North Korean Markets and the High Seas: A Review of Justin Hastings’ “A Most Enterprising Country”

By | February 25, 2019 | No Comments

Do sanctions work? This question seems to unite academics and policy makers. After all, considering this puzzle with respect to North Korea in 2019 requires not just generalized tea-leaf reading of the Trump administration, but also a grasp of the historical context of how sanctions have worked, and failed to work, with apartheid-era South Africa, pre-2003 Iraq, or present-day Russia. Such work requires a combination of a general theoretical framework with country- or regional-level specificities. In North Korea’s case, United Nations sanctions have grown particularly stringent since 2017, yet the DPRK remains notably unbowed.

Even before the UN Security Council implemented resolutions 2375 and 2397, Justing Hastings of the University of Sydney presented a sound basis for understanding how the Pyongyang regime has managed to withstand increasing economic isolation. Here, Sino-NK Senior Editor Adam Cathcart offers insights into Hastings’ work A Most Enterprising Country. This review in particular analyzes how the work fits into recent research on North Korea’s sanctions busting, as well as how Hastings was able to reach his conclusions given the particularly fraught task of synthesizing data on this complex topic. — Anthony V. Rinna, Senior Editor

Review of Justin V. Hastings, A Most Enterprising Country: North Korea in the Global Economy (Ithaca, New York: Cornell University Press, 2016), 240 pp., 9781501704901, hardcover $29.95.

By Adam Cathcart

A Most Enterprising Country, Justin Hastings’ “terse and densely documented” look at how North Korea sustains itself in the world economy. | Image: Cornell University Press

In the sulfurous wake of the DPRK’s nuclear and missile tests through 2017, an interlocking grid of sanctions were levied on North Korea by the United Nations, the United States, South Korea and Japan. The Trump administration undertook a “pressure campaign” against North Korea that was by turns belligerent, pleading, and vengeful, pushing for ever-tighter sanctions. Even the Chinese government seemed to cooperate at key moments, slashing overall trade with North Korea and only selectively deflecting foreign pressure on Pyongyang. Amid these geopolitical tremors and economic storms, North Korea’s trade balances have taken a hit, but its “sanctions busting” activity has seemingly not relented; Kim Jong-un appears to have rather deep pockets when it comes to an endless array of prestige projects.

In Washington, D.C., both the U.S. Congress and the Executive branch aligned around a common view that sanctions enforcement and restrictions on North Korean trade would, as Adam Szubin of the US Treasury put it at a 2018 hearing,  ‘wrestle them [the North Korean government] to the negotiating table,’ if not collapse the regime altogether. Work by research groups and think tanks has paralleled that of the American government action and US Treasury sanctions; namely, US, British, and Canadian scholars and groups like the Center for Defense Analysis (C4ADS) have done their part to leverage disparate data sets like shipping ledgers, satellite data, defector testimonies, and Chinese corporate and customs bureau websites. These scholars then map out how North Korea has been able to maintain what the UN Panel of Experts would consider illicit imports and exports. Thus, even if Kim Jong-un does turn up with a new Mercedes Benz from time to time, the mission of squeezing the court economy and holding the DPRK to an array of international standards continues.

Several areas of scholarly inquiry fall in the general orbit of sanctions, or investigate North Korea’s generally illicit means of avoiding those sanctions. The empirical base and awareness with respect to the importance of North Korea’s Chinese business connections has been demonstrated in work by scholars like John S. Park. When it comes to the role played by marketization in North Korea’s past, present, and future, Hazel Smith and Kevin Gray have written a great deal of useful work, while Andrei Lankov has looked at the newly moneyed North Korean elite and their role as political stabilisers rather than rogue and even anti-regime elements working to undermine the state’s authority. Nicholas Levi and Remco Breuker have looked at North Korea’s overseas labor force within the matrix of international law, and a large number of analysts are focused on the cross-border trade along the Sino-North Korean frontier.

While work on sanctions enforcement is therefore a crowded field, North Korean marketisation and sea-bourne trade are in need of more critical examination and fixation to the sanctions debate. From RUSI, James Bryne and Tom Plant have launched a new report which moves in this direction.

In his terse and densely documented new book A Most Enterprising Country, Justin Hastings brings a new perspective on North Korea’s economic adaptations and ambivalent relationship with international law. Blending international relations concerns with international political economy and trade analysis, Hastings, who is based at the University of Sydney, has put together an engaging and cohesive monograph. Readers familiar with some of Hastings’ work previously published work on North Korean drug smuggling networks will find resonance in the book, plus some expansion within a useful framework.

