Closure of diplomatic buildings highlights North Korea’s dire financial troubles

A North Korean flag flies over the North Korean Embassy in Kuala Lumpur, Malaysia, in this March 20, 2021, file photo. North Korea is reportedly moving to close its consulate in Hong Kong, only several days after announcing that it will shutter its embassy in Uganda. EPA-Yonhap

North Korea appears to be paring back its operations regarding diplomatic missions. Only several days after announcing that it will shut its embassy in Uganda, a vital partner in Africa, Pyongyang is now moving to close its consulate in Hong Kong, according to the Yomiuri Shimbun, a Japanese daily.

Given the significant roles the diplomatic offices served for decades, such as obtaining foreign currency and gathering intelligence, the decision to close them suggests a deep financial crisis for the regime, experts told The Korea Times on Sunday. As sanctions will continue to take a toll on its economy, North Korea could reduce its overseas operations further, possibly in Europe as well, they added.

“The current leader of Uganda (Yoweri Museveni) has maintained close relations with North Korea for many decades. Closing that embassy bears a symbolic meaning,” said Oh Gyeong-seob, a senior researcher at the Korea Institute for National Unification, a state-funded think tank.

“Signs show quite clearly that North Korea is closing it not for diplomatic reasons ― but for financial ones… If the economic situation worsens, as expected, North Korea could close more diplomatic buildings elsewhere including Europe as it cannot afford them.”

According to Museveni’s presidential office, the North Korean decision came as a “strategic measure to reduce the number of embassies in Africa, including Uganda, in order to increase the efficiency of the country's external institutions.”

North Korean Ambassador to Kampala Jong Tong-hak said the two nations’ friendly relations will nonetheless “continue and will be further strengthened and developed,” adding that he “love(s) Uganda and its people,” according to local media reports.

North Korea runs more than 40 embassies globally, including in its key partners such as Russia and China, where it has consulate offices as well.

The consulate in Hong Kong has served as a base for North Korea to obtain foreign currency and procure goods and as its diplomatic link to the West. But in recent years, North Korea has probably been forced to rethink whether it is necessary to continue financing the office when it has the embassy in Beijing and two other consulates in Dandong and Shenyang, experts said.

“With Hong Kong now under the complete control of Beijing, North Korea appears to have concluded that the office is no longer necessary,” said Cho Han-bum, another expert at the think tank.

“The current geopolitical situation, described by (North Korean leader) Kim Jong-un as a ‘new Cold War,’ might have also influenced the decision to streamline foreign missions to focus on more important ones.”

Cho said North Korea has been struggling with operating overseas missions for decades. But its increased spending on developing weapons including an advanced missile and a military reconnaissance satellite appears to have aggravated its already-serious budget problems.

According to the Korea Institute for Defense Analyses, a defense research center under the Ministry of National Defense, North Korea spent nearly $700 million for the first nine months of 2022, firing 36 ballistic missiles including six intercontinental ballistic missiles and an intermediate-range ballistic missile.

In another study published last year by the International Campaign to Abolish Nuclear, a global nonproliferation organization, the regime spent over $640 million in 2021 to further its nuclear ambitions.