Peoples Workers' friend

Newsworthiness: Producer/director of controversial four-part series on Des O'Malley for RTE

In 1992, the Irish Times' Moscow correspondent, Seamus Martin, was rooting around the official archives of the Soviet Communist Party when he made an interesting find.

Martin discovered two letters on Workers Party (WP) headed notepaper, addressed to the international department of the Central Committee of the Communist Party of the Soviet Union (CPSU).

The letters were dated July and September 1986, and were apparently signed by the general secretary of the Workers Party, Sean Garland.

The September letter sought a grant of GBP1 million from the CPSU and referred to WP fundraising through "special activities". The party later claimed that this letter was a fabrication, but never denied the authenticity of the earlier letter.

That letter, sent on July 1 1986, was a request by Garland to the CPSU to meet Gerry Gregg - then on leave from his job as an RTE television producer - who had recently formed his own TV production company, Iskra Productions. (Iskra was the name of the Bolshevik newsletter in 1917.) Iskra, wrote Garland, was interested in producing films on Soviet life.

Garland explained that the Workers Party in Ireland had devoted a lot of time and money to combating the "capitalist media" and to educating "the working class".

"As part of this struggle," he continued, "some members of the Workers Party recently formed Iskra Productions. Iskra productions functions in an environment hostile to a Marxist analysis of many of the problems confronting western society.

"However, Iskra Productions also recognises that, within the western media there is a commercial appetite for 'stories' which, paradoxically, may embody a critique of the dominant ideology or power structure of western society."

Garland described the company as "a Marxist film-making enterprise which commands this party's full support. Iskra is potentially a useful propaganda device for the socialist cause, for a small party like ours it promises much by way of building up the intellectual, ideological and financial resources of our party."

Garland said Iskra's "very talented team" included Gregg, his fellow TV producer Eoghan Harris, and radio producer John Caden. All three were longtime and vocal Workers Party supporters in RTE.

Gregg was a paid-up member of the party who would later later go on to make its political broadcasts at election time.

Gregg confirmed to the Irish Times that he had sought Garland's assistance while looking for contacts in the Soviet Union. He said that Iskra had set out to make films which were distinctive, challenging and radical, "which wouldn't have been a million miles away from the Workers Party in terms of world affairs or, indeed, in terms of Northern Ireland".

It is not known whether Des O'Malley recalled the Iskra letter last year when he agreed to grant Gregg exclusive access for a four-part documentary on his life. What is known - now that the first part has been broadcast - is that Gregg has managed to pull off the sort of ideological media coup that Garland had promised the CPSU back in 1986.

In what was marketed by RTE as a straightforward biography of O'Malley, Gregg has produced, in my opinion, a piece of old-style Workers Party propaganda, unmoderated by any dissenting view. The production is now causing great embarrassment to RTE, following its week-long drubbing by commentators and politicians.

Gregg himself can hardly be accused of deviousness. He has never hidden his politics, nor the fact that his work and his politics are entirely interlinked. Virtually every documentary he has made since the 1980s has challenged the mainstream nationalist and religious consensus.

With that as a backdrop, just how likely was it that Gregg was going to produce a balanced view of O'Malley - and particularly his line on the North? Two days before the first part was broadcast, RTE executives were satisfied that the programme was "balanced", although this itself may be a reflection of the effort that went into talking Gregg down from what was seen as complete sycophancy.

What is so remarkable about the O'Malley documentary is that Gregg succeeded in peddling his views through one of the most important and costly political profiles that RTE has broadcast in decades. What is even more remarkable is that RTE let him. No one at senior level in RTE was unaware of Gregg's politics. Apparently, some also knew that Harris was a co-director of Gregg's latest production company, Praxis Pictures.

Harris and Gregg are not just ideological soulmates. Harris has also provided a chorus of approval through his Sunday Times column for virtually all Gregg's productions over the last few years. One was described as "spellbinding", another as "brilliant", another as worthy of an award.

The documentaries - in a nutshell - have dumped on Sinn Fein or the Catholic Church, or both.

Gregg and Harris share broadly similar backgrounds. Both were working-class, both had relatives who fought in 1916, both came from families with strong republican leanings and both had formative experiences that turned them against nationalism. They developed a view of Northern politics which was closely aligned with that of Conor Cruise O'Brien and later the Workers Party, which emerged in the early 1980s from Official Sinn Fein and the Official IRA.

Dublin-born Gregg, like his father and uncles before him, joined the Labour Party at the age of 18. He left the party while at UCD. By the time he joined RTE in the late 1970s as a trainee producer, it was Official Sinn Fein to which he gave his allegiance.

In an interview last year Gregg laid out his ideological stall. Ireland, he said, was a corrupt, hypocritical, inegalitarian society, and the legislative framework of the Catholic state was still very much in place.

There was a debate within RTE to democratise it and open it up and there was a split between those who embraced the critique - roughly the Workers Party camp - and those who didn't - roughly the Provo camp. The debate was at its most virulent on the national question, and there was no hiding place between the two factions.

In the 1980s the WP ideologues chose RTE's flagship current affairs programme as their battleground.

Presided over by Joe Mulholland - not a member of the Workers Party, but a supporter of its line on the North - Today Tonight was an unpleasant place for those with even the mildest nationalist leanings.

President Mary McAleese was a reporter on the programme when Mulholland took over. McAleese - described at one meeting by an unnamed producer as a "West Belfast Provo" - was frequently in tears after abusive jousts with her co-workers over their coverage of the North.

In an interview with the Irish Times three years after she quit RTE, McAleese said: "I was a Northern voice and I spent a lot of time there. Every weekend I was with friends and relations trying to find out what was happening in the North, but I was not listened to. Whenever I tried to explain that more and more people were being drawn into the H-Block cause because of the failure of the British government to act, they wouldn't listen to me because they felt that anyone who was bringing that message into the programme had to be a Provo supporter."

