Security Watch: China, Iran, North Korea

China puts its foot down at the G20; Iran jails a journalist; and Kim Jong Il’s secret slush fund comes to light.

The Intelligence Security Diary is a monthly compendium of open-source intelligence on global security matters distributed by Gowling Lafleur Henderson LLP. Its findings rely on freely available information gleaned from public, unclassified sources. Each month, summarizes these findings.


  • A once-reclusive China played a surprisingly active role at the recent G20 meetings in London, pushing its trade and anti-protectionism agenda while working to minimize concerns about the environment. China also indicated it wouldn’t hesitate to throw its economic weight behind its effort to maintain sovereignty over Tibet. As its economic clout grows due to its holdings of U.S., China is expected to emerge as a major player in global affairs. Its successful strong-arming of France into abandoning a clampdown on tax havens that could have targeted Hong Kong and Macau, as well its derailing of U.K. Prime Minister Gordon Brown’s bid to include environmental concerns in the summit communiqué, may provide a hint of things to come.


  • Iranian-American journalist Roxana Saberi has been convicted of espionage in an Iranian court. Prosecutors alleged Saberi was transferring information gleaned from government documents and interviews to American intelligence sources. Should Iran’s Revolutionary Court find Saberi’s actions were part of an attempt to overthrow the government, she could face the death penalty. The case is expected to further dampen efforts at reviving diplomatic relations between Iran and the U.S., though Saberi’s conviction could be an attempt at gaining leverage to secure the release of three Iranians accused of spying in Iraq. It may also be an attempt to deflect discussion away from its nuclear ambitions and delay a preemptive strike against it by Israel.


  • Leader Kim Jong Il was re-appointed as the country’s defense chief, a post he has occupied since 1998, when North Korea began testing long-range missiles.
  • Intelligence sources indicate North Korea may have as much as $5 billion stashed away in a secret slush fund known as “Division 39.” The fund was set up in 1970s to further Kim Jong Il’s political career and is also linked to North Korea’s weapons programs. Analysts believe that freezing it could be the key to regime change in North Korea. “Division 39” is believed to be made up of two principal arms—one to fund legal activities undertaken by the Daesong Group, the Daesong bank and Golden Star Bank, the other to fund illegal activities, such as trafficking in heroin and amphetamines. The money is doled out primarily to key military officials and Workers’ Party leadership figures.


  • Somali pirates have reportedly agreed to financial deals with a local Islamist terrorist group known as al Shabab (“the youths”). The group once worked as the military wing of the Islamist Courts Union, which controlled Somalia for six months in 2006, and is intent on implementing Taliban-style Islamic government in Somalia. Al Shabab’s leadership is partially made up of graduates of al Qaeda’s training camps and its membership is said to include several veteran al Qaeda figures.


  • The Manhattan District Attorney’s office have indicted Limmt Economic & Trade Co. on 118 charges related to accusations it engaged in “illegal financial transactions to allow Iran to import a number fo proscribed materials used in weapons programs, including metal alloys and tungsten copper plates.” The charges date back to activities that allegedly took place between November 2006 and September 2008. Limmt is accused of using at least eight aliases or front companies to cloak their identity.
  • Defense Secretary Robert Gates released a “strategic Pentagon blueprint” last month that calls for wholesale changes to the way the U.S. military establishment conducts its business affairs. The most noteworthy element in Gates’s blueprint is his call for the U.S. to abandon the production of the American-made F-22 Raptor fighter jet. Gates also wants purchasing decisions to reflect current needs in Iraq and Afghanistan, rather than the hypothetical needs that might emerge from future wars. Congress, however, could be reluctant to implement Gates’s proposals—he’ll need significant bipartisan support and that may be hard to come by as politicians begin preparing for the 2010 mid-term election.
  • The Pentagon announced it has spent over $100 million responding to cyber attacks in the past six months. Last year alone, there were 5,500 attacks against government computers, up from 3,800 the year before. Reports also surfaced the U.S. electrical grid could be vulnerable to attacks that could potentially cause major service disruptions. It has been sugggested that the majority of the cyber attacks against the U.S. originated in China.