Malaysia and North Korea: Friends to foes
Malaysia and North Korea: Friends to Foes
WRITTEN BY UDAY BAKHSHI
12 April 2021
The close relationship between Malaysia and North Korea has severely deteriorated over the past month, with both countries shutting down their embassies in Pyongyang and Kuala Lumpur respectively. This break in diplomatic relations is significant given the historical ties between them. This relationship has seemingly become more transactional in nature, especially over the last few years. In this context, the cost of maintaining this relationship for both Malaysia and North Korea likely overweighed the benefits and resulted in the current scenario.
The assassination of Kim Jong-nam, the estranged brother of North Korean leader Kim Jong-un, at the Kuala Lumpur International Airport in February 2017 was a catalyst for the deterioration of relations between the two countries. North Korea objected to Malaysia’s decision to conduct an autopsy, which concluded that Kim Jong-nam was killed by a banned nerve agent. This incident had a negative impact on trade and economic ties. If the 2017 assassination was the trigger for deteriorating relations, then Malaysia’s decision to extradite a North Korean citizen to the US on money laundering charges in March 2020 was the breaking point. This is the first reported extradition of a North Korean citizen to the US. Following this, Pyongyang announced it would sever relations with Putrajaya, and the latter denounced the former, expelling all its diplomatic staff. Pyongyang similarly accused Malaysian authorities of being involved in a conspiracy with the US against it and making unacceptable overtures to Washington.
The evolution of Kuala Lumpur-Pyongyang ties
There is a long history of positive relations between the two countries. Putrajaya and Pyongyang established ties in 1973, and Malaysia over time became one of North Korea’s hubs for economic activity in Southeast Asia. Visa-free travel was introduced in 2009; Malaysia was apparently the first country to have this arrangement with North Korea. North Korean citizens have also been employed in Malaysia, and the businesses they are involved in are believed to funnel money to Pyongyang. Reuters released a report in 2017 detailing how such transactions are conducted, with respect to an alleged arms operation Pyongyang run from Kuala Lumpur. North Korean elements have also set up shell companies in Malaysia to bypass international sanctions. Malaysia has also acted as a middleman for talks with North Korea and has hosted informal talks between North Korea and the US, in 2016 for example.
It has also heavily focused on its cyber capabilities, and there are allegations it is propping up state-sanctioned financial crime syndicates to conduct heists. North Korea is not as isolated as the mainstream news narrative leads one to believe, and it will focus on these relations amid broader diplomatic considerations.
However, relations were already souring before the assassination due to Malaysia’s condemnation of North Korea’s missile and nuclear programs, and diplomatic considerations, such as Malaysia’s seeming compliance with increasing international diplomatic pressure on North Korea. In January 2017, Malaysia announced that it banned North Korea’s national flag carrier, Air Koryo, from operating at airports in its jurisdiction in line with UN Security Council sanctions. Pyongyang perceived Kuala Lumpur to be parroting US and UN’s sentiments, and this did not sit well there.
The US effect
The new presidency of Joe Biden in the US may also have motivated North Korea to take this seemingly drastic measure. Pyongyang has been known to test new administrations in Washington DC to see how much they can get away with. Against a backdrop of US-North Korean ties going nowhere under former US President Donald Trump, North Korea is trying to project a belligerent attitude to the new administration to show that it still has cards up its sleeves, perhaps to gain some leverage in any future discussions. This is despite the fact that the possibility of talks is highly unlikely at this time. This can be seen in the back and forth between Pyongyang and Washington over the former’s recent missile launches, the first since President Biden was inaugurated. North Korea is trying to signal that it will not easily bow down to pressure from the new administration.
For Malaysia, there are few incentives to continue its relationship with North Korea. The alleged involvement of the North Korean embassy or its personnel in Kim Jong-nam’s assassination created an environment of distrust that is not easily shaken off. Successive Malaysian governments since the 2018 elections have focused on recovering funds stolen in the controversial 1MDB corruption scandal as the issue became heavily politicised, which has required working closely with relevant US authorities. When discussing the 2020 1MDB settlement, Malaysian Finance Minister Tengku Zafrul Aziz said, “We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations”. In terms of trade, data from 2017 shows that Malaysia halted exports from North Korea ahead of the strict sanctions imposed by the US and UN in September. Malaysia’s former Prime Minister Najib Razak met former US President Donald Trump in 2017; Trump announced that Malaysia does not engage in business with North Korea.
Pyongyang — playing a balancing game
Pyongyang is also hedging its bets on weathering the blowback from the deterioration in ties with Malaysia with other foreign relations. Thailand has been an important partner for North Korea, both economically and diplomatically. Thailand has helped North Korea increase its political representation, for example, by inviting it to participate in the ASEAN Regional Forum hosted in Bangkok in 2000. In 2016, official trade between Thailand and North Korea was valued to be at USD 53 million, making Thailand one of North Korea’s largest trading partners. There are claims that this figure is too conservative as it does not capture the alleged clandestine trade between the two countries.
The North Korean ambassador in Bangkok met Thailand’s permanent secretary for foreign affairs and the director-general of the Department of East Asian Affairs this year. Both sides expressed a commitment to developing cooperative relations. Although the sanctions imposed by the UN in 2017 led to a slowdown in the growing historical trade activity between Bangkok and Pyongyang, their relationship remained intact. Thailand has largely ignored US requests to exert pressure on North Korea. American authorities alleged that North Korean front companies acting as funding channels for Pyongyang have established a regional hub in Thailand. In 2020, US authorities alleged that North Korea’s Foreign Trade Bank used these companies to evade sanctions. However, as US-Thailand relations have been strained since the 2014 coup, Bangkok has been reluctant to heed pressure from Washington DC.
As more countries in the region face mounting criticism from the US over their human rights and democracy records, North Korea will be looking to strengthen ties with them. For example, Indonesia has maintained friendly historical ties with North Korea, and its companies have also been embroiled in cases of violating US sanctions on North Korea. China remains a big brother to North Korea. Over the years, Pyongyang has built a robust system to conduct business around the world. It has also heavily focused on its cyber capabilities, and there are allegations it is propping up state-sanctioned financial crime syndicates to conduct heists. North Korea is not as isolated as the mainstream news narrative leads one to believe, and it will focus on these relations amid broader diplomatic considerations.
In conclusion
Suggesting that North Korea is acting in an irrational and unpredictable manner oversimplifies the complex dynamics underlying its decision-making. Malaysia and North Korea’s relationship has been on shaky grounds for years now, and the extradition case significantly escalated the tensions. However, this should not be viewed as an isolated event. While the severing of diplomatic ties can be perceived as a knee-jerk reaction to the extradition case, North Korea is also likely to have calculated that it had options to secure its interests, especially financial interests, elsewhere.
It remains unlikely at this time, or in the near future, that sentiments will thaw. North Korea still has the capabilities to circumvent sanctions through other places. Since Malaysia and North Korea have few incentives to cooperate at the moment, relations between them are likely to remain strained as both seem unwilling to compromise. This may change in the future, and both countries may seek to revert to some semblance of their former ties, depending on the costs and benefits at that time.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Uday Bakhshi is a geopolitical risk analyst with a focus on Southeast Asian politics. Image credit: Wikimedia.