Sanctions, Cyber, and Crypto: How Pyongyang Can Exploit the War in Ukraine

Jason Bartlett

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According to North Korean state media, Foreign Minister Choe Son-hui recently acknowledged the People’s Republic of Donetsk (PRD) and the People’s Republic of Luhansk (PRL) in eastern Ukraine as independent states. As a result, Kyiv severed diplomatic ties with Pyongyang, citing North Korea’s efforts to undermine the sovereignty of Ukraine on behalf of Moscow.

Located in the Donbas region of eastern Ukraine, the two rebel-controlled territories have significantly contributed to Russian efforts to assert its ideological, political, and military influence over Ukraine for years, with a particularly important role in the ongoing Russian invasion starting in February 2022. Choe expressed Pyongyang’s intent to develop “state-to-state relations with those countries,” following a series of official government statements and convenings seemingly codifying diplomatic relations between the two breakaway states and North Korea.

Sanctions Evasion

If Russian forces completely isolate Donetsk and Luhansk from the rest of Ukraine, North Korea could expand its sanctions evasions campaigns in eastern Europe without potential pushback from the Ukrainian government. Traditionally, Russia and North Korea have a shared history of forced labor and migration dating back to the Cold War when banished Soviet-Koreans helped create political and social infrastructure in North Korea, as well as numerous industrial projects within both countries.

In the modern day, the U.S. government reports that Pyongyang continues to dispatch domestic laborers and IT workers into foreign countries like Russia to illicitly generate currency for Pyongyang. While the current number of overseas workers post-COVID-19 is difficult to confirm, CNN reported in 2018 that an estimated 50,000 North Korean laborers are stationed inside Russia to generate roughly $500 million a year for Pyongyang. Despite a U.N. resolution stipulating that all member states should repatriate North Korean laborers by December 2019, the U.N. Panel of Experts on North Korea indicated that both Russia and China have allowed North Korean laborers to overstay their visas in clear violation of U.N. sanctions.