To many RTE current affairs personnel it was Gregg - because of his key producer status on Today Tonight - rather than Harris, who epitomised Workers Party thinking and influence.

One former producer said: "When people talk about the Workers Party in RTE, they're really talking about Gregg, because he was 90 per cent of it. He was - and is - unambiguously political in everything he does. He is a completely political person.

Gregg took leave of absence from RTE in 1986 and formally resigned three years later.

Iskra was founded in 1986 and from then on Gregg - as he tells it - battled to have his productions accepted by the station. In 1993 the Independent Production Unit was set up with Claire Duignan, a former TV producer, at its head.

Last year Gregg claimed that many of his proposals were rejected by the IPU because of his political agenda. However, the same proposals still managed to get airtime thanks to the support of Mulholland, who was, until March last year RTE's managing director of television.

A revisionist documentary about the republican Sean South, rejected by the IPU, was later funded by RTE's Leargas programme. Gregg's film A Love Divided, which told the true story of a 1950s Catholic/Protestant family clash over schooling, was also rejected by the IPU and then supported by Mulholland.

The history of the O'Malley documentary is somewhat complex. It appears that it was accepted by the IPU, but later withdrawn by Gregg.

It later went back on the IPU's books, after it had been endorsed by Mulholland. Commissioning editor Kevin Dawson oversaw the project, which was effectively inherited by Mulholland's successor, Cathal Goan.

A former radio producer, Goan had clashed with Gregg in the past when he dared to invite a panel on to the Day By Day programme to discuss a fawning documentary on Conor Cruise O'Brien produced by Gregg.

The IPU decision to accept the O'Malley proposal after rejecting a number of other Gregg productions was almost certainly influenced by the popular success of A Love Divided, plus the award to Gregg of an Emmy for his Channel 4 documentary on a massacre at Kosovo. RTE's publicity material on the O'Malley documentary mentioned only those two Gregg productions.

Last week one commentator after another lined up to tear the documentary apart, not just for its failure adequately to address the recent arms trial revelations, but also for its overall hagiographic tone, its crude and cruel demonising of O'Malley's enemies and its sheer dullness.

What he may not be able to laugh off is the likely fallout for him from RTE's embarrassment over its decision to broadcast propagnda masquerading as objective current affairs. The station's rationale for going with the documentary was to fill the gap in the station's political archives.

One suspects that, wherever Des O'Malley - A Public Life is placed once it ends, it won't be in that gap.

World Report 2/15/99

The wiseguy regime
North Korea has embarked on a global crime spree

BY DAVID E. KAPLAN ......... http://www2.dynamite.com.au/garran/nkor19990215usnwr.htm

Something about the two North Korean diplomats passing through Egypt didn't seem quite right. The pair, based in Syria, had arrived only a day earlier from Ethiopia and already were high-tailing it out of Cairo. Suspicious, an Egyptian customs official insisted on checking their six suitcases. He found quite a stash: 506,000 tablets of Rohypnol, a sedative known as the "date-rape drug."

That episode last July–the largest seizure of Rohypnol on record–is just one in a long string of drug incidents, counterfeiting cases, and other alleged crimes involving North Korean officials. Isolated, beset by famine, and desperate for hard currency, North Korea has in effect turned into a vast criminal enterprise, U.S. experts say. "It's the mafia masquerading as a government," contends James Przystup of the National Defense University in Washington, D.C. Says another international crime analyst: "If North Korea were not a nation, you could indict it as a continuing criminal enterprise."

Cases of North Korean officials engaged in smuggling and drug trafficking began to surface in the 1970s, but law enforcement analysts have noted a disturbing jump in the past five years. Using data from the Drug Enforcement Administration, Japanese and South Korean police, and foreign press reports, U.S. News has compiled a record of criminal complaints against North Korean diplomats in 16 countries since 1994. Interviews with law enforcement officials, intelligence analysts, and North Korean defectors suggest that the regime is now dramatically expanding its narcotics production and that much of the criminal activity is controlled at the highest levels of government.

How much of the profiteering goes to prop up the world's last Stalinist state–and how much lines the pockets of corrupt officials–is impossible to know. But it is clear that the worldwide network of North Korean embassies, coupled with the use of diplomatic pouches and immunity, offers the ideal cover for a criminal enterprise. "We've rarely seen a state use organized crime in this way," says Phil Williams, a University of Pittsburgh professor and editor of the journal Transnational Organized Crime. "This is a criminal state not because it's been captured by criminals but because the state has taken over crime." Among the evidence:

Authorities in at least nine countries have nabbed North Korean diplomats with a virtual pharmacy of illegal drugs: opium, heroin, cocaine, hashish. Investigators have traced orders for 50 tons of ephedrine–the base for methamphetamine–to North Korean front companies; that quantity is 20 times as much as the nation's legitimate needs.

North Korean officials have been caught distributing counterfeit $100 bills in Cambodia, Russia, Macao, and Mongolia. The regime is believed to produce some of the world's best bogus currency with the same model press used by the U.S. Bureau of Engraving and Printing.

North Korean officials in countries from Romania to Zambia are accused of using embassies and front companies to smuggle a mind-boggling array of goods, including untaxed cigarettes, bootleg CDs, fake antiques, and endangered species parts. North Koreans also have been tied to kidnappings and terrorism.

Behind much of this criminal activity lies North Korea's desperate need for cash. With the end of Soviet patronage, and with Koreans in Japan sending less money home, North Korea has lost two key sources of hard currency. Drug dealing and smuggling offer a lucrative alternative and are believed to bring into the nation's crippled economy more than $100 million each year. Just one North Korean methamphetamine shipment, seized in August by Japanese officials, had a street value of $170 million. By comparison, North Korea's legitimate exports plunged last year to a mere $520 million, while the nation spends an estimated $200 million annually on its nuclear program.

