[In view of recent news developments, I think it’s time to post an excerpt from an off-the-record breakfast talk I gave in Seoul last February. Updates follow. — BRM.]
When a ruling elite focuses on one issue above all others, as the Moon Jae-in Blue House focused on North Korea, it’s safe to assume that it bears special potential for machine-political exploitation. In this case that potential is obvious. First, construction of the envisioned “New Peninsula” would be the biggest state endeavor since the chemical and heavy industry push of the 1970s. We’re talking hundreds of billions of dollars. The lion’s share would be spent on building airports, infrastructure, power plants and power grids up there, but it would be in Seoul that most of the contracts would be awarded and thousands of plum bureaucratic posts created.
Second, inter-Korean dealings of any substance are always kept secret, allegedly to preserve Pyongyang’s face and keep cooperation running smoothly. They’re managed by the intelligence agency, of which the Unification Ministry is just the front office, the PR arm. The agency gets around half a billion dollars in annual special activity funds that can be spent at its own discretion, no questions asked.
Third, it’s never easy to monitor the value of what is donated to the North: tree saplings, for example, or food commodities. And who’s to say for certain whether they were actually delivered? The chairman of one NGO was recently arrested for pocketing about half of the million or so dollars he’d been given to re-forest the North, but we can be sure that most who embezzle money in this way have gotten away with it.
Long story short, there’s great potential for corruption in the inter-Korean sphere, and everyone knows it. That includes the North, which is why its officials tend to treat South Korean envoys so cavalierly. But just because politicians want to feather their nest through a policy doesn’t mean their ideological commitment to it is fake. Kim Dae Jung was sincerely committed to North-South cooperation and to leaving the Blue House much richer than he was when he went in, two goals that proved very compatible. The slush fund created during his rule has been estimated at well over a billion dollars. Lending weight to that estimate is the fact that a member of his family later attempted to transfer $100 million to Pyongyang. We can’t peer into someone’s mind and distinguish ideology from material interest when the two are working together – and they usually are, as Karl Marx pointed out.
As you know, Trump defied Moon’s expectations by not granting the sanctions exemptions the Sunshine Policy governments had received from Bush and Obama. In late 2018, after the imports of North Korean coal became known, Washington put Moon on a very short leash, better known as the Joint Working Group. I assume that a few hundred million dollars had already made it from Seoul into Kim Jong Un’s pockets by that time, or the Moon-Kim summits wouldn’t have taken place. Some of that money may well have been skimmed here, as in 2000. But the ruling camp certainly couldn’t make as much money as had been made in the Sunshine years – not least because the chaebol are a lot less starry-eyed about North Korean business opportunities than they were then.
Although the White House said no even to paltry forms of cooperation, the Blue House kept talking up the reconnection of the peninsula’s railway network as if the Hanoi summit had never happened. Even in the unlikely event of an American green light, a project on that scale would take close to 20 years and tens of billions of dollars to bear fruit. Why would a South Korean president desperately want to launch a budget-busting endeavor so unlikely ever to get going in earnest, and one which, even if it were completed, a future president would get all the credit for? The answer became clear enough when the government, with opposition-party support, began constructing a high-speed railway line from Gangneung on the east coast up to a tiny station on the eastern edge of the DMZ. This railway, for which no passenger demand exists, will cost well over 2 billion dollars.
To go from pork-barrel spending to activity more easily characterizable as outright corruption, we also know that the intelligence agency paid over a million dollars (in American terms) for a house in Paju near the DMZ, almost 50 grand for a table to go into it, and another half-million for a yacht, just in case Kim Jong Un should want to come and stay a while in a border town, or get on a boat too small for his bodyguards. The key detail is that the house in question was allegedly sold to the agency for twice the market price by a friend of the agency’s director.
