(Reuters) – In May this year, a North Korean defector in her 40s took a call from an unknown number at her office in the South Korean capital Seoul.
It was from her brother, who she had not seen for more than a decade, calling illegally from North Korea after tracking her down.
He was speaking from a remote mountainside near the border with China, and was in dire need of money to help treat another sister’s late stage cancer, she said.
Accompanied by a Chinese broker, the brother had spent five hours climbing up the mountain, avoiding North Korean security and desperately searching for a signal on a Chinese mobile telephone. Contact with anyone in the South is punishable by death in North Korea, one of the world’s most isolated states.
The broker was part of a growing group of people, mostly Chinese of Korean descent, who use ties on both sides of the border to funnel money to the North, an illegal and highly dangerous operation.
At first, the defector in the South suspected a trick and demanded the caller answer a question that only her brother could know the answer to.
“I asked him to tell me the name of the train station where we were separated. I am now 40 and we were separated when I was 26,” she said, requesting anonymity for fear of reprisals against her family. “Then he said he needed money.”
Next morning, she wired 15,000 yuan ($2,400) to the broker’s account at a bank in China, near the border. His wife confirmed receipt of the funds, informed her husband, and the defector’s brother got money in North Korea, a state where the average income is estimated at just $1,200 a year.
Brokers typically charge up to 30 percent fees for such transactions, but by and large, they work well.
“I heard it only took 15 minutes for my brother to get the money (after funds were wired),” said the defector, who is officially listed as dead in North Korea. “Two days later, my brother called me back saying ‘Thank you. We will spend your money wisely’.”
The woman is one of the 23,000 defectors living in South Korea, with which the North remains technically at war after an armistice ended the 1950-1953 Korean War.
Some 70 percent send money home to the country they fled, says the Organization for One Korea, a South Korean support and research institute on North Korean defectors. Annual flows are estimated at $10 million a year as defectors try to help out families in a country where many are malnourished and lack access to basic healthcare.
CHINA CONNECTION
Most of the funds flow through China, North Korea’s main diplomatic ally and trading partner. With North and South Korea divided by a demilitarized zone, China provides the only land entry into the isolated nation other than a little-used crossing into remote eastern Russia.
There is a two million strong ethnic Korean population in the Chinese provinces near the border and that generally provides the entry point for the southern money, defectors in Seoul said.
Incoming funds from South Korea have become so significant that they have been dubbed the “Mount Halla Stream”, named after the tallest mountain in South Korea, said Kang Cheol-hwan, the author of “The Aquariums of Pyongyang,” a survivor’s account of North Korean gulags.
This has helped offset a decline in funds from ethnic Koreans living in Japan that dominated in the mid-1980s and was known as the “Mount Fuji Stream”.
“In the past, pro-Pyongyang people in Japan and some Korean Americans sent money but they grew old and strong sanctions from Japan also took a toll. So the generation providing remittances has changed and it is now the defectors in South Korea who are doing it,” said Kang.
Kang declined to comment whether he too sends money home.
Not much is known about how the average North Korean copes, but the country is one of the poorest in the world.
Its leadership is believed to live a life of luxury – former leader Kim Jong-il’s Japanese chef said he had a taste for fresh sushi, caviar and fine French wines and cognac – but a recent United Nations report classified 7.2 million of the 24 million population as “chronic poor” and said one in three children were stunted due to poor nutrition.
Little appears to have changed under new ruler Kim Jong-un, a heavily built man believed to be in his late 20s who appears to be following his father Kim Jong-il’s “military first” policy since he took power last December.
North Korea’s 1.2 million strong military chews up a quarter of gross national product, according to U.S. State Department estimates and a recent report by the South Korean central bank estimated gross national income per capita there at just $1,200 a year, five percent of that of the affluent South.
A NEW CLASS
Another defector from the North, surnamed Lee, who is studying Chinese at a university in Seoul as well as working two jobs to pay her way, told Reuters she wired $4,000 last year to help cover her sister’s medical bills in the North. She also sends $1,000 once or twice a year to help support her sister’s business.
“The economic prosperity my sister enjoys there comes from my money and my remittances. She started a business in a private market thanks to them,” said Lee, now in her senior year at college.
Like other defectors, she declined to be more precisely identified for fear of reprisals against her family in a country where entire families are often sent to gulags for crimes against the state.
The North’s economy has not recovered from a devastating famine in the 1990s that killed an estimated 800,000 to 1.5 million people or from the collapse of the Soviet Union, a military and economic backer of the Pyongyang regime during the Cold War.
But such is the flow of funds from defectors that it has created a new class in the North, one that is no longer dependent on the Kim family and its clans or on paychecks from the country’s moribund state-owned enterprises, which in many cases have stopped.
“They are the new rich. I think those who left North Korea and now live in South Korea outnumber the established wealthy class in the North,” a third defector surnamed Im told Reuters.
“They are the invisible rich. Everyone knows who receives money from South Korea but no one openly talks about it,” said Im, who also requested to be known by one name so she and her family could not be identified.
She said she sent about 3 million won ($2,600) last year to her parents.
While South Korea requires its citizens to get government permission to visit the North, which is rarely granted, there is little it can do to staunch the money flows.
Some of the money is used to buy off North Korean officials, many of whom are no better off than their civilian counterparts.
“Incoming money from the South is like honey,” said An Kyeong-soo, a researcher at the Database Center for North Korean Human Rights, a group in South Korea that studies defectors’ remittances.
“When this honey drops into someone’s house, it is like a swarm with lots of officials wanting to eat some of it, like hungry ants.”
With few signs of change in a country that, according to a 2011 United Nations assessment of its economic prospects, faces a challenge to “restore the economy to the level attained before 1990”, North Koreans outside the ruling clique will likely remain dependent on their southern relatives.
“Isn’t it good that South Korea’s money can help North Koreans? What we are sending goes to its people, not the regime,” said Im, who is now married to a South Korean. ($1 = 1143.7250 Korean won) ($1 = 6.3659 Chinese yuan)
(Editing by David Chance and Raju Gopalakrishnan)