Some analysts suspect that drug profits may, in fact, be going into that program. Since 1994, Washington has pursued a policy of engagement, offering billions of dollars in Western aid if North Korea gives up its nuclear weapons development and missile exports. But the policy has produced a frustrating stalemate, and U.S. intelligence officials say new satellite photos indicate the North Koreans are rapidly expanding a suspected underground nuclear site. Meanwhile, the North Korean Army–the world's fifth largest–remains a potent threat to South Korea and Japan. "I can hardly overstate my concern about North Korea," CIA Director George Tenet told Congress last week.

Congressional report. Concern over North Korea's illicit activity is bound to be fueled by a Congressional Research Service report due this week. The study, U.S. News has learned, cites at least 30 incidents that tie North Korea to drug trafficking. The CRS report suggests not only that drug profits could be funding the nuclear program but that U.S. food aid to the regime–over $77 million worth this year–may be needed in part because farm acreage is used to grow poppies for opium.

North Korea made its entry into the narcotics trade in the 1970s by purchasing drugs for resale, according to a U.S. intelligence report. At the time, the country had defaulted on international loans and, as now, was in dire need of cash. In 1976, four Scandinavian countries kicked out 17 North Korean diplomats after claiming to have found evidence that they were illegally selling narcotics, cigarettes, and alcohol. Among the officials were two ambassadors and the entire staff of the North Korean Embassy in Norway. (Diplomats, when caught, are rarely prosecuted.)

By the mid-1980s, North Korean farmers began cultivating opium poppies, allegedly under orders from leader Kim Il Sung. The processed opium and heroin were then sold overseas. With the cutoff of Soviet aid in the 1990s, Kim's son and successor, Kim Jong Il, ordered a major expansion of the drugs-for-export program, U.S. officials say. Based on data from defectors and other intelligence sources, U.S. and South Korean narcotics analysts believe that up to 17,000 acres now produce at least 44 tons of opium annually. If true, that would approach the output of Colombia, the largest supplier of heroin to the United States.

Despite repeated requests, North Korean officials declined an interview with U.S. News. In the past, however, North Korean spokesmen have branded accusations of drug dealing and other crimes as "smear campaigns" orchestrated by South Korea. The nation's opium production, they say, is strictly for medicinal purposes and is being stockpiled for use in war. Moreover, some drug control officials remain skeptical that North Korea is a major drug producer, among them Herbert Schaepe, secretary of the United Nations International Narcotics Control Board in Vienna. "If those production figures are correct, we would see seizures everywhere," he says. "But we just haven't seen the evidence." U.S. law enforcement officials counter that they are seeing large seizures and that the growing number of smuggling incidents–as well as mounting testimony by defectors–cannot be explained away as propaganda from Seoul. More conclusive evidence could come from U.S. spy satellites; one satellite was recently tasked to photograph North Korea's opium fields, intelligence sources say, but the day was cloudy and officials have been unable to get the satellite retasked.

Defectors say that drug trafficking is, indeed, a state-run industry. One defector interviewed by U.S. News, Bae In Su, says he worked for three years as a driver for the Communist Party's Foreign Currency Earnings Department, ferrying opium and heroin to port for export. At least twice a month, Bae says, he would deliver a van full of opium–packed by the kilogram in plastic bags–to Japanese ships or to a local pharmaceutical plant that refined it into heroin. The entire process, he adds, was controlled by high-ranking party officials. "They talked about opium being gold," Bae says. Another defector, pharmacist Ho Chang Gol, has claimed that the government ran more than 10 poppy farms to export opium.

Given the tight control wielded by North Korea's security apparatus, U.S. analysts say that such large-scale production of illegal drugs could not exist without sponsorship by authorities in Pyongyang, the capital. Intelligence reports say that the trade is handled by Office 39, a party organ under the direct control of Kim Jong Il, which oversees production and then doles out the drugs to trading companies and diplomatic posts. U.S. officials believe the profits are funneled into a private slush fund controlled by Kim and used to hand out favors, bankroll intelligence operations, and buy military hardware.

The North Koreans have not targeted their drugs at the U.S. market, although at times their shipments have ended up here. One of Hong Kong's most notorious drug lords, Lai King-man, started out peddling heroin from North Korea, says Catherine Palmer, a former assistant U.S. attorney who successfully prosecuted Lai in 1990. Palmer believes that 100 to 200 pounds were smuggled into the United States and that most of it ended up on the streets of New York.

Mexico to Moscow. Recent arrests suggest that the North Koreans are now exploring European markets. One year ago, Russian officials arrested two North Korean diplomats for smuggling 77 pounds of cocaine–enough to fetch $4 million on the street–from Mexico City to Moscow. In their pockets were round-trip tickets to Frankfurt. And last October, German police investigated the deputy ambassador at the embassy in Berlin for ties to a heroin-and-weapons-smuggling ring. But hardest hit are North Korea's neighbors. In the early 1990s, Russian officials noticed opium being sold by North Korean loggers in Siberia. The sellers, they found, dissolved opium and morphine into "medicines" with names like Roots of the White Bell and peddled them in local markets. But it took a 1994 sting operation to uncover the full scope of North Korean official involvement. Russian undercover cops agreed to buy nearly 18 pounds of heroin from two dealers who turned out to be North Korean state security agents. The deal was meant as a first installment for over 2 tons of the drug–and the Koreans boasted that nearly 8 tons were available.

Still, the drug of the future for North Korea is likely to be methamphetamine. The Koreans are moving quickly into industrial-scale production of "meth," the drug of choice in much of East Asia, say law enforcement officials. U.N. drug control officials are tracking 50 tons of ephedrine base allegedly ordered by North Korea in the past year. The drug is used as a cold remedy, but the nation's legitimate annual needs are 2.5 tons. "They must have a lot of stuffy noses," quips one drug control agent.

