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After the 1956 crisis, the relations between North Korea and the Soviet Union began to deteriorate, reaching the point of almost open hostility between 1962 and 1963. References to the Soviet Union almost disappeared from the official media, and the Soviet advisers were sent home. The same was the fate of a few hundred Soviet and Eastern European wives of North Koreans who studied overseas and married women from other Communist countries. Their North Korean husbands were ordered to divorce foreign women, who were then summarily expelled from the country. By 1960, all North Korean students were recalled from the ideologically suspicious Soviet Union and Eastern Europe, and only two decades later were these student exchanges restarted—albeit on a significantly smaller scale.

Pravda
and
Rodong Shinmun
, the major official newspapers of the USSR and North Korea, respectively, were engaged in open polemics:
Rodong Shinmun
accused the Soviets of being exploitative and ready to take advantage of Korea’s weakness, while
Pravda
lamented the ingratitude of the North Korean leaders who suddenly became silent on the Soviets’ significant aid efforts (indeed, since around 1960 and until after the collapse of the Soviet Union in 1991, North Korean media seldom admitted the very existence of continuing economic aid from the Soviet Union). A North Korean ambassador to Moscow wrote a highly critical letter to Kim Il Sung and then asked Moscow for asylum. His request was granted by the Soviet government—a nearly unprecedented situation in the history of the Communist bloc.

Pyongyang’s relations with Moscow partially recovered after 1965. Changes in the Soviet leadership, specifically the replacement of impulsive and reform-minded Khrushchev with the more conservative Brezhnev,
did play some part, but there were more important reasons. First, during the relations crisis, Soviet economic assistance declined, while China was proving to be neither willing nor able to compensate for this loss. Second, in 1966 China itself plunged into the bloody turmoil of the Cultural Revolution. For the North Korean elite, the Cultural Revolution was the embodiment of utter chaos; it might have been seen in Pyongyang as even more dangerous than Soviet liberalization (privately, when talking to Brezhnev in 1966, Kim Il Sung described the Great Proletarian Cultural Revolution as a “massive idiocy”).
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Actually, the late 1960s were a period of grave crisis in the relations between North Korea and China. Ambassadors were recalled and tensions on the border mounted—much later, in May 1984, Kim Il Sung recalled in his confidential talk with East German leaders how much patience was necessary to deal with Chinese soldiers intruding into the North Korean territory.
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In a telling sign, Kim Il Sung even asked Moscow to use Soviet air space for air travel by the North Korean official delegation, openly expressing fear that North Korean planes might be intercepted and forced to land by the Chinese.
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The Chinese Red Guard groups openly criticized Kim Il Sung, describing him as a “neo-feudal ruler” living a life of luxury and self-indulgence.
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In the early 1970s North Korea finally switched to the “equidistance” policy, which continued until the early 1990s. It was essentially a diplomacy of balancing between two mutually hostile sponsors, China and the Soviet Union. North Korean politicians and diplomats discovered that the new situation of Sino-Soviet rivalry, in spite of ingrained instability, gave them remarkable political opportunities as well. With a measure of guile, they could extract aid from both sponsors without giving much in return.

The aid was increasingly important: in spite of the frenzy of ideological campaigns, from the late 1960s the North Korean economy, once the most advanced in continental East Asia, was sliding toward stagnation. Without a constant influx of foreign aid, North Korea would probably become economically unviable.

Neither Moscow nor Beijing had illusions about North Korea. They knew perfectly well that they were being manipulated, but still saw no
viable alternative to providing Pyongyang with aid. Partially, their policy was driven by the need to keep North Korea as a stable buffer zone protecting both China’s Northeast and Russia’s Far East against the US military presence in Japan and South Korea. However, to a larger extent, the rival Communist giants were paying North Korea for remaining neutral in their own quarrel. Of course, both Moscow and Beijing preferred to see Pyongyang join their side unconditionally, but since that was not going to happen, they were at least determined not to let North Korea join the opposite camp. Thus, with remarkable skill North Korean diplomats squeezed aid from their two quarreling benefactors without making excessive concessions to them.

