North Korean House of Cards

the Royal Economy. In the summer of 2010, Kim Jong-il reportedly began to shift
control of the funds in several banks, primarily in Europe, to Kim Jong-un. When
Kim Jong-il died, decision-making responsibilities with regards to the Royal
Economy fell to Kim Jong-un, with guidance from both Kim Kyong-hui, who had
helped her brother manage the Kim family funds for years, and Kim Sol-song, who
was a key figure, possibly the Director, of General Bureau 73. 449 Jang Song-taek may
have been involved in some of the conversations about how to secure funds from
outside the regime, namely China, but was likely kept out of the conversations on
how to utilize the funds inside the regime to build power around Kim Jong-un. 450
Circumstantial evidence suggests that the Kim family was increasingly
desperate because of depleted family coffers. Expenditures ballooned during Kim
Jong-il’s later years as he sought to solidify the succession process. In addition,
there were huge costs associated with the events commemorating the centennial
of late President Kim Il-sung’s birth in April 2012. Finally, in the absence of any
accomplishments and leadership charisma, Kim Jong-un was forced to embark on
an idolization and gift-giving campaign that dwarfed that of his father. This anxiety
existed amidst an ongoing struggle within the regime as power-brokers fought over
control of lucrative sources of hard currency inside and outside North Korea. This
has resulted in many rumors that have obscured assessments of the Royal Economy.
What follows is a highly speculative examination of the Royal Economy
under Kim Jong-un. It is based on a close reading of regional media, as well as a
number of interviews in 2013 and 2014 with defectors and Pyongyang-watchers in
Asia and Europe. The reader should be careful in placing too much faith in any one
story or the specific amounts of money tied to various parts of the Royal Economy.
Instead, the narrative should be taken as a whole to represent one theory of the
money trail under Kim Jong-un.
a. Struggles to Maintain the Royal Economy
Even before becoming Supreme Leader, Kim Jong-un was faced with a
fundamental challenge to his ability to consolidate power: the lack of funds. In the
past, Kim Jong-il had given Mercedes Benzes, high-end watches, and other luxury
449 “Economic Reforms Stalled, Controls on Economy Tightened One Year After Death of Kim
Jong-il,” Sankei Shimbun, November 29, 2012. When Kim Jong-il died, foreign currency operations were
reportedly halted temporarily as they were consolidated under Kim Jong-un’s control. When these
operations resumed, some sources contended that a new Department 81 was established under the NDC
to manage these funds. The department is supposedly tied to Kim Jong-un’s NDC Secretariat, which is
headed by Kim Jang-son.
450 Author’s interviews in Seoul with senior defectors and Pyongyang-watchers, 2013 and 2014.
Committee for Human Rights in North Korea
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