The target for this appears to be Japan, where the nation's 500,000 users pay handsomely for high-quality crystal meth. Most of Japan's speed in recent years has come from China, but Tokyo cops got a surprise in April 1997, in a small port in southern Japan. There a lone customs inspector wondered about the 12 large cans of honey that crew members hand-carried from a North Korean freighter. It seemed strange, the inspector thought, that North Korea was exporting food in the midst of a famine. A check found the cans crammed with 130 pounds of meth. Then, last August, Japanese police traced a 660-pound meth shipment, worth $335 million on the street, to a North Korean boat disguised as a Japanese vessel. Investigators have tied both cases to the yakuza–Japanese crime syndicates–many of whose members are ethnic Korean. Japanese police are alarmed: In two years the North Koreans have come to supply nearly 20 percent of Japan's multibillion-dollar meth market.

North Korean-printed U.S. dollars are also showing up with troubling frequency: Authorities have seized Pyongyang's bad bills in at least nine countries, from Mongolia to Germany. Last April, for instance, a North Korean trade attaché in Vladivostok, Russia, was caught passing $30,000 in fake hundreds. In 1994, police in Macao traced $600,000 of the bogus bills to a North Korean trading company. Any doubts of official complicity were erased in 1996, when Yoshimi Tanaka, a former Japanese Red Army member wanted for hijacking, was arrested in Cambodia and tied to $200,000 in counterfeit money. Tanaka held a North Korean diplomatic passport, traveled in a North Korean Embassy car, and was accompanied by North Korean officials.

"Supernotes." The Korean $100 bills have been dubbed "supernotes"; they are so good they helped push the United States to issue redesigned currency in 1996. The old-style bills are cranked out on a $10 million intaglio press similar to those employed by the U.S. Bureau of Engraving and Printing, officials say. North Korean defectors claim the notes come from a high-security plant in Pyongyang. Kim Jeong Min, a former top North Korean intelligence official, told U.S. News that he had been ordered to find the paper used to print U.S. currency but couldn't. "Instead, I obtained many $1 notes and bleached the ink out of them," he says. "The size of the bill was what mattered, not the denomination."

South Korea's intelligence agency estimates that the North turns out some $15 million in counterfeit U.S. money each year; American officials believe that figure is high. But even that amount would not constitute a threat to the stability of the greenback ($480 billion in U.S. currency is circulated worldwide).

Defector Kim says his career was not limited to counterfeiting. He boasts that before he left in 1988 he smuggled gems and Western currency out of Africa. Cramming French francs, U.S. dollars, and South African diamonds into his suitcases, he ventured overseas as often as five times a month during the 1980s. Protected by diplomatic immunity, Kim claims he cleared a profit of $80 million during that time, both for the regime and for himself. "I was immune from any laws," he says.

Authorities in numerous countries have stopped North Korean diplomats from smuggling vehicles, alcohol, fake antiques, electronic goods, weapons, and more. Other reports deeply implicate officials in the endangered-species trade. Since 1996, at least six North Korean diplomats have been forced to leave Africa after attempts to smuggle elephant tusks and rhinoceros horns. Such efforts seem partly driven by the dismal funding of North Korea's embassies. Lacking cash, North Korea closed at least 14 embassies last year and reportedly told those remaining to become "self-sufficient." Still other diplomatic smuggling incidents involve cigarettes, allegedly sold tax free on the black market, and pirated CDs. Two diplomats crossing into Romania from Bulgaria last year were found to have crammed 12,000 bootleg CDs in the trunk of their car. Truly inventive at times, North Koreans even counterfeit name-brand cigarettes, which contain their own cheap tobacco. In 1995, Taiwanese authorities seized 20 ship containers of counterfeit cigarette packaging bound for North Korea. It was enough to make 2 million fake cartons of bestselling Japanese and British brands.

North Korea's criminal reach extends beyond smuggling and counterfeiting, U.S. officials say. Japan has accused North Korea of kidnapping at least 19 of its citizens so that the regime's spies could learn Japanese and assume their victims' identities. The nation also appears on the State Department's short list of countries sponsoring terrorism. Its agents are suspected of the bombing of a 1987 South Korean flight and a 1983 bombing that killed South Korean officials in Burma.

Some policy makers argue that the best strategy is to isolate North Korea and wait for it to fall. But the regime has proved surprisingly resilient, and the key levers of power–the security forces and the Communist Party–remain under the firm control of the reclusive Kim Jong Il. South Korean President Kim Dae Jung and other allies argue that lifting U.S. sanctions and further engaging the regime is the best way. Whatever the course ahead, at least the time has passed when North Korea's criminality could be ignored by policy makers. "It wasn't even on the radarscope," says one surprised U.S. analyst. "It's a classic case of hear no evil, see no evil, respond to no evil."

With Steven Butler in Seoul and Mark Madden

They love our money
More U.S. currency circulates abroad than in America

BY CHRISTIAN CARYL

ISTANBUL--Every morning thousands of traders from the countries of the former Soviet bloc descend on the Aksaray district of this ancient Turkish seaport. Soon its narrow streets, where signs in Russian outnumber those in Turkish, are filled with visitors buying wholesale goods for resale to consumers back home: jewelry, eyeglasses, plumbing fixtures, and, most of all, clothing. "You want it in black?" asks the Russian-speaking owner of a store specializing in leather coats. "Come back tomorrow by 5 p.m. and we'll have it in black." Then he names the price: $150 per coat--in American cash, please.

While Istanbul's money-changers can handle everything from Romanian lei to Kazakh tenge, the greenback reigns supreme. And that is true around the globe. Few Americans may realize it, but more U.S. currency is in circulation outside the United States than inside. Of the $450 billion in bills and coins now lining people's wallets, cash registers, bank vaults, and mattresses, about two thirds--or $300 billion--is abroad.

That percentage is rising. The end of the cold war opened the former Soviet bloc to American currency, and restrictions on currency trading have been eliminated in much of Africa, Asia, and the Middle East. Joseph Botta, who tracks U.S. cash for the Federal Reserve Bank of New York, says that the amount of U.S. currency abroad has grown $15 billion to $20 billion a year for the past five years.

