesong Guidance Bureau Kyonghung Guidance Bureau Rakwong Guidance Bureau Kumkang Guidance Bureau Daehung Guidance Bureau Daesong Bank Daesong Trading Co. Rung Ra-to Trading Co. KNIC KWP Machine (Munitions) Industry Department (Chu Kyu-chang) Office 99 Changkwang Credit Bank Second Economy (Paek Se-pong) KWP Civil Defense Department 114 Guidance Bureau External Economic Guidance Bureau SANS Yonhap Trading Co. Danchon Bank Daehung Trading Co. Ministry of People’s Armed Forces (Kim Yong-chun) Udok Guidance Bureau Paekho 7 Trading Co. Ministry of People’s Security (Ri Myong-su) General Bureau 7 General Bureau 8 Kangsong Trading Co. State Security Department Customs General Bureau Sinhung Trading Co. Changsaeng Trading Co. Separate entity 399 Hyon Song-il, North Korea’s National Strategy and Power Elite (Seoul: So’nin Publications, 2007). 400 Hong Sung-Ki, “South Korea Needs New Policy on North Korea in Kim Jong Un Era,” Daily NK, September 2, 2015, http://www.dailynk.com/english/read.php?cataId=nk03600&num=13439. A recent article by Hong Sung-ki, a professor at Ajou University, lays out a number of sources of funding that came into the North Korean regime since the end of the Kim Il-sung era and over the course of the Kim Jong-il era (1991-2012), a portion of which ended up in the Royal Economy. The total amount of this funding was approximately $20 billion, including: $5.1 billion from international aid and “denuclearization payoffs;” $4.8 billion from oil and coal trade with China; $4 billion in trade with South Korea (including profits from the Kaesong Industrial Complex and the Mt. Kumgang tourism); $3.9 billion from the North Korean service sector (including profits from Chinese tourism, foreign remittances, and shipping charges); $1.3 billion from overseas restaurants and other projects (outsourcing manual labor for overseas logging and mining companies); and $2.8 billion from profits from illicit operations (weapon sales and other illicit goods and services). This is an approximation, and the reader should not treat these individual numbers as ground truth. Other sources, for example, contend that the regime’s illicit operations netted much larger returns. Committee for Human Rights in North Korea 184
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North Korean House of Cards Leaders
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Copyright © 2015 Committee for Hum
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Jack David Senior Fellow, Hudson In
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3. The Regent Structure............
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d. Ministry of People’s Security.
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II. PREFACE After his seminal 2012
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the reader that many are purged bec
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IV. ABOUT THIS STUDY There are nume
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VI. EXECUTIVE SUMMARY Merriam-Webst
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ultimate decision maker and sole so
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humanity; in order to understand cr
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32. NIS: South Korean National Inte
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egent structure would begin to chan
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However, there is very little evide
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IX. SECTION ONE: NORTH KOREAN LEADE
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All Party members, military men, an
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Dressed in black, gloveless, and ba
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choreography of the transfer of pow
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suffered a stroke. 18, 19 A month l
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the GPB in the Kim Jong-il era, beg
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2009 from Chief of the GSD to Comma
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posting, Ri had been the Fifth Corp
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Days after Jang Jong-nam was identi
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4. Civil-Military Relations by Mid-
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above, especially the purge of Ri Y
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leaders include Choe Ryong-hae, Kim
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of the military. More than that of
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B. CHAPTER TWO: THE PURGE OF JANG S
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afforded Jang the opportunity to me
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and merged into the RGB as Bureaus
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to as the éminence grise, who was
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a. Kim Jong-il’s Will In 2012, de
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A second rumor suggests that Jang
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KWP OGD, and the SSD, to construct
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ut his pleas went unanswered. At th
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eferred to him as an “unparallele
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out of the picture, 163 the connect
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ankings in October 2013 and then fe
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Jong-il, such as Ri Su-yong (Ri Cho
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ones, lowering the average age of t
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the regime. Throughout 2013, Choe a
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4. Kim Jong-un and the Wider Leader
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Armed Forces, 202 had been executed
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Name Position(s) Comments Kim Solso
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Name Position(s) Comments Kim Songn
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Name Position(s) Comments Colonel G
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Table 2: Second Echelon of Power Na
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Name Position(s) Comments Miltary/
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Name Position(s) Comments General K
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Table 3: Third Echelon of Power Nam
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Name Position(s) Comments Ju Kyucha
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Name Position(s) Comments General P
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Name Position(s) Comments Colonel G
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Name Position(s) Comments Ro Tu-cho
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Table 4: Fourth Echelon of Power Na
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Name Position Comments Lieutenant G
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Name Position Comments Lieutenant G
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Name Position Comments Hong Yongchi
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Name Position Comments Jo Thae-san
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Name Position Comments Government R
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Name Position Comments Kim Choljin
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Name Relation Comments Ri Il-hyok K
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Name Relation Comments Cha Cholma S
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While there is debate within the co
