U.S. will announce new North Korea sanctions as early as this week.

At this event at the Heritage Foundation yesterday, I emphasized that U.S. and U.N. sanctions are mutually complementary, and that for the U.N. sanctions to work, the U.S. must show its determination to back them with the new authorities in H.R. 757, and by harnessing the power of the dollar.

The signs I’m seeing this week all suggest that the Obama Administration finally gets this. On Monday, President Obama said “that effective enforcement of sanctions on North Korea is one of the key tasks facing the country.” Yesterday, Treasury Secretary Jack Lew briefed a congressional committee on his talks with Chinese officials about enforcing North Korea sanctions, which he described as only “theory until you implement them” through “sustained efforts.” Said Lew, “We know from these sanctions programs that it’s grueling day-to-day work. You’ve got to identify the entities, act against the entities.” Exactly right.

The administration has also begun the hard work of financial diplomacy:

Adam Szubin, acting undersecretary of Treasury of terrorism and financial intelligence, will be in Beijing and Hong Kong on Monday and Tuesday to meet with senior government officials and compliance officers to discuss “a range of issues of mutual interest,” according to an advisory notice from Treasury. It comes in light of recent United Nations and U.S. sanctions on North Korea imposed this month, Treasury said.

“This trip provides an important opportunity for discussions of ways to strengthen U.S.-China coordination in response to North Korea’s destabilizing behavior and to ensure sanctions targeting the North Korean regime are as effective as possible,” the advisory notice said. [WSJ, Risk & Compliance Blog]

According to Channel News Asia, Szubin was to meet “with both government officials and the private sector” with regard to the implementation of both U.N. and U.S. sanctions. Reading the reports together, Szubin appears to have met with officials of certain banks that may hold North Korean assets. It may be a complete coincidence that Szubin visited Hong Kong just as HSBC froze Sam Pa’s accounts, and that HSBC’s top legal officer is Stuart Levey, Szubin’s predecessor. Coincidences do happen.

What we often forget about Treasury’s anti-money laundering effort against North Korea in 2005 and 2006 is that it was more than an action against one dirty bank. It was a broader campaign of financial diplomacy, led by Levey and Daniel Glaser (who is still a senior Treasury Department official today). It looks like we’re starting to see a similar strategy re-emerge now. There’s no question that implementing it will be challenging, based on what the U.N. Panel of Experts told us last week about North Korea’s extensive use of deceptive financial practices.

179. The financial sanctions notwithstanding, the Democratic People’s Republic of Korea continues to gain access to and exploit the global international financial system (including banking and insurance) through reliance on aliases, agents, foreign individuals in multiple jurisdictions, and a long-standing network of front companies and embassy personnel, all of which support illicit activities through banking, bulk cash and trade.

180. The Panel has concerns about banks without adequate banking regulations and the intent to enforce them, especially in countries lacking effective laws and compliance institutions.91 Transactions originating in foreign banks have been processed through corresponding accounts in the United States and Europe. The enhanced due diligence required under the resolutions in the case of the Democratic People’s Republic of Korea is frustrated by the fact that companies linked to the country are often registered by non-nationals, who also use indirect payment methods and circuitous transactions dissociated from the movement of goods or services to conceal their activity.

Cooperation and information sharing among member states will be essential to the success of the strategy.

181. The implementation of financial sanctions becomes more complex as it moves from targeted financial sanctions based on designation lists to activity-based sanctions,92 an endeavour that requires first establishing whether an entity is being controlled or used by a designated entity. The situation is complicated because lists of aliases are never exhaustive, not least because of alternative ways to transliterate Korean names. In addition, the Panel is hampered in updating information on designated entities owing to time lapses in responses to its inquiries, allowing entities more room to continue their activities.

Yonhap also reports that “[t]he U.S. is putting together a package of unilateral sanctions against the North to carry out the Security Council sanctions and the recent congressional legislation tightening the screws on Pyongyang.” Special Envoy for Human Rights Robert King adds, “There is an Executive Order being drafted right now that will deal with these additional sanctions.”

This is welcome, if unexpected. After all, what could a new executive order do that Executive Order 13687, which the administration has barely used, doesn’t already do? (Search “DPRK2.”) I suppose it could further clarify that the President may impose secondary sanctions on persons who engage in arms trafficking with North Korea, insure or reflag its ships, or maintain correspondent accounts for its banks, but H.R. 757 already gives the President the authority to address those things. What would be more useful would be a round of designations under section 104.