Looking across the Yalu from Dandong, where many of North Korea’s economic deals are done. | Image: Destination Pyongyang

Hastings deals firstly with supply chains in North Korea and the ability of North Korean firms to maintain and recruit entities to make profits and avoid international sanctions enforcement in the aftermath of wave after wave of sanctions since the first nuclear test in the Kim Jong-il era. As he puts it, after 2006, ‘The North Korean state was thus faced with an external environment where it was no longer just a backward, neglected country struggling to survive, but now had the full attention of many countries’ trade and finance regulators, and faced private companies and banks that were reluctant to do business (openly) with its representatives abroad’ (p. 69). Hastings engages in the very complex work of constructing a chronological periodisation of the sanctions up to about 2015. Although Enterprising Country went to press before the two additional North Korean nuclear tests of 2017 that sparked yet tighter sanctions and focus on the textile and seafood export sectors of the DPRK economy, his work provides a very firm foundation for understanding those areas anyway.

In terms of the data collected and used Hastings has done an excellent job of leveraging and synthesising diverse sources from media outlets such The Daily NK, some Chinese and Japanese media, and particularly the United Nations panel expert reports. He has also been able to do extensive interviews — some through a very able PRC research assistant — with Chinese entrepreneurs working in North Korea and with North Koreans in China.

Fieldwork on these kind of questions is always a slightly tenuous enterprise given that the Chinese police are increasingly being encouraged to see spies everywhere, and the quality of data gathered can be fragmentary at times and misleading at others. Hastings does a good job qualifying the data he has gathered from the border regions. For example, his eight pages of discussion of North Korean restaurants and waitresses is the best available for a subject that is frequently portrayed in a rather one-dimensional light. And one of the more surprising findings from the book deals with the role of Taiwan in North Korean trade networks.

For a period of time, North Korea trading networks had to transform and mutate rapidly. Again 2006 is a type of ‘year zero’ when lucrative Japanese Korean networks were more or less shut off for investment and trade with North Korea. Hastings ably covers the purge of the North Korean leader’s uncle, Jang Song-taek, and glides briefly into the seafood business and the nascent special economic zones.

The text’s abiding lesson, repeated over and over throughout the book, is North Korea’s ability to rapidly switch through shell companies and other organisations to find new sources of revenue. But Hastings also points to the paradoxes that these trading partnerships and relationships face when exposed to international pressure. In comparing the balance of land based trade in contrast with shipping, Hastings seems to focus on the maritime aspect as this is a much more important element in the North Korean economy. Indeed it is through international shipping that North Korea has been able to export and import arms and minerals and materials used in its supply chain for its nuclear program.

Scholars with interest in Chinese corruption networks and cross-border provincial ties between Chinese and North Korean officials will find some helpful threads, but not always bound clearly to an overarching thesis. This may be because, every so often (and not unlike any text packed with loads of details) Hastings gets a bit sidetracked by specific anecdotes about drug deals or shell companies. Perhaps this book is a type of gold mine, then, for creative fiction which could be spun out this material, as the contents of the book sometimes veer more toward the stuff of spy novels than Congressional reports. It takes intrepid sorts to do business with North Korea, and the North Koreans out operating in global supply chains appear to mix extreme calculation with fearlessness.

As Washington pivots and yet again aims to turn the screws on North Korea it is clear that work like Hastings is certainly worthwhile of considering and further developing. Likewise, it may help scholars to consider the role sanctions play within restructuring the country’s approach to economic activity generally. Absent this distorting pressure, could the energies of the North Korean economic trade elite be turned toward more systemic change? Currently, it remains rather difficult to find the line between the military first politics, or Songun, and the new strategic line. Like statistics in North Korea, precision on ideological matters is a difficult thing to pin down.

There is very little room in this otherwise exciting book to dwell on what it all means for the past or the future of North Korean economic reforms. If anything, it seems that whatever comes from North Korea’s elite, and whatever the ideological implications or irrelevancies, amid whatever US-led sanctions activities, players in the middle and within North Korea’s bureaucracies and government ministries have been given the space to create wealth. Hastings carefully describes how such people have gone about that extremely complicated process and in some ways very impressive task.

This essay will be published in the March 2019 (Vol. 18, No. 2) of the European Journal of Korean Studies, and appears in a preliminary version here.

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