National Intelligence Daily Cable for Tuesday, November 2, 1976

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National Intelligence Daily Cable for Tuesday, November 2, 1976.

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NORTH KOREA: The Drug Bust

[redacted 25X1] Pyongyang is trying to limit the damage from the recent highly publicized expulsions of North Korean diplomatic personnel from the Nordic countries for trafficking in narcotics, duty-free liquor and cigarettes. Since the issue surfaced in mid-October North Korea has:

--Acknowledged privately that some of its representatives were engaged in illegal activities.

--Withdrawn ambassadors and staff members as requested without a major public protest—an implicit admission of guilt.

--Avoided any retaliatory acts against Scandinavian officials in Pyongyang.

--Moved quickly to replace the ousted diplomats.

[redacted 25X1] The timing of the episode is particularly poor for North Korea. Its international reputation had already suffered in recent months as a result of its large-scale default on foreign debts, its heavy-handed tactics at the nonaligned conference at Colombo, and the slayings of US personnel at Panmunjom.

[redacted 25X1] Pyongyang is anxious to forestall any move by the Nordic countries to use the smuggling scandal as a pretext for terminating several incomplete and financially troubled industrial development projects in North Korea. The Danes and Japanese are jointly constructing a large cement plant, the Swedes are building an ore processing facility, and the Finns have supplied equipment for a paper mill.

[redacted 25X1] The illegal actions in Scandinavia were part of a systematic effort by the North Koreans to exploit their diplomatic status for profit. Similar activities—although not on the same scale—have been reported in Burma, Nepal, Malaysia, Switzerland, Egypt, and Argentina.

[redacted 25X1] The illegally acquired funds are used to help defray operating expenses for Pyongyang's embassies and trade missions as well as to finance intelligence and propaganda activities abroad. Over the past year or so, North Korea has been cutting back some of its larger overseas staffs in an apparent effort to reduce expenses. The scope of the recent smuggling operations in Scandinavia suggests that the North Korean embassies there may have been under some special injunction to become self-supporting in view of Pyongyang's shortage of foreign exchange.

[redacted 25X1] North Korea has clearly suffered a serious black eye in the diplomatic community. For the near term, it probably will act cautiously, especially in Western Europe where the press has been giving heavy coverage to the smuggling. An international forum on Korea, organized by Pyongyang, had been scheduled in Brussels for late October but has now I been postponed indefinitely.

[several sentences redacted 25X1]

[redacted 25X1] The scandal also will further complicate North Korea's commercial and trade relations with the West. Foreign governments and business firms are likely to be even less inclined to extend credit or debt relief.//

[redacted 25X1] So far, none of the countries in which North Korea abused its diplomatic privileges has indicated it will break diplomatic relations. The Scandinavian countries, for example, all have noted that they do not wish the expulsions to disrupt relations with Pyongyang further, and none of them has vet ordered the closure of a North Korean mission.

[several sentences redacted 25X1]

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