The North Korea travel ban, PUST, and the failure of people-to-minder engagement

Earlier this week, the State Department announced that it will publish a Federal Register notice in the next 30 days, restricting the use of U.S. passports for travel to North Korea, where Americans tend to end up getting arrested, detained for prolonged periods, and lately, much worse. If State will implement the ban through a Federal Register notice, it means it will be done pursuant to the Administrative Procedure Act under some existing statutory authority — almost certainly this one:

§211a. Authority to grant, issue, and verify passports

The Secretary of State may grant and issue passports, and cause passports to be granted, issued, and verified in foreign countries by diplomatic and consular officers of the United States, and by such other employees of the Department of State who are citizens of the United States as the Secretary of State may designate, and by the chief or other executive officer of the insular possessions of the United States, under such rules as the President shall designate and prescribe for and on behalf of the United States, and no other person shall grant, issue, or verify such passports. Unless authorized by law, a passport may not be designated as restricted for travel to or for use in any country other than a country with which the United States is at war, where armed hostilities are in progress, or where there is imminent danger to the public health or the physical safety of United States travellers.

My favorite reaction was Bruce Klingner’s:

It would be a simple matter to let Americans exercise that right as they saw fit if the U.S. government — and the taxpayers who elect it, fund it, and expect it to make foreign policy to protect them — were willing to forfeit their reckless countrymen to Pyongyang’s jails, or to Darwin’s cull. It is our virtue (or to some, our weakness) that we hold for the lives of our fellow citizens too dear for this. Thus, Pyongyang’s hostage-taking makes too much work for our diplomats, pilots, presidents, and ex-presidents. And it implicitly restrains our policy decisions to know that Pyongyang may harm our citizens to punish or intimidate the rest of us.

That is to say, the cost of these detentions isn’t just paid by the person who takes a foolish risk and gets himself arrested. The cost is paid by every U.S. taxpayer, and by every American, South Korean (and lest we forget, North Korean) with an interest in having the U.S. government execute a coherent policy, unencumbered by Pyongyang’s hostage diplomacy. And if that policy is “maximum pressure,” a passport restriction isn’t that by a mile.

For one thing, the passport restriction will reportedly allow for “special validations” for humanitarian and journalistic travel, even if we should hope those validations will be granted judiciously. After all, Pyongyang has also taken American aid workers and journalists hostage. And even if you could argue that all of these arrestees did stupid things to get themselves arrested, none of those stupid things justified lengthy detentions (much less what Pyongyang did to Otto Warmbier).

A passport restriction will deter the sort of casual, morally frivolous traveler who goes to North Korea knowing too little about the place, but it will be easy to evade for those with deeper (as in, political or financial) motives. Dual nationals can simply use a third-country passport. Don’t expect the North Koreans to obligingly stamp the passports of paying customers or prospective hostages just for the convenience of the U.S. Department of State.

Nor is this action likely to have more than a minimal effect on Pyongyang’s accumulation of its preferred currency, the dollar. A passport restriction won’t impact Pyongyang’s income from Chinese, Canadian, and European tourists who pay dollars for their tours, flights, and hotels. It also won’t close the legal loophole in the Treasury Department’s designation of Air Koryo, which has a long history of smuggling missile parts and luxury goods. You can accuse the U.S. government of many things, but never of well-synchronized inter-agency policy (which is why my first reaction to most conspiracy theories is laughter).

To do these things would require a ban on transactions incident to travel to, from, and within North Korea. That, however, would have required special legislation like the North Korea Travel Control Act, or the Trade Sanctions Reform and Export Enhancement Act, which was the legal vehicle for the Cuba travel ban. Whenever Congress is ready for that, I could do them one better by slapping a secondary immigration sanction on North Korea, one that would make any recent non-U.S.-citizen travelers to North Korea ineligible for admission into the United States under the Visa Waiver Program. 

Still, the restriction will have some value. To the extent that Americans go to such lengths to visit North Korea and get themselves arrested, it will at least be easier for us all to shrug and say, “You can’t fix stupid,” and get on with implementing our policy. Speaking of things you can’t fix, the organizers of the Pyongyang University of Science and Technology, who have sacrificed two hostages to His Porcine Majesty (so far!), are already clamoring for an exception to the passport restrictions.

The Pyongyang University of Science and Technology, whose faculty includes 60 to 80 foreigners throughout the academic year — half of whom are Americans — would likely have to suspend operations if it did not receive an exemption from the forthcoming restriction, according to Colin McCulloch, the institution’s director of external relations.

“If we didn’t get an exception, we would basically have to stop our work,” McCulloch, who has taught business, economics and English at the school since it first opened to North Korean students in 2010, told ABC News. “That’s how serious it would be. Because we would not be able to provide enough personnel.” [ABC News]

The State Department’s answer to this should be immediate and emphatic: “Good!” Every PUST faculty member is the next potential hostage. All of them should come home immediately.

Tony Kim, who also goes by his Korean name, Kim Sang-duk, taught accounting at the university before he was detained at an airport in April and charged with unspecified hostile criminal acts, and Kim Hak-song was held in May after spending several weeks doing “agricultural development work with PUST’s experimental farm,” the university said at the time. He was also charged with unspecified “hostile acts.”

There are also long-standing concerns, supported by recent defectors, that PUST’s computer science instruction is helping to train Pyongyang’s hackers. PUST denies this without explaining how it could possibly know better. 

Wesley Brewer, an American who has taught computer science at PUST since 2010 and now serves as the institution’s vice president of research, said that the arrests shook the university community and affected him deeply. He told ABC News now looked like a good time for him to take a long-planned sabbatical.

“Being an American there, you feel like you’re standing right in between the two countries and maybe preventing some kind of moving forward, in terms of diplomatically,” Brewer said.

Brewer splits his time between Seoul and Pyongyang and spoke from Jackson, Mississippi, where he was visiting a church that supports his work. “I just felt like with the heightened tensions, it seemed it would be wiser to step back and let things settle down before re-engaging,” he said. 

Finally, paragraph 11 of UNSCR 2321, approved last November, requires all member states to suspend scientific and technical cooperation with North Korea pending a full review for potential proliferation concerns. The U.S. government should not only withdraw its people, licenses, and permits from PUST, it should encourage other member states to do likewise. We can’t ask other governments to implement sanctions we aren’t implementing fully ourselves.

Naturally, self-interested tour guides who profit from leading lambs to the slaughter and worshippers to the altars of despots complain that State is cutting off avenues for engagement. But this is the sort of people-to-minder engagement that has never changed North Korea for the better, and arguably reinforces what is worst about it: its Manichean, supremacist xenophobia.

Many of the most egregious apologists make a point of mocking the excesses of the North’s official culture. I have encountered two so far — one in print, one in the flesh — who have talked of the uncontrollable laughing fit they suffered while touring a site sacred to the personality cult. They seem to think this proves that their critical faculty is as developed as anyone else’s.

It does not. On the contrary: To be an apologist for North Korea, you have to treat its ideology as a bit of a joke. If you take the personality cult seriously, you cannot fail to see the impossibility of the North’s ever reconciling itself to a South that ignores it. And if you take the bellicose, racist and sexist propaganda seriously, you cannot at the same time reassure yourself that this is a communist or “reactive” or “survivalist” state; or that it is arming out of mere fear of the US; or that it will behave if we only appease it enough.

Least of all can you take its ideology seriously and still believe that by traveling to the country, you are helping to subvert the locals’ worldview. To grasp the official culture is to understand how perfectly the humble, wreath-laying foreigner fits into it.

All agencies operating tours in North Korea preach an extremely apologetic line in regard to the country, both on their websites and during the tours themselves. Whether they really believe it or only pretend to do so is beside the point. [Brian Myers]

A passport restriction is, if nothing else, a welcome acknowledgment that our experiments in people-to-minder engagement have failed. It will reduce the pool of hostages available to Pyongyang and put a small crimp in its supply of dollars. Perhaps, by taking the first and most controversial step of banning American tourist travel to North Korea, the State Department has cleared Congress’s way to pass a travel transaction ban, which would have a far broader impact on Pyongyang’s finances.

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OFK Exclusive: House, Senate move new North Korea sanctions legislation

Last year, Ed Royce, the Chairman of the House Foreign Affairs Committee, and Cory Gardner, Chairman of the Senate Asia Subcommittee, led the charge to cut Pyongyang’s access to the hard currency that sustains it by drafting and passing the North Korea Sanctions and Policy Enhancement Act. We’ve known all along that nothing short of presenting Kim Jong-Un with an existential choice — disarm and reform, or perish — would create the conditions for a negotiated disarmament of North Korea, assuming that’s still possible. And we’ve always known that it would take several years for even aggressively enforced sanctions to present Pyongyang with that choice.

One nuclear test and multiple missile tests later, neither international compliance with U.N. resolutions nor (until very recently) U.S. enforcement of the NKSPEA has been enough to either change Kim Jong-Un’s mind or weaken his hold on power. Congress now seeks to raise the pressure on Pyongyang by closing loopholes in existing sanctions, attacking its developing sources of income (textiles, fisheries, and labor exports), catching U.S. law up with new U.N. sanctions, and most importantly, increasing penalties for foreign banks and governments that (for various reasons) haven’t complied with the U.N. resolutions.

Ed Royce continues to lead this effort with the KIMS Act, which passed the House overwhelmingly in May, and which has now been merged into Title III of the Russia, Iran and North Korea Sanctions Act of 2017, or RINKSA. But the foreign affairs committees can only go so far in attacking Pyongyang’s cash flow through financial regulation before the parliamentarians in Congress give primary jurisdiction over a bill to the financial services committees. Some of the most important remaining sanctions loopholes are within the banking committees’ jurisdiction.

Introducing S.1591, the BRINK Act

An unlikely champion has stepped into this void in the form of Senator Chris Van Hollen of Maryland, a liberal Democrat who sits on the Senate Banking Committee. I say “unlikely,” because historically, it hasn’t been liberal Democrats who’ve led Congress’s efforts to raise the pressure on Pyongyang. This would be a good time to abandon any assumption that Democrats are soft on North Korea. Now, Van Hollen and Republican Senator Pat Toomey of Pennsylvania have introduced S.1591, the Banking Restrictions Involving North Korea Act, or BRINK Act, of 2017.  The text of the bill, which you can read herehasn’t been posted on GovTrack or Congress.gov, although the bill itself was introduced several days ago. At the outset, I’ll just get this bit of full disclosure out of the way. I’ve had some discussions with Senator Van Hollen’s staff about this bill, and ….

The BRINK Act is a tough and sophisticated piece of legislation. It will be a strong complement to both the NKSPEA and the RINKSA. This post will discuss its key provisions, starting with the definitions. A very important new one that appears in multiple places in the bill is “North Korean covered property:”

That definition potentially covers just about every transaction the North Korean government profits from. The key question, of course, is whether the U.S. can reach any given transaction in NKCP — either because a U.S. person (or a foreign subsidiary) is a party to the transaction, or because part of that transaction occurs in the United States (most likely, because a financial transaction is cleared through a U.S. correspondent bank, or because a product seeks to enter U.S. commerce).

Another significant definition is “knowingly,” which includes circumstances in which a party to the transaction “should have known” that it was prohibited.

Section 101 of the BRINK Act creates a blacklist of Chinese and other foreign banks that are failing their due diligence obligations to prevent North Korea from accessing the financial system, or are helping North Korea evade sanctions by facilitating offshore dollar clearing, or dealing with North Korea in precious metals or other stores of value. It then provides a list of sanctions that restrict the access of those banks to the U.S. financial market, add additional civil penalties to the criminal penalties under 31 U.S.C. 5322, or (at worst) block their assets here.

Like all of the sanctions under the BRINK Act, this sanction can be suspended if North Korea makes progress toward disarmament and accounting for American POW/MIAs, and can be lifted when North Korea completes that disarmament and accounting.

Section 102 requires any transactions in North Korean covered property within U.S. jurisdiction (involving a U.S. person or occurring in whole or in part in the United States) to be licensed by the Treasury Department’s Office of Foreign Assets Control. As we’ve learned from recent actions by the Justice Department, North Korea’s banks, smugglers, and money launderers — and their Chinese bankers — tend to evade OFAC licensing requirements, despite their preference for dealing in U.S. dollars. Under this provision, any unlicensed transactions in NKCP are punishable by a $5 million fine and 20 years in prison. More importantly, the proceeds of unlicensed transactions, and property “involved in” unlicensed transactions, will be subject to forfeiture. In most cases, that’s the only form of “punishment” we have the power to impose on the targets of these activities.

Section 103 authorizes sanctions against providers of specialized financial messaging services to North Korean financial institutions, a topic I previously covered here, here, and here.

Section 104 authorizes new sanctions against foreign governments that fail to comply with U.N. sanctions, such as those that require member states to freeze the property and close the offices of designated North Korean entities (KOMID, Korea Kwangson Bank, the Reconnaissance General Bureau, Bureau 39, etc.), to expel representatives of North Korean banks and North Korean diplomats who engage in arms trafficking, and to deregister North Korean ships. For governments identified as noncompliant, the U.S. can limit exports of goods or technology to those countries, withhold foreign aid, and instruct our diplomats to vote against them getting IMF, World Bank, and other international loans. This provision may well put teeth into sections 313 and 317 of the RINKSA (discussed below) and broadens the sanctions authorities of section 203 of the NKSPEA. 

Section 105 authorizes grants for governmental and non-governmental organizations that currently provide the U.S. government with much of its actionable intelligence on North Korea money laundering — the U.N. Panel of Experts, and private groups like the Center for Advanced Defense Studies and Sayari Analytics. (Again, this complements a provision in the RINKSA — specifically, section 323, which provides rewards for informants who provide information leading to the arrest of persons responsible for North Korean money laundering or cyber attacks).

Section 106 requires a report on North Korea’s use of beneficial ownership rules to mask its interests in property (previously discussed here).

Section 107 directs the President to team up with the World Bank’s stolen assets recovery initiative to go out and find the hidden, ill-gotten gains of Kim Jong-Un and his minions, wherever in the world they can be found, block them, and release them for humanitarian use.

Section 108 will undoubtedly create headlines in South Korea — it urges South Korea not to reopen Kaesong until North Korea completely, verifiably, and irreversibly dismantles its nuclear, chemical, biological, and radiological weapons systems and any systems for delivering them.

Sections 201 through 204 call on and encourage assets and pension fund managers to divest from companies that have investments in North Korea, and immunize those fund managers from suit for any such divestment.

The KIMS Act becomes Title III of the RINKSA

For a while, it looked like all that would survive of the KIMS Act in the Senate was an untitled bill called S.1562, which removed most of the KIMS Act’s toughest provisions except for secondary sanctions on North Korea’s labor exports. But last week, S.1562 was referred, ironically enough, to the Banking Committee, taking it out of the hands of Foreign Relations. More importantly, the White House is also signaling its support for a newer bill, the Russia, Iran, and North Korea Sanctions Act. The RINKSA incorporates nearly all of the KIMS Act into Title III (full text here; scroll down to page 144).

Bob Corker, the Chairman of the Senate Foreign Relations Committee, has expressed some concern about how easy it will be to pass a bill that big this year. I don’t have the knowledge to say whether this was a good tactical move or not, so I’ll defer to the congressional leadership on that point. (Some of us are keenly aware that Congress still has to reauthorize the North Korean Human Rights Act this year, or it will expire.) Instead, I’ll describe the provisions of Title III in a bit more detail than I described the KIMS Act before.

Section 311 amends the key provision of the NKSPEA, section 104, to expand both the mandatory sanctions of section 104(a) and the discretionary sanctions of NKSPEA 104(b). Mandatory sanctions would now apply to purchases of precious metals from North Korea, selling aviation or rocket fuel to North Korea, providing bunkering services for any U.N.- or U.S.-designated ship, reflagging North Korean ships, or providing correspondent services to any North Korean bank (Title III, section 312, also codifies a prohibition on providing indirect correspondent account services to North Korean banks).

Section 311 also expands the President’s discretionary authority to designate and sanction persons who violate U.N. sanctions, and U.S. regulations and executive orders, that apply to North Korea. These new, discretionary authorities also authorize the President to designate persons who purchase more coal and iron ore than U.N. limits allow, who purchase textiles or food products from North Korea, who transfer bulk cash or other stores of value to North Korea, and who export crude oil to North Korea (humanitarian exports of gasoline, diesel, and heavy fuel oil are exempt). Other new sanctions authorities apply to North Korea’s online gambling, sale of fishing rights, labor exports, and banking, transportation, and energy sectors.

Some of these areas are already subject to the potential for asset freezes under Executive Order 13722, but designations under section 104(a) or 104(b) of the NKSPEA can have additional and more severe consequences.

Sections 313 and 317 are secondary sanctions provisions applicable to governments that aren’t complying with U.N. sanctions. Section 313 amends and strengthens NKSPEA 203 sanctions against governments that engage in arms deals with North Korea, by denying them most foreign assistance. Section 317 creates a blacklist of noncompliant governments, which would dovetail nicely with the sanctions provisions of section 104 of the BRINK Act.

Section 314 expands the President’s authority to increase customs inspections for cargo coming from ports that fail to inspect all cargo going to or coming from North Korea, as required by UNSCR 2270. This provision is a secondary shipping sanction. It presents a very real risk that cargo coming to the U.S. from noncompliant ports may be held up longer in Customs, which could cause shippers to take their business elsewhere. As with all secondary sanctions, it forces third-country entities to choose between doing business with the U.S., or with North Korea. It also provides a list of suspect ports in China, Russia, Iran, and Syria that would be first in line to blacklisted for additional inspections.

