A vital slush fund controlled by North Korean leader Kim Jong-un has reportedly been drained by a series of missile and nuclear tests, and extravagant vanity projects.

Two Chinese sources with connections to North Korean government officials told Radio Free Asia that Kim has been exhausting his inheritance, a fund intended to run the country, since coming to power after the death of his father, Kim Jong-il, in 2011.

They alleged that the leadership's last-minute decision to take part in the South Korean Winter Olympics was part of a wider plan to boost the nation's failing economy.

"Due to Kim Jong-un's extravagant spending, the slush fund from his father, Kim Jong-il, is running out," said one source.

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Volunteers pass by the Olympic rings for the 2018 Pyeongchang Winter Olympics in South Korea. Photo / AP
Volunteers pass by the Olympic rings for the 2018 Pyeongchang Winter Olympics in South Korea. Photo / AP

The source claimed to be "well-acquainted" with officials from Bureau 39, a secretive government body tasked with obtaining foreign currency for the North Korean elite through illicit activities.

"I heard them worrying about insufficient funds in Office No. 39 a number of times," he said.

The exact amount in Kim's slush fund is unknown. However, the young dictator has carried out four of North Korea's six nuclear tests, and so far tested more missiles than his father and grandfather combined, including 23 in 2017, and the country's first intercontinental ballistic missile.

South Korean government analysts have estimated North Korea's nuclear spending to be $1.1 billion–$3.2billion.

Kim has also splashed out on showpieces like the high rises of the Ryomyong Street neighbourhood in the capital, Pyongyang, and the luxury Masikryong Ski Resort, which critics have claimed the cash-strapped country cannot afford and which has been allegedly serviced by child labour.

Meanwhile, the economy has been hit by the double whammy of toughening international sanctions.

A second Chinese source told RFA that North Korea had decided to join the Winter Games to improve relations and solicit charity from its rival southern neighbour.

"North Korea's warm gestures towards South Korea have underlying intentions: to use the Pyeongchang Winter Olympics... as a breakthrough for their financial difficulties," he said.

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In this April 15, 2017, photo, a submarine missile is paraded across Kim Il Sung Square in Pyongyang. Photo / AP
In this April 15, 2017, photo, a submarine missile is paraded across Kim Il Sung Square in Pyongyang. Photo / AP

The precedent lies in South Korea's "sunshine policy" of the 1990s and early 2000s, when Seoul offered subsidies in exchange for warmer relations.

It was the policy of former liberal President Roh Moo-hyun, whose chief-of-staff was the current President Moon Jae-in. Conservatives have blamed the decision for allowing the North's weapons programme to flourish.

While the North's move to open talks with the South in January was widely welcomed, analysts remain cautious about the potential for dialogue on security issues after the Olympics.

That hesitancy has been underscored by an order handed down by Kim Jong-un on January 19 for a new round of ideological training and combat preparation for the entire military, reported the Daily NK.

The leadership had stressed that the army must remain ready to "hit the enemy with a devastating blow," said a source.

Inside the dysfunctional Kim family

Kim Jong-un is the second child of former North Korean supreme leader Kim Jong-il and Ko Yong-hui, who was born in Japan.

His elder brother Kim Jong-chul was originally touted as the heir apparent to their father but was passed over after his death in 2011. He now reportedly lives a quiet life in Pyongyang, where he plays guitar in a band.

Their younger sister, Kim Yo-jong has assumed a more prominent political role, having been elevated to the politburo, the country's highest decision-making body, in October.

Being a member of the Kim family can be a treacherous affair. In 2013, Kim's powerful uncle, Jang Song-thaek, who was married to the daughter of the young dictator's grandfather, Kim Il-sung, was executed.

He had been expelled from the ruling Worker's Party and accused of "counter-revolutionary factional acts".

In February 2017, the world was stunned when Kim's elder half-brother, Kim Jong-nam, the son of actress Song Hye-rim, was murdered in Kuala Lumpur airport by two women who alleged attacked him with VX nerve agent.

As a young man, he had also been expected to succeed Kim Jong-il, but later lived in exile in Macau after falling out of favour. South Korean and western intelligence agencies believe the North Korean regime was behind his assassination – an accusation that Pyongyang denies.


This article originally appeared on the Daily Telegraph and is reproduced with permission.