Impact North Korea will Have on the Ukraine Conflict

On 19 November, Ukrainian President Volodymyr Zelensky claimed during an address to the Ukrainian Parliament that he expects as many as 100,000 North Korean troops to be sent to Ukraine to support Russia’s war efforts in the coming months.

Context:

• This disclosure by President Zelensky follows months of speculation and rumours from Western intelligence agencies—including South Korea’s National Intelligence Service (NIS)—that Pyongyang is aiming to deploy its troops in Ukraine to aid Russia’s military campaigns there. Despite a consistent stream of intelligence reports on the matter, hard facts regarding this deployment are currently limited. Indeed, even the number of deployed troops is highly debated among Western allies, with the total being reported at between 11,000 and 100,000“special forces” troops. Similarly, it is unclear whether these troops are being deployed to the frontlines in the Donbas or Russia’s Kursk region to fight against the Ukrainian incursion into the Russian territory. However, the NIS claimed that North Korean forces are reinforcing Russian Airbourne (VDV)and marine formations.

• In addition to manpower, Kim Jong-un reportedly provides Moscow with ammunition and other military aid, including artillery equipment, in exchange for barrels of oil and other strategic benefits. One of the Russian state’s Telegram channels (Voevoda Broadcasts) posted a picture on 14 November of a purported North Korea-made 170mm “Koksan” self-propelled gun. The Koksan was previously the world’s longest-ranging cannon-type artillery in the 1980s. The Koksan are likely being sent to replace the Russian 203mm Pion and Malka stocks that have been significantly depleted throughout the conflict, limiting Russia’s operational capabilities against Ukrainian forces in both Kursk and the Donbas. However, the effectiveness of this weaponry is questionable, as they are outdated, cumbersome to use, and take upwards of 30 minutes to prepare for firing, leaving them extremely vulnerable to Ukrainian counterstrikes.

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North Korea’s Military Support in Ukraine Will Exacerbate Negative Impacts Of Ukraine Conflict On Global Trade

While Western intelligence agencies have speculated that Pyongyang’s involvement in the Ukraine conflict could significantly tip the scale in favour of Russia, North Korea’s military impact is likely to be limited to the conflict. Firstly, North Korea is highly unlikely to be able to donate anywhere near the 100,000 soldiers estimated by the US Pentagon. Indeed, intelligence reports from the NIS indicate that North Korea is barely able to maintain a standing army of 1 million soldiers. As such, the donation of 100,000 soldiers to Moscow’s war efforts in Ukraine would significantly degrade its domestic military capabilities vis-à-vis regional threats such as South Korea or the US, which pose persistent threats to the Kim regime.

Moreover, Western allies’ recent policy reversals to allow Ukraine’s armed forces to fire US-supplied ballistic missiles – namely the Army Tactical Missile System (ATACMS) – and UK and French long-range missiles inside Russian territory presents a significant threat to North Korean soldiers in Russia and Ukraine. Most notably, ATACMS can target large troop concentrations over long distances (between 240-320 KM), limiting the utility of North Korea’s purported mass forces in Russia’s Kursk region. A tactical misstep against such weaponry could result in a high causality rate and result in reputational damages domestically for the Kim regime. In concert, North Korea remains a closed-off society with an overarching propaganda that does not mesh with exposure to Western society. As such, Kim Jong-un is likely to limit the total number of soldiers sent to Ukraine to mitigate the risk of being exposed to Western ideals and media, which could be brought back to North Korea and result in potential social disruptions.

These military and operational constraints will lower the likelihood of Pyongyang sending mass troops to Ukraine, significantly limiting its ability to influence the Ukraine Conflict. Nevertheless, North Korea’s economy is in dire need of revenue, and it is believed that Moscow is paying Pyongyang around USD 2,000 per North Korean soldier per month. This gives the reclusive regime a highly lucrative opportunity to fill its state’s coffers, especially after the COVID-19 pandemic-related restrictions depleted them. As such, Kim Jong-un is highly likely to send tens of thousands of troops (e.g., 10-50k) to profit from their labour.

The direct physical security impact on businesses in Europe is expected to be limited, given that North Korea’s involvement in the war is unlikely to shift the balance between Russia and Ukraine. However, Pyongyang’s involvement and support will likely prolong and exacerbate the pre-existing economic concerns linked to the conflict. Most notably, food shortages linked to decreased grain shipments from Ukraine will likely continue in the coming 6-12 months. Food prices in Europe experienced a sharp increase after the Ukraine conflict broke out, with food inflation rates hitting 19.8% at their peak in March 2023. However, low- and middle-income countries continue to struggle the most with high food prices as of the time of writing.

Indeed, interventions from the UN and EU over the last two years have successfully pushed down global food prices in developed countries. However, a prolonged NK presence in Ukraine could undo some of this work and push food prices up slowly, a trend already seen as food price inflation has increased over the last three months. Further steadily increasing prices could negatively impact consumer sentiment and result in decreased spending, impacting reliant industries such as hospitality, textile, or manufacturing industries. However, the upcoming Christmas period should partially mitigate any short-term losses as spending is expected to experience its usual boom during the holiday period.