Section 315 is another secondary shipping sanction, and a very tough one indeed — ships flagged by countries that reflag North Korean ships (a violation of UNSCR 2270 and 2321) could be denied access to U.S. ports and waterways. Vessels that have visited North Korea recently, for other than strictly humanitarian purposes, could also be banned.

Section 316 orders a report on WMD cooperation between North Korea and Iran.

Section 318 orders a report on whether SWIFT and other providers of specialized financial messaging continue to service North Korean banks, including those designated by the U.N.

Section 321 is a set of powerful sanctions against employers of North Korean labor and the sellers of products made with North Korean labor. It subjects those employers to potential sanctions under the Trafficking Victims Protection Act or the freezing of their assets. Governments that allow the use of North Korean labor could also see their TVPA status drop. A rebuttable presumption would apply to any goods made with North Korean materials or labor, excluding from U.S. commerce under section 307 of the Tariff Act.

Section 323 provides for the government to pay rewards to informers — whether these be defectors or NGOs — that provide information leading to the arrest of North Korean money launderers or persons responsible for cyber attacks.

Section 324 again raises the pressure on the State Department to declare North Korea to be a state sponsor of terrorism.

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Both of these bills attempt to attack North Korea’s third-country enablers. Legislation of this kind is necessarily creative and complex because it’s not always obvious how the U.S. can reach North Korea’s income while minimizing harm to legitimate commerce and to the North Korean people. If the target only does business with North Korea, then our next option is to target the bankers, shippers, and insurers that deal with the primary target and force them to choose between access to the U.S. or the North Korean economy. The most common ways we can influence the conduct of these enablers are (1) prohibiting U.S. persons and their subsidiaries from dealing with the target; (2) denying the target access to U.S. financial markets, trade, foreign assistance, and technology. Clearly, the U.S. has a stronger case when it enforces the terms of a U.N. Security Council resolution than when it acts alone.

While it may be too difficult to merge RINKSA Title III and the BRINK Act at this point in the congressional calendar, the two bills would go together like chocolate and peanut butter. Minor inconsistencies between the two will likely be resolved by amendments to the BRINK Act. I’ll defer to others how best to enact them, but each bill serves important purposes in making sanctions work, and in presenting Kim Jong-Un with that existential choice.

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What construction in Pyongyang tells us, and doesn’t tell us, about sanctions

As the Trump administration looks to sanctions, including secondary sanctions, to gain the leverage to disarm North Korea, it is natural that North Korea watchers would try to gauge the potential for sanctions to impact Pyongyang’s finances. In a place where predictions of glasnost go to die, it is natural that they would measure what the regime puts on display, like the development of Pyongyang’s skyline. And regrettably, it is natural that any analysis whose research begins and ends with news clippings that are half-wrong or half-read, and that betrays little understanding of the sanctions authorities or how their enforcement has evolved, will be of nearly no predictive value whatsoever.

So it is with this contribution by Henri Féron for 38 North, which suggests that sanctions can’t work in 2017 based on the failure of sanctions that either didn’t exist or weren’t enforced between 2014 and 2016. (An online bio for Féron describes him as a post-doctoral research scholar specializing in Korean language who has previously studied law in China — hardly the best place to gain a useful understanding of what the U.N. resolutions require — but hey, I went to law school in Nebraska and I do this as a hobby, so there’s that.) 38 North summarizes Féron’s argument thusly:

The construction boom in Pyongyang, along with other indicators of improved economic performance such as food production and foreign trade, provide further evidence of the ineffectiveness of current economic sanctions. The North Korean economy appears to be beating sanctions thanks to Chinese aid and trade, as well as the reallocation of conventional defense spending to the civilian economy.

There are several problems with this argument, starting with the fact that there is no general blockade of trade with North Korea and never has been. Féron argues that stable food prices (which have risen sharply recently, but that’s the subject of another post) suggest that sanctions have failed, despite the fact that all U.N. and U.S. sanctions exempt food imports. Féron writes, “[c]omparatively speaking, our most reliable indicators are food production and trade statistics.” I’ll just pause and give you a chance to stop laughing now.

Worse, citing U.N. World Food Program data, he writes, “North Korea is now more or less back to the nutritional self-sufficiency of the 1980s.” But earlier this year, UN aid agencies said that 70 percent of North Koreans were undernourished, and in 2015, they said that 80 percent of North Korean households had “poor” or “borderline” food consumption. The U.N. World Food Program, Food and Agriculture Organization, UNICEF, and the U.N. Development Programme all continue to assist North Korea. Self-sufficiency indeed!

Féron cites the recent decline in defections to imply that Kim Jong-Un’s regime is more popular, but the article he cites correctly notes that this is really a function of increased border security. Féron knocks down a straw-man “narrative of destitution” about Pyongyang, but there is general agreement that Kim Jong-Un has improved material standards of living for Pyongyang’s one percent (though elite defections continue to rise for other reasons). In North Korea, the destitution has always fallen on the victims of a unilateral class war Pyongyang wages against the “expendable” ones in the countryside and the provinces. 

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But Féron’s Exhibit A is Pyongyang’s recent construction boom. At the outset, construction is a dubious metric for the effectiveness of sanctions. There are no U.N. or U.S. sanctions on construction materials or equipment and never have been. As Féron notes, North Korea has plenty of cement (he might have added that it has plenty of sand, gravel and building stone, too). As a Rimjing-gang guerrilla journalist documented in 2015, Pyongyang builds its buildings using army construction laborers working on starvation rations, without modern equipment, and under grossly unsafe working conditions. Pyongyang probably had to import lighting and plumbing fixtures, tiles, and floor coverings, but it probably didn’t need as much foreign capital for its new construction as appearances alone would suggest.

On the outside, the new construction looks great — the sort of “progress” that would look impressive from the window of a train passing a second-rate Chinese factory town. Indeed, the main purpose of this facelift appears to have been to show North Korean elites, potential investors, foreign journalists, and gullible op-ed writers that sanctions can’t stop Kim Jong-Un:

The project is intended to show “the spirit of the DPRK standing up and keeping up with the world, despite all sorts of sanctions and pressure by the U.S. imperialists and their followers,” and “the truth that the DPRK is able to be well-off in its own way and nothing is impossible for it to do,” state-media quoted Kim as saying when he ordered the beginning of construction in March. [CBS]

Still, images can be deceiving — especially in Pyongyang. In December 2015, the “completed” apartments on Mirae Scientists’ Street had no power, no running water, no heat, unfinished interiors, unsafe construction, and broken elevators that made the upper floors of the high-rise apartment buildings uninhabitable (imagine hauling your own water up 30 stories, to think nothing of what you might have to haul back down if the sewage system fails). It’s a similar story at another showpiece, Ryomyong Street (see also).

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Could other sanctions provisions have applied to showpiece construction projects like Mirae Scientists’ Street and Ryomyong Street? Potentially. For example, there is evidence that other construction projects in Pyongyang, KKG Street and those revealed by this extraordinary new work of investigative journalism by Justin Rohrlich for NK News, had links to Bureau 39. Any dealings with Bureau 39 would be a clear sanctions violation today. Unfortunately, the world has been slow to designate Bureau 39, and even slower to enforce that designation. The U.N. didn’t designate Bureau 39 until March 2016, presumably because China blocked the designation until then. And even then, Treasury (to say nothing of the U.N., or China) would have hesitated to freeze any assets without a clear link between a particular construction project and a designated entity. A competent investigator with access to the right intelligence might find some link between a particular construction project and a sanctioned North Korean entity, but I don’t have that evidence, and Féron certainly doesn’t cite any.

Although much of the money for these building projects probably flowed through correspondent banks in New York, until very recently, U.S. sanctions were a case of trying to dam a river with a tennis net: in 2014, when Ri Jong-Ho was working for Bureau 39 in Dandong, there were just 43 North Korean entities designated (compared to 50 in Belarus and 161 in Zimbabwe) and (critically) no secondary sanctions — again, as I’ve been saying for years. The U.S. Treasury Department first designated Bureau 39 in 2010, five years after Treasury’s final rule about Banco Delta Asia detailed Bureau 39’s laundering of counterfeit currency. Treasury imposed some potentially broad sanctions under Executive Order 13687 in January of 2015, but has hardly used that authority to designate anyone. President Obama (reluctantly) signed the North Korea Sanctions and Policy Enhancement Act in February 2016. A ban on new investment in North Korea only came into effect in March 2016. Before any of the significant sanctions that might have halted it existed, tenants were already moving into Mirae Scientists’ Street. Dozens had probably moved out again.

The same is not true of Ryomong Street, which was only completed in the spring of this year. But as with Mirae Scientists’ Street, it isn’t clear what sanctions this would have violated without further investigation — investigation that no one was doing. I don’t see evidence of a clear link to Bureau 39 or another sanctioned entity in the open sources, and given how badly President Obama under-resourced the investigation of North Korea sanctions violations, he probably didn’t, either.

Simply designating “Bureau 39” by itself is meaningless. Bureau 39 doesn’t hold its bank accounts under “Bureau 39;” it hides them behind the names of front companies, shell companies, and various Chinese trading companies, co-conspirators, and patsies. With sufficient resources and talent, we could expose these companies and agents and freeze their assets. The work of the U.N. Panel of Experts, investigative journalists like Rohrlich and Mailey, and NGOs like C4ADS and Sayari Analytics has shown us how. But ask yourself: doesn’t it seem at all strange to you that the U.N., NGOs, and journalists keep exposing networks that our own government didn’t? If you’re a journalist or a congressional staffer, here’s a question you should ask the Treasury Department: how many full-time investigators and intel analysts are dedicated full-time to investigating North Korea?

If the necessary financing for Ryomyong Street wasn’t already done by 2016, President Obama might have tried to block those transactions as they flowed between Chinese commercial banks and U.S. correspondent banks, but as I’ve discussed ad infinitum here, Obama wasn’t willing to do that, except in one isolated case, well into the eleventh hour of his presidency. I could refer you to all of the pieces I’ve published documenting this policy of passive non-enforcement. I could do even better by citing Anthony Ruggiero’s exhaustively researched testimony for the House Financial Services Committee this week, or Dan De Luce’s real-time coverage of Obama throwing away his last chance to show some spine, or this, by Bill Powell for Newsweek, showing us how China abetted Pyongyang while Obama watched and did nothing:

A one-off case against a big Dandong-based holding company such as DHID is one thing. Beijing apparently didn’t protest too much when the Treasury issued its sanctions, apparently believing that it needs to show at least some willingness to pressure Pyongyang, even at the expense of one of China’s own firms. But several Trump appointees in the national security community are increasingly scathing about the efforts of both the Obama administration and Beijing to hobble Kim’s nukes. “As the North continued to make progress [toward an intercontinental ballistic missile capable of delivering a nuke], the U.S. and the U.N. tightened sanctions, it’s true,” says one Trump official. “But those were sanctions with a big caveat: They didn’t much apply to China, at least when China wanted to ignore them.” Another Trump official says the Obama team was focused on climate change as the key issue in bilateral relations with Beijing—not North Korea. “At no point was the sanctions regime against North Korea as effective as the sanctions were against Iran before they came to the [nuclear negotiating table],” says one senior Trump official, “and that’s almost entirely because of China.” [Newsweek]

President Trump took the Oath of Office in January. Then, he ordered a policy review that took four months, met with Xi Jinping in April, and gave him two more months before tweeting that China wasn’t helping. Around that time, the tenants of Ryomyong Street were first climbing the stairs to their new 50th-story lofts. In July, the Trump administration finally started targeting Pyongyang’s finances in earnest, including its use of Chinese banks to evade U.N. and U.S. sanctions. Even this is only a beginning of what will be necessary to how visible effects on the palace economy, which will likely take at least a year to show. 

The lessons being: first, even the best 2017 sanctions can’t stop 2016 construction; second, one cannot measure the effect of sanctions through non-sanctioned commerce; and third, when offering expert analysis on any topic, there’s no substitute for some careful research. Féron is right that sanctions failed to prevent Kim Jong-Un from slapping up a lot of spiffy-looking buildings in Pyongyang, most of which did not immediately fall down. But in the end, that may not tell us much about the potential for aggressively enforced, well-targeted sanctions to present Pyongyang with some very hard choices.

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The silver lining in State’s 2016 terrorism report: at least they quit lying to us

The State Department published its 2016 Country Reports on Terrorism today, and contrary to the evidence, the law, and my predictions, Secretary Tillerson did not re-list North Korea as a state sponsor of terrorism. I won’t repeat all of the reasons why I believe that this was the wrong decision; you can read the blog post here, or the 100-page, peer-reviewed report hereIf I wrote an update to the longer version — and perhaps State’s report is a reason to do that — I could add more recent evidence that would support a re-listing, but it should be obvious by now that State isn’t basing its decisions on the evidence or the law. 

In no sense is this report a serious examination of the evidence that Pyongyang sponsored terrorism in calendar year 2016. Its four terse paragraphs (which you can read below the fold) do not mention the still-unexplained axe-murder of Pastor Han Chung-Ryeol, who had aided North Korean refugees in China; reports that it ordered the assassination of prominent defector Ko Young-hwan in South Korea; its promotion of the accomplished terrorist Kim Yong-Chol to manage its relations with Seoul; its call for the murder of South Korea’s then-President; or any of its threats to nuke pretty much everyone. 

Mind you, this makes 2016 a slow year for terrorism from North Korea, compared to how 2017 is going so far.   

At the same time, the administration isn’t boxing itself in, either. State’s report dryly recounts the narrow legal basis for President Bush’s decision to remove North Korea from the list of state sponsors of terrorism on October 11, 2008 (discuss among yourselves) and then skims the wave tops of some of the lesser reasons why perhaps it just might be re-listed: it harbors Japanese Red Army hijackers, holds Japanese abductees, does not cooperate with counterterrorism efforts, and has failed to address concerns about terrorist financing and money laundering. It offers no arguments or justifications that would contradict a decision to re-list Pyongyang tomorrow.

Thankfully, the report also spares us the flagrant, oft-repeated lie that North Korea is not known to have sponsored acts of terrorism since 1987, something the State Department had repeated in these reports for years and that may have been the single worst thing about them.

Next year’s report may be more telling. Then, State will have to address Pyongyang’s February 2017 murder of Kim Jong-Nam’s face with VX in that airport terminal crowded with parents, grandparents, babies, and children, and its claim of a universal and plenary right to murder whoever, wherever starting with former President Park Geun-Hye.

The State Department is fond of saying that an SSOT listing of North Korea would be purely symbolic. As I say whenever I hear this, symbols can be powerful things, and no regime places a greater value on symbols than the one in Pyongyang, whose very survival rests on symbols, myths, and illusions that hold its subjects in awe of those who rule over them. State’s decision will also be symbolic of the reasons for Americans — and their elected representatives — to withdraw their confidence from the U.S. Department of State. That withdrawal of confidence is already evident in the Congress, which will continue to push State to explain a decision that its officials could not defend under competent congressional questioning. Fittingly, Congress’s answer will likely be to make State’s analysis increasingly “symbolic” (or irrelevant) by legislating the very consequences, and withdrawing the discretion, that State refuses to apply itself.  

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McCarthyism! Moon Jae-In’s government declares Christine Ahn persona non grata

Is it possible to be too far-left for Moon Jae-In? In the end, I suspect not, but still:

An American who helped arrange for 30 female peace activists to cross the heavily armed border between North and South Korea in 2015 has been denied entry to South Korea, officials confirmed on Monday.

Christine Ahn, a South Korean-born American citizen, said she did not know she was persona non grata in the country until Asiana Airlines stopped her from boarding a flight at the San Francisco airport on Thursday. She had planned to transit through Incheon International Airport outside Seoul on her way to China, where she intended to spend a week before visiting South Korea.

After being told she was not allowed to transit though South Korea, she bought a new ticket to fly directly to Shanghai, she said.

The Justice Ministry of South Korea said on Monday that Ms. Ahn had been denied entry because there were sufficient grounds to fear that she might “hurt the national interests and public safety” of South Korea.

Ms. Ahn said she suspected that the government of the former president Park Geun-hye, a conservative who was impeached over a corruption scandal and removed from office in March, had put her on a blacklist for helping organize the Women Cross DMZ campaign in May 2015. [NY Times]

Since the question has been raised by those who invent facts with the promiscuity of Larry Craig on a five-hour layover in Bangkok with a new pair of Salvatore Ferragamo oxfords, no, this decision had nothing to do with me, at least as far as I know. For that matter, I don’t know who in his right mind (and this may be the determinative premise) would ever suspect me of having any influence in Moon Jae-In’s administration.

But at least the South Korean government, unlike the New York Times, is willing to go beyond Ahn’s self-serving claims of “peace” activism to investigate her actual views. Her 2015 Women Cross DMZ march through Pyongyang and points south was arranged in collaboration with a North Korean diplomat. Stage-management of the event was then handed off to the Committee for Cultural Relations with Foreign Countries, which handed the participants very nearly the same banners used by the Korean Friendship Association and every other useful idiot who marches through Pyongyang. 

In the end, the trip was a case of life imitating parody — a public relations disaster whose nadir was the Rodong Sinmun’s quotation of Ahn as saying that Kim Il Sung had devoted his life to the liberation of the North Korean people, with Gloria Steinem and others left to deny the statement as Ahn ducked the press.

As I documented a dozen years ago when the shoe (ahem) was on the other foot, South Korea has a long-standing practice of excluding or expelling foreigners whose purpose for visiting is to engage in political activity. And while I’m admittedly sympathetic to Vollertsen’s views and unsympathetic to Ahn’s, I’m hard-pressed to say that any government is obligated to admit any alien to engage in political activity, regardless of his or her political views.

