Just this morning, I was writing about reports that President Obama would sign a new North Korea sanctions executive order. The Executive Order the President signed this afternoon takes several important steps toward implementing the North Korea Sanctions and Policy Enhancement Act, and to a lesser extent, U.N. Security Council Resolution 2270. Full implementation will require years of aggressive investigation and designation of targets, but this is a good start.
The text of the E.O. itself is strong, exceeding in several regards what both Congress and the U.N. require. It’s encouraging that Treasury was willing to go beyond the minimum requirements of the law and U.N. consensus. Aid groups will be relieved that Treasury has issued the implementing guidance and general licenses I’d been hoping it would get done quickly.
As mandated by NKSPEA 104(c), the E.O. freezes all North Korean government and ruling party assets in the dollar system. It also goes beyond the NKSPEA in banning U.S. persons from exporting any goods, services, or technology to North Korea; from making any new investments in North Korea; and from facilitating transactions banned under the E.O.
So in retrospect, maybe it wasn’t such a great idea for James Passin to talk to the New York Times about his big North Korean oil bonanza.
I can no longer make the claim that our North Korea sanctions aren’t comprehensive. This is comprehensive, although I’ll want to see what the new regulations say. In one important regard, however, the E.O. falls short of UNSCR 2270, by failing to prohibit correspondent relationships with North Korean banks. (Update: Treasury might take the view that blocking subsumes that.)
The North Korean regime is resourceful in its abuse of the international financial system to evade sanctions and fund its illicit programs. OFAC designated Ilsim International Bank and Korea United Development Bank for operating in the financial services industry in the North Korean economy. Ilsim International Bank is affiliated with the North Korean military and has attempted to evade United Nations sanctions. Ilsim International Bank has a close relationship with Korea Kwangson Bank (KKBC). KKBC was designated pursuant to E.O. 13382, in part for providing financial services to UN-listed Tanchon Commercial Bank. Tanchon Commercial Bank was identified by the President as a weapons of mass destruction (WMD) proliferator in the Annex to E.O. 13382. KKBC was also singled out under UNSCR 2270 as subject to an asset freeze.
This seems to foreshadow a determination that North Korea is a Primary Money Laundering Concern. Treasury also released a list of new designations, including 10 shipping companies and 20 more ships, mostly the same ones that appear in Annex III of UNSCR 2270. Sectoral sanctions worked against Iran and Burma. This is a good sign that Treasury will have free reign to put His Porcine Majesty on a diet.
The E.O. also freezes any assets subject to U.S. jurisdiction of any “person” (a legal term that includes individuals, businesses, or entities) the Treasury Secretary (in consultation with the Secretary of State) determines to have engaged in certain categories of conduct. The categories loosely track NKSPEA 104(a), starting with the prohibition on mineral exports that also appears (in different forms) in NKSPEA 104(a)(8) and UNSCR 2270.
(ii) to have sold, supplied, transferred, or purchased, directly or indirectly, to or from North Korea or any person acting for or on behalf of the Government of North Korea or the Workers’ Party of Korea, metal, graphite, coal, or software, where any revenue or goods received may benefit the Government of North Korea or the Workers’ Party of Korea, including North Korea’s nuclear or ballistic missile programs;
From Treasury’s press release:
North Korea generates a significant share of the money it uses to fuel its nuclear and ballistic missile programs by mining natural resources – often exploiting workers in slave-like conditions – and selling those resources abroad. In particular, coal generates over $1 billion in revenue per year for North Korea. OFAC designated the following companies for operating in the mining industry in the North Korean economy: Singwang Economics and Trading General Corporation and the Korea Foreign Technical Trade Center. Singwang Economics and Trading General Corporation is a subordinate of the DPRK’s Ministry of People’s Armed Forces. The Korea Foreign Technical Trade Center supports the North Korean special weapons research entity Pongwha Research Center.
UNSCR 2270’s potentially troublesome “livelihood” exception doesn’t appear in this E.O., although the general licenses and implementing guidance contain much, much narrower humanitarian exemptions, which I’ll discuss below.
Next, the E.O. freezes the assets of those designated for human rights abuses, as required under NKSPEA 104(a)(5).
(iii) to have engaged in, facilitated, or been responsible for an abuse or violation of human rights by the Government of North Korea or the Workers’ Party of Korea or any person acting for or on behalf of either such entity;
Yet still, not one North Korean official or agency — least of all, His Corpulency — is designated for human rights abuses or crimes against humanity. Which means I still have my talking points about how officials in Burundi are blocked over human rights abuses, but officials in North Korea aren’t. I can keep flogging the point that all of the top officials of the governments of Belarus and Zimbabwe are blocked, but none of the top officials of North Korea are.