Treasury also sorely needs a better set of sanctions regulations to replace the weak ones at 31 C.F.R. Part 510. Instead, it needs something broadly analogous to the more comprehensive regulations that apply to Syria (Part 542), or to Iran (parts 560, 561, and 562). One important part of the new regulation would be its general licenses for humanitarian transactions, subject to the limits of section 208. Another would expansive definitions of “arms or related materiel” (to include technical assistance) and “severe human rights abuses” (to include the use of North Korean forced labor). Let’s hope Treasury is working on that, too, but for now, the good news is that Treasury is working.

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The end of the beginning: President Obama will sign North Korea sanctions into law

Update, 2/18: The President signed the bill.

~   ~   ~

This afternoon, the White House made it official — the President will sign the North Korea Sanctions and Policy Enhancement Act. The White House didn’t say when, but I’d expect it to happen within a week or so.

The question now turns to implementing the bill to maximize its impact on the regime, while minimizing the impact on the North Korean people. For well over a month, the legislation has had enough momentum in Congress that the Treasury Department should have been working on implementing guidance and humanitarian waivers under section 208, to reassure banks that they won’t be sanctioned over transactions to ship food and medicine to North Korea. Here’s hoping that Treasury hasn’t waited until now to write it.

Some favorable reactions to the legislation come from South Korea’s second-highest ranking diplomat, who said he hopes the bill “will help teach Pyongyang that its provocations come at a price,” and from two members of the House Armed Services Committee who are visiting Seoul.

Vice Foreign Minister Lim Sung-nam made the remarks in a meeting with two U.S. Congress members — Rep. Robert Wittman (R-Va) and Rep. Madeleine Bordallo (D-Guam) — saying their visit as members of the House Armed Services Committee is very timely given the regional security landscape following North Korea’s nuclear and missile tests, according to a press release by the ministry. [….]

“Vice Minister Lim said he expects that the bill, through implementation of specific measures, will make clear to North Korea that provocations are followed by punishments,” the ministry said.

Bodallo (sic) said she reaffirmed through her visit to South Korea that the two countries’ alliance and joint defense posture remain strong, noting that they should maintain close coordination in response to the North’s continued provocations and firmly respond to them together with the international community.

Wittman added that he hopes Congress’ approval of the bill will help draw a strong sanctions resolution on Pyongyang from the U.N. Security Council. [Yonhap]

One area where the bill could make an immediate impact is against North Korea’s slave labor exports, which could be sanctioned as severe human rights abuses under section 104(a)(5). Since it closed down Kaesong, South Korea has been calling for sanctions against Pyongyang’s slave labor exports, saying it intends to focus on Southeast Asia first. Here, both U.S. national sanctions and a new U.N. Security Council resolution could play complementary, mutually reinforcing roles. Both could also help President Obama and President Park put diplomatic pressure on Southeast Asian nations to send North Korean slave laborers home. President Obama just met with the leaders of ASEAN this week; let’s hope he took the opportunity.

Separately, the Congressional Budget Office estimates that the bill will cost $44 million to implement over the next five years, including $33 million for radio broadcasting and other humanitarian programs, and $11 million to hire cops and lawyers to enforce the new bill. Treasury has been overworked by sanctions on other targets, including Iran, Russia, ISIS, Al Qaeda, and various drug traffickers, so these new resources are essential, especially in a time of shrinking federal budgets. (HT)

What the CBO did not score, however, is how much the bill could put back in the Treasury because of its expanded civil and criminal forfeiture authorities (see section 105) against criminal activity covered by section 104(a).

Meanwhile, let’s raise a toast to Ed Royce, who led the bipartisan rebellion against the bipartisan failure called “strategic patience,” and Cory Gardner, the up-and-coming freshman Senator who moved this bill through the parliamentarian labyrinth that is the United States Senate. And to the thousands of ajummas and ajoshis, teens and twentysomethings, Southern Baptists, hard-liners, bleeding hearts, and other good-hearted people who joined the ragtag rebel alliance that moved Congress.

Now, all we have to do is make the President enforce it.

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N. Korea sanctions bill headed for President’s desk later today; Hillary makes a funny about Bernie.

By now, most of you know that the North Korea Sanctions and Policy Enhancement Act, the Senate’s version of H.R. 757, passed the Senate unanimously Wednesday night. The House is expected to pass the Senate’s version this morning and send it to the President’s desk.

In an election year, when floor time is especially precious, it was remarkable and humbling that the Senate spent an entire day debating this bill. Senator after senator came to the floor to give supportive speeches. If you read only one of them, read the moving speech of Senator Diane Feinstein (D, CA) about human rights, but be warned — this is the stuff of nightmares, and not for children’s eyes.

