I still remember my excitement, bordering on giddiness, when in May 2013, a few big banks in China froze some North Korean accounts. That action came two months after the Treasury Department designated North Korea’s Foreign Trade Bank, and just over a week after Ed Royce dropped the first draft of the NKSPEA. But as we’ve learned from our friends in the FBI and the Justice Department since then, big Chinese banks began clearing the FTB’s transactions as soon as they felt that the coast was clear.
The lesson I’ve learned from this and other, similar episodes is that one should be cautious before believing any highly publicized case of China enforcing sanctions against Pyongyang or applying economic pressure to it. I’ve seen this show enough times to suspect that China has a deliberate media manipulation strategy of making a big deal of enforcing sanctions until reporters lose interest.
For example, reports that China has halted tourism to North Korea just before President Trump arrived in China seem suspect. Technically, there are no U.N. sanctions prohibiting tourist travel. North Korea’s business partners — UNSCR 1718, paragraph 8(d) if you doubt me — are obliged to “ensure” that they aren’t indirectly funding WMD programs and other prohibited purposes (spoiler alert: in a place like North Korea, they can’t), but I doubt that most Chinese businesses either know or care about that obligation yet. Instead, remember the ten-week rule: check back in ten weeks and I’ll tell you if it’s for real.
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Take the coal export cap under UNSCR 2321, which later became a coal ban in UNSCR 2371. Remember August, when China announced that it was halting coal imports from North Korea? We’ve since learned that this is yet another case of China initially complying with an obligation, only to resume its cheating as soon as reporters looked the other way. The flaw in this strategy is that nowadays, too many reporters don’t look the other way for long. The sharp-eyed crew at NK News has been especially diligent about spotting North Korean bulk carriers at Chinese coal terminals, but this time, I’ll credit VOA.
China imported 509,000 tons of coal from North Korea last month, raising doubts about its implementation of U.N. sanctions over Pyongyang’s nuclear and missile programs, Voice of America (VOA) reported Tuesday. VOA’s Korean Service said China bought US$44 million of coal from the North in September, citing data from the Korea International Trade Association. [Yonhap]
China is now saying that the coal landed in February but did not clear customs until September because Beijing implemented the ban so suddenly. But this does not resolve the question in China’s favor. First, under a strict reading, China should have returned any coal that wasn’t “imported” before the full ban. Second, by February, China had already exceeded the existing quota for 2017, under the most recent resolution then in effect, UNSCR 2321. Third, two of the three largest suppliers of North Korean coal are companies controlled by U.N.-designated entities — the Reconnaissance General Bureau and the Munitions Industry Department. If the RGB or the MID ultimately controlled the coal that was sold to China, China’s legal obligation under UNSCR 1718, paragraph 8(d), was to seize the coal and dispose of it. Hold that thought.
The resolution that finally imposed a total ban on coal exports, UNSCR 2371, does not have a grace period for coal exports. It’s a flat ban. Now, a friend with deep knowledge of the facts and law tells me it’s actually more complicated than that, for reasons that the person was unable to make clear to me. Still, I don’t see anything in the language of the resolution that permits the purchase of North Korean coal in September. I read this as a violation of the resolutions.
What can we do about that? For one, the President should be raising it with Xi Jinping. For another, if any of those coal transactions were denominated in dollars, paid to one of the blocked North Korean coal exporters, and cleared through the United States, he should unleash the Justice Department, whose aggressive prosecutors have begun to enforce the legal prohibitions against dealing with sanctioned North Korean entities strictly. The fact that Congress is keeping the pressure on and tightening the coal ban further will also help. It will take more of that strict enforcement to make the coal ban stick.