North Korea’s Military Support in Ukraine Will Increase Likelihood of Sporadic Disruptions in the Asia-Pacific Region

While such numbers are unlikely to turn the war in Russia’s favour and endanger business operations in the countries bordering Ukraine (e.g., Poland, Romania, or Hungary), there is a heightened risk that North Korea’s new Russia-linked revenue streams could threaten business operations in the Asia-Pacific region. The most notable threat would be that Pyongyang would use these revenue streams to renew its ballistic missile and nuclear testing activities.

The United Nations estimated that North Korea spent over 2% of its GDP in 2022 when it launched a record number of missiles (90). However, this significant economic burden – coupled with its limited economic activity due to COVID-related border restrictions – resulted in far fewer tests over the past 2 years (74). However, this renewed and consistent revenue stream will provide Pyongyang with the means to complete one of its grand strategic goals: perfecting its Intercontinental Ballistic Missile (ICBM) and nuclear technology programme. To achieve its goals, it will need to test the technology, elevating the likelihood of North Korea increasing its number of ICBM tests in the coming months and potentially launching its first nuclear test since 2017.

While such tests are highly unlikely to be targeted against specific countries and/or critical infrastructure, they will, nevertheless, present a potential threat to Asia-Pacific-located businesses. The sectors most likely to be impacted by North Korea’s tests will be the maritime and aviation sectors, especially if they have operations in the Sea of Japan or the Yellow Sea (the locations where North Korea typically tests its missiles). Given that Pyongyang does these tests without warning, firms operating in both industries will be at a heightened risk of having their assets – sea platforms, oil carriers, wind farms, etc. - damaged due to falling debris. In concert, commercial aviation firms are highly likely to cancel or delay their flights for several hours in the Japan-China-South Korea region immediately after a test, so time-sensitive business trips and activities in the region are likely to be impacted as a result.

Growing Pyongyang-Moscow Relations will Heighten the Cyber Threats Faced by European Businesses in the coming 6-12 months

While the kinetic implications of North Korea’s growing military support of Russia in Ukraine will be limited for European businesses outside of APAC, there is a latent threat posed by cyberspace. Western intelligence agencies consider Russia and North Korea two of the “Big 4” cyber threat actors that pose the most significant threat to the West. According to the Lowy Institute Asia Power Index, Russia and North Korea rank 2^nd and 7^th, respectively, in terms of defensive and offensive cyber capabilities. While both threat actors possess robust capabilities, they specialise in different types of activity, which could benefit the others’ overall geopolitical ambitions.

The most beneficial aspect of the Pyongyang-Moscow partnership is that North Korea could help alleviate Russia’s labour shortage. While Russia did use a volunteer system during the early stages of the war, due to waning troop numbers, a forced mobilisation was implemented, resulting in a mass exodus of nearly 1 million people between late 2022 and early 2023. As such, North Korean troops appear to alleviate not only their shortage in Ukraine but also via cyberspace, with Pyongyang likely to send along its cyber specialists as well to engage in malicious activity. North Korea’s cyber programme has one primary focus: gathering funds for the Kim regime to alleviate its socio-economic struggles, caused mainly by the long-term effects of the international sanctions levied over its provocative ballistic missile and nuclear tests. However, the consistent flow of revenue that Pyongyang is likely receiving from Moscow for its weapons transfers and soldiers will free up some capacity for North Korean hackers to target not only its strategic targets but also Russia’s, such as US or European organisations in the defence, government, technology, or financial sectors.

Furthering this threat is the high likelihood scenario that these two parties’ growing partnerships could refine their already robust cyber capabilities. Moscow has proven extremely successful in finding innovative ways to compromise entities – e.g. government agencies, energy sector firms, technology firms, etc. – with highly robust security systems and exfiltrate sensitive information. Chief amongst these campaigns was the 2020 SolarWinds-enabled software supply chain attack that compromised over nine US federal agencies. As such, there is a heightened risk that North Korean hackers could begin to adopt new innovative tactics, techniques and procedures (TTPs) created/discovered with Russian threat actors to begin targeting their entities of interest, increasing the likelihood of cyberattacks – such as ransomware, wiper, espionage, or data theft – succeeding against targets of interest.

To mitigate these threats, private sector firms at the highest risk of being targeted – including European, South Korean, or US finance, defence, energy, or technology sectors – will need to ensure they maintain a robust geopolitical risk programme that includes policies such as:

1. Integrating a Cyber Threat Intelligence (CTI)team into your security framework (via third-party or in-house) via a“security-by-design- principle. This integrated approach will allow companies to monitor on a strategic level – aka which cyber actors are active – but also give them insights into which assets they are targeting and which TTPs they are likely to use so they can implement the necessary security measures to protect their organisation’s “crown jewels”.
2. Build an in-house or hire a third-party geopolitical risk intelligence function to keep your organisation abreast of ongoing developments related to Ukraine and the Korean Peninsula and the potential political, economic, and/or security threats posed to firms by the aforementioned nation-states.

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