"The restaurants are used
to earn additional money for the government in Pyongyang -- at the same
time as they were suspected of laundering proceeds from North Korea's
more unsavory commercial activities," he said. "Restaurants and other
cash-intensive enterprises are commonly used as conduits for wads of
bills, which banks otherwise would not accept as deposits."
It's hard to know for certain how much money the restaurants raise, but in a recent report, the South Korean daily Chosun Ilbo estimated
that around 120,000 South Koreans visit the two restaurants in Siem
Reap, Cambodia, each year, contributing an estimated 200 to 300 million
won ($179,000 to $269,000) to the coffers in Pyongyang. The report
concluded that each of the restaurants probably earns $100,000 to
$300,000 per year for the regime. As a result, Lankov said the eateries
-- which probably number in the "low hundreds" across Asia - are likely
one of Pyongyang's major earners. "It's a small, poor country. For them a
few million U.S. dollars is a sufficient amount of money."
Reports
from defectors suggest that the businesses are operated through a
network of local middlemen, who send a certain amount of cash to North
Korea each year as remittances. According to one report,
the Cambodian eateries were opened by Ho Dae-sik, the local
representative of the DPRK-aligned International Taekwondo Federation.
(His son, Ho Si-ryong, is listed as the email contact for the Pyongyang
Café in Phnom Penh, though he did not respond to queries). Like North
Korean embassies, which are meant to be financially self-sufficient, the
eateries have to cover their costs without cash from the central
government.
Kim Myung-ho, a North Korean defector who ran a
restaurant in northern China, reported in 2007 that each establishment,
affiliated with "trading companies" operated by the government, was
required to meet a fixed benchmark payment. "Every year, the sum total
is counted at the business headquarters in Pyongyang, but if there's
even a small default or lack of results, then the threat of evacuation
is given," Kim told the Daily NK, a North Korea-focused online
publication. Evacuation -- going back to North Korea -- is a serious
threat for someone who is allowed a few years in the relative prosperity
of, say, Cambodia.
Kwon Eun-Kyoung, English editor of the
Daily NK, said the eateries are part of trading companies controlled by
Bureau 39, the revenue-raising arm of Kim Jong-Il's Korean Workers
Party. "Every business belongs to the party and is affiliated with the
party systematically," she said. "Even though it is maybe run by
brokers, the whole system we presume is controlled by the center of
North Korea."
The establishments, highly political both in
purpose and in the bizarre décor, have at times acted as political
lightning rods for Korean expatriates. After the South Korean frigate
Cheonan was sunk in March of last year, presumably by a North Korean
submarine, South Korean residents in Cambodia launched a campaign to
dissuade their compatriots from patronizing the DPRK-run restaurants.
The Korean Association in Cambodia distributed stickers proclaiming,
"We, Korean residents, don't go to North Korean restaurants." Posters
condemning the sinking of the Cheonan were displayed on the windows at
South Korean-run eateries.