The speeches should be available on video here within the next few days.

Both Ted Cruz and Marco Rubio interrupted their presidential campaigns to fly back to Washington and cast “yea” votes. Both senators have been solid supporters of the bill. Two years ago, Senator Rubio personally read every line of an earlier version. I hope I’m not giving away a trade secret here, but it’s pretty damn rare for representatives and senators to personally read lengthy, legalistic bills themselves; most delegate that to their staffers. Rubio did so with obvious care and understanding, leaving no doubt that he’s extremely bright. I saw his tracked changes and comment bubbles in the draft, and suspect that the mineral export ban the Senate added to section 104 was (at least in part) his idea. That provision could be quite powerful, akin to previous legislation that banned Iran’s oil sales.

Cruz’s staff was also strongly supportive of the effort following North Korea’s nuclear test, and (working through the snowstorm) made a careful effort to understand the impact of its secondary sanctions. In the interest of bipartisanship, the same can be said of Senator Ed Markey, a liberal Massachusetts Democrat, from whom I expect great things on the human rights issue this year. And every senator — even Senator Paul, who had me concerned to the point of apoplexy at one point — resisted the temptation to inject the bill with parliamentary malware or veto bait.

The Senate’s key leaders on foreign policy, including Senators Bob Corker (R, TN), Ben Cardin (D, MD), and Bob Menendez (D, NJ) all gave strong speeches. Standing watch over it all was up-and-coming freshman and Asia Subcommittee Chair Cory Gardner (R, CO), who led the Senate’s efforts to move the bill forward.

You can see the full list of the Senators who voted here, but it would be easier to give a list of those who didn’t vote — Dan Sullivan (R, AK); Dick Durbin (D, IL); Lindsay Graham (R, SC), who was campaigning for Jeb! in his home state, but who had co-sponsored an earlier version of the bill; and Bernie Sanders (I, VT), who stuck to the campaign trail, but did issue a statement supporting the legislation.

For which, Hillary pounced on him.

“It is unfortunate that yet again, Senator Sanders has shown a lack of interest in vital national security issues, failing to vote on sanctions against the country he said poses the greatest threat to the United States,” Clinton campaign spokesman Jesse Ferguson said after Wednesday’s vote, according to news reports.

Sanders was quoted as saying that he had to be “necessarily absent,” but the increased sanctions were “absolutely essential” to ending North Korea’s nuclear program. [Yonhap]

Myself, I’m not a Bernie guy, because I like my regular supplies of meat and toilet paper, and 23 choices of deodorant obviously still aren’t enough for the people who sit next to me on the Metro. But … let’s just bear in mind that much of what this bill does is force the State Department to do things it could have done itself at any time over the last decade, but didn’t. That includes the period following North Korea’s second nuclear test, the sinking of the Cheonan, the shelling of Yeonpyong Island, the collapse of the Leap Day deal, a spate of assassination attempts against defectors and human rights activists in China and South Korea, and the disappearance of tens of thousands of political prisoners and their families at Camp 22 — all of which happened on Hillary Clinton’s watch as Secretary of State.

So there’s that. 

The South Korean government, which has immense influence in Washington, and which my paranoid side had at times suspected of a certain ambivalence about the bill, ultimately welcomed its passage.

The bill was lauded by the South Korean Ministry of Foreign Affairs Thursday as demonstrating the “need for strong and comprehensive sanctions on North Korea.” [….]

The South Korean Ministry of Foreign Affairs in a statement Thursday lauded the resolution for “reflecting a bipartisan understanding and will on the need for strong and comprehensive sanctions on North Korea.” [Joongang Ilbo]

After the Senate vote, the South Korean Ambassador came to visit Ed Royce (R, CA), the Chairman of the House Foreign Affairs Committee (full disclosure), where both men welcomed the Senate’s action.

With Park Geun-hye’s decision to pull out of Kaesong, Seoul has broken decisively with the Sunshine Policy, its main cause for ambivalence. Now, South Korea’s influence machine turns its weight toward a more effective enforcement of sanctions against North Korea. 

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On North Korea policy, the opinion pages suddenly read like posts from this blog

Since January’s nuclear test, I have noted with satisfaction the signs that Washington’s consensus on North Korea policy has taken a decisive turn toward views I’ve advocated at this site for years. This week, OFK readers have been sending me a great deal of better-placed commentary about North Korea, asking me, “Did you write this?” I swear I didn’t write, for example, this Washington Post editorial, published yesterday:

What is needed is a return to the only non-military strategy that brought results: sanctions that strike at the regime’s inner circle. Mr. Kim and his cronies are still managing to import luxury goods from China, in spite of a U.N. ban; they still use Chinese banks to do business with the rest of the world. Those links could be curtailed if North Korea, like Iran before it, were designated as a money launderer and U.S. sanctions were slapped on Chinese banks and other businesses that supply weapons and luxury goods.

