Episode 474: The North Korea Files : Planet Money We got a stack of letters from American citizens who wanted to buy stuff from North Korea. On today's show, we try to figure out who sent the letters, and why.
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Episode 474: The North Korea Files

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Episode 474: The North Korea Files

Episode 474: The North Korea Files

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ROBERT SMITH, HOST: Hey, everyone. Here at PLANET MONEY, you probably know this already, but we are obsessed with any news that comes out of North Korea. I personally was delighted to find out that the current leader Kim Jong-un is addicted to Swiss cheese, a small part of the vast fondue conspiracy. Anyway, today we bring you one of our favorite podcasts from last year about North Korea. (SOUNDBITE OF ARCHIVED RECORDING)

ZOE CHACE: I have in front of me a stack of papers, government documents never before seen outside the offices of the Treasury Department.

SMITH: These documents - they involve one of the most secretive regimes in the world.

CHACE: Yes.

SMITH: One of the few places we can actually legitimately call an enemy of the United States of America.

CHACE: Mortal enemy.

SMITH: And mortal enemy, yes. Documents so secret that we had to get them through a Freedom of Information Act request. They came to us in a tight package. They are heavily redacted, big black lines, because these documents involve North Korea.

CHACE: North Korea - the worst of the worst, horribly repressive, completely isolated, basket case economy, doesn't really do business with the rest of the world.

SMITH: And yet these documents - these show requests by American citizens who want to do business with North Korea.

CHACE: Who would want to do this? Who are these shadowy figures?

SMITH: Hell-bent on sending U.S. dollars into the hands of the Hermit Kingdom.

DONALD SUNDMAN: I'm Donald Sundman. I'm president of Mystic Stamp Company, America's leading stamp dealer in Camden, New York.

SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.

CHACE: I'm Zoe Chace. Today, a window into one of the most mysterious economies in the world through the ordinary Americans trying to buy stuff from North Korea. (SOUNDBITE OF SONG, "NOTORIOUS")

DURAN DURAN: (Singing) No-no-notorious.

CHACE: The United States has the strictest sanctions possible against North Korea - can't buy anything from them, can't finance anything there. There are no diplomatic relations whatsoever. And it's a pretty simple idea. Our policy is to make life so hard for the North Korean regime that they will be forced to change - treat their people better, stop exporting military equipment, stop testing nuclear weapons.

SMITH: And even if you aren't trafficking in plutonium or rockets or something like that, even if you just want a stamp or some trinket from North Korea, then you need permission from the U.S. government to break the embargo. No matter how small the item, you have to write a letter to the U.S. Treasury Department. You have to prove to them that you aren't sending dollars right into a dictator's pocket.

CHACE: Over the last few years, at least 16 people have tried to do this, and we will have a few of their stories today.

SMITH: Yeah, like the stamp guy Donald Sundman. He's had success before bringing in postage stamps - stamps with portraits of Kim Il-sung, Kim Jong-il - and they sold well. But he says that beyond the monetary reasons, he does have another reason for going through this big hassle of getting government permission to import something. He thinks that looking at a stamp gives you a way to understand a foreign country like North Korea. You can get a glimpse of what a dictator dreams about at night by the sort of dreams that they put on their stamps.

SUNDMAN: Dogs or Princess Diana or butterflies or something. And then they'll have stamps that show the unified Korea because that's supposedly one of the goals of North Korea is to unify again.

SMITH: Those are actual North Korean stamps.

CHACE: Sundman's requests represents something that we saw over and over again in these documents. People aren't doing business with North Korea just because it's a bargain, it is cheap. It is not anything that comes from North Korea is so special or well-made that the rest of the world really wants it. The reason people want stuff like North Korean stamps or other North Korean products is because they're rare. It's because of the sanctions. That's what makes them so valuable.

SMITH: And there's a certain kitsch factor of having a stamp with a picture of the dear leader or a picture of the dear leader standing next to a statue of the dear leader. I mean, kitsch drives a lot of these requests that we saw in the documents. It's just - like frankly, it's just cool to be able to say hey, look, I have a pair of jeans from North Korea.

