Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hey Sarah here. One of the best things about working
Speaker 2: at Bloomberg is that we've got reporters everywhere. Today, on
Speaker 2: the Big Take, we're bringing you a story from our
Speaker 2: colleagues in Hong Kong. I'm handing the mic over to
Speaker 2: my colleague Janet Paskin, and we'll be back with you soon.
Speaker 2: Here's Janet.
Speaker 3: We are now two years into the war in Ukraine,
Speaker 3: and while both sides were running low on ammunition for
Speaker 3: a while, Russia seems to have solved that problem. Russia
Speaker 3: is not only relying on its own weapons, it's getting
Speaker 3: ammunition from elsewhere, from someone who has enough to spare
Speaker 3: and wants Russia to win this war. Now, United Nations
Speaker 3: countries aren't supposed to be selling arms to Russia, so
Speaker 3: no one wants to take the credit. But there are
Speaker 3: some pretty good clues about where all this ammunition might
Speaker 3: be coming from. Starting with a letter that Russia sends
Speaker 3: in twenty twenty two, just six months after it invades Ukraine.
Speaker 1: We have Russia saying nails in time to a deepen
Speaker 1: an enhancer cooperation for strategic purposes.
Speaker 3: Who's Russia writing to North Korea. Now, Russia sends a
Speaker 3: letter like this every year to North Korea in celebration
Speaker 3: of Liberation Day, a holiday marking the end of Japan's
Speaker 3: rule over the Korean Peninsula. But my colleague John Herskowitz
Speaker 3: has been covering and watching North Korea for more than
Speaker 3: twenty years, and he says this letter was different. For
Speaker 3: one thing, it was broadcast on North Korean state TV
Speaker 3: most U latim do u Latimio. And then there's what
Speaker 3: the letter said, this call to deepen and enhance our
Speaker 3: cooperation for strategic purposes.
Speaker 1: And it's like, uh, it's yeah, there's just a subtle
Speaker 1: change here. It seemed like, given the situation, it was
Speaker 1: a good time to take stock of what North Korea
Speaker 1: had and what Russia needed.
Speaker 3: So what does North Korea have that Russia needs? The
Speaker 3: answer is ammunition, lots of it. I'm Janet Paskin and
Speaker 3: this is the big tick from Bloomberg News today on
Speaker 3: the show, how North Korea has become critical to Russia's
Speaker 3: military campaign in Ukraine and why that might be one
Speaker 3: of the most lucrative things North Korea has ever done.
Speaker 3: North Korea is one of the most isolated, cut off
Speaker 3: countries in the world, and it's not like that letter
Speaker 3: from Russian President Vladimir Putin straight up says please send
Speaker 3: us some ammunition, thank you very much. So I asked John,
Speaker 3: how do we even know for sure that North Korea
Speaker 3: is supplying Russia's military And he said, for one thing,
Speaker 3: there are satellites that take pictures of North Korea, and
Speaker 3: images from those satellites do show shipments heading to Russia.
Speaker 1: There were about three or four ships which went regularly
Speaker 1: between Russia and North Korea. And then there are satellite
Speaker 1: images showing munitions dumps being filled with munitions, so these
Speaker 1: show the route from North Korea to Russia across Russia
Speaker 1: into munition stumps by the border with Ukraine.
Speaker 3: On top of that, there was this warning from US
Speaker 3: State Department spokesperson Ned Price.
Speaker 4: We have information that, despite the public denials that we've
Speaker 4: heard from the DPRK.
Speaker 3: DPRK is North Korea's official name, the Democratic People's Republic
Speaker 3: of Korea.
Speaker 4: The DPRK is covertly supplying Russia's war in Ukraine with
Speaker 4: a significant number of artillery shells, while obfuscating the real
Speaker 4: destination of these arm shipments by trying to make it
Speaker 4: appear as of their incented countries in the Middle East
Speaker 4: or North Africa.
Speaker 3: According to estimates by the US and South Korea, North
Speaker 3: Korea has sent ballistic missiles and more than two million
Speaker 3: rounds of one hundred and fifty two millimeters artillery shells.
Speaker 3: Those shells are basically huge bullets. There are some of
Speaker 3: the most heavily used munitions in the war in Ukraine,
Speaker 3: and with two million of them, Russia can fire up
Speaker 3: to tens of thousands a day. For that, Russia is
Speaker 3: willing to pay dearly, So for North Korea, there's a
Speaker 3: lot of money on the table.