If my memory serves me, the South Korean government later relented and let Vollertsen back in. I expect the Moon administration will probably also relent when Ahn’s hard-left friends raise a ruckus. After all, I can’t objectively say that Ahn is any more extreme than Tim Shorrock, to whom President Moon granted one of his first interviews, and her contents don’t seem to be red-lining the pressure valve quite like a man so militant that in the end, not even Ralph Nader could stand him.

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For Beijing, a sharper choice on N. Korea: accord and prosperity, or discord and chaos

Writing in Foreign Affairs this week, Zhu Feng sketched out a vision of the thinking in Beijing from the perspective of a person more reasonable than Xi Jinping has been, so far. Zhu’s piece suggests the outlines of an agreement with Beijing to defang Kim Jong-Un and manage North Korea’s transition to peace. Alas, Zhu Feng is not in charge in Beijing, and Xi Jinping is. Suspend your paranoia that this essay is only an artifice to persuade us that Beijing will be reasonable, if only we stay our hands on secondary sanctions another year or two (years we no longer have). The piece is well worth reading in its entirety, if only for what it tells us about the thoughts of those in Beijing whose influence we should seek to weaken or strengthen, and whose fears we should seek to exploit. 

In this regard, Trump needs to understand the complexity of China’s thinking on North Korean policy. Getting China to take more responsibility on North Korea requires both a gentle and a hard push. The Trump administration has made it clear that it will not tolerate a nuclear North Korea—but Beijing has heard this before. Despite the rhetorical flourish, to the experienced Chinese diplomat, the Trump administration’s policy sounds quite a lot like those of Presidents George W. Bush and Obama: a desire to achieve denuclearization but an unwillingness for this to come at the cost of war on the peninsula. Chinese President Xi Jinping is similarly bound by the strategic logic of China’s long-standing approach to its petulant neighbor—avoiding the dangers and uncertainty of war and instability by looking past the present consequences of North Korea’s actions. Xi’s view of North Korea is still dominated by the fear of a reunified Korea under Seoul, which may want U.S. forces to remain in the country. This is a legitimate concern, but it is possible, given Trump’s isolationist stance, that he might consider not stationing U.S. troops above the 38th parallel or deploying offensive capabilities to a unified Korea. [Zhu Feng, Foreign Affairs]

I can envision how an agreement with Beijing might work: China would enforce the U.N. Security Council resolutions — no more and no less. It would import no more than $400 million worth of coal, and it would not buy coal or anything else from any entities designated by the U.N., that were associated with Pyongyang’s weapons programs, or that were reasonably suspected of contributing to those programs. It would freeze the assets of North Korea’s proliferators and their front companies and put their agents on the first Air Koryo flight home. It would also freeze any accounts of North Korean nationals or trading companies until it ensured, in accordance with UNSCR 1718, paragraph 8(d), that those funds could not be used for WMD programs or other prohibited purposes. For good measure, it would also expel any North Korean workers. It would keep those measures in place until Pyongyang was fully disarmed. That, in turn, would almost certainly require the removal of Kim Jong-Un, but coordinated economic strangulation of the regime — which should carefully avoid impeding the trade in food — would likely cause the elites to lose confidence in him. By many accounts, that confidence is already shaky.

In return, the U.S. would agree not to station forces inside the borders of what is now North Korea (something that we should not do under any circumstances anyway). We might even discuss a timetable for the withdrawal of U.S. ground forces, which would no longer be needed in Korea. We would agree to suspend sanctions, year by year, provided Pyongyang was making progress toward the conditions described in our laws, toward a more humane and open society whose disarmament we could actually believe in. This state would be neither a militarized totalitarian cult nor a Jeffersonian democracy, but a state that was evolving from totalitarianism to one that was merely authoritarian, along the lines of what we see in Burma today. Great change takes time. North Korea and its people would need time to evolve into a self-governable society, ready to take its place in the world.

Once North Korea was disarmed and the artillery was removed from the bunkers along the DMZ, Korea could be reunified in all but name. Korean families would be reunited, a new pan-Korean culture would be reborn, and commerce would flow freely across the nature reserve formerly known as the DMZ. An agreement with Beijing and Seoul might preserve a fig leaf of separation for an agreeable transitional period, excluding any foreign forces and ensuring friendly relations with all of Korea’s neighbors, friends, and trading partners, to assuage Beijing’s security and economic concerns. South Korea would assume responsibility for controlling the China-North Korea border and caring for the poor and dispossessed North Koreans who might otherwise cross it. The consequent economic revitalization, including access to refurbished North Korean seaports, would be a boon to China’s northeastern rust belt. The political status of North Korea after this transitional period — say, ten years — would be for the people of both Koreas to decide. Enough of foreign powers drawing lines through a nation that ought to be able to decide its own fate. A unified Korea would be no threat to China.

Of course, if Beijing does not cooperate, things might have to take a darker turn.

The real difference that Beijing and Washington must overcome, however, is China’s fear of chaos in North Korea spilling over its own borders. Such instability could spell an unmanageable situation involving all sorts of crises: civil war, famine, and mass displacement, not to mention the danger of fissile material and biological weapons falling into even more unstable hands. Of course, some Chinese hardliners take this view even further, suggesting that it would be foolish for China to take the North Korean burden off the back of its greatest competitor. They argue that, considering that the United States is in many ways a thorn in the flesh to Chinese interests in areas such as Taiwan and the South China Sea, it would be against China’s national interests to release the United States from this problem.

Today, many within China believe that Beijing must reevaluate its relationship with both Koreas, which essentially means abandoning Pyongyang. It is both the strategic and the moral choice. Choosing South Korea, a democracy with a strong economy, will place China on the right side of history. China’s lack of clear direction on this issue is beginning to negatively affect its reputation, with Beijing seen by the international community as reluctant to cooperate or behave responsibly. These are not traits that behoove a rising power. [Zhu Feng, Foreign Affairs]

I can also envision how things would have to work if China does not cooperate. The alternative would be China’s greatest fear — chaos. It would have to be. Pyongyang insists that its nuclear program is non-negotiable. Even assuming that, under extreme duress, Pyongyang eventually said otherwise, it will never be possible for a prudent person to believe in the denuclearization of a society as closed as North Korea’s, or to trust the words of a regime as mendacious as Pyongyang’s.

Because of all the years wasted by Bill Clinton, George W. Bush, and Barack Obama, we may, for a while, be stuck with the option of trying to deter a nuclear North Korea. This option is only slightly less terrible than war, and anyone who has watched how Pyongyang has behaved in recent years knows that this isn’t sustainable. We are always laying down red lines we think Pyongyang wouldn’t dare cross. Our calculations are invariably miscalculations, and Pyongyang crosses our red lines like so many cracks in a sidewalk. Can we deter a regime that built a reactor in Syria, used VX in the middle of the crowded Kuala Lumpur Airport terminal, or uses cyber attacks to terrorize us, smother own freedom of expression, and rob banks? Can we deter a regime that has carried out multiple armed attacks, cyber attacks, and assassination attempts in South Korea since 2010, killing at least 50 people? Can we deter a regime that sells chemical weapons technology to Assad and MANPADS to terrorists? How do you deter Pyongyang once it thinks it can nuke Seoul, Tokyo and New York? Will Pyongyang become more restrained when it thinks we think it can, or might?

Eventually, Pyongyang will go too far and we will be at war. Deterrence will fail. That’s why the Trump administration is right to turn down the idea of a freeze — not that Pyongyang is interested in one anyway. Pyongyang can’t be allowed to have nukes, or even nuclear technology to sell to others. But no one believes it is possible to take these things away from Pyongyang without a fundamental change in the regime’s character.

~   ~   ~

The cold, hard truth that too few of us are willing to confront is this — there is no peaceful solution to the North Korea crisis as long as Kim Jong-Un remains in power. The syllogism is a simple one: if Kim Jong-Un won’t disarm, and if we can’t live with Kim Jong-Un (or he won’t live with us) if he doesn’t disarm, then Kim Jong-Un must go. The question then becomes a matter of finding the least-risky option to achieve that result.

Once we conclude that Pyongyang won’t disarm under pressure, what it means for sanctions to “work” shifts. Then, the focus of sanctions also shifts, from creating economic pressure on Pyongyang to supporting political subversion of the regime by targeting its immune system — the border guards, the army, Ministry of State Security, the State Security Department, the Reconnaissance General Bureau, and the Propaganda and Agitation Department. In a country whose political and economic models are fragile and possibly unsustainable, change can take many forms. Certainly, it should not take the form of invasion or decapitation unless that’s our only protection against a grave and imminent threat to ourselves and our allies. It could mean sudden collapse if the elites turn on Kim Jong-Un, but our influence over such an event would be indirect at best. Don’t get me wrong — we should do everything within our power to prepare the Pyongyang elites for it, if only to make the right people in Pyongyang and Beijing nervous, and most urgently, to discourage North Korean troops from killing their brother and sister Koreans in the event we can’t prevent war.

The change we can do the most to catalyze, however, is a slow-motion revolution in the countryside. Our strategy should be to use sanctions and information warfare to degrade the regime’s capacity to repress, even as we use economic engagement and information warfare help an informed, enriched, and empowered people rise. This would not be regime change, exactly, but regime decline and regime replacement by dozens of local shadow governments. As the security forces lost their foreign sources of income due to sanctions, their members would desert, turn to corruption, or allow themselves to be coopted by the rising merchants and shadow warlords. Officers patrolling the markets could not shake the people down without fear of resistance or reprisal. Inside the jangmadang, they would become prisoners of the people. Inside their stations, they would be besieged, isolated, and ineffective. As the state’s power melted away and flowed back down the songbun scale, information operations would tell the elites that Kim Jong-Un’s days are numbered, that they should not support him, and that they should disobey any orders to kill their brothers and sisters. Implicit in the slow degradation of a totalitarian state is the historical inevitability that it can decline only so much before it can’t contain an explosion. That is, it must change or perish. Political change tends to happen like bankruptcy: gradually, then suddenly. Who is to say when regime decline might become the people’s revolution that Thae Yong-Ho has predicted? Beijing and Pyongyang should certainly worry about this.

For poor North Koreans, this would mean freedom of trade, freedom from fear, and freedom from the confiscation of their land and their crops. It might also mean chaos along China’s border. China would have to deploy troops to seal that border. Dandong, Dalian, and other cities involved in cross-border trade would face the concentrated effects of secondary sanctions, and even a loss of access to trade with America, that might plunge them into recession and unemployment. If the propaganda circulating in the jangmadang harnessed North Korea’s nationalism in an intensely anti-Chinese direction, it could make North Korea an unsafe place for Chinese investments for years to come. Even after reunification, Chinese goods would face steep fees for the use of North Korean ports. China would be offered no guarantees about the future disposition of U.S. forces (though we’d be smart to leave the pacification of North Korea to the Koreans). Chinese investments — particularly those found to violate U.N. sanctions — might be confiscated, or written off as odious debts. Refugees would flood across the Tumen, and Seoul and Washington would be powerless to stop that flood. To prevent Pyongyang from proliferating, we might have to impose a naval blockade, and an economic air blockade.

All of this is a much more chaotic alternative than an agreement to enforce the sanctions Beijing already voted for at the U.N. Security Council, but for us, it’s far better than the collapse of global nonproliferation or a coerced capitulation of South Korea. If Beijing is blithe about (or applauds, or encourages) our greatest security fears, then our response should be to identify and exploit its greatest fears in return.

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Maximum pressure watch: The Dandong Zhicheng warrants foreshadow N. Korea-related indictments

Last fall, as America was consumed by (depending on your state of residence) post-election trauma or celebratory gunplay, China blew past the North Korean coal import caps it had just agreed to at the U.N., and the Obama administration issued what would be some of its final North Korea sanctions designations — of Daewon Industries (a coal exporter subordinate to the North Korean military) and Kangbong Trading Corporation (a coal exporter subordinate to the Munitions Industry Department and involved in the development of North Korea’s ballistic missiles).

At the time, I suggested that the administration might have shown a belated willingness to enforce the coal cap that China would not. A few months later, the Trump administration designated Paeksol Trading Company, a third coal exporter that answers to the Reconnaissance General Bureau, the agency that carries out Pyongyang’s foreign intelligence operations, terrorism, and cyberattacks, and some of its arms smuggling.

The real significance of these three coal designations was not the amount of money that Kangbong, Daewon, and Paeksol might have been laundering through the United States, although Americans tend to underestimate such things. Their real significance is that by designating these three entities, the Justice and Treasury departments were laying down a marker for anyone who was knowingly dealing with them, for violations of the International Emergency Economic Powers Act, money laundering, or conspiracy. What’s that, you say? It doesn’t matter if there’s no one here to arrest? Not to worry. The smarter strategy need not burden the taxpayers with feeding and housing crooked Chinese traders and bankers; it can be even more effective to seize their ill-gotten gains, bankrupt them, terrify other bankers into meeting their due diligence obligations, and depositing said gains into either of two U.S. government forfeiture funds that pay for the cost of other law enforcement operations.

That is to say, I don’t know how Donald Trump will make Mexico pay for the wall, but I do know how he can make the Chinese banks pay for bankrupting Kim Jong-Un.

~   ~   ~

By now, it is now clear that Treasury’s designations of the North Korean coal exporters were only the first steps, and that there is substance, strategy, and policy behind the Trump administration’s talk of “maximum pressure.” The first clear sign came last month, when the Justice Department sued to forfeit almost $2 million Mingzheng International Trading Limited laundered for the Foreign Trade Bank of North Korea (FTB). A few weeks later, it cut the Bank of Dandong off from the financial system for laundering money for North Korean arms dealer KOMID and Korea Kwangson Banking Corporation, an FTB subsidiary. (Treasury blocked KKBC and FTB in 2009 and 2013, respectively, making it illegal to do business with them inside the United States, though corrupt trading companies stepped up to help them access the dollar system indirectly, for commissions of up to 25 percent per transaction). We can now see the feds’ emerging strategy taking shape — to bankrupt the Chinese trading companies that fill His Porcine Majesty’s coffers and make them toxic to the entire financial industry.

North Korea’s latest missile test changes the administration’s calculus, said Nicholas Eberstadt, a North Korea security expert at the American Enterprise Institute. He expects the White House to accelerate its sanctions against Chinese firms.

A central aim of the strategy of freezing out a Chinese bank from the U.S. financial system is to chill transactions by other Chinese institutions. Access to U.S. financial markets and the dollar are critical for trade and finance around the globe. But for that effort to be perceived as a credible, said Mr. Eberstadt, the administration will have to list other Chinese banks to instill broader fear.

“If I wanted to send a message, I’d probably send several postcards,” Mr. Eberstadt said.

Analysts and senior officials from two previous administrations say the existing sanctions regime against North Korea have so far been elementary compared with the thicket of actions applied against Iran at the height of the Obama administration’s punitive actions against Tehran. That effort pushed the country into recession and persuaded the country to negotiate, although many foreign-policy experts question the effectiveness of the subsequent deal the U.S. reached with Iran. [WSJ, Ian Talley]

Then, last week, the U.S. District Court for the District of Columbia unsealed this seizure warrant for funds of Dandong Zhicheng Metallic Materials Company that entered eight U.S.-based correspondent banks. According to the warrant, Dandong Zhicheng processed $700 million in prohibited North Korea-linked transactions through those eight correspondents since 2009, including $52 million in the last seven months alone. Yes, that’s right — Pyongyang was laundering its money through our banks and right under our noses all along, just like I’ve been saying.

Tantalizingly, the warrant cites a cites a grand jury subpoena that isn’t published on PACER, most likely because it’s still sealed under Rule 6(e) of the Federal Rules of Criminal Procedure, which protects the secrecy of grand jury material. This particular warrant is a “damming warrant,” a tool prosecutors use when they have probable cause to seize evidence or contraband that regularly transits through a specified place, even if it isn’t there at the moment (such as drugs through a dealer’s P.O. box, or funds through a money launderer’s account). It means that money goes into, but not out, of the account subject to the warrant. In this case, the damming warrant lasted 14 days, which may be as long as a depositor would continue to dump money into a bank account before wondering why his checks weren’t clearing.

I found the names of the correspondent banks on PACER so that wouldn’t have to: Bank of America, Deutsche Bank Trust Company Americas, Citibank, Bank of New York Mellon, HSBC, JP Morgan Chase, Standard Chartered Bank, and Wells Fargo. So far, the feds aren’t directly targeting those banks for legal action, and neither the banks nor the feds are saying anything else about that, but read on. You’ll also see in footnote 5 of the court’s order that the feds have now begun to make good use of the NKSPEA; evidently, the prosecutors cited section 104(a)(8) it in their warrant application.

By now, the more astute readers among you have picked up on the familiarity of Dandong Zhicheng’s name. No, this isn’t the Chinese network exposed in C4ADS’s report (and mostly undone by the Justice Department’s indictment and forfeiture complaint) last year. That was Dandong Hongxiang (or DHID). Dandong Zhicheng (or DZMM) is the Chinese network exposed by C4ADS’s most recent report, just last month.