Big bills only, please. Roughly 80 percent of the American cash abroad is in the form of $100 bills. That contrasts sharply with cash at home, which circulates mainly in $20 bills (the denomination favored for use in automated teller machines). Says Botta: "The higher denominations are very popular outside the U.S., and that reflects what people there are using the currency for"--not small, daily purchases but savings and commercial transactions. In many countries, the local currency is ravaged by inflation or residents do not trust the banks.

The popularity of the dollar overseas benefits the United States in ways that go far beyond mere pride or ease of shopping for American tourists. From the point of view of the Federal Reserve Board, the $300 billion circulating abroad is like an interest-free loan to the U.S. government. Foreign producers have accepted the paper money in return for real goods and services. As long as the paper stays overseas, the United States does not have to redeem it for other goods or services, and it does not swell America's domestic money supply or contribute to inflation. The Fed estimates the annual savings at $15 billion to $20 billion--the bill that taxpayers would otherwise have to foot for the government's interest payments on $300 billion (a benefit that economists call seigniorage, a medieval French term for the right of a lord to coin money).

Competition may be coming, though. On May 2, the European Union formally will announce which countries have qualified to join the European Monetary Union, a single currency system that will begin in 1999 and that is expected to transform business in Europe. The new currency, called the euro, will make its physical appearance on Jan. 1, 2002. By July 1 of that year, all the participating countries must withdraw their old national bank notes and coins from circulation.

If the euro truly replaces the German mark, French franc, and British pound, the dollar may meet its match. But for the moment, the buck seems unstoppable. To get an idea of its global reach, one need only visit the sorting facilities of one of the big commercial banks that trade in U.S. currency. The hundreds of thousands of bills sorted every day at UBS in Zurich come from all over the world. The U.S. dollar is legal tender in Panama and Liberia, and countries from Zimbabwe to Turkey demand payment for entry visas in American cash. In Cuba, Fidel Castro's government has staved off deeper reforms by allowing the emergence of a dollar-based economy parallel to the stagnating socialist system. Albanians trade for dollars in an open-air market next to their own Central Bank. When a condominium changes hands in Buenos Aires, it is not unusual to pay with shopping bags of $100 bills. Buyer and seller then spend the day counting the bills with the help of a specially hired bank teller. The two sides enter the serial numbers of the bills on preprinted sheets that can be checked later in the case of a counterfeit.

The popularity of the U.S. bank note, says Peter Bakstansky of the Federal Reserve, is "a vote of confidence in the monetary, fiscal, and economic system" of the United States. And the Fed is willing to go a very long way to maintain that confidence: In the spring of 1996, when the United States redesigned the $100 bill to thwart counterfeiters, Treasury officials undertook a multimillion-dollar advertising campaign to reassure Russians that the estimated $20 billion of old bills they possessed would still be legal tender. Many Russian consumers, unnerved by their own government's tradition of confiscatory monetary reform, nevertheless rushed to change old dollar bills into new ones--sometimes paying a 2 percent commission to rapacious banks. (Saddam Hussein ran the same scam on his citizens by telling them that old $100 bills would be replaced by new ones, and Iraq's state banks took hefty fees as Iraqis rushed to exchange their notes.) In all, the U.S. government's publicity campaign for the new $100 bills took Treasury officials to 18 countries. One of the last on the list: Vietnam, where greenbacks are especially popular.

Russia's love affair with the dollar dates back decades. Writer Yevgeni Popov points out that many Soviets survived the turbulent years of the 1920s thanks to dollars sent by relatives in America. In the later years of the Soviet Union, he says, "the regime treated people who held dollars as if they were in the possession of drugs. Nowadays, when a Russian holds the same dollars that could have got him thrown in jail a few years ago, he feels freer." Russians still tell jokes that reflect their fondness for dollars (known as bucksy, or "cabbage"). In one, a Russian who has just returned from a trip to the States shows off the dollar bills he's brought back. "How about that," marvels a friend. "They look just like ours."

Supernote. But this windfall for the U.S. Treasury poses some risks. "No other country in the world has these large amounts of currency circulating outside of its borders," Botta notes, and one of the main concerns is that foreign counterfeiters may slip their wares into the stream. Some of the counterfeiting is state sponsored--a form of economic terrorism. When mobs stormed the headquarters of the East German secret police, the Stasi, in 1990, they found a laboratory for printing dollars. Nearly perfect counterfeits, dubbed the "supernote," also were manufactured on an industrial scale in the early 1990s somewhere in the Middle East, perhaps the Syrian-controlled Bekaa Valley of Lebanon. By February 1996 the Secret Service had confiscated $10 million of the notes. Fake bills also have turned up in Tehran, and suspected Iranian involvement in counterfeiting has led to heated diplomatic exchanges. More recently North Korea has been suspected of flooding East Asia with high-quality $100 bills dubbed "Super K's." When Thai authorities arrested the leader of a counterfeiting gang two years ago, he turned out to be a former Japanese Red Army terrorist named Yoshimi Tanaka, who had dropped out of sight after hijacking a plane to North Korea in 1970. Colombian drug cartels also have been prolific sources of funny money.

It is almost impossible for U.S. authorities to keep track of where U.S. currency is circulating. Shipments of less than $10,000 do not have to be reported to the Federal Reserve. As recently as 1996, the Secret Service--the first line of defense against a counterfeit threat that now stems primarily from overseas--had a mere 20 officials stationed abroad. Congress, in April 1996, ordered the Secret Service and U.S. monetary officials to set up a joint program to keep closer tabs on greenbacks abroad, but so far it has delivered few concrete results. The challenge facing U.S. currency sleuths is perhaps best exemplified by a story told by Vincent Morabito, a development worker who has spent many years in the former Soviet Union. In 1993 he handed over a $5 bill to pay for two bottles of beer in a hard-currency store in Latvia. "The two dollar bills they gave me in change looked and felt sort of odd," he says. "But it was only when I took them out of my wallet the next morning that I realized they were two silver certificates dating from 1933."

