Russia has allowed the release of millions of dollars in frozen North Korean assets and could potentially help its isolated ally access international banking networks, aid that comes after the North's transfer of weapons to Moscow for use against Ukraine, according to reports American allies. intelligence officials.
The White House said last month it had evidence of that North Korea had supplied ballistic missiles to Russia, and that the North sought military hardware in return. Pyongyang also appears to have shipped up to 2.5 million rounds of ammunition, according to an analysis by a British security think tank.
While it is unclear whether Russia has given North Korea the military technology it may need, new banking ties would be a sign of the steady progress in relations between the two countries. The expanding partnership has most likely emboldened the North because it has sent a signal stream of belligerent threats in the past months, That's what American officials say.
Russia has authorized the release of $9 million of $30 million in frozen North Korean assets deposited with a Russian financial institution, according to intelligence officials, money they say the impoverished North will use to buy crude oil .
In addition, a North Korean front company recently opened an account at another Russian bank, intelligence officials say, evidence that Moscow may be helping Pyongyang evade U.N. sanctions that ban most banks from doing business with North Korea. These sanctions have stifled the North's economy and largely cut the country off from international financial networks.
The new bank account will be held in South Ossetia, a self-declared independent state in the Caucasus that has close ties to Russia, said the officials, who spoke on condition of anonymity to discuss sensitive intelligence matters.
U.S. officials said they could not confirm the details of the banking arrangements. But a senior official, who also requested anonymity to speak about intelligence matters, said the arrangements were in line with US expectations about what North Korea would expect from Russia for its arms transfers.
Access to financial networks is just one item on North Korea's wish list, according to experts. What the North wants most from Russia, they say, is advanced military hardware, such as satellite technology and nuclear-powered submarines.
The closer ties have already yielded diplomatic results. After North Korean leader Kim Jong-un met his Russian counterpartVladimir V. Putin, Last fall in eastern Russia, Mr. Putin met with the North's Foreign Minister Choe Son-hui in Moscow.
At that meeting, Putin indicated he might soon visit Pyongyang, his first trip to the North Korean capital in nearly 25 years, North Korean state media said.
The banking arrangements could be of major importance to North Korea, which relies on imports to sustain much of its economy. The relations could facilitate transactions not only within Russia, but also abroad. North Korea could leverage Moscow's connections with a handful of countries, including Turkey and South Africa, that still trade with Russia after the country was hit with international sanctions over the Ukraine war.
If Moscow allows North Korea to use Russian banks or releases frozen assets, the government will have “crossed the line between being willing to do business with North Korea and being a financial and commercial villain,” said Juan C. Zarate, a former assistant. Minister of Finance and expert in the field of financial crimes.
While Russia's release of $9 million in frozen assets is relatively small, the North Koreans welcome “any alternative way to access capital,” Mr. Zarate said.
The United Nations and the United States have imposed a series of sanctions on North Korea in response to the banned nuclear weapons tests. Sanctions on the banks have been “one of the challenges for the North Koreans and the reason that, frankly, they have been creative in the way they have set up their financial networks,” including the use of cryptocurrencies, Mr. Zarate said.
For Russia, the financial transactions may be more palatable than providing military expertise and nuclear and other technology.
While the two countries “could now be friends with benefits,” says Soo Kim, a former CIA analyst on North Korea, their trust is not so great that Russia would “give up its prized secrets.”
Experts said Russia would act cautiously because, as a permanent member of the Security Council, the country was still aware of UN sanctions. Russia, they said, may think it can circumvent sanctions in a deniable way.
“They can always say, 'Oh, well, this is a private bank and our investigators will look into it,' and it will never go any further,” said James DJ Brown, a professor of political science at Temple's Tokyo campus. University specializing in relations between Russia and East Asia.
In addition to banking relationships, Russia can simply barter goods the North needs in exchange for its weapons.
“What would make sense for North Korea is to engage in the bartering of grain and agricultural technology such as tractors, which are banned under sanctions,” said Hazel Smith, professor of Korean studies at the School of Oriental and African Studies from Korea University. London.
“Given the uncertainty of the ruble and the total lack of value of the North Korean won, it is very difficult to understand why major transactions for Russia or North Korea would be carried out in rubles,” she added.
In any case, by sending missiles and munitions to Russia, North Korea has gained the world's attention and diplomatic benefits from Moscow.
“I think they really appreciate that,” said Joseph Byrne, a researcher specializing in North Korea at the Royal United Services Institute, a British security think tank. “The ceremony of it, the legitimacy of it.”
“It just makes North Korea so much stronger,” Mr. Byrne said, “if it looks like they have Russia's full support.”
Hisako Ueno reporting contributed.