Author: Arsen Araqelov

On February 19, in Sokhumi, the de facto Prime Minister of Abkhazia, Alexander Ankvab, hosted Yoon Guk Nam, the General Director of the Mangenbon International Trade Corporation of North Korea. The meeting discussed the prospects of opening “trade reprensentations“ as well as issues of cooperation in the fields of food industry, banking and tourism between Sokhumi and Pyongyang.

There is little information about Mangenbon in open sources. According to Abkhaz sources, the scope of the corporation specializes in the trade of food and non-food products, IT technologies, cooperation in the field of medicine, seafood processing, and knitwear production.

It is interesting what ties exist between North Korea and the occupied regions beyond this visit.

North Korean Labor Migrants in Abkhazia

In 2017, the UN imposed sanctions on North Korea, according to which all North Korean labor migrants had to leave UN member states by 2019. China and Russia also supported the decision. As of 2019, there were still 10,000 or more North Korean nationals working in Russia. The purpose of the said sanction was to limit Pyongyang's access to foreign currency, the lack of which North Korea was experiencing due to Western sanctions. According to a 2015 UN report, the North Korean government has sent a total of 50,000 its citizens to work in different countries in order to attract foreign currency. The income from labor migration amounted to USD 1.2-2.3 billion per year.

Given that occupied Abkhazia is not a member of the United Nations, the North Korean government is trying to use Abkhazia to circumvent the ban. Abkhazia has been one of the employment locations for North Korean labor migrants for several years. According to the so-called Immigration Service, in 2019, there were approximately 250 citizens of North Korea in Abkhazia, who were mainly engaged in construction work. As the Washington Post reported in 2019, there were 400 North Korean citizens (all male) in occupied Abkhazia.

In 2019, Vitali Sharia, a journalist of Echo of the Caucasus, living in Abkhazia, devoted an article to this issue. As the author writes he often sees migrants from North Korea working in the de facto republic. He also tried to interview some of them who were engaged in the renovation works of the „Cabinet of Ministers“ building. It should be noted that some of them speak Russian. The then President of the so-called Chamber of Commerce and Industry, Tamila Mertskhulava, stated that the North Korean authorities appealed to the Abkhaz side. „The offered us workers. This is what they can export,“ she added.

The Interest North Korea May Have in Abkhazia

North Korea may consider the development of relations with the occupied Abkhazia as one of the ways to develop trade relations and circumvent sanctions. North Korea can „employ“ labor migrants in Abkhazia. In addition, Pyongyang can use the maritime infrastructure of occupied Abkhazia to achieve its economic goals and, like Russia, use occupied Abkhazia to circumvent sanctions. The visit of the North Korean company to Sokhumi can be viewed in this context.

North Korean Bank Account in Tskhinvali

In January 2024, the White House reported that North Korea supplied ballistic missiles and 2.5 million cartridges to Russia amid the latter’s ongoing military aggression in Ukraine. According to the US side, in response, Moscow lifted the restriction on the disposal of USD 9 million, which is part of North Korea's frozen assets (amounting to USD 30 million) in Russian financial institutions. According to the same information, Pyongyang intends to buy oil with this amount, in which the occupied Tskhinvali region may help Pyongyang.

In February 2024, The New York Times published information according to which North Korea opened an account in a bank operating in the occupied Tskhinvali region, which it will use in its relations with Russia. The article does not specify, however, most likely it refers to the „International Settlement Bank“ which was established a few years ago with Moscow’s support. Russia used the bank for economic relations with the occupied regions of Ukraine before recognizing them.

The North Korean account opened supposedly at the „International Settlement Bank“ located in the Tskhinvali region will be used for the transfer of the sanctioned USD 9 million, which North Korea will use to purchase oil from Russia. Under this scheme, Russia will not „violate“ the sanctions imposed by the United Nations, since the amount transferred to Russia will not formally be North Korean sanctioned money, and the occupied Tskhinvali region, as a non-member „country“ of the United Nations, has no obligation to enforce the sanctions imposed against Pyongyang. Under this arrangement, North Korea will return its own funds, which it uses to buy oil or other goods, in exchange for the weapons supplied to Russia.

The Tskhinvali region will also benefit from the Moscow-Pyongyang deal. In September 2023, a representative of the de facto government announced that after Russia's annexation of the Donbas region, the „International Settlement Bank“ would gradually leave the region. The said decision was due to the fact that Russia no longer needed to disguise its financial operations with the occupied regions of Ukraine. In Tskhinvali, they feared that the closure of the bank would cause a budget deficit in the amount of RUB 350 million because the bank is one of the major payers to the „budget“ of the occupied region. With this deal, the „International Settlement Bank“ will continue its operation in the Tskhinvali region and contribute money to the „budget“ for a certain period of time.

Why Has North Korea Become More Active in the Occupied Regions?

The activation of North Korea in the direction of the occupied regions should be viewed in the context of the rapprochement between Moscow and Pyongyang, against the background of the ongoing Russian military aggression in Ukraine. Russia appears to be offering North Korea assistance in circumventing sanctions and solving economic problems through the occupied regions in exchange for military equipment.