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Published on: 10/8/2008
Last Visited: 11/30/2008
Earlier this year, I visited David Asher, a former senior adviser for East Asian and Pacific affairs in the State Department and an outspoken critic of the North Korean regime.
In late 2001, he explained to me, Assistant Secretary of State James Kelly asked him to study why the North Korean regime had not collapsed, given that the country's economy had declined even further over the previous decade, with industrial output alone falling by as much as three-quarters.
Former Communist countries had ended their subsidies, Kim Il Sung had died, the country was stricken by floods and famine and the food-distribution system had collapsed. (Party slogans betrayed more than a hint of desperation: "Let's Eat Two Meals a Day" was one of the era's more uplifting exhortations.) Yet Kim Jong Il, defying all expectations, managed to cling to power.
"How this was happening was perplexing, given the huge trade gap, even with adjustments for aid flowing into the country," Asher recalled.
...
As Asher and his colleagues began amassing intelligence, evidence of an array of illicit activities began surfacing â€" everything from ivory smuggling to the production of high-grade methamphetamine.
And counterfeiting was at the core.
"The more we found out about this counterfeiting of dollars, the more we thought it was outrageous," Asher told me.
These activities provided what Asher calls "an alternative framework for existence" and "the palace economy of Kim Jong Il."
In the spring of 2003, the State Department established the Illicit Activities Initiative, an interagency effort designed to investigate and counter North Korea's criminal activities, and appointed Asher coordinator.
The department began to systematically collect a variety of forensic and other evidence gathered by its own investigators, the Secret Service and elements of the intelligence community linking North Korea to the supernotes. (Asher declined to comment on the nature of the evidence, most of which remains classified.)
In addition, the department put together circumstantial evidence of North Korean counterfeiting that had been accumulating for more than a decade.
...
When I discussed this with Asher, he let out a sigh.
...
Asher, for one, was stunned by the audacity of the regime.
"If they're going to counterfeit our currency the entire time they're engaged in diplomatic negotiations, what does that say about their sincerity?"
he asked me. "How can they want normalization with a country whose currency they're counterfeiting?
How can they expect it?"
However the diplomatic standoff is resolved, Asher said that he believes North Korea won't continue to counterfeit much longer.
Next year, the Bureau of Engraving and Printing is issuing an updated version of the $100 bills.
The notes will be expensive to manufacture, requiring the purchase of a new set of presses at a cost that Asher estimated in the "hundreds of millions" of dollars.
The Treasury Department characterizes the next generation of notes as part of a routine redesign that it will undertake on a regular schedule every decade.
But Asher has no illusions as to the timing.
"It might be a routine update," he said, "but it's a routine update that's being instigated by one country: North Korea."
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