CHACE: Yes, we found a request for North Korean jeans. It was actually the top of the pile when I pulled out the documents that came from the Treasury Department. And it goes like this - Dear Sir or Madam, I am writing to request a license for a single transaction to purchase an item which is produced in North Korea. The item in question is a pair of jeans. And the letter goes on. The jeans are for my wife whose father is originally from North Korea and escaped to the south just before the Korean War. Sincerely, redacted.

SMITH: Yeah, his name was blacked out. But we managed to find him because part of his address was still visible. (SOUNDBITE OF TELEPHONE DIAL)

CHACE: He's the CFO of a Coca-Cola bottling company out in Tennessee.

PATRICK FORSTER: Hello.

CHACE: Hi, is Patrick Forster there?

FORSTER: This is Patrick.

CHACE: Patrick Forster. Now the U.S. government said yes to Patrick's request for the jeans, so what'd his wife think?

FORSTER: She's only worn them one time.

CHACE: (Laughter) Oh, no. Really?

FORSTER: Yeah. They just didn't fit quite right.

CHACE: Patrick - it's a nice thought though, right? It's a big deal.

SMITH: Yeah, and he put a lot of effort into it. It was not easy to get a pair of North Korean jeans. He had to write this letter, he had to wait months for a response from the U.S. government.

CHACE: He missed his wife's birthday. He had to catch her on the birthday next...

SMITH: ...On the next birthday. And there are very few North Korean jeans in the world. They are not easy things to find. In fact, Patrick had to get them from a Swedish company that's set up in North Korea to manufacture the jeans, and they only produced 1,100 pair.

CHACE: And that got us wondering about the mysterious jeans-making Swedes in North Korea, because...

SMITH: What are they doing there?

CHACE: ...Jeans - that is not the kind of clothes that you would expect to find in Pyongyang because, in fact, they're illegal there. You are not allowed to wear jeans in public. It is a sign of American imperialism like during the Cold War.

SMITH: So how did these jeans come to be in Pyongyang? We called up the Swedish guy behind NoKo Jeans, Tor Kallstigen. He says yeah, you have to be a little bit sneaky when you make jeans and North Korea.

TOR KALLSTIGEN: We didn't use the word jeans during the production there. We made them blank and then we stamped them with the type in Sweden. And the company was called Pants Provided, so the word jeans was basically blacklisted during the production.

CHACE: Do you think they knew they were making jeans or they just thought they were making pants?

KALLSTIGEN: It didn't really matter to them as long as we weren't really speaking openly about it inside the country.

CHACE: Tor did not start off wanting to be a denim mogul. He and his friend in Sweden were just Googling stuff about North Korea. They were just clicking around on the Internet as I myself have done many times just to get information on the country. And he and his friends found this website that kind of looked like an official North Korean website, and there was this tab on the site that said exports.

KALLSTIGEN: It was basically just a long, long page, a list of items that North Korea wanted to export to the outside world. And it was everything from potato starch to cheap - heavy, cheap building, some rockets. And at the very end of this page, a photo of a pair of blue jeans.

CHACE: So it was kind of an aspirational list of exports.

KALLSTIGEN: Exactly. And in the very bottom of the page below the jeans, it was an e-mail address, like contact us if you would like to send your business inquiry.

SMITH: So Tor and his friends started thinking. They remember how jeans were this important symbol of freedom in the old Soviet Union. And they thought, what the hell? I mean, let's go make jeans in North Korea. Let's like break some boundaries here.

CHACE: And remember, they're just a couple of kids. They are not garment makers. They are not even entrepreneurs yet. They are just wearing suits and trying to talk big and impress the North Koreans.

KALLSTIGEN: We tried to be as serious as possible because we knew that we were pretty young. And this confusion culture is a lot about respecting the elders and being senior in what you're doing, so we felt that that could be against us. And to tackle that, we wore suits and were speaking very big words about building relations between the European Union and North Korea.

CHACE: And apparently the North Koreans ate it up because they said, sure, make your jeans here - I guess. And by the way, how do you make jeans exactly?

SMITH: (Laughter) They did not know.

CHACE: Because it turns out it really was an aspirational list of exports on their site. North Korea didn't have the buttons, the right thread for the jeans - all that stuff was brought over from Sweden.

