North Korea has developed a nuclear weapons programme despite poverty and international sanctions, using home-grown technology and virtually free labour to cut costs, experts said.
South Korean government analysis has put North Korea’s nuclear spending at $1.1bn to $3.2bn overall, although experts say it is impossible to make an accurate calculation given the secrecy surrounding the programme, and estimates vary widely.
However, the weapons that North Korea has tested thus far are comparatively small and based mostly on less sophisticated fission, or atomic bomb, technology.
The isolated North’s claim that its fourth and most recent test, conducted last week, was of a more advanced and powerful hydrogen bomb has been widely doubted, although experts said it is possible Pyongyang took the intermediate step of boosting an atomic bomb with hydrogen isotopes.
A former South Korean official involved in nuclear diplomacy with North Korea said previously that it was likely the North’s nuclear programme was cutting corners on safety, further driving down costs.
North Korea was at the bottom of a 2011 list on nuclear arms spending by Global Zero, a group campaigning to rid the world of nuclear weapons.
The full cost of Pyongyang’s programme that year was estimated by the group at $700m, making it the lowest spender among nuclear states, beneath Pakistan’s estimated $2.2bn, although the analysis was made before the North’s two most recent nuclear tests.
By comparison, the US spent $61.3bn on nuclear weapons in 2011, according to the report.
Construction of the Yongbyon Nuclear Scientific Research Centre, North Korea’s main nuclear facility, cost $600m-700m, based on a 2012 estimate, a South Korean defence ministry official confirmed.
Tax the rich
Paying for those parts is not easy for a country whose official economy was worth just $28.4bn in 2014, according to South Korea’s central bank.
But it has turned to a variety of sources for hard currency in the past, including counterfeiting, insurance scams, selling missile parts to the Middle East, and, more recently, exporting manpower abroad under conditions that human rights groups say resemble indentured servitude.
North Korea also boasts a booming unofficial market economy, driven by private trade that has flourished since the devastating famine of the 1990s, giving the state a relatively new source of foreign currency.
That grey economy has eclipsed the official one, experts said, and generates so much wealth that, after previous nuclear tests, wealthy traders known as “donju”, or “masters of money”, were arbitrarily and suddenly taxed by the state to pay for the nuclear programme, according to one report.
In addition, North Korea exported more than $1bn in minerals last year, mostly coal, to China, its main trading partner, according to calculations based on Chinese export data.
Although heavily sanctioned, North Korea still sells small arms to buyers who turn to Pyongyang because of a lack of viable alternative supplies, according to a recent report.
It also raises $200m-$300m a year sending labourers as far afield as Poland and Mongolia to earn cash, said the Database Center for North Korean Human Rights in Seoul.
Kim Min-gyu, the former diplomat, said labourer salaries are usually used to prop up the Pyongyang economy, and not invested in the nuclear programme.