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• The Royal Economy. This chapter
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within the leadership in the mid-19
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ase of power. 261 Decision-making o
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The Tenth SPA convened in Pyongyang
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system of socialism.” 273 For man
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Leader. However, this will not last
Page 141 and 142: Image 11: Kim Jong-il’s signature
Page 143 and 144: Image 13: National Security meeting
Page 145 and 146: Image 15: A March 13, 2013 military
Page 147 and 148: . Kim Jong-un’s Role as Decision
Page 149 and 150: The Friday meetings focus on milita
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Page 153 and 154: KWP Charter, the CMC “discusses a
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Page 157 and 158: constraints established by his fath
Page 159 and 160: Fully assuming the role of Supreme
Page 161 and 162: As the guidance in Kim Jong-il’s
Page 163 and 164: 1. The Personal Secretariat under K
Page 165 and 166: of Kim’s death in 2011, it is rum
Page 167 and 168: Kim Jong-il Secretariat was not an
Page 169 and 170: and manner of operation, however, a
Page 171 and 172: a. Personal Secretariat Personnel a
Page 173 and 174: In 2013, South Korean media reports
Page 175 and 176: Supreme Command apparatus to the GS
Page 177 and 178: . Secretarial Office of the Central
Page 179 and 180: from the field commands, as well as
Page 181 and 182: administrative. Kim Jong-il, a more
Page 183 and 184: overseeing the implementation of th
Page 185 and 186: C. CHAPTER SIX: THE ROYAL ECONOMY
Page 187 and 188: for Kim Il-sung’s own consolidati
Page 189 and 190: Following the creation of Office 39
Page 191: The Early European Connection In th
Page 195 and 196: According to a former diplomat who
Page 197 and 198: National Intelligence Service (NIS)
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Page 205 and 206: General Trading Corporation, then a
Page 207 and 208: Hong Kong, and Singapore. These bus
Page 209 and 210: Kim Jong-il’s private secretary a
Page 211 and 212: Jang’s Channel to China The Korea
Page 213 and 214: Chart 10: Jang’s Channel into the
Page 215 and 216: the Royal Economy. In the summer of
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Page 219 and 220: leadership dynamics inside North Ko
Page 221 and 222: • The KWP Administrative Departme
Page 223 and 224: • Tourism represents a growing so
Page 225 and 226: Chart 12: Jang’s Tapping into Mil
Page 227 and 228: In addition to these reforms, Kim J
Page 229 and 230: Despite the regime’s efforts to s
Page 231 and 232: Night of the Long Knives. Saddam Hu
Page 233 and 234: In the months following the Party c
Page 235 and 236: According to South Korean sources,
Page 237 and 238: In April 2012, the regime made a nu
Page 239 and 240: National Security Meeting, January
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of the GC escorted Jang from the ha
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as it related to the KWP Administra
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it became more difficult for trader
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Name Post Relationship to the OGD M
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Star.” 545 His elevation in North
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the command and control structure o
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the connections between the larger
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i. Structure The headquarters of th
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Chart 18: Organizational Chart of t
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Pyongyang Anti-Aircraft Artillery C
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Palace of the Sun, which holds the
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ii. Cordon of Security: Relationshi
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iii. Role in the Regime It is assum
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assume the role of political office
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• The Eighth Bureau (Border Secur
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d. Ministry of People’s Security
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chain of command and is responsible
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olstering internal security. Provin
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associate, these fortunes began to
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offices: the Cadre Department, the
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Jo Kyong-chol seated at the far lef
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XI. CONCLUSION To commemorate the 1
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Others see a ruthless regime that i
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it remains to be seen whether this
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continues to create the image of a
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had been executed by anti-aircraft
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• General Ri Yong-gil (60) has be
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2. Party • Kang Sok-ju (76) has b
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• Kim Song-nam (62) is an alterna
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domestic and social issues .668 He
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may occasionally be able to reach o
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Committee list.At the Third Session
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1970s, 692 but his career was resur
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Vice Chairman of the NDC, O Kuk-ryo
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of communication to Kim Jong-un lik
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• Ju Kyu-chang (87) has been an a
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General Pak as his successor withou
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as the “Storm Corps.” He first
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present for Kim Jong-un’s guidanc
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senior leadership are evident in hi
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on debt settlement issues with Russ
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Date Visit Gift (as described in No
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Date Visit Gift (as described in No
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XIV. APPENDIX C: NORTH KOREAN MILIT
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Insignia Title/Name 소좌 (So-jwa)
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B. KOREAN PEOPLE’S ARMY NAVAL FOR
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Insignia Title/Name 상위 (Sang-wi
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C. KOREAN PEOPLE’S ARMY AIR FORCE
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Insignia Title/Name 상위 (Sang-wi
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XV. BIBLIOGRAPHY A. Books and Journ
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54. Cathcart, Adam. “Thrice-Curse
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117. “Is Kim Jong Un Playing Musi
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191. Lee, Gyo-Gwan. “Kim Jong-il
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264. “North Korea’s Kim Jong-un
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Committee for Human Rights in North
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North Korean House of Cards

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