With Kevin Whitelaw

http://www.google.com/search?q=cache:bOTWuMWe-Ck:www.usnews.com/usnews/issue/980427/27cash.htm+%22yoshimi+tanaka%22+news+and+world+report&hl=en

The Koreas

PYONGYANG WATCH
By Bradley Martin
Asia Times Online

The cushy life of a hijacker

One of nine Japanese Red Army guerrillas who hijacked a Japan Airlines jumbo jet in March 1970 and flew to North Korea, Yoshimi Tanaka ran afoul of the law again in 1996. He was arrested on the Cambodia-Vietnam border and whisked to Thailand to face charges that he'd been part of a plot there to cash counterfeit $100 bills, the hard-to-detect "Super-K" forgeries produced by North Korea's ruling party. Recently he seems to have beaten those charges. But already he has spent almost three and a half years in a Thai jail, and even after his final acquittal in Thailand what he has to look forward to is extradition to Japan and another jail cell there. No wonder, then, that he told an interviewer for the Japanese weekly Gendai: "I now recollect my life in Pyongyang with a warm heart." Maybe even North Korea with its grievous food shortages could have a nostalgic appeal to a jailbird.

But wait. It's not just the comparison with jail life. The way Tanaka tells it, it seems he and his Japanese wife and three daughters actually had a cushy life in Pyongyang before 1994 - the year he headed to Cambodia as, he says, a trader. "In Pyongyang I could obtain various Japanese foodstuffs," he told interviewer Yasushi Watanabe. "I could get coffee, Japanese-made beer and also tobaccos such as Marlboro Light cigarettes." Using the formula phrase that North Koreans are taught from nursery school to repeat interminably, Tanaka added that the state "procured all necessities for living with a parental care, and there was no inconvenience at all for me."

But then, making clear he was not just propagandizing, he dropped a bit more information that made it clear why his Pyongyang life had been so satisfying: his circumstances there obviously were far, far above those of ordinary North Koreans. Tanaka told his interviewer he had lived amid greenery in a quiet section of Pyongyang, along the Taedong River. About 20 North Koreans were assigned by the state to work at the residences of the Japanese Red Army members and some Ecuadorean guerrillas who lived next door. The helpers "were there to manage the waterworks and boilers, transport coal and propane gas, secure foods and daily necessities and repair our Benz cars."

Benz cars, indeed. The interviewer, Watanabe, took that as his cue to ask: "You seem to have enjoyed a higher living standard than those of ordinary citizens . . . " Tanaka acknowledged that some people had disparaged the ex-guerrillas' circumstances as "life within a palace." But he himself had no complaint on that score. "I think the president" - the late Kim Il-sung, who died in 1994 - "simply wanted to treat us as foreigners." Anyhow, living in an affluent residential area that was something of a cocoon, isolated from most North Koreans, Tanaka "did not know what the ordinary life in the republic was. So I cannot tell whether I lived a luxurious life or not." He added: "As to the issue of hunger, as well, I really do not know about it."

His comments ring a bell. Some foreign analysts have theorized that Kim Il-sung's similarly splendid isolation in real palaces - combined with the efforts of underlings to report only good news and expose him to Potemkin villages that oozed fake prosperity - kept the Great Leader himself from realizing the full extent of his people's plight until close to the time of his death (if he ever did catch on). Since 1994, though, conditions have worsened so drastically that Kim's son and heir, Kim Jong-il, could hardly be unaware that his people have been starving in large numbers.

Fun and games

North Korea and South Korea are both sending teams to the Second World Military Games in Zagreb, Croatia, this week. If those competitions in shooting, taekwondo and skydiving, etc., were a substitute for real war, the citizenry of Seoul would be well advised to start fleeing south now to evade the conquering Northern hordes. In the previous Rome games in 1995 North Korea finished fifth, and it's tipped to repeat that ranking this time. South Korea, on the other hand, ranked only 17th in Rome and hopes to improve to 10th in Zagreb.

Even 10th or 17th is not too shabby, of course, and both sides' rankings demonstrate the intense competitiveness of Koreans - a trait that hijacker Tanaka mentions in his Gendai interview. "I was brought up amid fierce school entrance examinations in Japan, and so I think I have a strong competitive spirit," he says. "But you can't beat the Koreans in this respect." North Koreans living in Tanaka's residential area in Pyongyang held athletic meetings in the spring and autumn. Dividing themselves into two teams, the Sunflowers and the Azaleas, for a hurdle race, they went all out to win. That included breaking the rules. A ladder was placed flat on the course and runners were supposed to jump through the gaps between the rungs. Instead they simply bypassed the ladder and headed for the goal line.

Five years on, the Dear Leader's still there

July 8 was the fifth anniversary of Kim Il-sung's death, and the date came and went with Kim Jong-il still in charge in Pyongyang. That's not what many foreign analysts had expected at the time the country was thrown into mourning for its Great Leader. The junior Kim, a mere shadow of his imposing dad, wouldn't last long, they figured, variously estimating his likely tenure at anywhere from a few months to five years.

The Seoul magazine Weekly Chosun for its July 22 issue assembled a panel of experts to ponder how the Dear Leader, as Kim Jong-il used to be known, had managed to keep his regime alive. (He's now the Great Leader, by the way, but uses a different word for great than his father did.) One of the specialists, former vice minister for unification Song Yong-tae, summed up the winning formula by pointing to the younger Kim's artful wooing of the military and his success in winning outside economic assistance.

A high-level defector from the North, former Kim Il-sung University professor Cho Myong-ch'ol, elaborated on the matter of the military. North Korean officials had studied the collapse of communism in Europe and seen that ideological "contamination" of the military had been partly responsible. Keeping control over the soldiers thus became a key goal, long before the elder Kim's death. Some 70 to 80 officers, mostly those who had been trained in the Soviet Union, were purged in 1991, Cho said. They were suspected of having been infected with the sort of thinking that prevailed in Moscow.

