In a fascinating report that provides a glimpse into the shadowy North Korean black-market economy, the Washington Post has published a story about a 2016 incident in which Egyptian authorities intercepted a North Korean ship bearing a Cambodian flag after being alerted by US authorities. After searching the ship, Egyptian law enforcement discovered something unexpected: a trove of nearly 24,000 rocket launchers, and components for 6,000 more weapons, hidden below a large pile of loose iron ore.
But perhaps the biggest surprise for the Egyptian authorities emerged when they tried to determine for whom the weapons were intended, and discovered that they had been secretly purchased by the Egyptian military in violation of international sanctions against NK arms sales. Further compounding the irony, Egypt had recently joined the UN Security Council – the international body sponsoring said sanctions – before deciding to circumvent them and buy the weapons.
As has been widely reported in the US media, North Korea reaps profits from several illegal rackets, believed to include counterfeiting of US dollars to the sale and distribution of methamphetamine. Now, we can add to that list the clandestine sale of Soviet-area conventional weapons, of which the North retains a massive stockpile, though it also manufactures its own copies.
According to WaPo, North Korea continues to sell arms to a handful of countries, including Chad and the Congo, which have relied on North Korea to equip their armies for decades, largely because of one simple reason: North Korea is one of the few remaining manufacturers of Soviet-era arms and components. For military managers in smaller, cash strapped economies, being able to upgrade their existing weapons systems with North Korean arms instead of replacing their entire inventory.
The WaPo story, which appears to stem from a UN Security Council report about the incident that was shared with the reporter, details the backlash that Egypt faced – the incident was one reason why the Trump administration abruptly withheld nearly $300 million in development aid to Egypt over the summer, an announcement made during a trip by Jared Kushner to discuss terror-related matters with Egyptian officials.
But it's unclear whether the US, which has struggled to strangle the North Korea economy for years, only to see the country continue making progress on its weapons program with the help of Ukrainian rocket-engine manufacturers and various conventional-arms clients.
The incident highlights just how reluctant many of North Korea's clients may be to give up their relationship with the isolated North for one simple reason: they can buy better weapons for lower prices.
But U.S. officials confirmed that delivery of the rockets was foiled only when U.S. intelligence agencies spotted the vessel and alerted Egyptian authorities through diplomatic channels - essentially forcing them to take action - said current and former U.S. officials and diplomats briefed on the events. The officials, who spoke on the condition of anonymity to discuss U.S. and U.N. findings, said the Jie Shun episode was one of a series of clandestine deals that led the Trump administration to freeze or delay nearly $300 million in military aid to Egypt over the summer.
Whether North Korea was ever paid for the estimated $23 million rocket shipment is unclear. But the episode illustrates one of the key challenges faced by world leaders in seeking to change North Korea's behavior through economic pressure. Even as the United States and its allies pile on the sanctions, Kim continues to quietly reap profits from selling cheap conventional weapons and military hardware to a list of customers and beneficiaries that has at times included Iran, Burma, Cuba, Syria, Eritrea and at least two terrorist groups, as well as key U.S. allies such as Egypt, analysts said.
Some customers have long-standing military ties with Pyongyang, while others have sought to take advantage of the unique market niche created by North Korea: a kind of global eBay for vintage and refurbished Cold War-era weapons, often at prices far lower than the prevailing rates.