In 2016, a single company, Dandong Zhicheng Metallic Material Co. Ltd. 丹东至诚金属材料有限公司, reportedly accounted for 9.19% of total North Korean exports to China. Established in July 2005, just as North Korean coal exports began to increase as a percentage of total exports, Dandong Zhicheng Metallic Material Co. Ltd. is a commodity company based in Dandong, China. The company’s archived website states that, as of April 6, 2016, it was recording annual sales of US$250 million, mainly of North Korean coal. This fact is recorded in trade data: 97% of the company’s imports were of North Korean coal. The company’s rapid growth and subsequent market position today is best described by a 2013 statement by one of the company’s traders, “The golden time for high profit has ended. It is now difficult to expand the market share further, and small players are out of the game.” Since 2014, Dandong Zhicheng Metallic Material Co. Ltd. has reportedly been the top overall importer from North Korea in China. [C4ADS]

If C4ADS is right that North Korea’s financial networks are centralized, limited, and vulnerable, the Justice and Treasury departments can damage or destroy the Chinese conglomerates that link Pyongyang to the financial system. To hear C4ADS tell it, DZMM is the single biggest Chinese importer of coal and other products from North Korea. Reuters backs that up by citing a 2013 online profile for DZMM, which claims that it imported $250 million worth of North Korean coal that year. By contrast, UNSCR 2321 capped North Korea’s total annual coal exports at $400 million. Thus, DZMM is almost certainly Pyongyang’s single largest coal customer and one of its key links to the global economy (no matter how many “experts” say that Pyongyang is already too isolated to sanction or that those links are too well hidden to find).

Nothing in the damming warrant mentions Kangbong, Daewon, or Paeksol, but it’s almost a sure bet that at least one of them is having some cash flow problems today, if not all three. The fact that the warrant reveals that a grand jury has been empaneled is also telling. Reuters got someone at DZMM to answer the phone, but they wisely refused to comment. If the cliché is correct that you can indict a ham sandwich, we should expect to see an indictment unsealed in the coming weeks or months, and we’ll learn the names of DZMM’s banks.

Asked about the issue, Chinese Foreign Ministry spokesman Geng Shuang reiterated that any infringements of U.N. resolutions on North Korea would be dealt with according to Chinese law, and that China opposed “long-armed jurisdiction”. [Reuters]

That is to say, China is opposed to unilateral sanctions, except when it isn’t. I can’t recall when I’ve ever heard China sound so upset and concerned about the prospect of paying a penalty for Pyongyang’s behavior.

~   ~   ~

When the feds indicted Dandong Hongxiang last September, they hastened to add that the banks were not suspected of any wrongdoing. How much legal jeopardy are the banks in this time? Potentially, plenty. The court issued the DZMM warrant in May, so presumably, the affected transactions would have come after Treasury’s Financial Crimes Enforcement Network (FINCEN) issued this new regulation, based on its finding that North Korea is a jurisdiction of primary money laundering concern. The FINCEN regulation requires banks to cut North Korean financial institutions off from both direct and indirect access to the financial system, and requires due diligence of banks processing transactions to that end. Clearly, the banks should not have processed transactions for designated North Korean entities — including the FTB, KKBC, Daewon, Paeksol, or Kangbong. This time, DZMM’s Chinese banks and their U.S.-based correspondents both face higher legal burdens due to the new FINCEN regulation. The amount of jeopardy depends on how apparent DZMM’s links to North Korea were, or alternatively, how many hard questions they asked DZMM and each other about their customers.

What’s clear, regardless of the outcome, is that the banking industry has to step up its compliance game. And judging by the clarity of the message the feds are finally sending, I expect it already is.

Have all the shoes dropped? By no means. A grand jury is (or was) in session, indictments are thus more likely than not, the feds have plenty of other options short of that, and according to the Wall Street Journal, their strategy has backing at the highest levels of the administration. Our government is now promising — and taking steps to implement — a secondary boycott of North Korea’s enablers around the world, Nikki Haley is telling countries that they cannot trade with both the U.S. and North Korea, and the U.S. is moving to combine its economic power with that of South Korea and Japan (collectively, China’s three largest trading partners). Yes, China and Russia are stalling approval of a new U.N. sanctions resolution, but I’ve long felt that we’ve reached the point of diminishing returns from new U.N. sanctions anyway. What’s needed now is strict enforcement of the existing sanctions and anti-money laundering authorities, and that’s what I’ve just been talking about here.

Last year was a bad year for North Korean banks. Although the effects of that still aren’t clear, this year promises to be much worse for them. And we haven’t even gotten to the tools the Senate is about to give the feds.

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Why Moon Jae-In can’t make the sun shine again

Given the background of Moon Jae-In and some of his closest confidants, the question that has nagged at me is whether Moon is (1) a closet hard-left ideologue who has managed to let everyone around him say and do the extreme things he avoids saying and doing himself; (2) just another oleaginous opportunist who paddled his canoe to the swifter currents on the left side of the stream; or (3) a hopelessly naive squish who thinks he can simultaneously charm, tame, and please his hard-left base, moderate voters, Donald Trump, Xi Jinping, and Kim Jong-Un, and who is consequently fated to end as tragically as (if less horribly or bravely than) Andres Nin.

Whatever theory comes closest to the truth, it’s apparent that Moon is no fool and has enough political sense to know his limitations. Evidence of those limitations comes in the form of new polling data from the Asan Institute. Generally, South Koreans —

– dislike the United States much less than they dislike their neighbors (I’m suspicious of Asan’s use of an approval index instead of a straight percentage of favorables). They dislike North Korea the most intensely. The biggest shift is that they now dislike China as much as they dislike Japan. That’s a fairly stunning shift, and it has been persistent since China began sanctioning the wrong Korea.

– favor the U.S. over China as their “preferred partner” by an overwhelming margin of 67 to 22, a gap that has widened by 18 percentage points in the last year after having steadily narrowed between 2014 and 2016. We can guess that China’s sanctions against South Korea, and perhaps its failure to reign in North Korea, have caused immense damage to its favorability on the Korean street. (I’ve long felt that a nationalist message with distinctly anti-China overtones has potentially high appeal in both Koreas, and elsewhere in Asia. These numbers may support that supposition.)

– oddly, hold the most favorable views of Xi Jinping of any neighboring leader. Given the other findings in the survey, it sounds like South Koreans respect Xi more than they like him. Their views of Trump recovered considerably after his reassuring phone call to Park Geun-Hye last November, although favorable views of Trump remain far lower than their favorable views of the United States. They hold Kim Jong-Un in the lowest esteem, by far.

– favor the deployment of THAAD by 55 percent, compared to just 37 percent who disapprove. This, despite Trump’s ham-handed stumbles, demanding that South Korea pay for it despite an agreement to the contrary, just before South Korea’s election. Most South Koreans, however, believe the National Assembly should ratify the THAAD deployment, which almost certainly means gridlock and indefinite delay.

– disfavor reopening Kaesong by a margin of 50 to 46, and disfavor resuming humanitarian aid by an overwhelming 72 to 26, absent a change in North Korea’s behavior (personally, I’d be much more receptive to resuming humanitarian aid that reaches the poor than resuming Kaesong, which is a wage-theft scam to fund Bureau 39).

The other interesting finding is that South Koreans in their 20s are much more conservative on national security issues than those in their 30s and 40s. That tells us that if these young voters’ views have been shaped by recent experiences, and if they continue to hew conservative as they age, the U.S.-Korea alliance may have a stronger demographic future than I’d feared.

Overall, the numbers suggest, first, that as I suspected, Moon Jae-In has no mandate to revive the Sunshine Policy; second, that they expect Moon to maintain a strong alliance with the United States; and third, that they hold extremely dim views of North Korea and His Porcine Majesty. That explains why Moon was so eager to avoid a fight with Trump during his visit to Washington. He knows very well that security issues are a vulnerability, and that by appearing to put distance between himself and Washington, he stands to lose much of his currently stratospheric approval rating, which is certain to decline as his honeymoon wears off and the media stop covering him like KCNA covers Kim Jong-Un. That is to say, if Moon Jae-In was on his best behavior, it may be because, like any good politician, he knows how to read a poll.

For the last week, I’ve been picking away at a still-unfinished post, commute by commute, about Pyongyang’s rejection of Moon’s offers of “engagement,” and demands for supplication instead. Whatever the true feelings of Moon and his inner circle about North Korea, then, a return to Sunshine faces three obstacles that seem insurmountable for now: first, of course, Pyongyang itself; second, U.S. opposition to any engagement that would undermine “maximum pressure;” and third, the South Korean people themselves. That is to say, Moon is starting his term (as did Lee Myung-Bak and Park Geun-Hye) by offering Pyongyang conditional engagement, only to find that Pyongyang isn’t interested in anything conditional.

If Moon is an intelligent politician — and I suppose he is that, if nothing else — he’ll decide to emphasize other parts of his agenda instead: breaking up the chaebol, cracking down on public corruption, putting limits on working hours and making other improvements to the rights of workers and consumers, and giving Korea a better-functioning welfare state. If Moon makes progress on these initiatives and supports our North Korea policy until such time Pyongyang denuclearizes (unlikely) or overthrows its king (more likely), we should support him. If he actively undermines our North Korea policy, a few well-timed and carefully written tweets (that don’t look carefully written) could damage his party in the next round of National Assembly elections.

If Moon really wants to really make me cheer, he’ll reform the Korean legal system to give defendants a right to counsel that’s more than just pro-forma, the right to a trial by jury, the right to confront one’s accusers, robust discovery rights, a hearsay rule, and other procedural protections to ensure that people can get fair trials. Also, truth should be a defense in libel suits. But by now, I’m asking too much.

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Stop talking about bombing North Korea. Talk about the revolution it desperately needs.

The supreme art of war is to subdue the enemy without fighting.  – Sun Tzu

On the Fourth of July, I had a long talk with a Famous Person who would probably prefer that I not mention his name here. He’s famous (or infamous — your mileage may vary) for his association with a foreign policy philosophy described as “neoconservative,” whatever that means. Like many Famous Persons, this person’s public image is an injustice to his actual views, which sounded classically liberal to my ears. He had an easy and unpretentious manner, and great depth in both experience and intellect. He recalled, at length, his support for Kim Dae-Jung’s life and freedom during South Korea’s right-wing dictatorship and other events I watched in rapt attention years ago. Because I’m not naming him, he probably won’t mind me quoting a wise thing he said: “This talk of bombing North Korea is scaring our friends more than it scares our enemies.” I couldn’t agree more. The word I keep returning to is “madness.” Not that it should matter, but there are people in Seoul I love.

It will probably also scare some of our friends that I made the case to this Famous Person that we must match Pyongyang’s escalation and deter the next one by helping the people of North Korea to resist the regime, but at least that suggestion has the advantage of terrifying our enemies and merely dividing our friends. Already, some of you are thinking that I’m scaring the Chinese and the Russians away from cooperating with us, as if all of the State Department’s supplications of the last 20 years have achieved anything. Or, that I’m scaring Pyongyang away from the negotiating table, as if Pyongyang would come back to the negotiating table otherwise, and as if Pyongyang doesn’t already believe we’re trying to overthrow it. Or that I’m ignoring the danger of loose nukes — as if the danger of WMD proliferation isn’t just as great or greater with this regime intact.

If we’re really honest, we’re all praying for some kind of regime change in North Korea. Prayer, of course, is not a strategy. The Sunshine Policy didn’t work, but it was a strategy for regime change by other means. Former South Korean President Kim Dae-Jung, the architect of that policy, was extraordinarily cautious about suggesting an intent to catalyze political change in the North, but a careful reader could see that it necessarily had political objectives: “Through open interaction with the global economy, North Korea will emerge as a responsible member of the international community, contribute to the stability of the peninsula, and develop its economy efficiently.” As Professor Lee, Bruce Klingner and I explained in the pages of Foreign Affairs, that is also why Pyongyang couldn’t let the Sunshine Policy succeed. I also doubt that Kim Dae-Jung was only speaking of South Korea’s former right-wing dictators when he quoted Confucious in his Nobel acceptance speech: “The king is son of heaven. Heaven sent him to serve the people with just rule. If he fails and oppresses the people, the people have the right, on behalf of heaven, to dispose of him.” (This is a point I’ll return to later in this post.)

The same is true of Americans who believe (or believed) in the Sunshine Policy. As the unreconstructed arch-engager David Kang once wrote, “I am totally for regime change, or a regime that modifies its ways and introduces economic and social reforms that improve the lives of its people.” At the height of talks over the 1994 Agreed Framework, Wendy Sherman pined for something more kinetic: “We just thought all that would bring about the collapse of the North Korean government within two or three years.”

We’ve all wished for a change of regime in North Korea, if only on an emotional level, notwithstanding how expensive, chaotic, and dangerous we know Kim Jong-Un’s Götterdämmerung could be. For years, we desperately hoped there might be some path to easy, evolutionary change. The unstated part of this hope was that with sufficient time and engagement, that evolutionary process might terminate as it did in Eastern Europe. But as events have proven beyond a reasonable doubt, there is no path to easy, evolutionary change in North Korea. There is profiteering and outright theft, and Pyongyang’s rich are getting richer. Call that capitalism if you want, but it’s the capitalism of a predatory military-industrial complex that’s no more a harbinger of peace or political reform than Krupp, Messerschmitt, or I.G. Farben were.

Contrary to Wendy Sherman’s expectations, the North Korean government did not collapse, because the North Korean people were too afraid, too hungry, too exhausted, and (above all) too isolated from each other to challenge the state. That is why, though there have been a thousand small and not-small acts of armed and unarmed resistance by the North Korean people against the state in recent years, those acts could not threaten the state’s control or disrupt its oppressive strategy. The people of North Korea had no means to communicate, organize, or resist. For those things, they will need our help. We should give them that help, in ways that would be public knowledge, and in other ways that would necessarily remain covert or clandestine. I don’t see another way. If you do, the comments are open.

In this week’s posts, I’ve explained why every other option ends in either a nuclear war, a surrender of South Korea, the collapse of nonproliferation, or grave threats to our own security and freedom. The hard realities are, in no particular order, that we cannot live with a nuclear North Korea, and that neither talks, nor surrender, nor China, nor the Swiss-educated reformer who never was will solve this crisis for us. War would, but it would also be a catastrophe of incalculable proportions. All options that remain — including the option of doing nothing, or seeking an accommodation with the regime — come with a significant or unacceptable risk of ending catastrophically. There is no safe option left to us; there are only less-dangerous ones. Dramatically improved enforcement of sanctions is the only nonviolent one left, and while I continue to believe that vigorously enforced sanctions could bring the regime to an existential crisis that could dethrone His Porcine Majesty, only the removal of Kim Jong-Un from power (and consequently, from this Earth) can disarm Pyongyang now.

It is increasingly hard to avoid the conclusion that Kim Jong-Un must die so that Korea may live, and that the coup de grâce must come from within, and not from us. It may be that the only way to prevent a larger war is to catalyze a smaller one. But that smaller war — or even the credible threat of one — may stand the best chance of ending with a peace agreement worthy of its name, from which Korea would emerge intact, liberated, unoccupied by foreign powers, and on a manageable timetable for reunification.

~   ~   ~

Let’s stop tiptoeing around what most of us have quietly wished for, but which we’ve done nothing — at least nothing I can see — to instigate: North Korea needs a revolution. It is in our interest to be rid of Kim Jong-Un, but above all, it’s in the interests of the North Korean people to be rid of him. The merchants who have waged an unarmed war of resistance against the state’s uniformed shake-down artists and press-gangs want to be rid of him. The nameless victims of torture who wanted nothing more than the right to live and move freely want to be rid of him. The people of North Hamgyeong, who are still waiting for an uncaring government to help them more than a year after floods devastated their homes and farms, want to be rid of him. The dirt-poor private farmers whose land is being confiscated, even as food prices rise, want to be rid of him. The collective farmers whose hopes for agricultural reform were dashed into the reality of exploitative sharecropping want to be rid of him. The poor in North Korea’s cities and towns, who scrape through life inside the confines of a state-imposed class system, want to be rid of him. The soldiers who are killing their abusive officers or walking through minefields to freedom want to be rid of him. The desperately hungry border guards who carry their guns into China and desert want to be rid of him. The elites in Pyongyang, who have begun defecting in greater numbers than ever — to include diplomats, money launderers, security officials, and (most recently) one of Kim Jong-Un’s bodyguards — want to be rid of him. The men, women, and children in the gulags must surely pray that they may live long enough to be rid of him. The 30,000 North Koreans who risked everything to flee to South Korea — and the countless others who died along the way, or in prison camps after they were recaptured — wanted to be rid of him.

Our real military option isn’t bombing, but a combination of overt, covert, and clandestine operations to catalyze the formation of a resistance movement by North Korea’s rural poor, historically its most exploited and discontented class, particularly in the northern and eastern provinces. The tried-and-tested argument for that uprising is the timeless appeal of class warfare. North Korea’s is a society of artificial, politically assigned, hereditary classes that mark every citizen for life and decide her access to education, a decent job or place to live, and even food.

As for the organizational foundations of such a movement, I’ve already discussed them at length, but they aren’t so different from the model used by Hamas or the Muslim Brotherhood. That model begins with a guerrilla banking system that seeds a multitude of unaffiliated, clandestine social welfare organizations and evolves into a shadow government, providing for the needs of the people that the state does not, and that resists the state’s violation of the fundamental human rights of the people in whatever ways it can. The essential and missing element is a means of communication, but even that isn’t far off. I’ll keep the discussion of logistics to myself or leave that to Dave Maxwell — he’s the retired Special Forces colonel, not me. I’ll only say that North Korea has two long coastlines, one long and partially porous border, robust smuggling networks, and a population that has learned to be extraordinarily resourceful to survive. The markets in North Korea seem to provide anything for which there is a demand.

I think — and there is a basis for my speculation — that Kim Jong-Un’s nightmare scenario is to wake up one day to hear that after an MPS officer beat a merchant who refused him a bribe, that the merchants rioted and killed the officer with a pistol bought from a deserting soldier, that riots spread throughout the province once people began texting the news on smuggled phones, and that people had set up roadblocks all over Hoeryong, within sight of journalists just across the border in China.

