The North Korea-Russia relationship is blossoming into a common market of autocracies

Click on the banner above to explore the Tiger Project.

Almost on a weekly cadence now, a new headline spotlights the growing flow of artillery shells and ballistic missiles from North Korea to Russia and then to the battlefield in Ukraine. On October 23, Secretary of Defense Lloyd Austin confirmed the latest development: North Korea has not only sent materiel to Russia; it is now sending troops. Austin warned that if the North Korean troops become “co-belligerents” in Russia’s war in Ukraine, the impact will go beyond Europe to impact Indo-Pacific security. Given the stakes, how should the United States and its allies understand this deepening cooperation between Moscow and Pyongyang?

In June, Russian President Vladimir Putin traveled to Pyongyang—his first visit since 2000—to sign what was called a “mutual defense pact” with North Korean leader Kim Jong Un. At the time, Kim said the agreement amounted to an “alliance.” This likely overstates the character of Russia-North Korea relations. At the same time, it would be an underestimation to view recent weapons and supplies transfers as simply transactional or ad hoc deals. Instead, what is emerging between Russia and North Korea is something closer to a specialized “common market of autocracies.” It’s the marketplace extension of the Atlantic Council’s prior work conceptualizing the “arsenal of autocracy” as well as the “axis of evasion.” The implications of this growing common market are serious for the following reasons.

First, this market works through barter-like deals, which take place largely outside the reach of potent US economic statecraft tools. These bespoke deals operate without the need to settle payments in US dollars, ship through international waters, or transport over foreign territory. As the previous and current targets of some of the United States’ most powerful sanctions, Russian and North Korean entities have accumulated significant experience in evading them. The two partners can increasingly apply those lessons learned to their bilateral transactions and present them with the opportunity to create recurring barter deals. There are concerning gaps now between Putin-Kim bartered deals and the latticed structure of powerful US economic statecraft tools.

The next stage of this common market dynamic would be the Russians directly assisting the North Koreans in modernizing and expanding their munitions industry.

What is largely missed is that recurring business deals represent the culmination of partners structuring, testing, and refining business practices. Usually, this takes many years to develop. Moscow and Pyongyang appear to be moving much quicker. One of the unintended consequences of the United States’ application of powerful sanctions is that for some targets, these tools serve as an accelerator for learning how to adapt and evade. These targets develop sanctions resistance by innovating and developing new ways to do business. By pivoting, Russia and North Korea have been able to devise and develop new business practices and form new business networks.

Second, this common market structure presents a serious longer-term threat to the United States and its allies because it bolsters the ability of these autocracies to aid each other in sustaining themselves. Through a barter version of comparative advantage, Kim can provide Putin with an item that Putin urgently needs and that Kim uniquely produces or stockpiles (such as North Korean artillery shells and ballistic missiles). The same is true for what Putin can provide Kim (such as Russia helping to resolve technical setbacks with North Korea’s rocket and missile program, as well as potentially providing war-tested drones for Kim’s deployment on the Korean Peninsula).

The next stage of this common market dynamic would be the Russians directly assisting the North Koreans in modernizing and expanding their munitions industry to meet the ambitious plans for more North Korean-produced artillery shells for the Russian war effort. (As the Russia Sanctions Database highlights, Putin’s primary military vulnerability lies in Russia’s deficient ammunition manufacturing capability.) A scaled-up munitions industry could provide North Korea a considerable industrial base with expanded capabilities that it could apply to other sectors. It could also be a source of economic growth for the Kim regime. As an exclusive supplier to a massive European war zone, the recurring barter trade channels could bring in a widening range of other high-demand items into the country.

Third, Putin and Kim are now out of their respective boxes, which China carefully crafted to try to influence their behavior. China maintained the height and length of these bespoke boxes by becoming a large bulk purchaser of energy resources from Russia and a critical secure supplier of petroleum products to North Korea. With Putin and Kim building more direct channels between their personalistic regimes for recurring specialized barter, the two leaders are, in practice, reducing obstacles and friction as they advance their own urgent national goals. For Putin, the goal is to outlast the Ukrainians on the battlefield. For Kim, it is to further erode deterrence on the Korean Peninsula.

While recent reports of Russian shipments of petroleum products to North Korea garnered only a few sentences in international media, this development likely jolted Chinese leaders. In a relatively short period of time, the potency of Beijing’s main policy tool in managing the complex China-Russia relationship and the dysfunctional China-North Korea relationship has eroded. This dynamic appears to be largely underestimated because it resides outside the scope of an immediate and direct threat to US national security.

However, if this Russia-North Korea trend continues along with other bilateral transactions, crises in Europe and the Indo-Pacific will have a trans-Siberian logistical support dynamic reminiscent of World War II. From a logistical standpoint, the Soviets effectively drew on their resources in the Far East to tip the scales on their western front. A main difference this time is that this logistical support would be two-way, with North Korea now gaining resources that could enable it to tip the scales on the Korean Peninsula and beyond.

It is a critical time to fully map out and categorize the host of specialized barter deals between North Korea and Russia. Doing so will enable the United States and its allies and partners to better understand how the common market of autocracies is growing so that policy tools can adapt to this expanding threat. The window to do so is closing quickly at the speed of war.

John Park, PhD, is a nonresident Senior Fellow with the Scowcroft Center’s Indo-Pacific Security Initiative and the GeoEconomics Center’s Economic Statecraft Initiative at the Atlantic Council.

The Tiger Project, an Atlantic Council effort, develops new insights and actionable recommendations for the United States, as well as its allies and partners, to deter and counter aggression in the Indo-Pacific. Explore our collection of work, including expert commentary, multimedia content, and in-depth analysis, on strategic defense and deterrence issues in the region.

Tags

The North Korea-Russia relationship is blossoming into a common market of autocracies