Today’s news from the Chinese Ministry of Commerce that North Korean businesses and joint ventures within PRC territory have been given 120 days to cease trading (or, per the pragmatist in me, to concoct some other way of hiding the realities of ownership) has shone a light once again on North Korean exports of labor. These exports have emerged as a significant source of revenue for the Kim Jong-un regime since the young man took power in 2011.

The people at the sharp end of the labor exports, the businesses that take on the North Korean workers, invariably have an excellent rationale for doing so. As such, the challenge for those who would ban the hiring practice is to provide a viable alternative source of similar labor. In places like the Russian Far East, demographic decline and fear of being overrun with Chinese migrants makes North Koreans all the more desirable. Not only that: they come on contracts, do their work, and go home again; a repressive apparatus makes them the ideal migrant labor force — for the time being leaving to others the question of whether “they do what they are told, work long hours, and can’t quit” is, in addition to being a sound rationale for hiring them, also a description of modern slavery.

In any event, as Anthony Rinna explains here, it is not clear who exactly is available to replace North Koreans in Russia, and so it is not easy to imagine the Russian government weaning itself off them.– Christopher Green, Senior Editor.

The UN sanctions that followed North Korea’s two ICBM tests in July 2017 took on another of the the Pyongyang regime’s economic lifelines: guest laborers abroad. These people have for several years been a vital source of income for Pyongyang as it faces steadily increasing economic isolation. Section 11 of Resolution 2371, while not banning the employment of DPRK citizens abroad per se, places limits on the number of North Korean laborers that countries can hire. Russia’s acceptance of these provisions limiting the employment of North Koreans is surprising, given that the country hosts an estimated 20,000 of them.

In 2013, the Russian government increased the quota of work permits for North Korean laborers to 35,000, indirectly proving that the country benefits from having North Koreans employed in a variety of industries, often labor-intensive, including logging and construction. It stands to reason that the Russian Federation, with a cash-strapped economy and dwindling domestic labor force, would be unwilling to sacrifice such a cheap supply of labor, one that is beneficial for the economic development of the Russian Far East. Of course, while Russia may be willing to support a ban on large numbers of new North Korean workers coming into the country, the North Korean workers who already reside in Russia are likely to stay, continuing to aid the regime financially.

This, of course, raises the question of what happens once a North Korean worker’s contract ends. According to a fact sheet published by North Korea in the World, North Korean laborers in Russia come on fixed-term, five-year contracts, with the possibility of applying for a one-year extension. Once their contracts expire, however, they must return to North Korea. As Section 11 of Resolution 2371 stipulates that “[m]ember States shall not exceed on any date after the date of adoption of this resolution the total number of work authorizations for DPRK nationals provided in their jurisdictions at the time of the adoption of this resolution”, there does not seem to be anything to prevent Russian employers from hiring replacement workers once DPRK citizens working in Russia at the time of Resolution 2371 go home.

The previous essay in this series argued that China’s demand for Russian coal could help mitigate the problem of China’s failure to fully enforce a ban on North Korean coal exports. Now, taking the issue of laborers in the Russian Far East, this essay asserts that it is unlikely that Russia will sacrifice access to the North Korean labor pool for the sake of enforcing sanctions against the DPRK, at least no more than it absolutely has to. Even if Chinese workers could serve as a perfect substitute for North Koreans, the prospect of this happening remains slim.

Even as legal actions at both the UN level and unilateral actions undertaken in Washington may have an effect on the flow of revenue into the treasury in Pyongyang, attempts to target DPRK workers in Russia face limitations. And that is to assume that Moscow elects to comply with the resolution; there is no guarantee that it will.

Roots in the Soviet Era | The history of North Korean laborers in Russia is as long as the history of the North Korean state itself. During the late Stalin period, several North Koreans moved to Sakhalin oblast (province) and the Khabarovsk region for work. They were in the Soviet Union on fixed contracts, although the Soviet authorities didn’t enforce the contract terms insofar as their residency period was concerned. Many North Koreans didn’t want to return to North Korea. While the Soviet authorities often allowed them to remain in the USSR, this did create the issue of having foreign nationals residing in an (unofficially) permanent capacity on Soviet soil. Several of the North Korean nationals who remained in the Soviet Union did finally end up acquiring Soviet citizenship through naturalization or intermarriage.