Let’s move on now to Lee Jae-myung’s outreach, which is in the headlines. First a little background: In 2010 Lee, a Minjoo man, became mayor of Seongnam, a commuter city to the east of Seoul that had been a center of pro-North radicalism for decades. In 2018 Lee was elected governor of Gyeonggi Province, which of course borders North Korea. But Moon Jae-in dislikes Lee intensely, so when he went to Pyongyang for the September summit in 2018 he left Lee behind, thus forcing the governor to establish his own relationship with the North. To this end his vice-governor went to North Korea and promised that the province would help launch smart agriculture there. When sanctions prevented Lee from carrying through on the $5 million pledged to this end, the vice-governor allegedly asked the CEO of a friendly underwear company to make good on it. The CEO, a former organized crime boss, agreed to do so, in the hope that Kim Jong Un would give one of his subsidiary companies the nod for a rare-earth mining deal in North Korea.
Had the CEO got that nod, he would have received large subsidies from the ROK government as well as from Seoul’s separate inter-Korean fund. This is the beauty of dealing with the North: contracts to handle big subsidized projects don’t have to be competitively awarded here if Kim Jong Un says he wants to work with so-and-so in particular. Which is why big business is still ready to pay for the match-making and North-lobbying services of powerful ROK politicians or officials.
Allegedly the CEO paid another 3 million dollars on behalf of Governor Lee so that Kim Jong Un would invite him to talks in Pyongyang, which would have given his quest for the presidential nomination a big boost. Remember that at that time — before sexual harassment allegations drove Seoul mayor Pak Won-soon to suicide, and before Moon’s crony Kim Kyoung-soo went to prison — Lee was perceived as being third in the running for the Minjoo nomination. Why $3 million? The North Koreans apparently made clear that if Lee wanted to be welcomed in fitting style they’d need a new Mercedes, a new helicopter, etc, which they sure weren’t going to pay for out of their own pockets….
In short, it was 2000 all over again, big business paying for what the South Korean government could not, in the hope of gaining advantages from both governments. Alas, the COVID lockdown prevented Lee from getting the invitation that had been paid for on his behalf. This didn’t stop him from continuing to present himself as someone especially eager to get the New Peninsula going. In addition to having a special “vice-governor for peace,” he sent officials to the Philippines to meet North Koreans, sponsored events urging the reopening of the Kaesong Industrial Zone, and distributed brochures on how to apply for sanctions exemptions. Virtually every city on his turf piped up with some new peace initiative or exploratory committee. All this went down well with the left outside the province, which thought, “Okay, Lee may not have been in the protest movement during the 1980s like we were, but he’ll push harder against the Yankees, and do more to get around sanctions, than Moon dared to do.”
[It has since been reported that a salt shipment which a nationalist-left NGO had received about $400,000 to send to North Korea was never delivered. The NGO had been chaired by Kim Dae Jung’s youngest son, the thwarted donor of slush-fund money to North Korea whom I mention above, though he says the salt affair came after his time there. During his Moon-era stint in the National Assembly, incidentally, he came under fire for sitting on inter-Korean-relevant parliamentary committees while heavily invested in Hyundai Rotem. (Now better known for weapons manufacture, it was then a popular inter-Korean railroad play.) Meanwhile Lee Hwa-young, the detained ex-vice-governor of Gyeonggi Province, has evidently been compelled to admit that at the Philippine conference in 2019 he a) talked to a North Korean representative about a gubernatorial visit to Pyongyang, and b) asked the underwear CEO to help out with this. But he rather implausibly maintains that he said both these things on the spur of the moment, without running them by his boss first — or informing him afterwards. This in contrast to gleeful conservative media claims that the former vice-governor is cooperating with prosecutors.— BRM.]
UPDATE: 26 July 2023:
It seems that the ex-vice-governor did indeed tell prosecutors that he had informed Lee Jae-myung about Ssangbangul’s decision to pay the $3 million to North Korea. Unfortunately for the Minjoo Party boss, that testimony carries a lot more weight than the backtracking letter the ex-vice-governor then sent to comrades from behind bars. Worried that he was being poorly served by his legal team, his wife (reputed to be a supporter of Lee Jae-myung) sent in a formal application for its dismissal. On 25 July the ex-vice-governor told the court that he didn’t support this application, whereupon his wife shouted from the gallery, “Pull yourself together!”
