North Korean Military Exploits Pandemic to Cash-in on Face Masks

Raw materials go only to military-affiliated companies, so other producers are pushed out of the market.
2021-03-03
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North Korean Military Exploits Pandemic to Cash-in on Face Masks Pyongyang citizens visit Mansu Hill to pay respect to bronze statues of North Korean late leaders Kim Il Sung and Kim Jong Il in Pyongyang, North Korea Friday Feb. 12, 2021.
AP

North Korean companies affiliated with the country’s military are exploiting nationwide coronavirus emergency protocols to cash in on face mask production, sources in the country told RFA.

North Korea declared an “emergency quarantine posture” at the beginning of the pandemic, and in April 2020, Pyongyang extended the emergency posture to the end of the year. Then in November the government announced a shift to “ultra-high-level emergency quarantine measures,” all while telling the international community that it was virus-free.

As the measures include a mandatory mask mandate, trading companies run by the country’s military have been able to take advantage of increased demand to the tune of hundreds of millions of won (100 million won = U.S. $14,124) per day.

“Masks are big money,” a resident of the city of Chongju, North Pyongan province, in the country’s northeast, told RFA’s Korean Service.

“The wholesale price for a mask is 2000 won [$0.28]. Let’s say there are 200,000 residents in Chongju. If they buy one mask a day, that’s 400 million won [about $56,500]. If they buy one mask every three days it’s still more than 100 million won [about $14,000] a day,” said the source, who requested anonymity for security reasons.

A state-run clothing factory in Chongju began producing masks at the beginning of the pandemic, the source said.

“But while the buildings belong to the state and workers are employees of the state, the facility is run by a trading company under the 8th Corps of the General Political Bureau of the People’s Army. They are sitting on a pile of money.”

The 8th Corps, headquartered in the province’s Yomju county, already operates foreign currency earning bases in each region of the province to provide funds for military units. Then, in February 2020, the corps obtained permission from the central authorities to start producing masks in Chongju and nearby Sonchon county.

“The 8th Corps is stronger than other money-making organizations. It’s under the General Political Bureau, and the State Security Department is also related,” said the source.

“The Central Committee [of the Korean Workers’ Party] gives them a production permit, so they are relatively privileged. The security department prepares the mask production facility, and the General Political Bureau is the party’s political bureau, so the security department is making money for them.”

RFA’s Korean Service estimated that the 8th Corps is capable of generating tens of millions of dollars from mask production each month.

The military are not the only ones who have profited from increased mask demand, but recent supply issues are pushing companies unaffiliated with the military out of the market, sources say.

Two such companies, the Sinuiju textile factory in North Pyongan and the Pyongsong export garment factory in nearby South Pyongan eventually ran out of materials. And though new raw materials from China were then imported as emergency supplies, they were procured through a trading company affiliated with the party and military, meaning they went only to the military’s companies.

Military companies in South Pyongan are profiting off masks to an even higher degree than in other regions, a resident of the province told RFA.

“In the city of Pyongsong, the Military General Political Bureau and the foreign currency earning bases belonging to the party are producing masks,” said the second source, who requested anonymity for security reasons.

“The Pyongsong area has 300,000 people living there, so the sales of the masks are higher, and the revenue is about twice as much as in other areas,” he said.

The pandemic has taken a huge toll on the North Korean economy. In January 2020, Pyongyang and Beijing closed the entirety of the 880-mile Sino-Korean border and suspended all trade. And with much of the people’s livelihood tied to the buying and selling of goods from China, many North Koreans then found themselves with no way to make money.

While many people who have nothing to spare are now forced to buy masks to comply with quarantine rules, those controlling the mask market are able to rake in a fortune.

Much of the proceeds from these sales go to funding the military and party, but officials of these organizations also take a substantial cut. Sources told RFA that the party leadership has no choice but to protect the interests of the privileged class because a large share of the mask money is devoted to supporting the leadership through so-called “loyalty funds.”

War on coronavirus

In February the Workers’ Party of Korea Publishing House published educational material with the title, “Let’s be more aggressive with the emergency quarantine to protect our country’s well-being and for the safety of the motherland.”

The literature, which characterizes the efforts against coronavirus as an ongoing war, has dashed the hopes of officials and factory workers who had hoped that the borders could reopen in the spring and trade could be restarted.

“It is very wrong and foolish to think that measures related to the blockade for quarantine will be lifted in the near future,” the literature said, adding that those who hope for a reopening are ‘enemies’ in the fight against socialist quarantine.”

Residents unhappy with the message have begun complaining that the authorities were turning a blind eye to the livelihood of the people with ever-tightening quarantine measures, all the while using the crisis to make a lot of money, sources say.

“Residents are aggressively asking if the authorities are deliberately extending the quarantine to collect more profit from the marketplace along with the privileged people who sell the masks,” a North Pyongan resident told RFA.

The third source spoke of a crackdown against those who make or sell masks without permission, a scheme that merchants and many of the area’s rich have attempted to advance by smuggling raw materials. Law enforcement agencies now seize these illegal masks.

“They are cracking down on us so recklessly now. They argue for nothing just to crack down on us. They say we have to sell the maska in some other place, and not here,” a fourth source, who was caught by the authorities for making masks and supplying them to the local marketplace, told RFA.

“I cried out, ‘Why can the military base make and sell masks, and why not individuals?’ But the law enforcement official said, ‘The army must make money to protect the country,’ and seized all the masks. I was then even angrier,” the fourth source said.

“We used to be discouraged, but now we fight against the authorities because they keep picking a fight by making issues out of nothing,” the source said, adding, “I said to them, ‘Isn’t the army the son of the people? If the people live, they will farm and feed rice to the army. How can the army survive if the people starve to death?”

“Why do you keep making things difficult for the people? When the people can make a living, the army can survive, and the party policy can be supported.’”

Reported by Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.

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