I get that the traditional approach in sanctions enforcement is to go bottom-up, but after so much time has been wasted, and more than two years after a U.N. Commission of Inquiry reported evidence of crimes against humanity, I’d expect to see things go bottom-up pretty damn rapidly.
Although I took the position that labor exports were already subject to mandatory designation under this paragraph, Marcus Noland will be pleased (and so was I) to see that Treasury specifically made labor exports sanctionable:
(iv) to have engaged in, facilitated, or been responsible for the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea or the Workers’ Party of Korea;
Next, in accordance with the mandatory sanctions for cyberattacks, per NKSPEA 104(a)(7):
(v) to have engaged in significant activities undermining cybersecurity through the use of computer networks or systems against targets outside of North Korea on behalf of the Government of North Korea or the Workers’ Party of Korea;
Notably absent from the designations here: the Chilbosan Hotel in Shenyang, where Unit 121 allegedly carried out the Sony cyberattack.
Then, per NKSPEA 104(a)(4), there are mandatory sanctions for censorship:
(vi) to have engaged in, facilitated, or been responsible for censorship by the Government of North Korea or the Workers’ Party of Korea;
Here, there was a surprising designation:
OFAC has designated the Workers’ Party of Korea, Propaganda and Agitation Department (the “Propaganda and Agitation Department”) as an agency, instrumentality, or controlled entity of the Government of North Korea. The Workers’ Party of Korea has full control over the media, which it uses as a tool to control the public. The Propaganda and Agitation Department also engages in or is responsible for censorship by the Government of North Korea. Each month, the Propaganda and Agitation Department delivers party guidelines explaining the narrative that all broadcast and news reporting plans must follow. The North Korean media must follow all Party guidelines. The Propaganda and Agitation Department is also the primary agency responsible for both newspaper and broadcast censorship. Today’s action implements provisions of the North Korea Sanctions and Policy Enhancement Act of 2016, which includes mandatory designation criteria for persons engaging in censorship in North Korea.
Music to my ears.
Now, you may be wondering why the new E.O. doesn’t cover other provisions of NKSPEA 104(a), relating to, say, WMD technology transfers or arms trafficking. I can only presume that’s because that conduct is already sanctionable under Executive Order 13382 and Executive Order 13551, respectively. Of course, those executive orders have existed since 2005 and 2010, and both have been underutilized ever since.
The new E.O. would seem to subsume the Executive Order the President signed just over a year ago, E.O. 13687, but today’s designations actually include two new “DPRK2” designees under that order, Jo Yong-chol and Ri Won-ho, officers of North Korea’s Ministry of State Security living in Syria and Egypt, respectively.
OFAC designated Ri Won Ho and Jo Yong Chol pursuant to E.O. 13687 for being officials of the Government of North Korea. Ri Won Ho is an official of the DPRK’s Ministry of State Security based in Egypt. Jo Yong Chol is an official of the DPRK’s Ministry of State Security stationed in Syria. They both facilitate North Korea’s Mining Development Trading Corporation’s (KOMID) business in Egypt and Syria. KOMID was identified by the President in the Annex to E.O. 13382 and designated pursuant to E.O. 13687. It was also designated by the United Nations Security Council pursuant to UNSCR 1718. KOMID is North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.
I was also pleased to see that, along with the new E.O. and designations, OFAC also issued a series of general licenses — effectively, exemptions to the sanctions — that will help avoid adverse consequences for innocents, and for the sorts of changes we want to promote in North Korean society. The highest-profile of these covers humanitarian work:
(1) Activities to support humanitarian projects to meet basic human needs in North Korea, including drought and flood relief; food, nutrition, and medicine distribution; the provision of health services; assistance for individuals with disabilities; and environmental programs;
(2) Activities to support democracy building in North Korea, including rule of law, citizen participation, government accountability, universal human rights and fundamental freedoms, access to information, and civil society development projects;
(3) Activities to support education in North Korea, including combating illiteracy, increasing access to education, international exchanges, and assisting education reform projects; and
(4) Activities to support non-commercial development projects directly benefiting the North Korean people, including preventing infectious disease and promoting maternal/child health, sustainable agriculture, and clean water assistance.
( 5) Activities to support environmental protection, including the preservation and protection of threatened or endangered species and the remediation of pollution or other environmental damage.
I’m also pleased that OFAC also granted a general license to allow refugees to send remittances home to their relatives in North Korea, for reasons I’ve described here. Another general license permits “transactions necessary to the receipt and transmission of telecommunications involving North Korea,” which would seem to allow cross-border phone calls, but “does not authorize (i) The provision, sale, or lease of telecommunications equipment or technology; or (ii) The provision, sale, or lease of capacity on telecommunications transmission facilities,” which presumably would not authorize, say, Naguib Sawaris’s investments in Pyongyang. But I’ll let Naguib hire his own lawyer.