Speaker 1: We don't know what the exact costs of North Korean
Speaker 1: artillery shells are, but it may be worth taking a
Speaker 1: look at something similar the one hundred and fifty five
Speaker 1: millimeter shell that's the NATO standard. Now, if you look
Speaker 1: at like some of these recent procurement contracts, these show
Speaker 1: that they're going for about three to four thousand dollars each.
Speaker 1: So if you do that times two million, you're looking
Speaker 1: at eight billion dollars. That's for normal, newly manufactured one
Speaker 1: hundred and fifty five millimeters artillery shells. North Korea has
Speaker 1: artillery shells that have been sitting around for decades. A
Speaker 1: lot of them are probably duds. What the actual value
Speaker 1: is I don't know, but I think they would probably
Speaker 1: have a value for billions of dollars.
Speaker 3: And even if you know, whether it's eight billion dollars
Speaker 3: or four billion dollars or two billion dollars, that's a
Speaker 3: lot for North Korea exactly.
Speaker 1: The economies estimated to be about twenty five billion dollars,
Speaker 1: so any any sort of help. If it's eight billion,
Speaker 1: it's the third of the economy. It would be the
Speaker 1: biggest gain in North Korea's economy in Kim Jong UN's reign,
Speaker 1: probably one of the biggest ever for North Korea.
Speaker 3: And the money is only part of it. After the break,
Speaker 3: how North Korea is really getting so much more Officially,
Speaker 3: both North Korea and Russia deny that there's any arms
Speaker 3: trade underway, but at the same time they're not being
Speaker 3: very subtle. Russian military leaders are visiting Pyongyang and North
Speaker 3: Korea is showing off it's inventory.
Speaker 1: Kim Jong un took Russia's defense minister to an exhibition
Speaker 1: hall and showed him all of his latest weaponry, missiles,
Speaker 1: anti aircraft systems. This went out on state media North
Speaker 1: Korea wasn't hiding anything.
Speaker 3: So between what North Korea is openly broadcasting, satellite images
Speaker 3: and other military intelligence, the US and its allies feel
Speaker 3: very confident that this arms transfer has happened. John, why
Speaker 3: does North Korea bother denying this to the world.
Speaker 1: Because it's a violation of UN sanctions. I'm not sure
Speaker 1: what the reason is, but openly admitting to violating UN
Speaker 1: Security Council resolutions and sanctions it's probably not a look
Speaker 1: that North Korea wants.
Speaker 3: But regardless of the denials from North Korea and from Russia,
Speaker 3: it's clear that this type of arrangement would be a
Speaker 3: win for Kim Jong un.
Speaker 1: The war in Ukraine has opened opportunities for North Korea
Speaker 1: that have never been there before for economic assistance the
Speaker 1: likes of which Kim Jong un has never seen.
Speaker 3: John says that economic assistance could come in many forms.
Speaker 1: North Korea has so many needs it's really difficult to
Speaker 1: say what it can be getting when. It needs food,
Speaker 1: it needs fuel and needs cash, It needs technology, it
Speaker 1: needs armaments. Kim Jong un wants to put more satellites
Speaker 1: in orbits, so it needs Russian out for that. He
Speaker 1: wants to build a nuclear powered submarine needs help for that.
Speaker 1: He may want to build cold power plants because his
Speaker 1: country is chronically short of electricity, He'll need Russian help
Speaker 1: for that. He may want to develop more powerful missiles,
Speaker 1: will need Russian help for that. He may want to
Speaker 1: buy more Hennessy Kognac and he may need Russian help
Speaker 1: for that. And you just don't know what exactly it is.
Speaker 3: After decades of sanctions, North Korea is one of the
Speaker 3: poorest countries in the world. Famine and malnutrition are chronic.
Speaker 3: Anything that Kim Jong un can deliver to improve overall
Speaker 3: quality of life is a big deal.
Speaker 1: One of the big things for him has been the
Speaker 1: construction of housing. Construction materials are some of the things
Speaker 1: that have been hit by sanctions, and North Korea has
Speaker 1: had trouble getting its hands on. The more materials he
Speaker 1: can get for building construction, the better it is for
Speaker 1: his economy, the more that he can show that he
Speaker 1: is providing.
