(Bloomberg) -- Russia's hunt for weapons to fire at Ukraine could provide a lifeline for North Korea, where even a relatively modest arms deal would help lift the country's cash-starved and stagnant economy into growth.
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The US made fresh accusations this month that Kim Jong Un is providing arms and ammunition to aid Putin's war, including sending shells and rockets. While the Biden administration said the weapons won't do much to alter the battlefield, the sales would open a new stream of revenue to a country isolated from much of world trade.
While North Korea has denied the US allegations of the arms transfers, any such deal would be well timed for Kim. His border closures during the pandemic pushed North Korea's already anemic economy into one of its biggest contractions in decades.
North Korea's economy failed to grow in 2021 and faced uncertain prospects last year, according to the Bank of Korea in Seoul, one of the few entities to produce regular assessments of the country's outlook. Meanwhile, Kim's seemingly lucrative forays into crypto-currency theft may now be facing a squeeze after the collapse of digital-asset exchange FTX.
One thing Kim does have in abundance is weaponry, especially the crude 20th-century artillery experiencing something of a revival on the frontlines of Ukraine. North Korea possesses untold stores of munitions to supply what the International Institute of Strategic Studies estimates is an arsenal of more than 21,600 artillery pieces, a force that has for decades held Seoul under the threat of Mariupol-like devastation.
"North Korea would grab with both hands an opportunity to get rid of aging stocks of legacy munitions at a significant markup," weapons expert Joost Oliemans said. The regime has produced a "myriad" of older, towed artillery designs that are compatible with some Russian systems, said Oliemans, who co-authored the book The Armed Forces of North Korea.
The US hasn't provided details on the amount of weapons it believes North Korea has sent to Russia. But the Biden administration said when it first made the accusations in September the Kremlin wanted to buy millions of rockets and artillery shells.
National Security Council spokesman John Kirby told a news briefing about a week ago there was evidence the Wagner Group, a paramilitary organization heavily involved in the effort to capture the eastern Ukrainian city of Bakhmut, was receiving deliveries of North Korean and equipment. He displayed two photographs that purported to show Russian rail cars traveling to North Korea.
"We obviously condemn North Korea's actions, and we urge North Korea to cease these deliveries to Wagner immediately," Kirby said, pointing out the benefits to Kim's regime for the transfers. "Let's keep it in perspective. This is not a burgeoning economy," he said.
Some North Korean items on likely on Putin's wish list would be 122-millimeter and 152-mm artillery rounds as well as 122-mm rockets, Oliemens said. The price for 122-mm rockets was about $6,000 a few years ago, he said, adding it was difficult to get prices for the items North Korea might be sending.
A major deal could be worth hundreds of millions of dollars, Oliemens said, adding, "it would make sense for Russia to first acquire smaller batches first," and assess their quality and effectiveness before committing to a larger purchase. It wouldn't take much - payments totaling less than $320 million - to add 1% to North Korea's gross domestic product.
A State Department spokesperson declined to comment on any potential economic boost that North Korea is seeing from munition sales to Russia, but said the US remained concerned that Pyongyang will deliver more military equipment to the Wagner Group.
Any weapons sales would mark a reversal in roles between the neighbors, since North Korea for decades relied on weapons from its former benefactor, the Soviet Union. Pyongyang has been banned from arms sales for more than 15 years under UN resolutions that Russia helped impose, although the country still sells arms to the likes of Iran, Syria and Uganda, according to the US Defense Intelligence Agency.
"There are both economic and political incentives for North Korea to supply arms to Russia, and the two may be intertwined," said Naoko Aoki, an associate political scientist at the Rand Corp. in Washington. North Korea's need for hard currency is the most obvious economic reason but Pyongyang could be compensated in other ways, including fuel shipments, she said.
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Russia has in recent months used its veto power at the United Nations Security Council to block additional sanctions on North Korea for its ballistic missile tests. North Korea is one of the few countries that have recognized the Kremlin-controlled "People's Republics" in Donetsk and Luhansk in eastern Ukraine.
Kim Yo Jong, the powerful sister of North Korea's leader, last week reaffirmed the country's support for Russia in its struggle against the US and "its top-class stooges." "We will always stand in the same trench with the service personnel and people of Russia who have turned out in the struggle to defend the dignity and honor of the state and the sovereignty and security of the country," she said, according to the official Korean Central News Agency.
Russia and North Korea appeared to have resumed trade over their sole rail link late last year, according to satellite images published by the 38 North website. Any weapons sent by rail from North Korea could make their way across the Eurasian landmass and into Ukraine without the possibility of interdiction by third parties.
In addition to cash, North Korea may also be looking for debt relief and possibly technology transfers, said Victor Cha, the senior vice president for Asia at the Center for Strategic & International Studies think tank. Much of North Korea's ballistic missile arsenal is believed to be based on Russian designs, such as the Iskander rockets that Moscow routinely lobs at Ukrainian targets.
"North Korea sees opportunity in the Ukraine war to draw closer to Russia, so it's using Russia's need for munitions to do that," said Cha, a former US envoy to six-country nuclear talks with Pyongyang.
--With assistance from Iain Marlow.
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