There would be no question, of course, of a peasant army marching on Pyongyang. That would be impossible, undesirable, and unnecessary. It would present Pyongyang with the sudden, use-it-or-lose-it choice that we must carefully avoid. The state’s loss of control would instead be gradual. If North Korea’s vast, almost roadless interior dissolved into anarchy as Syria and Libya did so unexpectedly, Pyongyang could lose its land access to the fisheries of the east, the coal mines and power plants in the interior, and all the remote places where it hides his missiles. Broadcasts directed at his elites, who are already defecting in growing numbers, would show them how the countryside was slipping into anarchy. If the security forces were already sanctioned to the verge of bankruptcy, they would be hard-pressed to pay, fuel, and maintain an army to patrol the borders, and the villages and fields near the most critical roads, railroads, and power lines. It is the economic and political blows, not the military one, that would be fatal, and that would force Pyongyang’s elites to demand peace talks on terms that would lead to a genuine peace.

As border control broke down, information would flow in and people would flow out. Trade links to China would become untenable, adding more financial pressure to the effects of sanctions. As Pyongyang functionally became a city-state surrounded by an ungovernable countryside and a patchwork of liberated zones, the elites might decide that the world was closing in on them and hedge their bets about the future. In exchange for our covert support, a thousand unseen eyes in the mountains could report the location of every missile truck, slip messages to unit commanders, or send out videos of gulags or abuses by soldiers. In the towns and villages of Ryanggang and North Hamgyeong, the State Security Department’s officers would become prisoners of the people, too afraid to patrol the markets and reduced to taking bribes from those they no longer dared to extort, in exchange for looking the other way at more open acts of subversion. No foreign power, including China, would dare wade into this mess. As for the generals, all that would be asked of them to save themselves and their families would be to make sure that at the critical hour, their troops don’t move and don’t shoot.

~   ~   ~

What can America give to the people of North Korea? First, a means to communicate and organize among themselves; second, a message to galvanize and focus their discontent; third, a concerted legal attack on the finances of the security forces to give the people breathing space; and perhaps, as a deterrent to further acts of aggression and oppression, a covert supply of arms, or a way to manufacture them in small guerrilla workshops.

We already have specialized aircraft designed for hijacking the airwaves of hostile states. The message we broadcast must be tailored to different audiences — the elites, the military, and the rural poor. For the elites in Pyongyang, the message must be that there is a better future without Kim Jong-Un than with him. That for those who resist the state and refuse to take part in its crimes against humanity, there will be clemency, freedom, and a better life in the future. If the regime persists, they can expect to meet the same fate as Jang Song-Thaek and his family.

For the soldiers, it must be a message of rice, peace, and freedom. In the event of war, they must refrain from killing their brothers and sisters in the South. They must be told that the targets assigned to them are civilian targets, and that their duty as Koreans is to disable their weapons, refuse to fire, or intentionally miss those targets.

For the rural poor, it must be that they are poor and hungry because of the state’s choices — to build weapons and ski resorts, and to import yachts and missile trucks, instead of feeding them. That the state keeps them hungry to control them. That it divides them against each other by making them inform on one another. The message must be rich with actual, credible stories about people like them who have suffered from the regime’s abuse, corruption, and oppression. They must awaken to the fact that they alone can change that, because no one else is coming to save them.

For all North Koreans, we should help them begin a conversation about the difficulties that sudden change will mean to a society that isn’t prepared for them. Should they stay in place or move? Who will own the soil, and who will till it? Will they be allowed to sell the land, and for what price? Will rich South Koreans flood in and make them second-class citizens in their own country? Will they acquire legal ownership of their own homes? Will industries in the hands of the state, the donju, or foreign investors be nationalized and sold off? Will the communes be broken up or consolidated? How can they prevent foreign occupation? What is the right balance between free speech and social stability? Who will be held responsible for crimes against the North Korean people, and who will be forgiven in the name of ending them? They must feel that they will have a say in how those questions are answered.

~   ~   ~

Our sanctions-targeting strategy must also evolve with the recognition of these same hard realities. During this event on Capitol Hill several weeks ago, former Treasury Undersecretary and former CIA Deputy Director David Cohen made a profoundly important statement that would have been easy to miss. Cohen said that the strategy for sanctions enforcement depends on the objective of sanctions. Until now, it has been to pressure Kim Jong-Un to negotiate away his nukes, based on the flawed premise that he cares about the welfare of his people and the development of his country (in fact, those things would pose serious threats to his internal control by breaking the peoples’ material and ideological dependence on the state).

If we agree that Kim Jong-Un will never disarm voluntarily, then our sanctions should instead target the regime’s security forces and their capacity to suppress the population. How? We know, for example, that two sanctioned North Korean coal export companies support the military and that a third supports the Reconnaissance General Bureau. The security forces fund themselves with certain trading companies. If so, our sanctions should preferentially target the regime’s immune system to disrupt its capacity to oppress, to compel its security forces to rely on corruption, and to break down barriers to the smuggling of goods, people, and information across North Korea’s borders.

Part of this strategy could take several years to prepare, unfortunately. The critical communications technology to allow North Koreans to organize still isn’t in place. Once resistance begins, it’s difficult to know whether it would spread or how quickly. If we controlled its funding, we could exercise some control over its conduct, but only to an extent. We can expect Pyongyang to hit back (though in limited, non-suicidal ways) if it knows or assumes that we’re supporting internal resistance. In the meantime, we’ll need an interim containment strategy, including aggressive sanctions enforcement, the accelerated deployment of missile defenses and deterrence, and perhaps a blockade. The President may have to use force to deter the next Yeonpyeong-do incident or slow North Korea’s missile development, and hope that a limited conflict stays limited. At the same time, we must never close the door to an agreement in which Pyongyang would disarm and begin a graduated process of humanitarian reform in exchange for the suspension of sanctions. But in the end, containment alone is not a permanent solution to this problem, and deterrence has been failing since 2010.

For years, the experts who have held the tiller of our policy for so much of the last three decades have offered Pyongyang “security guarantees” for a disarmament deal. Pyongyang either didn’t take them or took them and reneged. It’s time to turn this formula on its head and offer Pyongyang insecurity guarantees as long as it refuses to disarm. Once we pose a credible threat of destabilizing the countryside between Pyongyang and Dandong, our chances of a diplomatic solution rise from zero to something more than zero. How much more depends on the credibility of the threat and how much we have to offer in terms of trading stability for a lasting peace.

~   ~   ~

When Kim Dae Jung quoted Confucious in his Nobel speech, he reminded his audience that Confucious spoke those words 2,000 years before John Locke wrote of his version of the social contract theory, which incorporated a right of revolution. Against Locke, Thomas Hobbes argued, based on his bitter experiences during England’s civil war, that the subject’s duty was to obey the sovereign for better or for worse lest he reduce his kingdom to a state of anarchy where life would be “nasty, brutish, and short.” But North Korea, where the regime has imposed its social contract on the people, is as Hobbesian a place as you will find — it is a living (if one can call it that) exhibit to Locke’s brief for the right to revolution. In another hundred years, Thomas Jefferson would write that when a government becomes destructive of the ends of the life, liberty, and happiness of the people, “it is the right of the people to alter, or to abolish it.” I do not reserve that right to Americans alone. That would make me an American exceptionalist.   

In our long war of skirmishes against the Kim Dynasty, it has always been the people of North Korea who have been our most important — and most overlooked — potential allies. Kim Jong-Il now presents a grave threat to our freedom, our security, our prosperity, and our way of life. We are justified in threatening the integrity of his political system in return. The perpetuation of that system represents a grave threat to us, to our allies, and to the people of North Korea most of all. We also compelled to do this in a way that reduces the risk of catastrophe as much as that is still possible, and that minimizes unnecessary suffering by the North Korean people. Our support for any resistance group must be strictly conditioned on its adherence to the Law of Armed Conflict. It must tolerate no attacks against noncombatants, no banditry, and no theft. The choice to resist, of course, is a choice that belongs to the people of North Korea. But if they are willing to make it, they should find no better friend than us.

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We can neither talk, bomb, nor wait our way out of the North Korea crisis

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences.” – Winston Churchill

In one sense, North Korea’s first test of an ICBM should change little about our analysis of this crisis, other than to compress its timeline by two years. Two years ago, in fact, I predicted that we’d have reached this point by January. Most Korea-watchers have long assumed this development to be imminent, and have assumed for at least two years that Pyongyang could nuke Seoul or Tokyo. I’m no expert in missiles or missile defense, but when I ask the expert I trust the most on this subject (an Army friend) whether we can stop a North Korean strike, he says, “probably.” Pyongyang’s nuclear threat to the United States is probably still limited. Its missiles probably aren’t accurate, reliable, or numerous enough to overwhelm our nascent defenses — yet. The same is probably still true of our defenses against a nuclear strike against Seoul or Tokyo once THAAD is deployed, although Pyongyang’s rocket artillery (with its chemical and biological warheads) would likely overwhelm our defenses, as it would have when I was stationed in South Korea and had to get seven anthrax shots. Reassured?

But many other things have changed. North Korea is, for the first time ever, our top foreign policy priority. President Trump has done what his last three predecessors could not do — abandon the palliative illusion that China, which has done so much to weaponize Pyongyang, would enforce sanctions against it. There is bipartisan support in Congress for using all instruments of our national power short of war to deal with Kim Jong-Un. Whatever plans for Sunshine 1.1 Moon Jae-in may have delicately negotiated at the White House are in cinders. Even Moon had no choice but to call for more sanctions and support a new U.S. push for sanctions at the U.N. Security Council. Fine, but this is 2017, and an all-out campaign to bankrupt Pyongyang and subvert it politically would take from one to three years to work. That’s too late for some purposes, but not for others.

~   ~   ~

This week, I’ve read more snark at President Trump for giving Xi Jinping three months to bring Kim Jong-Un to heel than Barack Obama got for outsourcing his entire North Korea policy to China for eight years. Regardless of your views of Trump, he inherited a problem that Obama (and lest we forget, Secretary of State Clinton) ignored for eight critical years. History should record that Obama, Clinton, and Kerry squandered our last, best chance to block Kim Jong-Un’s path to nuclear breakout without the use of force or violence.

Now, every option bequeathed to Trump — the man we elected to deal with this mess, for better or for worse — carries a significant risk of catastrophe. Building on yesterday’s parade of horribles, let’s start with the easiest option: doing nothing, or whatever it is we’ve done for the last eight years. If events continue on their present course, the region’s alliances and security framework will collapse, and South Korea will either be forced into a negotiated capitulation or will refuse (perhaps after a military coup) and start a war of its own accord. South Korea’s democracy and economy will collapse under the stress of political divisions, security risks, and ideological and regional factionalism before the neighbors tear at its carcass. Japan will be finlandized by China. China, which might subdue Pyongyang in the same way it nearly subdued Seoul, will inherit control of all of Korea, the western Pacific and Indian Oceans, and with them, the windpipe of our economy. There will be a regional (and perhaps, global) refugee crisis and recession.

Negotiate a “peace” treaty with Pyongyang on its terms and rest assured that we would, at best, delay all of the same outcomes. The capitulation of South Korea would not mean the end of North Korea as a threat to the United States and the rest of the world, of course — that threat has its origins in the ideology and extreme xenophobia of the regime itself. Pyongyang would continue to build its arsenal until it presented a serious threat to the U.S. mainland. It would become eBay for every terrorist and rogue state for both profit and sheer spite. Insecurity and terror would metastasize globally, just as they did when Syria collapsed. Free trade and immigration would come under greater pressure from the security state and isolationist sentiments. Pyongyang would not be content to allow our diplomats, scholars, and authors to criticize its crimes against humanity (and consequently, attack its greatest weakness — its domestic legitimacy). It would use every instrument of its unchecked power to demand a veto on what you see and read. And if you still believe that Kim Jong-Un has reformist ambitions, that those ambitions would make him less threatening to us, or that we’d see their positive effects in the next decade, you’re living in your own reality.

I suppose there are still people who believe that we can talk Pyongyang into a freeze or some other soothing and baffling expedient in exchange for giving up whatever leverage we have left. To believe that requires you to ignore that Pyongyang has said again and again and again that its nukes aren’t up for negotiation.

I find John Delury so personally likable that I really, really want to believe this tweet was a parody.

[Come out of the jungle, Lieutenant Onoda. The war is over.]

Pyongyang wants to negotiate, all right. Just as I predicted, it wants to negotiate South Korea’s unilateral disarmament and its incremental submission to Pyongyang’s political control. Here it is, in plain and stark terms: Pyongyang’s demand for surrender, for unification on its terms. I’ve pasted the full text in, below the fold, as a public service (click “continue reading”). Read every sobering word of it. That goes double for those of you living under the stupidity of South Korea’s censorship. It is you who have the greatest need to know what the future may hold for you, and to decide accordingly.

Or, we could launch a preemptive strike and risk a war that would kill millions. This option may present a marginally lower risk of an even greater catastrophe. It does have the advantage of preventing the greater, longer-term catastrophes of a nuclear North Korea. It is also madness.

We can neither bomb nor surrender our way out of this crisis. We cannot wait or talk our way out of it. It is too late for some options, but it is never too late for the least-worst options we still have. There is no option that does not risk catastrophe. The only question is which option carries the lowest risk of a catastrophe, that makes catastrophe the most amenable to diplomatic preemption, and that gives us the most potential to mitigate the consequences. The paradox before us now is to find a policy that convinces the generals in Pyongyang that time is not on their side and is quickly running out, but that Götterdämmerung is not so imminent that they must either use their nukes or lose them.

Also, the person who must now find that delicate, nuanced policy formula is Donald J. Trump.

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We cannot live with a nuclear North Korea (or rather, it will not live with us)

Yesterday, the North Korean threat finally crossed the ocean to our shores. As it is after every fresh outrage from Pyongyang, the question many will ask is, “Now what?” Certainly, there are plenty of legal, financial, and diplomatic options on this list that President Trump’s cabinet can exercise. Congress is also ready to act, or nearly so. You should expect to see the Senate move legislation you’ve seen (or something similar to it) and legislation you have not yet seen. That is good, but is there still time? After years of indecision and neglect, it will take concerted diplomatic and law-enforcement efforts for financial pressure to show its effects on Pyongyang, and no pressure that fails to threaten the very end of Kim Jong-Un’s misrule will be sufficient.

As you read this, “experts” across Northwest D.C., including some of those who are most responsible for getting us into this mess in the first place, are proof-reading their next op-eds calling for us to beg for a deal that Pyongyang doesn’t want and wouldn’t keep. As Pyongyang has said repeatedly (though too many of us choose not to hear it) it will not negotiate away its nuclear arsenal. A freeze would only trade away valuable concessions until Pyongyang seizes on the slightest pretext to renege on it.  Those who tell us that we must talk to North Korea ignore the evidence of how often we have tried. Indeed, it is they who aren’t listening to North Korea. These people are deluding everyone — most of all themselves. Pyongyang did not starve millions of “expendable” people to build a nuclear arsenal so that it could trade that arsenal away. Kim Jong-Un does not want nuclear weapons merely to defend himself from us. He will use them to blackmail Seoul into a “peace process” that would achieve the incremental surrender of South Korea and ultimately, the legacy to which his father and grandfather devoted their lives — the reunification of Korea under his rule. I believe he now sees that goal as within his reach. He may be right.

Can we learn to live with a nuclear North Korea that sold missile technology to Iran, built a nuclear reactor in a part of Syria now controlled by ISIS, and threatened to sell nuclear weapons to terrorists? That attacked our South Korean treaty ally or U.S. forces stationed in Korea in 1968, 1969, 1970, 1976, 1983, 1987, 1998, 2002, 2010, and 2015, killing 50 South Koreans in 2010 alone? That sends assassins to murder human rights activists and dissidents in exile? That has launched cyberattacks against banks, newspapers, nuclear power plants, and the Seoul subway? That launched another cyberattack against a Hollywood movie studio, made terrorist threats against movie theaters in the United States, and chilled the freedom of expression that Americans cherish and have given their lives for? That murdered the half-brother of its tyrant with a deadly nerve agent, in a crowded airport terminal, in the capital city of a friendly nation, 5,000 miles away? That may already be able to strike the United States with a nuclear weapon? The very idea is madness. One day, Kim Jong-Un, whose tolerance for risk always exceeds the calculations of our “expert” class, will go further than we are prepared to tolerate. Down this path lies war — a war whose potential will grow more destructive with each passing year.

Any fool who can hear the rising roar and see the boiling cloud of mist ahead knows where this current is carrying us. We cannot live with a nuclear North Korea if it means — as it assuredly does — the end of nonproliferation and the beginning of an age in which nuclear, chemical, biological, and cyber-terrorism will cease to be theoretical and become imminent and frequent. Fundamentally, the question isn’t really whether we can live with a nuclear North Korea, but whether a nuclear North Korea so inculcated with hatred of America, and with contempt for our open and democratic society, would live with us.

For now, I doubt we’ll make much progress with Russia or China at the U.N., though I think we should give it a token try. One additional provision that’s now worth asking for is an air and sea blockade in which only imports of food, non-luxury consumer goods, and humanitarian supplies should go through. But China and Russia would not agree to this, and I increasingly incline toward not wasting our political capital there. Instead, we should re-focus our diplomatic energy on progressive diplomacy to build a coalition outside of the U.N. to enforce existing U.N. sanctions and deny the North Korean regime the funds that sustain it. But is there still time? And more importantly, don’t Pyongyang’s escalations call for a reassessment of what sanctions are meant to achieve, and therefore the targeting strategy?