SMITH: And it's funny 'cause, you know, at the last second the boys were watching them make these jeans and they realized they didn't have the materials to make pockets in the genes. They were about to market jeans with no pockets. And so they tell a story about literally having to run over to the one market that exists in Pyongyang where they found just some random material to make pockets out of. And the North Koreans - in the end, they couldn't make the jeans blue.

CHACE: That was like taboo. That was too much freedom with the blue jeans.

SMITH: They had to settle for black jeans.

CHACE: Whatever the quality of the jeans, the Swedes did manage to sell them and the made in North Korea that is embossed on the back, that has a huge novelty factor. Even if they didn't fit Patrick's wife, it's not like she's going to throw them out.

SMITH: Yeah. They're a great souvenir. And we told the stamp story and the jean story to Curtis Melvin, he has a great blog about the inner workings of North Korea called North Korea Economy Watch. And Melvin says that when you hear stories like this, it may seem like people are laughing at North Korea behind its back - hey, look at these crazy jeans I got - but Pyongyang, he says, knows what it's doing.

CURTIS MELVIN: The people in North Korea who are in charge of tourism and raising hard currency know very well how kitschy their system and their country is. And they sell things at a high price because they know they're selling a kitschy item to us. And you can see this reflected very easily in prices for trips to North Korea. They charge Chinese very little relative to what they charge Americans and Europeans because for Chinese it's not exotic. There's no big draw there like there is for us.

CHACE: Not every application though in this stack that we got is for novelty items from North Korea. Some applications seem to have maybe a higher purpose in mind. We found this one application from a group that wants to import children's shoes. And just, right up front, this one is still a mystery. I have not totally figured this out.

SMITH: Yeah, the business part outlined in the application is pretty straightforward. It says we, Barnabas Trading want to import 1,000 pairs of shoes from a special part of North Korea - this industrial complex where foreigners can do business. And you can see how the company would make a decent profit. They say here that North Koreans can make shoes for $3 a pair. That's a nice markup when you get them back here to New York City.

CHACE: But why would you buy there to make shoes in North Korea? Like a thousand pairs of shoes, that is a tiny run. There are countries everywhere who can make shoes. And unlike the stamps and the jeans, it seems like this company was not trying to trade on the kitschy value of owning an object from North Korea, it was something else.

SMITH: We did a ton of research on the company Barnabas Trading. We pulled up all their documents and filing stuff.

CHACE: And when I called them, I reached this guy David Kennicutt. He seems to be one of the owners of the company. And I had just a couple basic questions for him, but he was very cagey. He did not want to speak on tape and he said that North Korea was very sensitive to publicity and. And he did not want to endanger their relationship.

SMITH: Yeah, but what was the relationship exactly? In company documents, they say, Barnabas Trading, that their goal is to establish sustainable businesses inside North Korea to build communities. And these communities, quote, "play a critical role in expanding the kingdom of God."

CHACE: That is our only clue about what is up with this company. And Curtis Melvin, our expert, he did not know anything about Barnabas Trading in particular, but said that sometimes religious groups will bring humanitarian aid or do business with North Korea as a way to get a toehold in the country and do some proselytizing. And when this happens - and we're not saying this is what necessarily happened here - this kind of thing, though, is not a surprise to North Korean officials. The way Curtis explains it, it's part of their economic plan.

MELVIN: North Korea has been very shrewd about this from the beginning. They have official Catholic and Protestant churches in Pyongyang that were built specifically to attract the attention of overseas religious groups for receiving aid and gifts and things like this. And so...

SMITH: So they're not being fooled.

MELVIN: No they're not being fooled. They're both getting something out of it. The North Koreans receive aid and attention and different kinds of projects from these groups. And these groups can go back and say, you know, we've begun opening this closed-off land for the faith.

SMITH: So I guess there's a lot of good reasons for doing business with North Korea. You've got religious reasons. Maybe you believe in world peace and understanding. But no one seems to just want to do a simple business deal with North Korea. No one seems to be going there for just a good product at a cheap price. I guess that's what China is for.

CHACE: Right. It may seem like no one actually wants to make money off selling North Korean goods, but we did find this one guy in the documents who clearly is out for himself.