In the early 1970s, North Korea tried to rid its economy of dependency on Moscow and Beijing, and began to borrow heavily on the international market. At that time, immediately after the oil crisis of 1973, Communist regimes were considered to be exemplary debtors while the international market was awash with newly arrived petro-dollars. Therefore, securing loans was not that hard. Probably, North Korean leaders hoped to use this additional income to overcome the slowdown that was taking hold of their economy. The scheme did not work: the loans were wasted on a number of prestige-boosting and/or ill-conceived projects, with Pyongyang soon refusing to pay interest. Between the years of 1979 and 1980, North Korea became the first Communist state to default. This left them with significant debt—in 2007, $600 million in principal plus $1.2 billion in accrued interest.
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Their foray into the world of high international finance ended in debacle and seriously damaged North Korea’s credit ratings.

Around the same time, during the mid-1970s, more unseemly incidents began to occur. With increasing frequency, North Korean diplomats and officials were discovered traveling with large amounts of expensive contraband, illicit drugs, and counterfeit money.

In late October 1976, the Norwegian police caught North Korean diplomats selling 4,000 bottles of smuggled liquor and a large quantity of smuggled cigarettes. In those days, the Scandinavian governments imposed exorbitant taxes on alcohol, which made the importation of tax-free liquor an extremely profitable business. Pyongyang officials transported large
quantities of tax-free liquor and cigarettes inside diplomatic luggage. It was estimated that the DPRK Embassy in Norway sold liquor and cigarettes with a black market value of some one million dollars (in 2011 prices, this would be at least three times that amount).

After the incident involving Norway and Denmark, the same network was discovered in two other Nordic countries—Finland and Sweden. The scale of operations in Sweden was probably the largest, and the affair was widely discussed in the local press. One night, mischievous Swedish students put a sign reading “Wine and Spirits Co-op” on the entrance of the DPRK Embassy—to the great annoyance of its inhabitants.

Soon afterward, the North Korean authorities began to deal with far more dangerous substances. In May 1976 the Egyptian customs officials discovered the presence of hashish in luggage belonging to a group of North Korean diplomats—the first in the long chain of incidents of this type. The North Korean operatives even drew knives, but were overpowered by the Egyptian officers. Their diplomatic passports ended up saving them from prosecution. A similar incident then occurred in, of all places, Norway. In October 1976 the North Korean diplomats were caught handing a large amount of hashish to local drug dealers. In the subsequent decades, North Korean officials and diplomats were again occasionally found smuggling drugs in various parts of the world.

Apart from narcotics, North Korea also seemingly began to produce and disseminate high-quality counterfeit US dollar bills (the so-called supernotes), albeit in this case the evidence is largely circumstantial.
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It is often speculated that these smuggling operations were related to the new attitude toward the North Korean missions overseas: once the economic slowdown made its mark in the mid-1970s, the missions had to follow the self-reliance principle. In effect, North Korean embassy officials now had to pay for their own expenses from the funds its staff somehow earned.

It seems, however, that contrary to a popular misperception, these illegal activities never developed into major hard currency earners. Even from the regime’s point of view, smuggling and counterfeiting did more harm than good: these incidents made the North Korean government
look odious without bringing in much income. In the early 2000s there were signs that these activities were finally downscaled, but one wonders why this did not happen earlier.

Another bizarre feature of North Korean foreign policy of the 1970s was their spy agencies’ strange taste for abductions. These operations began earlier: in the late 1950s, North Korean intelligence attempted the abduction of a number of dissenters from the USSR. Not all operations were successful; Ho Chin (Lim Un), a young poet and dissenter, managed to escape from his kidnappers and was granted asylum in the USSR, where he eventually became a prominent journalist and historian. But not all were so lucky. A young North Korean musician was kidnapped by North Korean agents from downtown Moscow and was never seen again. This led to a major crisis in relations between Moscow and Pyongyang, with the Soviet Union expelling the North Korean ambassador—another event with few parallels, if any, in the entire diplomatic history of the Communist bloc.

