With the latest round of international sanctions making it increasingly difficult for the North Korean regime to obtain the hard currency that it requires to fund its nuclear and missile development programs, reports have emerged from the isolated state that it is once again stepping up the production of illegal narcotics, both for export and for its domestic market.

Quoting its network of covert contributors within North Korea, who communicate via mobile phone, the Seoul-based DailyNK news site has reported that state-run trading companies have begun to produce and sell illicit drugs.

Sources within North Korea say that companies have been "ordered to earn foreign currency" and, as legal means of doing so have been curtailed by the United Nations' export bans, "are turning to drug manufacturing on an industrial scale."

Read: China suspends North Korean iron, seafood imports over missile tests

North Korea needs the hard currency to fund its nuclear and missile development programs

Long track record

"The North has a long track record of manufacturing and selling drugs overseas and it is a convenient fallback for the regime to ratchet up production when sanctions are stepped up and it is harder for them to export legitimate goods," said Stephen Nagy, a senior associate professor of international relations at Tokyo's International Christian University.

"It is clear that they need hard cash for their new military gadgets and they know there is a big cash market for illegal drugs," he told DW.

North Korea has embassies in a number of states in Southeast Asia with high demand for narcotics and it is relatively easy to move shipments around once they are in the region because of the lax border controls.

As well as smuggling drugs into the country through ports, it has long been believed that the North's diplomatic bag - which is immune from search or seizure - is being used to transport drugs.

"It is much more difficult for the North to export drugs to the US or Australia because of the security relationships that are in place, so they are targeting areas where they are more likely to get the deliveries through," Nagy said.

North Korea has a long history of state-sponsored production and smuggling of narcotics, including heroin from poppies grown on farms and synthetic drugs prepared in university laboratories.

According to media reports, starting in the late 1990s methamphetamine was used as a medication in the North, which helped to fuel its spread. The regime began exporting to China, with the Chinese government confirming in 2004 that it had a problem with drugs smuggled over the border from North Korea.

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Exports expanded

Exports subsequently expanded to the Philippines, Hong Kong, Thailand, the United States and western Africa.

In April 2003, Australian troops boarded the freighter Pong Su - owned by North Korea but flying a Tuvalu flag of convenience - and recovered nearly 125 kilograms of heroin that had been previously landed by inflatable boat on a beach in the state of Victoria.

Four North Korean nationals, including the ship's political officer, were subsequently tried and deported. The North Korean government denied any knowledge of the illegal cargo.

North Korean diplomats and officials of state-run enterprises have been linked to the smuggling of ivory from Africa, counterfeit cigarettes and medicines, pirated DVDs, used cars and gold in order to earn money, but the most recent clampdown ordered by the United Nations under Security Council Resolution 2371 has made it more difficult to raise funds.

The DailyNK report identifies a number of educational institutions and companies that are allegedly involved in the manufacturing of crystal meth, including the Pyongsong College of Science and the Sunchon Pharmaceutical Factory. And given its relative proximity and a thriving underworld that already has links to North Korea, there are concerns that Japan would be one of the first targets of any export campaign.

'Criminal enterprise'

"North Korea is essentially a criminal enterprise run by one family and they excel at criminal behavior, and that includes the delivery of illegal drugs," said Jake Adelstein, author of "Tokyo Vice: An American Reporter on the Police Beat in Japan" and an expert on Japan's underworld groups.

"I have heard from my police sources that already there has been an increase in the supply of drugs that appeal to a younger generation of consumer, such as ecstasy. And Japanese authorities are doing their best to stem these imports, but there are just too many ways that they can be brought into the country," he said.

Another factor that may trigger a boom in sales of narcotics in Japan is the internal rivalries in the Yamaguchi-gumi gang three years ago that led to the formation of two splinter groups.

While the Yamaguchi-gumi refused to countenance drug dealing, the two splinter groups have no such qualms, Adelstein said, and are looking to generate more business by cultivating repeat visitors. That business model is also likely to appeal to North Korea.