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The Moon-Trump Summit: Catastrophe averted, for now

Korea-watchers are relieved that the uniquely volatile combination of Moon Jae-In and Donald Trump did not cause a catastrophe at last week’s summit. If avoiding catastrophe was the objective, then mission accomplished, for now. But if the objective was to build trust between the two governments or resolve the thorniest issues between them, the two governments achieved little. They tabled the issue of THAAD and already have an emerging split on free-trade renegotiations. Difficult USFK cost-sharing talks lie ahead.

On North Korea policy, they agreed on “a phased and comprehensive approach using sanctions and dialogue,” which just about every pundit calls for, with significant variations in sequencing. They only agreed on Moon’s plans to “engage” North Korea in the vaguest possible terms:

The two leaders expressed deep concern about the well-being of the DPRK’s people, particularly in light of the egregious human rights violations and abuses committed against them by the government, and noted their intention to ensure sanctions have minimal impact on the DPRK’s vulnerable populations. President Trump expressed support for President Moon’s aspiration to restart inter-Korean dialogue on issues, including humanitarian affairs. The two leaders reaffirmed the importance of cooperating with the international community to hold the DPRK accountable for substantial progress on the deplorable human rights situation in that country. [Joint Statement of the U.S. and S. Korean governments, via the White House]

Interestingly enough, Yonhap’s version of this text contained some small-but-significant variations from the White House’s version:

The two leaders expressed deep concern about the well-being of the North Korean people, including the egregious human rights violations and abuses committed by the government, and noted their intention to ensure sanctions have minimal impact on North Korea’s vulnerable populations. President Trump supported President Moon’s aspiration to restart inter-Korean dialogue on issues including humanitarian affairs. The two leaders reaffirmed the importance of cooperating with the international community to ensure accountability and achieve substantial progress in North Korea’s deplorable human right situation. [Joint Statement of the U.S. and S. Korean governments, via Yonhap]

The phrase “issues including humanitarian affairs” is so vague as to be meaningless. It could mean anything from the exchange of baton-twirling teams to donating food aid to reopening Kaesong. Did the U.S. side agree to any such project that would violate U.N. sanctions, subsidize Pyongyang, and undercut the “maximum pressure” that Trump has just begun to apply in earnest? Almost certainly not, but Seoul may not understand it the same way.

The agreement has helped ease concerns about a possible mismatch in the allies’ approach toward the nuclear-armed North. It’s apparently one of the biggest accomplishments for Moon, a liberal president who took office in early May, in his first talks with Trump.

“With regard to our government’s resolve to resume South-North talks, it’s true that there was some burden from worries that it may undermine (international) sanctions on North Korea,” a government official said on the condition of anonymity. The summit deal, however, has dispelled such a view and laid the groundwork for the Moon government to push for its North Korea policy “with more confidence,” he added. [Yonhap]

Left-of-center South Korean pundits are still speaking of negotiating concessions for a freeze agreement, which the Trump administration has never expressed support for. It’s as if these pundits remain uninformed of the overwhelmingly negative U.S. reaction to Moon Chung-In’s trial balloons. 

Nor did the visit resolve U.S. concerns over Moon’s shifting positions on security issues. One very influential person in government said to me on the last day of Moon’s visit, “I’m very worried about this South Korean president.” This letter from 18 senators of both parties, asking President Trump to push for a quick deployment of THAAD, barely masks Congress’s concerns that Moon’s delay of the deployment pending an environmental review was pretextual.  Most amusing was Ambassador Nikki Haley’s episode of a politician accidentally telling the truth:

President Moon Jae-in has made “good strides” towards the United States and away from North Korea, and the communist nation is pushing the South Korean leader further away from it with a series of missile tests, U.S. Ambassador to the U.N. Nikki Haley said.

Haley made the remark during a House Foreign Affairs Committee hearing as she talked about the deployment of the U.S. THAAD missile defense system in South Korea, which Moon has suspended pending an environmental assessment.

“He has actually made good strides towards us and away from North Korea on many levels and, you know, those missiles that continue to be tested continue to push him the other way. I do think he was trying to slow-walk THAAD to see where it was going to be,” Haley said. [Yonhap]

Unfortunately for President Moon, there is another necessary party to that dialogue, and that party isn’t pleased with the outcome of the summit at all.

North Korea on Sunday condemned the South for what it called Seoul’s “submission to the U.S.,” as leaders of the two countries joined their voices last week in urging Pyongyang to give up its nuclear ambition.

The Rodong Sinmun, the North’s main newspaper, published a commentary that assessed Seoul’s senior officials as having “revealed their miserable appearance seized with sycophancy and submission to the U.S. occasioned by the chief executive’s first junket to the U.S.,” referring to South Korean President Moon Jae-in’s recent first trip to Washington.

The newspaper argued that albeit talks of alliance between the two sides, the U.S. “regards them (South Korea) as a mere puppet and colonial servant.”

The Rodong Sinmun further lashed out at the new Seoul administration, saying that its senior leadership would end up “into the rubbish heap of history” if the South “yields to the U.S” while antagonizing the North. [Yonhap]

Even mentioning the well-being of the North Korean people and their “deplorable human rights situation” was sure to quake Pyongyang into a volcanic rage. Pyongyang also unleashed this angry screed at Moon’s Foreign Minister, Kang Kyong-Hwa, calling her a “dolt.” 

More fundamentally, there is an unbridgeable gap between the forms of engagement that Washington and Pyongyang would both accept. Washington’s consent is not only necessary because it is Seoul’s main security guarantor, but because it holds a vote in the U.N. Security Council and the U.N. committee that must agree to any “public or private support for trade” with North Korea, such as at Kaesong. And while Trump’s smart move would be to support Moon’s pursuit of forms of engagement that do not undercut sanctions — such as revenue-neutral athletic and cultural exchanges, and the donation of food and medicine in-kind to relieve the suffering of the North Korean people — Pyongyang has made it clear that it does not want those things; it wants cash and sanctions relief.

Worse, as tomorrow’s post will detail, Pyongyang has begun behaving like a nuclear hegemon with a right to make decisions about matters of governance inside South Korea itself. 

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Commence Primary Ignition: Treasury zaps the Bank of Dandong for laundering Kim Jong-Un’s money

And so, the “maximum pressure” we’ve been waiting for begins in earnest. Yesterday afternoon, the Treasury Department announced a series of legal actions against Chinese enablers of North Korea’s proliferation, smuggling, and money laundering. First, Treasury’s Office of Foreign Assets Control froze the assets of two businessmen and a shipping company. One of those businessmen, Sun Wei, was the sole shareholder of Mingzheng International Trading, the Chinese company targeted in this recent civil forfeiture action. The shipping company was sanctioned for smuggling luxury goods to North Korea, in violation of UN sanctions.

The more potentially significant action, however, was  Treasury/FINCEN’s action against a Chinese bank. The target was the Bank of Dandong, and the weapon was 31 U.S.C. 5318A(b)(5), otherwise known as the Fifth Special Measure of Section 311 of the Patriot Act — the same provision used against Banco Delta Asia in 2005. The action effectively makes the BoD a global pariah and cuts it off from the financial system.

[Alderaan shot first.]

Interestingly enough, if you had asked me to pick just one Chinese Bank to make an example of, I would have named the Bank of Dandong. Yes, the Bank of China was the most flagrant violator, but a large bank calls for a different strategy (which I’ll discuss below). Based on the open-source evidence, it was the BoD that had the most integration into Pyongyang’s palace economy. This 2013 report documented its ties to US- and UN-sanctioned Korea Kwangson Bank (KKBC). This report from early 2016 indicates that Chinese merchants trading with North Korea (temporarily) shifted away from the Bank of Dandong after the U.N. Security Council passed Resolution 2270. A few months later, the Justice Department indicted a Chinese company, Dandong Hongxiang Industrial Development, for laundering money for KKBC through 12 Chinese banks, including the BoD. Just a few days before, the Center for Advanced Defense Studies had revealed that DHID had an equity stake in the BoD.

To this body of evidence, the Treasury Department now adds a Notice of Proposed Rulemaking to support the 311 action. Treasury accuses the BoD of facilitating money laundering by trading companies that are fronts for North Korean banks and agencies designated for proliferation. Sorry for the long money quote, but it’s all worth reading:

Bank of Dandong serves as a gateway for North Korea to access the U.S. and international financial systems despite U.S. and UN sanctions….  For example, as of mid-February 2016, North Korea was using bank accounts under false names and conducting financial transactions through banks located in China, Hong Kong, and various southeast Asian countries. The primary bank in China was Bank of Dandong.

In early 2016, accounts at Bank of Dandong were used to facilitate millions of dollars of transactions on behalf of companies involved in the procurement of ballistic missile technology. Bank of Dandong also facilitates financial activity for North Korean entities designated by the United States and listed by the United Nations for WMD proliferation, as well as for front companies acting on their behalf.

In particular, Bank of Dandong has facilitated financial activity for Korea Kwangson Banking Corporation (KKBC), a North Korean bank designated by the United States and listed by the United Nations for providing financial services in support of North Korean WMD proliferators. As of May 2012, KKBC had a representative embedded at Bank of Dandong. Moreover, Bank of Dandong maintained a direct correspondent banking relationship with KKBC since approximately 2013, when another Chinese bank ended a similar correspondent relationship. As of early 2016, KKBC maintained multiple bank accounts with Bank of Dandong. 

Bank of Dandong has also facilitated financial activity for the Korea Mining Development Trading Corporation (KOMID), a U.S.- and UN-designated entity. As of early 2016, a front company for KOMID maintained multiple bank accounts with Bank of Dandong. The President subjected KOMID to an asset blocking by listing it in the Annex of Executive Order 13382 in 2005, and the United States designated KOMID pursuant to Executive Order 13687 in January 2015 for being North Korea’s primary arms dealer and its main exporter of goods and equipment related to ballistic missiles and conventional weapons.

FinCEN is concerned that Bank of Dandong uses the U.S. financial system to facilitate financial activity for KKBC and KOMID, as well as other entities connected to North Korea’s WMD and ballistic missile programs. Based on FinCEN’s analysis of financial transactional data provided to FinCEN by U.S. financial institutions pursuant to the BSA as well as other information available to the agency, FinCEN assesses that at least 17 percent of Bank of Dandong customer transactions conducted through the bank’s U.S. correspondent accounts from May 2012 to May 2015 were conducted by companies that have transacted with, or on behalf of, U.S.- and UN-sanctioned North Korean entities, including designated North Korean financial institutions and WMD proliferators.

In addition, U.S. banks have identified a substantial amount of suspicious activity processed by Bank of Dandong, including: (i) transactions that have no apparent economic, lawful, or business purpose and may be tied to sanctions evasion; (ii) transactions that have a possible North Korean nexus and include activity between unidentified companies and individuals and behavior indicative of shell company activity; and (iii) transactions that include transfers from offshore accounts with apparent shell companies that are domiciled in financial secrecy jurisdictions and banking in another country. [FINCEN NPRM]

For a brief discussion of the BoD’s rights to challenge this action before it officially becomes final in 60 days, see this post. The Bank of Dandong can’t say it wasn’t warned; in its notice, Treasury cites its November 2016 regulation at 31 C.F.R. 1010.659, calling on banks to exercise enhanced due diligence with regard to North Korean customers, and to deny North Korean banks direct or indirect access to the financial system. That regulation was promulgated to implement Treasury’s designation of North Korea as a jurisdiction of Primary Money Laundering Concern in November, which in turn was in response to section 201 of the North Korea Sanctions and Policy Enhancement Act, which effectively forced Treasury to make that designation.

Naturally, the principal congressional leaders behind passing the law that led to this result welcomed Treasury’s decision. Rep. Ed Royce (R-CA), chairman of the House Foreign Affairs Committee called the action “a big step,” adding, “The administration is right to target any around the world who act as financial lifelines to Kim Jong-un, and to give them a clear choice: You can do business with North Korea or with the U.S., but not both.” Royce also called on the Senate to pass his KIMS Act. Senator Cory Gardner (R-CO) issued a statement applauding the action and calling it long overdue.

It’s hard to believe that it was a complete coincidence that Treasury took this action while Moon Jae-In was in town. The message thus sent is that the U.S. and South Korea must be aligned on sanctions enforcement. We cannot have a repeat of 2005, when South Korea undermined the sanctions the U.S. imposed (Roh Moo-Hyun opened Kaesong, which became a $100-million-a-year subsidy for Kim Jong-Il, just as the Banco Delta Asia sanctions were achieving their effects). Someone in the White House clearly understands that we cannot make a coherent policy of sanctioning and subsidizing the same target at the same time. Treasury Secretary Steven Mnuchin emphasized that yesterday’s action was directed at North Korea, not China, and expressed the hope that China would “continue to work with us” to pressure North Korea.

So noted.

What should we watch for next? First, for North Korean money men to step up their bulk cash smuggling game, or shift to non-dollar currencies or trade-based money laundering as sanctions dodges. The excellent Noon in Korea Twitter feed, for example, points to a Korean-language report that authorities in Vladivostok have seized bulk cash from North Korean money launderers who are apparently having trouble sending wire transfers (an increasingly rare case of Russia enforcing sanctions). Interestingly, Treasury says that BoD also maintains “euro, Japanese yen, Hong Kong dollar, pound sterling, and Australian dollar correspondent accounts that would not be affected by this action.” That’s why it will be important for State and Treasury to engage in some good financial diplomacy to get those third-country regulators to blacklist the BoD under their own authorities.

Also, look for the “death spiral” — North Korean money launderers who defect because they can’t pay their kick-up quotas because of sanctions, who then provide us more intelligence, leading to yet more sanctions. Rinse and repeat. (We might as well put out the word now that they’ll get better living arrangements if they bring their ledgers and laptops.) For a fascinating interview of one of those money launderers who defected after the Jang Song-Thaek purge, read this. North Korean money launderers’ fear of coming home to Pyongyang short-handed may be one of our intelligence agencies’ best tools to be a major player in the sanctions game. For reasons I explained here, that death spiral could pose a serious threat to the survival of the regime.

We should also watch for local regulators stepping in to take over the Bank of Dandong to prevent a run and shield other local banks from secondary effects. We should look for more reports that other Chinese banks are closing North Korean accounts. We should also look for correspondent banks in the United States to raise their scrutiny of Chinese banks that try to clear dollar transactions on behalf of suspicious or poorly documented customers. If FINCEN plays its cards right, Chinese banks that don’t step up their compliance game may find it difficult to clear their transactions. For more on how EU and New York state regulators have applied similar strategies, see this post.

Finally, we should look for China to send more mysterious convoys to North Korea and engage in conspicuous sanctions violations to deter any more actions by Treasury. We must be prepared to escalate in kind. Chinese retaliation may be Trump’s excuse to do what some in his administration have wanted to do all along — hit China with, say, steel tariffs. Fortunately, Trump has backed off from a threat to withdraw from NAFTA. And needless to say, the worst possible time to drop or renegotiate the Free Trade Agreement with South Korea is when China is bullying it with unilateral trade sanctions. After all, you can’t wage a trade war with everyone at once. If you trade less with China and you aren’t willing to eat a recession, you have to trade more with someone else. Given that most of the economies that compete with China as providers of low-wage labor or high-technology manufacturing (or both) are in East Asia, Trump should consider making some face-saving changes to the Trans-Pacific Partnership and reviving it as part of a long-term plan to encourage an emigration of manufacturers from China to friendlier venues in Southeast Asia and Japan. While I’m not a fan of protectionism, Xi Jinping’s behavior in the South China Sea, North Korea, and Hong Kong has also convinced me that “peaceful rise” is a self-serving delusion, and that our economic interest in robust trade with China is outweighed by the threat that we’re selling Xi the rope to hang us with.

We also need a strategy for banks like the Bank of China that may think they’re too big to sanction. The Bank of Dandong is expendable, but the Bank of China is not. Unlike the Bank of Dandong, however, the Bank of China has deep links to the U.S. financial system, is under pressure from the Chinese Finance Ministry to improve its anti-money laundering compliance, and has a branch in New York (which regularly checks in on this humble blog for … for posts like this one, I suppose). The better approach for Treasury, then, would be to use FINCEN to treat the BoC’s North Korea ties as an anti-money laundering compliance problem and, in the event the feds smell something fishy, issue subpoenas with a mind toward doing to the BoC what it did to BNP Paribas — impose heavy fines and a deferred prosecution agreement for data stripping and flunking Know-Your-Customer obligations. That is to say, there is no such thing as “too big to sanction,” merely different strategies for different targets. Another advantage of a deferred prosecution agreement, of course, is that it can force a bank to cooperate by providing financial intelligence — intelligence the feds can use to take action against other targets.

Some of these effects should be evident within the next week or two. The effects that matter most, however, are on the stability of the North Korean system. To have any chance at all for a negotiated denuclearization of North Korea, we will have to force the regime to choose between its nukes and its survival. My guess is we’ll see effects of that kind within a year or two if — and only if — we continue to press the financial, law enforcement, and diplomatic campaign needed to starve the regime of funds.

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N. Korea just threatened to kill S. Korea’s ex-president & any of its critics anywhere

Here at OFK, we collect small bits of North Korea trivia, such as the fact that President Bush removed North Korea from the list of state sponsors of terrorism on October 11, 2008, and the related fact that the State Department’s official position is that North Korea has not sponsored acts of terrorism since 1987.

Discuss among yourselves.

In other news, the official North Korean “news ” agency, KCNA, has just published a call by the North Korean government for the extradition of former South Korean President Park Geun-Hye and the former head of South Korea’s National Intelligence Service to Pyongyang, where it has been decided, in absentia, that they are to receive “capital punishment” over an alleged plot to assassinate Kim Jong-Un.

