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North Korea’s Counterfeiting Mistake

Posted December. 24, 2005 03:00,   


- How do you judge North Korea’s ability to forge currencies?

“I am not comfortable with disclosing details about its printing machines and inks. North Korea has state-of-the art counterfeit machines as well as sophisticated counterfeit detectors to test if its forged money can fool counterfeit detectors. And the U.S. government has secured all related information.”

- What has North Korea been up to, after the U.S. issued an order for search of its ships?

“North Korea has been focusing on the manufacturing and sales of fake cigarettes, after reducing the drugs export recently. No country would associate the distribution of fake cigarettes with national security. This loophole is used by North Korea. The U.S. government secured information that fake cigarettes made by the North are flowing into the South. And the North is making enormous gains from the sales of fake cigarettes. This money is ultimately used as slush funds by the North Korean leader, Kim, Jong Il. He needs money to buy extravagant gifts to keep his loyal cronies.”

- Don’t you think that the U.S. is overreacting, in light of nuclear negotiations?

“North Korea attacked the U.S. currency. Dollars, one of the world’s key currencies, are the foundation for bolstering U.S. military power and promoting liberal democracy. North Korea has made a fatal strategic mistake in undermining the U.S.’s source of power. The U.S government’s patience is running out. On a scale of ten, the U.S.’s commitment to punish the North was rated at ‘2’ five years ago. Now it is 4. If it rises to 6 or 7, it would be unbearable for North Korea.”

- North Korea is denying its allegations, and the South Korean government maintains its “wait and see” attitude, citing the lack of decisive evidence.

“There is a lot of solid evidence linking those arrested for the circulation of counterfeit currencies with North Korean authority. North Korea is using its foreign embassies as the stronghold for illicit business, in violation of the Wien agreement.”

-There is also growing speculation over its counterfeiting of neighboring countries’ currencies other than dollars.

“That’s the reason why the country could be isolated even further. North Korea has been paying both in cash and commodities in its trade with foreign countries, due to its lack of cash. It can’t trade on credit. But it paid some countries with counterfeit money. If it is widely known that the North has been counterfeiting many foreign currencies and using them for trade, who would want to involve themselves in business dealings with the North? Trading partners will end up having to verify the authenticity of money paid by the North. If North Korea undermines the very fundamentals of economy in this way, what does the future hold for a nation whose is currency suspected by the world and an economic system based on such currency?”

Seung-Ryun Kim srkim@donga.com