Speaker 3: Besides those material gains, the arms deal with Russia also
Speaker 3: helps boost Kim's image among his own people.
Speaker 1: He's seen more as an international statesman the more that
Speaker 1: he gets the visits from Russia, which has also precipitated
Speaker 1: more visits from China.
Speaker 3: This makes Kim look good at home and with North
Speaker 3: Korea's allies abroad, and that has made him bolder.
Speaker 1: The most obvious thing in what we've seen in state
Speaker 1: media is that Kim has taken a more aggressive stance
Speaker 1: towards South Korea. Cut off economic cooperation, said peace reunification
Speaker 1: is impossible, remove the concept from the constitution, is said,
Speaker 1: he has the legal right to annihilate South Korea. So
Speaker 1: we have that on one.
Speaker 3: End, and we have North Korea re emerging as a
Speaker 3: viable source for military supplies. Now you have hot wars
Speaker 3: in Ukraine and Gaza and conflict in Yemen, and North
Speaker 3: Korea's weapons are passing a real time test on the battlefield.
Speaker 1: Now that Russia is buying North Korean missiles, they're newer missiles.
Speaker 1: It's kind of a seal of approval that North Korean
Speaker 1: missiles are good enough. It could reopen the market for
Speaker 1: North Korea to try sales abroad again.
Speaker 3: There are still sanctions in place to prevent this kind
Speaker 3: of trade, but.
Speaker 1: Russia has defied you on sanctions. North Korea has tried
Speaker 1: to find ways to get around you on sanctions. Soviet
Speaker 1: friends Iran, Yemen, Syria. The countries that were once customers
Speaker 1: for North Korea could go to Russia as a conduit
Speaker 1: for missiles, and Russia could be a friend for North
Speaker 1: Korea as it tries to go out in the world
Speaker 1: and find ways to get money.
Speaker 3: But becoming a global arm supplier would mean a trade
Speaker 3: off for North Korea. It can sell weapons overseas or
Speaker 3: it can rebuild its own stockpile, but it can't really
Speaker 3: do both.
Speaker 1: One thing to consider as well is that these stores
Speaker 1: of artillery that North Korea's had waiting for years are
Speaker 1: not as big as they want were. North Korea hasn't
Speaker 1: fallt a war since nineteen fifty three. They have thousands
Speaker 1: of artillery pieces which are positioned along the border to
Speaker 1: face off against South Korea, and the idea of an
Speaker 1: initial North Korean attack would be to rain down hundreds
Speaker 1: of thousands of shells onto South Korea, which will be
Speaker 1: much more difficult now that it's sending so many of
Speaker 1: its shells to Russia.
Speaker 3: Right now, there are no signs that this arms trade
Speaker 3: between Russia and North Korea will end anytime soon. Earlier
Speaker 3: this year, the two countries foreign ministers met in Moscow
Speaker 3: and North Korea said that Putin has accepted Kim's invitation
Speaker 3: to visit Pyongyang soon. The closer these two get, the
Speaker 3: more the pressure mounts on Ukraine and its allies.
Speaker 1: Ukraine's supplies are dwindling. Europe has pled a million artillery
Speaker 1: shells a year to Ukraine, but it's having trouble meeting that.
Speaker 1: So Ukraine is rationing ammunition and its air defenses are
Speaker 1: also under pressure. The more missiles North Korea provides to Russia,
Speaker 1: the more air defenses Ukraine has to deployed to shoot
Speaker 1: down North Korean missiles, Russian missiles, drones. You know, these
Speaker 1: are not sophisticated weapons, They're not difference makers, but now
Speaker 1: with Ukraine's stocks drying up, they could be.
Speaker 3: This is the big take from Bloomberg News. I'm Janet Paskin.
Speaker 3: This episode was produced by Yang Yang and Naomi Caitlin
Speaker 3: Kenny is our editor. It was mixed by Veronica Rodriguez
Speaker 3: and fact checked by Tiffany doy Like Maples is our
Speaker 3: sound engineer. Our senior producers are Naomi Shavin and Gilda Decarli.
Speaker 3: Elizabeth Ponsett provides the editorial direction. Nicole Beemster Bower is
Speaker 3: our executive producer, and Saige Brauman is Bloomberg's head of podcasts.
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