The end of the Cold War brought about changes to Russian migration laws, and many North Koreans who had been living in the Soviet Union and retained their DPRK citizenship suddenly became illegal immigrants in the Russian Federation. Nevertheless, the demand for North Korean laborers in Russia remained, particularly as North Koreans began to do labor-intensive jobs that Chinese migrants had once filled. Toward the end of the 1990’s, China and Russia implemented agreements aimed at regulating Sino-Russian cross-border migratory activities, which affected Russian firms employing Chinese citizens. Around the same time, in 1997, North Korea and Russia established an accord to allow North Korean citizens to work in Russia under the regulations of a visa regime.

The agreement, however, was not specifically aimed at promoting North Koreans working in Russia, but was rather a provision in a much broader accord aimed at regulating the movement of North Korean and Russian citizens between the two countries. Article 13 of the agreement simply stipulates that citizens of one country must comply with the visa regulations of the other country in order to work legally in the host state. Thus, it seems that toward the end of the 1990’s, after the dust from the upheaval of the Soviet collapse had settled, Russia set about regulating the movement of peoples in its Far Eastern territories and neighboring states.

DPRK Laborers and Economic Cooperation with Russia | To the present day, North Korean laborers in the Russian Far East benefit Russia in a multitude of ways. First, North Koreans working in Russia help take the edge off of the demographic crisis Russia has long faced. Not only is population decline a national trend, it is particularly acute in the Russian Far East. Additionally, employers can get away with paying North Korean laborers a pittance, even by local standards.

For Russia, the most important regions for economic cooperation with North Korea are Amur, Khabarovsk, Sakhalin and Primorye. Primorye is by far the economic hub of the Russian Far East, incorporating as it does the city of Vladivostok. Khabarovsk krai (a type of federal division) generates revenue from the mining and shipbuilding industries. In Amur Province, according to government statistics, 45.4% of the provincial gross product consists of agriculture, industry and construction, while trade only covers 12.3%. In Sakhalin Province, statistics published by the provincial government indicate that from 2010-2016, the provincial gross product grew by 298.6 billion rubles, mostly thanks to energy projects such as Sakhalin-1 and Sakhalin-2 consortia. Sakhalin-1 and Sakhalin-2, in which energy is extracted both inland and immediately offshore from the Sakhalin Islands near Japan, produced a multiplier effect for the provincial economy.

It is apparent, therefore, that Russia’s eastern regions are still first-and-foremost dependent upon labor-intensive industries, which are a perfect fit for unskilled or semi-skilled North Korean workers. Those workers, according to interviews featured in a New York Times piece, have a solid reputation among employers, and are highly sought-after. Inevitably, though, the economic considerations behind North Korean citizens being brought over to Russian clash with international political developments.

While Russia is not particularly worried about the DPRK’s weapons programs, what the Russian authorities do fear is instability, and the idea that North Korean citizens living in Russia may end up using their newfound (relative) freedom to defect and attest to the brutalities of the Kim regime. As part of a bid to mitigate the political risks Pyongyang may face by sending its citizens to work in Russia, the Kim and Putin governments have signed an intergovernmental agreement that states Russian authorities will will hand over to the North Korean authorities any DPRK citizen who attempts to defect.

Even though North Koreans have worked in Russia for decades, the progressive tightening of the screws against the Pyongyang regime since its first nuclear test in 2006 has prompted the DPRK to send its citizens to Russia as a way to compensate for the lack of foreign capital coming into North Korea. This has led to some calls for action, as well as actual policy responses, particularly in the United States.

Only in America | The United States led the push for Resolution 2371 in the UN. Nevertheless, Washington will likely pursue its interests to a greater extent through unilateral action. Anthony Ruggiero, a former US Treasury Department official and US Senate staffer, recommends that the US take its own action against the use of guest labor to ramp up the pressure on North Korea.

The United States has, in a limited fashion, implemented unilateral legal actions targeting the use of manual labor exports. In March 2016, then-US President Barack Obama signed Executive Order 13722, titled “Blocking Property of the Government of North Korea and the Workers’ Party of Korea, and Prohibiting Certain Transactions With Respect to North Korea.” Section 2 (a) (iv) of the executive order blocks the property (under US jurisdiction) of anybody who has been involved in the exporting of foreign workers from North Korea with the purpose of generating revenue for the North Korean government or ruling Korean Workers’ Party.