In the late 1970s the major targets of these operations were Japan and South Korea. Unlike earlier incidents, these kidnappings did not target dissenters or defectors. Abductees were average men and women off the street. In many cases it seems that the abductions were opportunistic, with North Korean commandos taking any person who was unlucky enough to stroll along some Japanese beach where the commandos were lying in wait. Indeed, these abductions were so bizarre that many reputable journalists and scholars (overwhelmingly—but not exclusively—of leftist inclinations) in the 1980s and 1990s wasted tons of ink insisting that North Korea had nothing to do with the strange disappearance of Japanese citizens in the 1970s.

These people were made to look foolish by Kim Jong Il himself. In 2002 Kim Jong Il admitted responsibility for the abductions and ordered the return of a number of survivors back to Japan. This was obviously done to improve relations with Japan, but produced a completely opposite outcome. Accusations that had been often perceived as the fantasies of the Right were suddenly proven to be completely correct, and the Japanese public exploded. The Japanese government demanded the immediate
return of all abductees. In response, the North Korean authorities stated that all survivors had been returned home, with any additional abductees having already died (this was in 2002). Few believed this statement, and as a result the trade and exchanges with Japan, once quite important for the regime, were completely frozen.
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Thus, the North Korean leaders were paradoxically punished for their rare attempt to be honest and admit past wrongdoings. No doubt they have learned their lesson and from now on will probably think twice before admitting to more of their past misdeeds.

Obviously, the Japanese were abducted to take advantage of their native language skills and their knowledge of Japanese daily life in order to train the North Korean agents. For example, Yaeko Taguchi, a former hostess kidnapped in 1978 (she was then aged 22), trained Kim Hy
ǒ
n-h
ǔ
i, a North Korean intelligence agent whose cover was to be a Japanese national. This decision to rely on the abductees was rather strange since the North Korean authorities could count on the enthusiastic support of a number of people who spoke Japanese as their first language and had firsthand knowledge of modern Japan. Those people were members of Chongryon (Chosen Soren), a powerful pro-Pyongyang group of Koreans in Japan.

Some 700,000 ethnic Koreans lived in Japan in the early 1950s. Most of them arrived there in the 1930s and early 1940s, either in search of a better livelihood or forcibly relocated by the colonial authorities as providers of cheap labor. In 1951 ethnic Koreans were formally deprived of Japanese citizenship. In Japan the ethnic Koreans were subjected to considerable discrimination and were kept in unskilled or semi-legal occupations. This ensured their affinity with the Japanese Left, but eventually it was pro-Pyongyang leftist nationalists who succeeded in organizing them.

In the late 1950s a majority of ethnic Koreans in Japan opted for North Korean citizenship, even though only a tiny minority of them had come from what became North Korea after 1945. Those “overseas citizens of the DPRK” created the aforementioned Chongryon.

During the late 1950s and early 1960s pro-Pyongyang activists successfully persuaded many ethnic Koreans to “return” to the North. These
returnees numbered an impressive 93,000, an overwhelming majority of whom had never previously lived in the country to which they now moved. They wanted to escape discrimination and contribute toward the building of a perfect new society in their native land. North Korean propaganda had lured the returnees, but, as the recent research shows, Japanese right-wing groups also promoted the migration in the hope of reducing the number of people they saw as a “fifth column” within Japan.
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Most of the returnees were gravely disappointed by the destitution they saw upon arrival. They soon realized, however, that there was no way back. Stuck in a destitute police state, they (and their children) now found themselves in a strange position: they were simultaneously privileged and discriminated against. On the one hand, the returnees were seen as ideologically unreliable. On the other hand, most of them received money transfers from Japanese family members who were wise enough not to go to the Socialist Paradise. This allowed them to enjoy a life that was affluent by North Korean standards. It was permissible for the returnees to ask relatives back in Japan for money as long as the letters included an obligatory eulogy to the Leader and his system.