SMITH: This is from a company called Korea Pyongyang Trading USA. It's run by a guy named Steve Park. And the application says, quote, "we are seeking an authorization to import Taedonggang Beer produced in North Korea.

CHACE: Now of all the beers in the world that I want to drink, the notion of a beer out of North Korea, that is not the most appealing thing. I would not expect it to be tasty. Like, if they cannot make jeans, how good could the beer be? We couldn't get a hold of Steve Park. But we did ask someone else who had recently been to North Korea and tasted it.

JOSH THOMAS: Literally, if you closed your eyes, and you had a - do you know the beer called Anchor Steam?

CHACE: Yeah.

THOMAS: Yeah. It tastes exactly like that.

CHACE: It takes exactly like an Anchor Steam?

THOMAS: Yeah. That's - Anchor Steam is California Commons. That's the original steam beer. It tastes just like Anchor Steam.

SMITH: This is Josh Thomas, a graphic designer who lives in Hong Kong. He is, as perhaps you can tell, a beer nut. And he traveled to North Korea just for the sole purpose of touring breweries and tasting their beers and then writing about it on his website. And the fact that this North Korean beer tastes so much like a Western-style beer is not a coincidence because North Korea literally purchased an old brewery in England. They bought the whole thing, dismantled it and brought it over to Pyongyang and built it again. And Josh has actually been to a bar associated with this brewery. And he was amazed.

THOMAS: It was really nice. We're sitting in there, and there's six beers on draft. It's beautiful. It's been fully restarted. It's like hardwood floors. We're watching "Real Madrid" on a projection screen, like a huge one on the wall. We're the only ones in there obviously. But it's like, if you closed your eyes and then open them again, you would easily be able to pretend yourself like - oh, I'm in, you know, middle of somewhere Italy right now. This is totally a normal bar, but it's empty; just us. And that sort of a window, you see the Juche Tower.

CHACE: So this seems like a straightforward business deal. North Korea, turns out, has good beer. Americans might want to taste it, dude wants to import it. So why isn't it on the shelves? It turns out this guy, Steve Park, the one who made the original application, he is a little more complicated than your average beer distributor.

SMITH: Complicated like a John le Carre spying novel. You got to hear about this guy. Steve Park was born in South Korea, immigrated to the United States, set himself up as an importer of North Korean products. He was the only guy to bring in a certain alcoholic beverage called Soju. It's like Korean vodka from Pyongyang. Steve Park traveled to North Korea quite a bit in his business.

CHACE: And then the FBI knocked on his door. A lot of this information comes from court documents so you can see where this story is headed. The FBI had observed that Park was traveling to North Korea and then meeting secretly with South Korean intelligence officers back in New York. The North Koreans apparently had asked Steve Park to get them anesthetics and pesticides. And then Park told the South Koreans.

SMITH: This guy was clearly playing a lot of different angles. But when the FBI asked Steve Park about these meetings with South Korean officials, Steve Park denied it. He said, I don't know who these people are. And then right after he denied it, the FBI followed him to another meeting in New Jersey with those same South Korean officials. The FBI arrested Steve Park for lying.

CHACE: Documents from the court case show that Steve Park offered up his connections in North Korea to the FBI and said he could be a go-between of sorts between the U.S. and North Korea. He said he had access to high-up officials in Pyongyang. And lo and behold, there's this deal that's worked out with prosecutors. Steve Park admits lying to the FBI, gets off with no jail time, probation, $300 fine.

SMITH: Yeah. It gets a little stranger because Steve Park, convicted felon, a guy who has admitted meeting with spies - Steve Park starts traveling again to North Korea. And this time, the U.S. government knows all about the trips. We found all sorts of documents about this. Every time Steve Park went to North Korea, he got the explicit blessing of the judge in the case and federal prosecutors.

CHACE: We don't know what he's doing up there in North Korea with the blessing of the U.S. government. It's hard to tell. We called the numbers that we could find for Steve Park and left messages and sent him emails. He didn't respond. And so this is what we have. What we have is a document where he applies for permission to start importing beer from North Korea.