Nevertheless, there is only so far that unilateral actions can go in stemming the flow of money to the Pyongyang regime. If Russia will not support further restrictions on North Korean labor than already exist under the provisions of UNSCR 2371, and if the US’ own policies can only go some way toward that end, then one of the few remaining factors that could reduce the viability of having large numbers of North Korean workers in Russia is the presence of a competing pool of labor; namely, an equivalent number of Chinese workers. However, the prospect that Chinese labor could reduce the desire of certain Russian industries to employ people from the DPRK is fanciful.

Chinese Workers: A Historic Presence With Little Meaning for Sanctions | The primary reason for positing Chinese employees as a possible alternative to North Koreans is because Chinese have been migrating to the Russian Far East in large numbers in recent years. This has of course led to emotionally-charged accusations that the Chinese are engaged in a demographic takeover of the Russian Far East, and even accusations of revanchism, given that the 1860 treaty following the Peking convention led to a loss of Chinese territory to the Russian Empire.

To be sure, many of the Chinese who inhabit Russia’s eastern territories are merchants and traders, as opposed to laborers. Nevertheless, Chinese citizens are a presence in Russia’s labor market, to such an extent that in 2000 China and Russia inked an agreement on the matter of temporary Chinese labor in Russia. This has had some limited effect on North Korean laborers’ job prospects. Throughout the first decade of the 21st century, North Korean laborers once again began to face competition from Chinese economic migrants for jobs in the Russian Far East. It is possible, therefore, that if Russian employers hire an increasing number of Chinese citizens, the need to import more North Korean workers will decline.

The hope that the substitution of Chinese workers could mitigate the need for North Korean employees, however, comes with one major caveat. Even as Chinese workers constitute one of the largest groups of non-Russian workers in the Russian Far East, their numerical presence, both in Russia as a whole and in its specific industries, undermines the possibility that they could present a viable alternative to North Koreans. Even within the short period since 2000, the number of Chinese economic migrants in the Russian Federation has varied considerably. North Koreans, on the other hand, have not seen a large fluctuation in terms of their presence on Russian soil. They have numbered around 20,000 since at least the end of the Cold War.

Indeed, using statistics from Russia’s Federal Migratory Service, Irina Ivakhnyuk demonstrates that in 2006, Chinese workers comprised 21% of Russia’s foreign work force, while in 2015 that number had dwindled to a mere 3%. According to the same data set, the number of workers in Russia that fell under the category of “other countries” (including North Korea, and not including post-Soviet republics) remained more-or-less consistent during the nine year period documented at around 10% of Russia’s total foreign work force.

Furthermore, Chinese and North Korean laborers in Russia have always tended to be industry-specific. According to figures provided by the Primorye Province statistical service, Chinese citizens working in Primorye were primarily employed in the agricultural and manufacturing industries, while North Korean citizens were most heavily concentrated in construction .

Therefore, in contrast to the case of the effectiveness of sanctions in the coal trade, market economics is unlikely to have an influence on the efficacy of sanctions against employing North Korean guest workers. Chinese laborers, while they are a force to be reckoned with in the Russian Far East given its need for a temporary work force, nevertheless do not have the strong numerical consistency that would be required for them to constitute an aggregate substitute for North Korean employees. The informal dispersion of Chinese and North Korean workers between different sectors of the Russian Far East labor market further undermines the chance that Chinese workers would displace their North Korean counterparts.

Conclusion | The continued employment of North Korean citizens in Russia raises a number of issues for the international community. The humanitarian aspect of North Koreans’ employment in Russia has gained increased media attention as their plight becomes increasingly known to the outside world. Working abroad also poses security questions, as a large portion of North Koreans’ wages end up in Pyongyang’s coffers. Yet even as the international community decries both of these concerns, in the end, the North Korean regime and Russia’s Far Eastern regions mutually benefit, to such an extent that there is little chance of international sanctions having any major effect on this arrangement.

In the end, the employment of DPRK citizens in some of Russia’s industries all comes down to the fundamentals of the labor market. That North Korea would have the Russian market open as a source of income is frustrating to those countries that seek to apply maximum economic pressure to the DPRK. If Russian employers find that Chinese workers yield a better cost-benefit ratio, then it is them that Russian firms and employers will turn. Otherwise, the only plausible policy those countries opposed to the Kim regime can adopt is continued unilateral actions against the people who employ North Koreans.