Dozens of North Korean ships stranded by U.N. sanctions

Since this year’s nuclear test and the rounds of U.S. and U.N. sanctions that followed, I’ve tracked the implementation and enforcement of shipping sanctions closely on this site. For ease of reference, here’s a brief chronology of what I’ve observed since March 2, 2016, when the U.N. Security Council approved Resolution 2270, which —

• required the inspection of all cargo to and from North Korea;
• banned the reflagging of North Korean ships;
• banned exports of coal and iron ore (except for “livelihood” purposes);
• banned exports of gold, vanadium, and rare earths; 
• designated a list of ships owned or controlled by Ocean Maritime Management; and
• designated North Korea’s Reconnaissance General Bureau, which also operates a small fleet (though the ships themselves are not designated).

As I’ve repeatedly noted, China has a long and well-documented history of violating North Korea sanctions right after voting for them, which is why any evidence of China’s compliance with the new U.N. sanctions ought to be read skeptically. Still, since March, the signs of China’s implementation of shipping sanctions has been mixed, but mostly good. A short chronology of my posts:

• On March 8th, I noted early signs that Chinese ports, specifically in Dandong, were turning away North Korean ships.
• On March 17, I noted more signs that more Chinese ports were barring North Korean ships.
• On March 21st, news services reported that Beijing had ordered 31 U.N.-designated ships barred from its ports, and that two North Korean ships were hovering offshore because they couldn’t enter their port of destination.
• On March 24th, one state canceled its registrations of North Korean ships, more Chinese ports barred North Korean ships, but China also strong-armed the U.S. into agreeing to let the U.N. de-list four previously designated North Korean ships, including the Jing Teng, which had been seized in the Philippines.
• On March 28th, there were more reports that North Korean ships were hovering off the Chinese coast after being denied entry into Chinese ports.

This month’s reports reinforce the trend we’ve observed in those past reports — that for the most part, foreign ports are shunning the designated North Korean ships, including in China.

None of the 27 North Korean ships that are on a UN Security Council blacklist have been able to dock at foreign ports, the Voice of America reported Wednesday. They are either stuck in North Korean ports or marooned on the high seas. A diplomatic source said, “The UNSC sanctions are now biting, and North Korean ships are port-bound or stuck at sea.”

As of March 3, when the UNSC adopted the fresh sanctions, 15 of the North Korean ships on the blacklist were moored at foreign ports or traveling the open seas, according to VOA’s analysis of data from the private website Marine Traffic showing the real-time vessel positions. Four days later seven were still in foreign ports, and last month they had dwindled to two. The others returned to North Korea this month after they were denied entry to ports in China, Hong Kong, and Russia. [Chosun Ilbo, April 7, 2016]

Well … plus or minus. A rather confusing UPI report, citing the Voice of America, finds that all 27 of the North Korean ships designated under UNSCR 2270 are stranded at what UPI calls “various ports,” but also says that a number of ships continue to move between other North Korean ports, or have vanished from online tracking databases.

NK News’s Leo Byrne also finds that China and other countries have generally barred the designated ships from their ports, but with one exception — the M/V Victory 2, which continues to shuttle between Nampo and Lizhao. The U.S. Treasury Department designated the Victory 2 under Executive Order 13722 last month, but the U.N. did not designate it in UNSCR 2270. The Treasury designation links the Victory 2 to Korean Buyon Shipping Company Limited, presumably a shell company used by Ocean Maritime Management, the North Korean shipping company previously designated by the U.N. and the U.S. for arms smuggling.

So what does it mean to be designated by the U.S., but not by the U.N.? As an initial, practical matter, being on the U.S. SDN list means as much or as little as the Treasury Department decides it does. If Treasury doesn’t actually enforce the blocking of the ship or the shell companies behind it, it might scare some banks, and it might mean nothing. If Treasury does enforce it, it could mean that the dollar accounts of the shell companies are blocked, and dollar payments to provide fuel, insurance, registration, and bunkering services for the ship are blocked.

If China and North Korea are circumventing dollar sanctions, the new U.S. sanctions law and Executive Order 13722 would allow Treasury to block the dollar assets of the Chinese middlemen who are knowingly facilitating those non-dollar payments.

If the de facto de-listing follows the pattern of the Jin Teng and other de-listed vessels, China may have argued that the Victory 2 is not, in fact, owned or controlled by Ocean Maritime Management. What this means depends on whether the U.S. and China are dealing with each other forthrightly to enforce the sanctions, or whether China is simply testing the administration’s attention span.

This is all interesting enough, but the most interesting report may be the one that informs us that in early April, the Palau-flagged M/V Lucky Star-8 entered the Japanese port of Rumoi, on the northern island of Hokkaido, where the authorities promptly arrested the vessel’s Chinese captain.

It seems the captain failed to mention that between January 29th and February 1st, he’d stopped over in an unnamed North Korean port, and under new Japanese laws, ships that recently visited North Korea are barred from Japanese ports. Japanese customs found out about the North Korean port call during a cargo inspection, although the ship was carrying no cargo. The ship the left port without its captain.

This is a secondary shipping sanction, like the ones Congress passed in section 205 of the NKSPEA, only targeting third-country ships rather than third-country ports. This could have tremendous impact over time. North Korea’s maritime exports are almost exclusively used to generate revenue for the state and its priorities. It may not be a bad idea for Congress to consider when North Korea launches that missile, subject to an exemption for port calls solely for the delivery of food or humanitarian aid to North Korea. The effect could be that North Korea’s only maritime commerce would be from a few non-designated ships that go between North Korean ports and Chinese ports, and pretty much nowhere else.