1. We declare at home and abroad that we will impose death penalty on traitor Park Geun Hye and ex-Director of the puppet Intelligence Service Ri Pyong Ho and their groups, criminals of hideous state-sponsored terrorism who hatched and pressed for the heinous plot to hurt the supreme leadership of the DPRK.

Further on, I’ll examine how North Korea defines terrorism, but it may be helpful to begin with a more rigorous and predictable definition. For an act to be terrorism under U.S. law, it must —

  1. be unlawful under the laws of the place where it is committed;
  2. involve a violent act; an act dangerous to human life, property, or infrastructure; or a threat of such an act;
  3. be perpetrated by a subnational group or clandestine agent;
  4. be directed against a noncombatant target; and
  5. appear to be intended to intimidate or coerce a civilian population, to influence the policy of a government by intimidation or coercion, or to affect the conduct of a government.

Although this definition is based on American law and precedent, most civilized nations define the term in similar ways. (Good luck finding an internationally agreed definition of terrorism, for reasons that should be obvious.) Also, that Ms. Park has been found guilty and sentenced to death in absentia without so much as prior notice of a trial might raise a procedural concern or two for the extradition hearing.

Just as I predicted, as Pyongyang perfects its nuclear capability, it is growing more aggressive and more extraterritorial with its threats (in this case, through the use of journo-terrorism).

IS men, to say nothing of Park Geun Hye and Ri Pyong Ho group, can never make any appeal even though they meet miserable dog’s death any time, at any place and by whatever methods from this moment.

The south Korean authorities should hand Park Geun Hye and Ri Pyong Ho group, organizers of the hideous international terrorist crimes, over to the DPRK without delay under international convention and laws and regulations.

The south Korean authorities have to judge themselves what adverse effect their act of shunning this crucial demand related to the dignity of the supreme leadership of the DPRK will have on the future north-south relations.

But KCNA does not stop here. It also threatens to “ferret out” Park and Ri “wherever they might be on the earth” and “mercillessly cut their dirty bodies to pieces.” 

The supreme leadership of the DPRK is a symbol of the dignity and might of the DPRK and it represents the life and destiny of the army and people of the DPRK.

It is the resolute will of our army and people regarding it as their life to safeguard the headquarters of the revolution to ferret out those keen on hurting the security of the DPRK supreme leadership wherever they might be on the earth and mercilessly cut their dirty bodies to pieces.

Clearly stipulated in the DPRK Criminal Code is that all those who organized, took part or pursued state-sponsored terrorism targeting the supreme leadership of the DPRK are subject to criminal prosecution irrespective of nationality and that no statute of limitations is applicable to such crime.

Just to be clear, then, Pyongyang is threatening to send its agents to South Korea to murder and dismember the former president of the Republic of Korea. And as you know by now, because you’ve stopped to read the links with which I’ve laboriously braced this argument, North Korea has sent assassins to commit murders in the South before. They’ve been caught and pled guilty in South Korean courts.

We officially declare that if the U.S. and the south Korean puppet forces again attempt at state-sponsored terrorism against the supreme leadership of the DPRK, we will track down those who organized, took part in and pursued the plot and carry out the summary execution of them without advance notice under wartime law.

But at least Pyongyang is only threatening those who take part in or plot “attempt[s] at hideous state-sponsored terrorism targeting the supreme leadership of the DPRK.” Except that on further research, we soon learn that North Korea has defined “terrorism” and “state-sponsored terrorism” to include everything from parody to criticism to legislation to the enforcement of UN sanctions. My  search of news reports, the S.T.A.L.I.N. archive, and the excellent KCNA Watch Twitter feed yielded the following examples:

  • In 2014, Pyongyang accused the United States of “agitating terrorism” for allowing Seth Rogen to make “The Interview,” a stupid movie parodying His Porcine Majesty.
  • In July 2016, it accused South Korea of terrorism for granting asylum to the Ningpo 12, as it was obligated to do under the Refugee Convention.
  • In March of this year, it accused Seoul of terrorism for alleged surveillance and blacklisting of its domestic political opponents — something that would be authoritarian and worthy of condemnation by someone with more stature that the government of North Korea on such topics, but would not qualify as terrorism (the acts are not violent, and to not appear to be intended to influence the conduct of civilians through intimidation).
  • In May, it called defensive military exercises and sanctions (presumably including those approved by the U.N. Security Council) terrorism.
  • In June, it accused the CIA and the South Korean National Intelligence Service of “state-sponsored terrorism” for allegedly planning preemptive strikes against North Korea (which would be an act of war by uniformed, conventional forces and a catastrophically terrible idea, but not terrorism).
  • At other times, it’s hard to tell what Pyongyang is even calling terrorism.

My guess, however, is that the specific pretext for Pyongyang’s latest threat is its claim from May 13th, that the CIA and the NIS “hatched a plot to commit a state-sponsored terrorism targeting the supreme leadership of the DPRK by use of bio-chemical substance.” Now, to state the obvious, I am … skeptical of this claim. I could cite many examples of Pyongyang lying flagrantly, but the most obvious one is its claim that the NIS kidnapped the Ningpo 13 (because that claim was tested in court and rejected, or so we can safely assume despite the confidentiality of the proceedings, because the women were granted asylum). The alleged modus operandi also sounds suspiciously like Pyongyang’s own assassination of Kim Jong-Nam, news of which spread rapidly inside North Korea and shocked even North Koreans. Now, with the rising reaction to the death of Otto Warmbier, Pyongyang might be projecting to change the subject.

For the sake of argument, however, let’s assume that Pyongyang’s allegation is true. If so, a plot to slime His Porcine Majesty with some toxin might qualify as terrorism under certain circumstances. The North Korean allegation suggests a violent act that could only be perpetrated by clandestine agents, so assume we meet those elements. If the alleged attack was meant to disrupt a military command structure during hostilities it would not meet the intent element, but let’s assume that this was to be a political murder by stealth. This might qualify, except that Kim Jong-Un isn’t a noncombatant; he’s the commander of North Korea’s military junta. So the merits of the “terrorism” claim would depend on whether this alleged plot was to be carried out for strictly political purposes or to disrupt military command and control as part of an armed conflict. (Suspend your disbelief that North Koreans would be terrorized, as opposed to ebullient, as the demise of His Porcine Majesty.) Of course, as peace treaty advocates point out unceasingly, North Korea is technically still at war with both the United States and South Korea. As they tend not to point out so unceasingly, Pyongyang itself as repeatedly repudiated the 1953 Armistice.

For the same reason, it wouldn’t be terrorism (but would be an act of war) if Pyongyang assassinated Moon Jae-In for the purpose of disrupting South Korea’s military command structure in the course of armed hostilities. It would certainly be terrorism if Pyongyang made good on its threat to assassinate Park Geun-Hye, who is now a private citizen, in her own home. Furthermore, it is also terrorism to threaten to assassinate Ms. Park, and it’s most likely terrorism when Pyongyang says this:

Whether such crime is committed within the territory of the DPRK or outside it, we will mercilessly carry out the punishment in the name of our people in field by our style merciless punishment measure.

We make it clear once again that those who dare challenge the dignity of the supreme leadership of the DPRK should never hope of staying alive under the sky.

We do not hide that should the U.S. and the south Korean authorities defy this warning and challenge our resolute measure, they will be made to pay a dear price in an irresistible physical way.

Those dare challenging the sun of the sky can never evade divine punishment.

Pyongyang appears to be claiming the right to kill any person in any place of its choosing, for conduct that it defines broadly enough to cover anyone from a stoner filmmaker to the Secretary of Defense to a human rights activist to the Chairman of a Committee of Congress. What it all sounds like more than anything else is a pretext for the next unconscionable, murderous outrage Pyongyang is already premeditating, and that it will subsequently get away because it always gets away with everything. As Professor Lee and I predicted before and after the Sony cyberterrorist threat, our failure to respond to North Korea’s attacks on our freedom of speech would draw more and bolder attacks on our freedom of speech. That prediction is coming true. To a small but growing degree, we are all living under the shadow of Kim Jong-Un’s censorship. In that small, yet profoundly disturbing way, we are all North Koreans now.

And so, I am left to ask this: if North Korea holds our political system in contempt and means to disrupt it, why don’t we show more determination and creativity in disrupting North Korea’s own political system? With North Korea’s refusal to negotiate or coexist peacefully, and the madness of war, our options for averting nuclear war in Korea increasingly narrow down to empowering the North Korean people to end Kim Jong-Un’s misrule. What else is even remotely plausible now? And whatever the cost, if Kim Jong-Un must die so that freedom of speech can live, I know what choice I’d make.

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China finally pays a (symbolic) price for its North Korean slave trade

This blog has long posited that a nuclear North Korea will not coexist with us and that war with it would be inevitable; that preventing another Korean War will require a focusing an assortment of financial, diplomatic, and political pressures on Pyongyang; and that to deter China’s government and industry from undermining that pressure will require us to pressure China itself. This will carry costs for both economies, and to the relationship between the two governments. Relations with China will have to get worse before they can get better. That is unfortunate, but it is a far better outcome than nuclear war, the collapse of global nonproliferation, or effective North Korean hegemony over South Korea.

Since the Mar-a-Lago summit in April, I’ve worried that President Trump’s tough talk about secondary sanctions against Kim Jong-Un’s Chinese enablers was a bluff. It’s still too early to say that it wasn’t, but the news that Secretary of State Rex Tillerson has dropped China from Tier 2 to Tier 3 under the Trafficking Victims Protection Act — specifically for its use of North Korean slave labor — is a welcome sign that the administration has begun (and hopefully, just begun) to escalate its pressure on Beijing.

“China was downgraded to the Tier 3 status in this year’s report in part because it has not taken serious steps to end its own complicity in trafficking, including forced laborers from North Korea that are located in China,” Tillerson said during a ceremony to release the report.

Tillerson said that forced labor is a key source of illicit revenues for the North.

“An estimated 52,000-80,000 North Korean citizens are working overseas as forced laborers primarily in Russia and China, many of them working 20 hours a day. Their pay does not come to them directly. It goes to the government of Korea, which confiscates most of that, obviously,” Tillerson said.

The North regime receives hundreds of millions of dollars per year from forced labor, he said.

“Responsible nations simply cannot allow this to go on and we continue to call on any nation that is hosting workers from North Korea in a forced-labor arrangement to send those people home. Responsible nations also must take further action,” he said. [Yonhap]

Tillerson’s decision reflects rising anger within the administration that Beijing is (sit down for this) still not fully implementing U.N. sanctions against North Korea.

So what does this action mean for China’s economy and trade, in practical terms? For now, not much. Beijing probably doesn’t care if the U.S. denies it foreign assistance or votes against World Bank loans for it. Any of the TVPA’s sanctions can be waived, and often are. But as Erik Voeten writes in the Washington Post, governments really do care about their tier rankings for reasons of national honor and reputation. I don’t think I’m speaking out of school by saying that during my time at the Foreign Affairs Committee, the competing appeals of diplomats and NGOs to raise or lower a government’s tier status in the next TVPA report consumed an inordinate amount of staff time. The Chinese government, being hypersensitive about its own reputation, will care very much about this.

In Beijing, foreign ministry spokesman Lu Kang said the government was resolute in its resolve to fight human trafficking and the results were plain to see. “China resolutely opposes the U.S. side making thoughtless remarks in accordance with its own domestic law about other countries’ work in fighting human trafficking,” he told a daily news briefing. [Reuters]

Beijing is furious, naturally. I expect it to make some ostentatious displays of non-cooperation to punish Washington. It would be especially tragic if China decides to take its anger out on North Korean refugees. Hopefully, the State Department has already gamed out its responses to potential Chinese escalations. Our message to Beijing must be that we’re also prepared to escalate. China, which needs another decade of high growth rates to pay its coming crop of pensions, cannot afford this. Both sides would suffer in an economic war between the U.S. and China, but China’s export-dependent, labor-intensive economy and fragile banking sector would suffer more. That may give us more leverage to press China to expel its North Korean laborers or the U.N.-designated North Korean proliferation and money laundering networks that have operated openly on its soil for years.

The Chinese companies using the North Korean labor will care much less — at first — but they are facing far greater financial consequences, especially if the KIMS Act passes the Senate. (I sense a particularly strong appetite in both chambers of Congress and both parties for secondary sanctions against North Korean forced labor.) Under section 201 of that legislation, the products of those companies may face exclusion from U.S. markets, and their dollar assets may be frozen. (Needless to say, prospective Kaesong recidivists will not find this news reassuring.)

Dropping China to Tier III will have little immediate legal or economic effect. It still isn’t the “maximum pressure” President Trump promised us. It is an escalation and a warning. It is symbolic, but powerfully so. Ultimately, Beijing may care about being listed as Tier III for human trafficking for the same reason that Pyongyang cares about being listed as a state sponsor of terrorism — because to governments obsessed with their images, symbols can be powerful things. One hopes that this will cause more Chinese citizens to see that North Korea is a ball-and-chain on their country’s acceptance into the family of civilized nations and continued economic growth. One hopes that more of them will say that it’s time to take a hacksaw to the chain.

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Five North Koreans, including two soldiers, have defected in June 2017 (so far)

Nat Kretchun’s latest report on Pyongyang’s efforts to control the spread of outside and subversive information suggests that the state has mostly written off its thirty- and forty-somethings as a lost generation, irrecoverably disillusioned by the collapse of the state’s rationing system, corruption, and the influx of South Korean DVDs. Instead, Kim Jong-Un is focusing his War on Glasnost on the detection of cellular signals and the watermarking of digital files to control the spread of dissent. Demographically, he is concentrating his indoctrination efforts on the younger generations. But judging by a small surge of north-to-south defections this month, the Propaganda and Agitation Department has some work to do.

  • On June 8th, a fishing boat drifted across the maritime boundary with four men aboard. As noted in this post, two opted to defect to the South.
  • On June 14th, less than a week later, a soldier walked through the mine fields of the DMZ in Gyeonggi-do, not far Kaesong, generally thought to be the place where Pyongyang puts its most disciplined forces. According to this Korean-language report, South Korean loudspeaker propaganda was a factor motivating his defection. South Korea expanded the use of the loudspeakers in February, to inform the North Korean soldiers of the assassination of Kim Jong-Nam.
  • On June 18th, a man in his 20s swam across the Han River estuary using styrofoam floats. Contra UPI, which reported that the man was a soldier, NK News’s Hamish Macdonald thinks the man was a civilian (though he does not specify in his report).
  • On June 23rd, another soldier walked through the minefields of the DMZ to defect, this time in the central sector (so presumably somewhere in the vicinity of Cheorwon).

Thanks to Hamish Macdonald for pointing out that, contra this tweet, the number of defections this month is five, not six (one of the incidents I linked here turns out to have been from 2015 — duh).

For an aggregation of other reports of North Korean military defections or disciplinary problems, click here. Collectively, the reports suggest that Pyongyang is having difficulty maintaining the discipline and cohesion of its forces along both borders, and across the whole length of the DMZ. When discipline erodes sufficiently in an area, there are small surges of defections there (admittedly, two defections may not qualify as a surge). The regime then sends inspection teams in to crack down and rotates new units in to reverse the decay. It usually works … for a year or two. Then, corruption starts to take its toll and the cycle repeats.

Any defection from a front-line until along the DMZ is telling. For at least two to occur in the space of nine days says that even in the North Korean army’s best regular units, discipline is uneven. (The qualifier “regular” distinguishes them from the North Korean Special Forces, who are the most cohesive.)

The June 14th incident suggests that information operations have the potential to catalyze more dissent. So does the fact that Pyongyang made the termination of the loudspeaker propaganda broadcasts a top demand for “resolving” that incident suggests. Pyongyang is deathly afraid of subversive broadcasts. All of which suggests that they may be one of the South’s most effective deterrents. I’ve previously taken a skeptical view of the loudspeaker broadcasts. I may have to reevaluate that skepticism.

Unfortunately, these factors almost guarantee that Moon Jae-In won’t use the information weapon, at least until Pyongyang commits some egregious provocation. Too bad. The message Seoul should deliver to the soldiers is a message of peace. That message would offend Pyongyang, but it would also help to protect the lives of Koreans on both sides of the DMZ by mitigating the threat of war.

First, the broadcasts should urge the soldiers to refuse orders to kill their brothers and sisters in the South. Naturally, their officers will tell them that they’re firing on Yankee Bastards. The soldiers should know that their targets are more likely to be South Korean cities — and the men, women, and children who live in them. Targeting them is a crime against both the law and the nation itself. And by firing on targets in the South, they will also draw counter-battery fire. The best way to prevent both consequences is to quietly disable their weapons or intentionally miss their targets (they can be provided the coordinates of unpopulated areas to target instead).

Or, we can tell them how to cross the minefields to the South, where rice, peace, and freedom await.

~   ~   ~

Update: See Hamish Macdonald’s updated post for a statement by the ROK government confirming that the June 18th defector/refugee was a civilian.

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Pyongyang’s freeze gambit is a transparent pre-summit ploy.

I’m going to give the reports that North Korea’s Ambassador to India floated the idea of negotiations for a freeze deal all they attention they deserve. The proposal, such as it is, came during an English-language interview with a local journalist.

First, the proposal is an obvious ploy to divide the U.S. and South Korean governments just before Moon Jae-In’s visit to Washington. (As I noted yesterday, that visit already looks to be a difficult one.) Even Moon Jae-In appears to see through this ploy, urging his people not to read too much into it. A secondary purpose is to manipulate the usual suspects in the left-of-center, Libertarian, and far-right commentariat* into writing a flurry of pro-appeasement op-eds.

