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Monday, December 26, 2005

North Korean Counterfeiting

One way for a government to buy goods and services is to print money. Better yet, print somebody else's money. Here's an editorial on the topic from a South Korean newspaper:

Seoul's U-Turn on N.Korean Counterfeiting Could Be Fatal, Editorial, Chosun.com: The National Intelligence Service, in a 1998 report ... said North Korea forges and circulates US$100 bank notes worth $15 million a year, and that the counterfeiting is carried out by a firm called February Silver Trading in the suburbs of Pyongyang. The NIS said in reports ... the same year and the next that the North operates three banknote forging agencies, and that more than $4.6 million in bogus dollar bills were uncovered in circulation on 13 occasions since 1994. "That North Korea is a dollar counterfeiting country was common knowledge among intelligence officials," said a former senior NIS official.

Yet suddenly, when the U.S. brings up the question of North Korea's counterfeiting activities, our government says there is insufficient evidence. That has prompted American officials to accuse our government of lying. The reason for the volte-face is that Seoul is afraid of antagonizing Pyongyang while six-party talks aimed at denuclearizing North Korea hang in the balance. But what if the shoe was on the other foot? If a country hostile to South Korea forged a huge number of our banknotes and circulated them around the world, what should our government do? And if an ostensible ally of ours defended that counterfeiting country, what would we think of that ally? ...

An expert with the U.S. Congressional Research Service said North Korea's attack on the dollar is a “fatal strategic mistake.” If the U.S.’ will to condemn North Korea measured 2 on a 10-point scale five years ago, it is now at 4, he warned. If that rises to 6 or 7, North Korea would find it “unbearable." Instead of appearing to act as a mouthpiece for North Korea and demanding “100-percent proof” from Washington, our government would be better advised to try and persuade the North just how serious the matter is.

Here's quite a bit more from the LA Times. The story says that North Korea is believed to make as much as $500 million per year from counterfeiting and other criminal activities, and that the U.S. is working aggressively to try and stop it. The story also notes that technically counterfeiting is an act of war.

    Posted by on Monday, December 26, 2005 at 12:07 AM in Economics, Financial System | Permalink  TrackBack (1)  Comments (0)

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    Although its economy has collapsed, the North Korean state still makes money. Lots of it.. And South Korea's government doesn't care. The National Intelligence Service, in a 1998 report ... said North Korea forges and circulates US$100 bank notes [Read More]

    Tracked on Monday, December 26, 2005 at 06:21 AM


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