SMITH: You know, we called up the liquor distributor that Steve Park has used in the past out of New Jersey. They have not seen hide nor hair of the beer yet. But they have some of the North Korean Soju. Remember, I said the Soju, the vodka-like stuff that Steve Park had originally bought to the U.S.? And they told me were to find it. And so in sort of honor of Steve Park, we brought some of this North Korean Soju to our friend Curtis Melvin. And we gave him toast.

CHACE: Oh, thanks.

MELVIN: And cheers in North Korea is Chupe.

SMITH: Chupe.

CHACE: Chupe.

MELVIN: That's pretty smooth.

SMITH: Oh, I expected it much worse.

CHACE: Me too.

MELVIN: Nah, it's just like a watered-down vodka.

CHACE: It's pretty easy to drink.

SMITH: You know, as I was drinking this North Korean Soju, I mean, it did occur to me that some of the money I spent - it was about $6 a bottle - some of that money has to have gone to a pretty horrible government in North Korea. And, you know, we focused a lot on the business ideas here on the show. But we haven't really dwelled on the fact that the sanctions against North Korea do have a reason. I mean, the U.S. does not want our money to flow to a repressive regime.

CHACE: And the people that filed these documents, the ones I talked t, I asked them the same question. You know, we have sanctions for a reason. We're trying to cut this government off. And don't you feel a little bit bad about it because when you pay North Korea, you are most likely paying the North Korean government? But the thing is, these people, all the people that I talked to - the stamps, the jeans guy - they thought of what they had done as these charming, little acts of diplomacy. Not, of course, towards the regime. It's not that they want to support the regime. But they want to reach out to the North Korean people. They believe that the sanctions are hurting the people way more than the government, and that the government is going to get theirs no matter what the U.S. policy is.

SMITH: Curtis Melvin, our North Korea expert, would tend to agree with them. He's been to North Korea many times. He has brought back many souvenirs. And he says when he looks at the sanctions, they just don't seem to have had any effect.

MELVIN: From an economics perspective, I've always been very skeptical of sanctions, particularly when it comes to dictatorships. Sanctions have almost never caused a repressive country to change its policies.

SMITH: And to be fair to the U.S. government, we talked to some people at the Treasury Department who said that when they look at these applications, they do try to determine whether the money to be paid by these businesses goes directly to the regime or whether it's filtered to the people. And they try to make the decision based on that.

CHACE: When I spoke to the Treasury Department to ask them, you know, about all of these documents and asked, you know, what is the intent of the sanctions - and the purpose of the sanctions is to change the behavior of the government. And they sort of equivocate when it comes to has the behavior changed. In some ways, yes, they believe that the sanctions have been destabilizing in a good way cutting North Korea off from developing weapons programs. On the other hand, you know, the behavior hasn't changed enough to take away the sanctions. And so that would kind of go contrary to the whole purpose of sanctions.

SMITH: So in other words, North Korea hasn't gotten any better, but it hasn't gotten that much worse. (SOUNDBITE OF SONG, "NOTORIOUS")

DURAN DURAN: You own the money. You control the witness. I'll leave you lonely. Don't monkey with my business. You'll pay the prophets to justify your reasons. I heard your promise, but I don't believe it. That's why I've done it again.

SMITH: There were 16 documents we got under the Freedom of Information Act request. We told you about four of them, but the other 12, you can see on our website, npr.org/money. You're welcome to read them and puzzle over them yourself. You'll find some requests from lawyers who want to protect the intellectual property, a printer cartridge scheme we didn't quite understand and an attempt to use North Korean carbon credits.

CHACE: As always, let us know what you thought of the show. Send us an email. Find us on Facebook or Twitter.

SMITH: After immersing yourself for 20 minutes in North Korea, you probably want to put a little more fun and pop culture into your life. May we suggest another NPR podcast, The Pop Culture Happy Hour. You can find it on iTunes, Stitcher or however you listen to podcasts.

CHACE: I'm Zoe Chace.

SMITH: I'm Robert Smith. Thanks for listening. (SOUNDBITE OF SONG, "NOTORIOUS")

DURAN DURAN: Notorious. You own the money. You control the witness. I'll leave you lonely. Don't monkey with my business. You'll pay the prophets to justify your reasons. I heard your promise, but I don't believe it.

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