The South Korean military briefly went on alert on July 16 in response to a rumor of a military coup in North Korea. But there was nothing going on but a military drill, the Korea Times reported. False alarm, as usual. Can the Kim Jong-il regime then go on indefinitely? "Some people say chances are slim for a mutiny on board, but the ship may sink due to an erosion-caused hole," observed Kim Hyon-ho, director of the Research Center for Korean Reunification and moderator of Weekly Chosun's panel.

Tanaka, the Japanese hijacker, wasn't on the magazine's panel. But in his Gendai interview he enthusiastically refuted the notion that Kim Jong-il is a lightweight. The younger Kim is as capable as his father, Tanaka argued. "Look at his diplomatic bargaining with America on the nuclear issue. He holds himself without budging an inch. On the contrary, it is America that is gasping for breath."

Give until the bank goes bust

Keeping the Kim Jong-il regime alive has required large infusions of foreign exchange to finance the imports needed to keep the military strong and relatively well fed and to make sure elite civilians, from Kim Jong-il right on down to ex-Japanese Red Army guerrillas, can keep on living the high life. In addition to counterfeiting schemes such as the one of which Tanaka was alleged to be a part, party-sponsored drug smuggling reportedly has been a major source of forex.

And then there is the community of pro-Pyongyang Koreans resident in Japan, who in many cases have achieved some financial success in businesses such as pachinko (pinball) parlors - and who typically have relatives in North Korea (read de facto hostages of the regime, in many cases). Frequently Pyongyang has prevailed upon such people for contributions to the motherland.

Some of their contributions, it turns out, have been not only involuntary but unknown to the contributors. Officials of a credit union affiliated with the pro-Pyongyang General Association of Korean Residents in Japan - Chongnyon in Korean - are suspected of having made sweetheart loans to Chongnyon and some of its regional and local subdivisions, the Japanese weekly Toyo Keizai reported in its July 12 issue. The magazine questions whether some of that loan money then went to Pyongyang as contributions to the regime. In at least one case, Toyo Keizai reports, a credit union official who was also a Chongnyon biggie simply embezzled a depositor's funds and sent them to Pyongyang.

No wonder, if this is true, that 13 branches of the credit union have gone broke, along with a trading company affiliated with North Korea that was into the credit union for huge loans to finance its shipments to Pyongyang. Toyo Keizai worries that the government's deposit insurance money - instead of helping ordinary Korean resident depositors who used the failed credit union branches - could go straight through the successor financial institutions and out to Pyongyang, as de facto subsidies of Kim Jong-il by Japan's taxpayers.

Who's the man at Chongnyon?

The Seoul daily Joongang Ilbo reported July 22 that Ho Chong-man, "responsible vice-chairman" of Chongnyon, was passed over for a promotion to first vice-chairman last year because of his prominent role in the association's messy financial affairs. The paper says the 67-year-old Ho had been eclipsed by So Man-sul, 72, who got the first vice-chairmanship instead of Ho. And the paper passes on a rumor that Ho has been purged.

Well, maybe Joongang Ilbo's Tokyo correspondent is on to something. But Ho didn't show any outward signs of being a purge candidate as recently as Chongnyon's reception in Tokyo in honor of Kim Jong-il's Feb. 16 birthday this year. As has been usual on such occasions in recent years, it was Ho who held court, talking through an interpreter with diplomats and foreign journalists who approached him. And he was still referred to as "responsible vice chairman" that night, some nine months after he supposedly had taken a fall.

(Asia Times Online) http://www.atimes.com/koreas/AH03Dg01.html

The China Threat
by Bill Gertz

Click here to return to book details

The B-2 stealth bombers took off from Whiteman Air Force Base, Missouri, around 9:00 am. It was Friday, May 7, 1999. Flying nonstop and refueling in midflight over the Atlantic Ocean near Britain, the aircraft were nearly invisible to Serbian air defense radar as they approached the Balkans. One of the aircraft reached the skies over the capital of Belgrade around midnight and launched five Joint Direct Attack Munitions, or JDAM, bombs. The 2,000-pound high-explosive weapons are among the most advanced precision-guided bombs in the U.S. conventional arsenal. The JDAMs maneuvered precisely to their targets with the help of signals sent by satellites that are part of the Global Positioning System, the navigation system used by boaters and military alike. Three of the bombs slammed into a building in downtown Belgrade that U.S. and NATO targeters believed was a key Yugoslav army weapons-buying facility.

In fact, the bombs rocked the embassy of the People’s Republic of China.

Ten days later, a top secret report was completed by the Defense Intelligence Agency (DIA). The report was based on intelligence from the headquarters of the Ministry of State Security, China’s civilian intelligence service, and was sent to what remained of the Belgrade embassy’s intelligence station. “Chinese embassy personnel in Belgrade were instructed… to collect missile fragments from the bombed embassy building and send them back to China, probably aboard the aircraft chartered to evacuate injured embassy personnel,” the report said. Three Chinese nationals were killed in the bombing, and about twenty-seven others were injured.

The DIA report went on to state: “Separately, an internal Chinese ministry level document revealed that the secure communications area and the defense attaché office within the Chinese embassy received the most damage from the NATO attack.... [The Chinese] also believed that NATO had intentionally hit the embassy as part of a larger conspiracy to drag China into the crisis.”

The report also indicated that a Chinese news organization “relayed guidance for reporting on the situation relating to the bombing.”

“The guidance, probably sent nationwide, instructed reporters not to report that NATO’s attack was accidental and to focus on the U.S. government, citizens and investors,” the report said. “Reporters are forbidden from covering demonstrations targeting any NATO countries except the United States.” The intelligence exposed how China’s communist leaders were using the state-controlled news media to focus public anger on the United States, which China views as the “world hegemon” to be stopped by less powerful states led by China. Riots by Chinese were orchestrated by government officials, and the American ambassador, James Sasser, was forced to remain holed up in the embassy while mobs of people stoned the consulate building.