Second, several of the phrases conveyed with the proposal have the potential to make it illusory, including, “we can negotiate in terms of,” “under the right circumstances,” and especially, “if our demands is [sic] met.”

[Such as?]

Third, if Pyongyang is willing to freeze or dismantle its nuclear or missile programs, why did its Foreign Ministry representatives so recently tell Bruce Klingner and Sue Terry (among others) that it isn’t? That Pyongyang did not convey its proposal directly to the Americans during recent Track 2 talks suggests that it didn’t want to answer obvious questions about “circumstances” and “demands,” and that the proposal is spurious.

Fourth, even if a freeze agreement can be reached before the U.S. gains a persistent source of leverage over Pyongyang, how long would it be before the North Koreans renege again? The sine qua non of successful diplomacy with Pyongyang (if that’s still possible at all) is leverage.

If nothing else, a ploy this transparent should advance our recognition of how Pyongyang sees diplomacy, and what it really thinks diplomacy is for. The U.S. and South Korean position should be that if Pyongyang is serious about meeting the obligations it has undertaken — and broken — again, and again, and again, it knows how to contact the U.S. and South Korean missions at the U.N. After all, it knew how to contact Nikki Haley when it decided to dump the soon-to-be-lifeless body of Otto Warmbier.

~   ~   ~

* Update: To give you an idea of what strange bedfellows North Korea makes, see this blog post at David Duke’s website, approvingly reprinting a Bruce Cumings op-ed in full. Yes, Professor Cumings knows. I emailed him to confirm it.

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Moon Chung-In’s visit was a fiasco. Moon Jae-In’s summit with Trump might be the next one.

Next week, South Korean President Moon Jae-In will arrive in Washington for his first meeting with President Trump. North Korea policy is certain to be at the top of their agenda. Months ago, I predicted that the combination of Moon Jae-In and Donald Trump would be a uniquely volatile one, and all the indications so far are bearing this prediction out. Volumes of august and cerebral analysis may soon be nullified by 140 characters.

This is partially (but only partially) due to differences of policy and ideology. As I’ve noted more than once, Moon has spent his entire political career in the brain trust of South Korea’s hard left, among those who’ve shown more solidarity with North Korea than with America. Moon started with the left-wing lawyers’ guild Minbyun (which once resisted right-wing dictators in the courts, and which has since become Pyongyang’s instrument for waging lawfare against North Korean refugees). He was legal advisor to the Korea Teachers’ and Educational Workers’ Union, whose members were often exposed for propagating pro-North Korean views to their pupils. He managed Roh Moon-Hyun’s presidential campaign, which rode to power on a wave of sometimes-violent anti-Americanism, and served at the highest levels in the Roh administration, where Moon made the decision to solicit Pyongyang’s views before Seoul abstained from a U.N. vote to condemn the North’s crimes against humanity (and later lied about it).

Thus, President Moon entered office with a collection of ideas and advisors whose moment came in 2002 and went in 2008, when South Korea’s electorate regressed back to the mean. As Moon entered office, he knew very well that he had no mandate for a return to a policy of appeasing North Korea called Sunshine, a policy that was a demonstrable failure, that had undermined international sanctions, and that probably helped Pyongyang pay for its nuclear arsenal

That Trump and Moon are also temperamental opposites may be just as great a problem. Whatever one thinks of Moon Jae-In’s ideology, he is an extraordinarily smooth, personally likeable politician. Throughout his career, Moon had climbed the shoulders of men who expressed extreme views that he was careful not to express himself. Trump, by contrast, is an impulsive man without ideological convictions or caution, who expresses every extreme idea that enters his head, whether it be direct talks with Kim Jong-Un or urging China to assassinate him. 

Since I was a soldier in Korea years ago, I’ve felt that the interests of the allies were diverging. For years, rather than confront and try to check this divergence, the leaders of both countries concealed it with quiet diplomacy that left South Korean politicians free to engage in nationalist demagoguery, even at the sacrifice of the alliance’s popular support. But in this regard, the United States has just unexpectedly overmatched South Korea. That is why, unlike most Korea-watchers, I suspect that the U.S.-Korea alliance is one tweet away from a crisis that will harm the interests of both countries. Recent events bear out my pessimism:

U.S. President Donald Trump expressed fury over South Korea’s decision to delay the full deployment of the U.S. THAAD missile defense system pending an environmental assessment, a senior official said Sunday. Trump showed the reaction when he discussed the matter with Secretary of State Rex Tillerson and Defense Secretary Jim Mattis at the White House on June 8, the official told Yonhap News Agency on condition of anonymity.

The revelations, if true, raise concern that the issue could affect the first summit meetings between President Moon Jae-in and Trump set for June 29-30 at the White House, though it is not clear if it would be on the agenda.

Earlier this month, South Korea suspended the deployment of an additional four THAAD launchers pending an environmental assessment, spurring doubts in the U.S. that the halt might be a precursor to the South ultimately rejecting the THAAD deployment altogether. But Seoul has promised the environmental study won’t lead to a reversal on the deployment itself. [Yonhap]

Moon’s position on THAAD shifted so much during his presidential campaign that it became all but impossible to pin it down in a debate. That’s certainly a function of public sentiment that still favors the deployment of THAAD, even (incredibly enough) after Trump’s ill-advised, pre-election demand that Seoul pay for it. And while I have little sympathy for Moon’s ideology, I have plenty of sympathy for his position. He now finds himself bullied by both China’s unilateral sanctions and Donald Trump’s extortionate demands that Seoul pay for THAAD, notwithstanding a prior agreement that the U.S. would pay, at least up front. That Moon finds himself in that position, however, owes much to his flawed reflex for trying to please everyone (which seldom pleases anyone). In doing so, Moon has created the perception in Beijing that he’s weak, soft, and an easy mark, and the perception in Washington that he’s a faithless ally. I can see the reason for both perceptions. (To make matters worse for Moon, even the North Koreans are unhappy with him, have refused Seoul’s offers of humanitarian aid, and want to sideline him in any talks with the U.S.)

By the time Moon took office, two THAAD launchers were in place and four others were set to be deployed. All of this had been agreed between the Pentagon and the Ministry of Defense, yet in what looked like an effort to manufacture a controversy to manipulate public opinion — a preparation for a capitulation to Beijing — Moon denied knowing this. Any such miscommunication looks to have been wholly intra-Korean, between the Blue House and the Defense Ministry. This gambit having backfired, the Moon administration began an “environmental review” of the deployment that looked suspiciously pretextual. His administration later added that the review might take as long as a year. All of these missteps cost Moon friends in the White House.

“One official at the National Security Council told me that there is a general distrust toward the Korean government in the United States, that the new administration may be lying,” said a diplomatic insider in Washington D.C. under condition of anonymity, especially after Moon complained that Washington had deployed four missile launchers for the Thaad battery without informing his government. “The U.S. government has confirmed that the South Korean government was aware of the arrival of the four additional Thaad launchers all this time.”

Moon had ordered last month an investigation into how four extra Thaad launchers had been brought into the country without his knowledge. The Blue House said earlier this month that the Ministry of National Defense intentionally omitted the delivery of the launchers in its report to the National Security Office. [Joongang Ilbo]

Now, instead of being able to blame any fissures in the alliance on a mercurial American president, Moon has irritated Ed Royce (possibly the best friend South Korea ever had in Congress), provoked a public spat with Democratic Senator Dick Durbin, and alienated key senators and representatives from both parties:

Meetings between President Moon and members of the U.S. Congress also fell through recently. Senator John McCain, chairman of the Senate Committee on Armed Services, had requested a meeting with Moon sometime between May 27 and 28, but the meeting was not scheduled after days of attempts.

“The date that McCain asked for did not work with Moon’s schedule initially, so we got back to him in a few days about holding a meeting on May 28, as he requested, but McCain in the end decided not to stop by Korea in his trip to Asia for the IISS Shangri-La Dialogue.” “The correct protocol would have been confirming first that Moon will meet with McCain before scheduling a date,” said a Foreign Ministry insider.

Rep. Mac Thornberry from Texas, chairman of the House Armed Services Committee, and Rep. Cory Gardner from Colorado, chairman of the Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy, also requested meetings with Moon in late May but they did not take place. [Joongang Ilbo]

“But don’t worry,” President Moon must have said to his cabinet at one point. “Moon Chung-In can explain everything.” It’s too bad we don’t have surveillance video of the cabinet meetings that must have followed in Seoul since then. It would make for an epic “Downfall” parody.

~   ~   ~

I can’t say who picked Moon Chung-In, a left-wing South Korean academic and President Moon’s Special Advisor for Diplomacy and Security Affairs, to be the one to explain President Moon’s putative North Korea policy to American audiences at such a determinative moment. If President Moon’s objective for Professor Moon’s visit was to gain some room to maneuver by reassuring Washington that he is not as extreme as some of us think he is, that he will be a reliable ally, and that he won’t act like a spoiler of “maximum pressure,” then his badly received speech at the Wilson Center in Washington last week was an unmitigated fiasco. The sample of opinions that follows will give you a sense of just how universally Professor Moon’s visit has been panned from left, right, and center. Let’s start with the center-left Korea Herald:

Such worries intensified after Moon’s special adviser Moon Chung-in said on his trip to Washington on Saturday that South Korea would consult with the US on whether to scale back the scope of annual joint military drills and US deployment of strategic assets in exchange for “suspension” of the North’s nuclear and missile activities. The Trump administration has maintained that the North’s “complete removal” of its nuclear arsenal is a prerequisite to any dialogue.

The envoy’s remarks sparked criticism that it would undermine the allies’ efforts to present a united front against the North, which has been facing international condemnation over its relentless ballistic missile tests and brutal treatment of a US prisoner.

“With the summit around the corner, the Moon Jae-in administration is pouring out a series of diplomatic remarks that could endanger the Korea-US alliance. If we begin talks unilaterally, what would happen to the international coalition (against the North?),” said Rep. Kim Young-woo of the opposition Bareun Party, who serves as chairman of the parliamentary defense committee.

“Talking about reduced combined exercise and the US deployment of strategic assets is nothing but succumbing to the North Korean pressure when the North has continued its provocations with nuclear and missile development.”

Washington also expressed skepticism about the envoy’s proposal. US State Department spokeswoman Alicia Edwards said that they view Moon Chung-in’s proposal as a personal view, not the official stance of the South Korean government, according to a report from VOA on Saturday. [Korea Herald]

The subhed to the center-right Joongang Ilbo’s coverage conceded that Professor Moon’s proposal went down “badly” in Washington. Even the far-left Hankroyeh, which frequently publishes Professor Moon’s views and expressed support for Professor Moon’s proposals, allowed that his speech “does not seem very cautious for such sensitive information to be coming from a special advisor just ten days before a South Korea-US summit.” There are already calls from the opposition for Professor Moon to resign. The speech was also widely panned by Americans, starting with the centrist Korea-watcher Gordon Flake:

 

On the right, where sentiment matters most right now in the U.S., Bruce Klingner told Yonhap that Moon’s comments would “exacerbate U.S. concerns about President Moon Jae-in’s potential policies on North Korea and the U.S. alliance,” and about a return to Roh Moo-Hyun-era appeasement policies. Klingner, one of the few academics the Trump administration listens to, called the speech “counterproductive” to President Moon’s objective of reassuring Washington on the eve of his summit with President Trump. Robert Manning of the Atlantic Council observed, “Some of the ideas floated by President Moon and his top advisers seem to be dusting off old ‘sunshine’ ideas that failed.”

The Blue House itself backpedaled furiously, distanced itself from Professor Moon, and seemed to fling him under every passing bus on the Jongro:

An official from South Korea’s presidential office Cheong Wa Dae in Seoul insisted the professor was voicing his own personal views, saying they had not been coordinated with the presidential office, let alone the president. The Cheong Wa Dae official, speaking to reporters on the condition of anonymity, noted the special adviser had met with a ranking official from the presidential National Security Office prior to his U.S. trip, but said the two had merely exchanged greetings.

Another Cheong Wa Dae official said the presidential office has since contacted the special adviser and sternly warned him of the danger of making such comments even if they were his personal views. “We sternly spoke of the fact that this may not be helpful to Korea-U.S. relations in the future,” the official said, also speaking on condition of anonymity. [Yonhap]

Moon Chung-In now finds himself blamed for the disastrous visit by his friends and foes alike, but that isn’t quite fair. The idea that Professor Moon was speaking only for himself strains credibility. Are we to believe that the Blue House did not vet his remarks? Or that it failed to consult the South Korean Embassy in Washington to solicit its views on how badly this proposal would go down here? Or that it had no role at all in selecting Professor Moon as spokesman for the views of his president at such a critical moment? If any of these things is true, this was extraordinarily incompetent.

Perhaps as an academic, Professor Moon is miscast as a diplomat. But who would have been a better choice? President Moon’s Chief of Staff, who served three years in prison for organizing Lim Soo-Kyung’s propaganda tour of Pyongyang, and who formerly led a radical, pro-North Korean student group that (shortly after his departure) tried to firebomb the U.S. Embassy in Seoul? Or his just-confirmed Foreign Minister, a self-professed human rights specialist who served in South Korea’s U.N. Mission and at the U.N. as Seoul abstained, year after year, on resolutions condemning North Korea’s crimes against humanity? What about the man who recently withdrew as nominee to be Justice Minister under an ethical cloud, and who led the National Human Rights Commission during the Roh Moo-Hyun era as it resisted (with only partial success) withering criticism for its refusal to criticize Pyongyang’s crimes against its own people? Or President Moon’s new Unification Minister, who was indicted for destroying a transcript of a meeting in which Roh allegedly promised to cede South Korea’s maritime border with the North? It’s not apparent who could have represented the new president’s views better without becoming a lightning rod.

And of course, both the Blue House and American Korea-watchers were certainly aware of Professor Moon’s long history of anti-anti-North Korean sentiment and thinly veiled anti-American nationalism. See, for example, this recent op-ed Professor Moon recently published in the Joongang Ilbo, in which he called for immediate and unconditional negotiations with Pyongyang and hinted at reopening Kaesong. The op-ed proposed “the adjustment or temporary halt of the Korea-U.S. joint military exercises” as a precondition to a nuclear and missile test freeze, and “[p]arallel pursuit of denuclearization and establishment of a peace system … because again, it is important to show a flexible attitude.” Endlessly flexible. These, of course, are the same views that went over so badly in Washington last week. Let no one say that Professor Moon’s views were spontaneous or thoughtless utterances. This was the trial balloon for the trial balloon.

Maybe the Blue House should have toned Professor Moon’s remarks, except that my guess is that these were the toned-down remarks. Keep reading Professor Moon’s Joongang Ilbo op-ed and decide for yourself whether he was at least arguably calling the alliance with the U.S. a “colonial occupation,” making a thinly veiled appeal to nationalism, and threatening to call for anti-American protests (which have historically turned violent).

The 25 years of the North Korean nuclear threat has taught us the painful lesson of how important imagination and determination are. Until now, Korea has been easily decided by foreign powers. Last century’s colonial occupation, war and division were tragic products of foreign powers’ political contests. Considering the weight of the Korea-U.S. alliance and the geopolitical structure of Northeast Asia, it may be reckless to block the influence of our neighbors. However, it won’t be easy to give priority to inter-Korean relations over Korea-U.S. or Korea-China relations, either.

The time has come for us to turn the power of the people and the miracle of the candlelight demonstrations into a driving force for peace on the Korean Peninsula. The nuclear issue is a complicated challenge, but we can overcome it when we become one. Korea needs to stand at the center of the Korean Peninsula and East Asian diplomacy. In order not to be limited as a dependent variable of foreign powers, and to not repeat the fate of the Balkans, Korea needs to take initiative in resolving the North Korean nuclear crisis. This is how Moon will succeed — or fail. [Joongang Ilbo]

As an American and a former USFK soldier myself, whenever I hear my country called a colonial occupier, my first reaction is to test that assertion by offering to withdraw our forces. Indeed, if South Koreans want us to leave, it would be our obligation to respect their will. For now, that isn’t the will of South Koreans, even if they see U.S. forces as a necessary evil. Yet Moon Chung-In carried this offensive and extreme viewpoint to Washington just as the mood toward North Korea was as furious as it has been at any time since North Korea’s last nuclear test, as Otto Warmbier returned from Pyongyang in a coma (and subsequently passed away). How much of this is really Moon Chung-In’s fault? The real blame for the catastrophe that followed lies with Moon Jae-In’s own failure to perceive that Moon Chung-In’s tone, and the substance of his proposals, were sure to alarm most members of Congress, the administration, and academia.

Of course, not all Americans were alarmed. There is a fringe of left-of-center American opinion that Moon Chung-In is close to, and it’s more than a fringe in academic circles. What Moon said in his Wilson Center speech isn’t far removed from what you can read in an unceasing stream of op-eds by American academics calling for freeze deals that neither the U.S. Congress nor North Korea seems particularly interested in. I don’t know how much exposure Professor Moon has to centrist or right-of-center views in America, but if he believed that his proposals were within our mainstream, it may be because he cocooned himself with too many simpaticos. Perhaps the approval of this group gave Professor Moon a false sense of affirmation. Either way, Moon Jae-In can’t blame anyone but himself for this disastrous tone-deafness.

Maybe next week, the two presidents will cobble together a show of unity, like two divorcing parents at their daughter’s wedding. Maybe Trump will end the summit by tweeting that Manchuria was historically part of Korea. Maybe Trump will behave so boorishly that Moon will be able to pin the consequences of his own extreme world view and ineptitude on Trump, and play the nationalist card that the deck hasn’t dealt him yet. Or, maybe both leaders will conclude the summit with a spat that will harm both of their own political reputations, and the long-term interests of both nations.

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