This was just a small, visible part of a new Cold War against the United States on the part of the communist government in Beijing.

A day after the bombing, an official Chinese Foreign Ministry spokesman issued a statement condemning the blast: “This act by NATO is a gross violation of China’s sovereignty and a willful trampling on the Vienna Convention on Diplomatic Relations as well as the basic norms governing international relations. This is rarely seen in the history of diplomacy.”

The statement also included a not-so-subtle threat that received virtually no attention from the U.S. news media. “The U.S.-led NATO must bear all responsibilities arising therefrom. The Chinese Government reserves the right to take further actions on the matter.” In essence, the communist government in Beijing viewed the attack as deliberate and tantamount to an act of war. The reference to “further action” was a sign that Beijing would not allow the action to go unanswered.

Inside the Pentagon, military planners working on the Kosovo operations around the clock had to consider the worst possible outcome of the errant bombing: retaliation. China’s options ranged from providing diplomatic support to Yugoslav leader Slobodan Milosevic all the way to conventional and possibly even nuclear conflict with the United States. Vociferous and repeated public apologies by Bill Clinton and other high-ranking administration officials appeared to be enough to mollify China’s communist rulers temporarily. No troop movements or preparations for launching long-range nuclear missiles were ever detected. It was unlikely that China even contemplated the action, but under the circumstances no one could be certain, especially given the portrait of an aggressive China that was emerging from top secret intelligence intercepts.

Communist China Plan

Three years earlier, in May 1997, a U.S. Air Force RC-135 intelligence-gathering jet took off from Kadena Air Base, Japan. The reconnaissance aircraft bristled with electronic spying equipment sensitive enough to pick out individual telephone conversations from the millions of signals in the airwaves over China. The jet flew along a flight path parallel to the coast of China about fifty miles offshore. The ultrasensitive electronic eavesdropping equipment on the militarized Boeing aircraft swept the airwaves during the nine-hour flight. In secret reports, the flights are given code names like “Bachelor Warrior,” “Beggar Hawk,” and “Distant Wind.” The plane’s electronic ears can hear as far away as western China, into the remote Xinjiang region, where Beijing conducts nuclear testing. This spring mission produced a rare intelligence gem. No Chinese interceptor jets diverted the plane, and a wealth of intelligence was recorded and passed on to analysts at the Pentagon.

The analysts began the task of separating the valuable material from mundane military information. The intelligence was polished and given a code word that assigned it a rank within the “Top Secret” designation. “Moray” is the first level of Top Secret. Then comes “Umbra.” The most sensitive data is “Gamma.”

Within a few days, the intelligence analysts had discovered that a senior Chinese Communist official had had a secret meeting with Sean Garland, managing director of a Dublin, Ireland, company identified in the intelligence report as GKG Comms International Ltd. But Garland is more than a businessman. He is well known to American and British intelligence.

A summary of the report was distributed to the highest-ranking officials in the Clinton-Gore administration in early June 1997. Among the items it contained were details of North Korea’s first launch of a new antiship cruise missile, Russia’s launch of a new generation spy satellite, and a warning from a Mexican drug lord about an upcoming raid by Mexican troops on a farm suspected of housing drug production equipment.

But it was the following passage that caught the eye of senior intelligence officials:

Suspected Supernote Distributor Meets with Chinese to _Discuss Undisclosed Business Deal (TSC OC)

(TSC OC) Sean Garland, Managing Director of GKG Comms International Ltd., in Dublin, met recently with Cao Xiaobing, Bureau Director-General within the Central Committee, to discuss unidentified business opportunities according to late May 1997 information. (COMMENT: Garland is suspected of being involved with counterfeiting U.S. currency, specifically, the Supernote, a high quality counterfeit $100 bill.) (W9B2, 3/00/18224-97, ILC)

Aside from his business interests, Garland was secretary general of the Workers’ Party in Ireland. A telling document obtained from Soviet archives revealed that Garland wrote to the secretary of the Communist Party of the Soviet Union on September 15, 1986. In the “dear comrade” letter, Garland stated that the Workers’ Party of Ireland had developed a five-year program and asked Moscow to provide one million pounds to help. The cash would be “of benefit to the world struggle for Peace, Freedom and Socialism.” The document was posted on the Internet by Vladimir Bukovsky, the well-known Russian dissident who spent years in the Gulag Archipelago.

The meeting between Cao and Garland in 1997 showed how China had become the ideological leader of what was left of the world communist movement. U.S. intelligence officials saw Communist China clandestinely supporting international communists, including those involved in international criminal activities-even those suspected of developing counterfeit $100 bills.

The intelligence was unwelcome news for the Clinton-Gore administration and was suppressed, as so many reports exposing the Chinese threat have been suppressed under Bill Clinton’s pro-China foreign policy. The reports have always been handled the same way. The standard procedure has been to dismiss such secret intelligence as “unconfirmed.” When it could not be dismissed, it was simply hidden or ignored. Among those covering up for China were White House National Security Adviser Samuel “Sandy” Berger, a former trade lawyer who worked to establish joint ventures in China for U.S. corporations, and Secretary of State Madeleine Albright, a liberal Georgetown University professor whose views of Communist China are extremely favorable. The Pentagon intelligence report and others like it contradicted the political line laid down by President Clinton: China is not a threat, and China must be “engaged” at all costs-even if U.S. national security and interests are harmed.

The China Threat

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The Iran Brief®

Policy, Trade & Strategic Affairs

"Iran and the Supernotes"

Testimony on S.277 before Congressman Spencer Bachus

Chairman, Subcommittee on General Oversight and Investigations

of the Committee on Banking and Financial Services

Feb. 27, 1996

by

Kenneth R. Timmerman,

publisher of The Iran Brief

Enlarged meeting of CILRECO executive committee