Pending U.S. sanctions legislation, already passed by the House and scheduled for a Senate floor vote this week, would mandate these steps, while providing the administration with some flexibility. It should pass, and Mr. Obama should sign it. [….]

Both China and North Korea must see that they will pay a mounting price for what, to the United States, should be Mr. Kim’s intolerable steps toward a nuclear arsenal. “Strategic patience” is no longer a viable option. [Washington Post Editorial]

Or this, from a Wall Street Journal columnist:

Groundhog Day was last week, but North Korea’s ballistic-missile test on Sunday may have you feeling you’ve seen this one before. First the weeks of rumors, then the launch, next the emergency session at the United Nations—and then nothing. The pattern will continue until the U.S. stops running its North Korea policy through Beijing. [….]

Though President Obama calls North Korea “the most sanctioned” nation on Earth, he’s wrong. The U.S. lists Iran and Burma as countries of primary money-laundering concern, a designation it doesn’t apply to Pyongyang despite its counterfeit-currency racket. The U.S. has applied harsher human-rights sanctions against Congo and Zimbabwe, never mind the tens of thousands of political prisoners in Pyongyang’s labor camps.

Treasury Department officials have argued for stronger measures, on the model of the highly effective sanctions the U.S. imposed on Macau’s Banco Delta Asia in 2005 that forced banks to suspend business with Pyongyang. But National Security Adviser Susan Rice has opposed the move for fear of upsetting U.S. relations with Beijing.

The House last month overwhelmingly passed the North Korea Sanctions Enforcement Act, mandating action against entities and individuals tied to illicit weapons programs, luxury-goods imports, counterfeiting and drug trafficking. The White House has hinted that it doesn’t oppose the bill, and the President might sign it if it passes the Senate. But the bill’s effectiveness depends on the Administration’s willingness to squeeze North Korean financing by punishing the Chinese banks through which the Kim regime moves its money. [….]

China isn’t likely to squeeze its client unless it sees the U.S. and its allies doing more to isolate the North on their own. Such a policy would seek to end the regime through sweeping financial sanctions that prevent the Kim family from financing the tools of their tyranny, from weapons to whiskeys, and that impose stiff penalties on their enablers abroad. The strategy of begging China has been a failure. [WSJ, Review & Outlook]

Or this, from the Chairman of the Senate Foreign Relations Committee:

This week the U.S. Senate will join the U.S. House of Representatives in passing legislation that sends a strong bipartisan message: North Korea is a serious threat to U.S. national security and our current approach is a failure.

The North Korea Sanctions and Policy Enhancement Act of 2016, which we expect to become law in the coming weeks, will provide the executive branch with a more robust set of policy tools to confront the threat posed by the rogue regime in Pyongyang. And while there is no “silver bullet” solution to the North Korea policy challenge, the United States must undertake a more proactive approach toward North Korea to address its nuclear and ballistic missile programs and human rights abuses against its own people.

The Senate bill represents the best of our bipartisan foreign policy tradition and builds upon legislation passed in the House of Representatives to expand and tighten enforcement of sanctions for North Korea’s destructive activities.

he bill requires the Obama administration to investigate sanctionable conduct. This means working to expose those involved in supporting North Korea’s human rights abuses, proliferation of weapons of mass destruction, and activities undermining cybersecurity — marking the first statutory framework for sanctions in response to the growing North Korean cyberthreat.

Importantly, it also targets for investigation those who back these activities through other means, such as providing the regime with industrial inputs such as coal, or luxury goods that serve as a valuable source of hard currency to fund North Korea’s nefarious activities. The President then is mandated to sanction any person found to have materially contributed to, engaged in or helped to facilitate these actions. [….]

Some North Korea watchers assert that Beijing doesn’t have the leverage that many U.S. officials contend it has over Pyongyang’s behavior. But that’s simply not true. [Sen. Bob Corker, CNN.com]

I welcome all of this unreservedly, and if this means I’ve directly or indirectly influenced these views, then that’s all I’ve ever wanted from this jihad of mine. It is an unfamiliar feeling to an insurgent to be overtaken by the mainstream. Still, it would be an error for any American to take credit for it. This tipping point is really the work of the most effective lobbyist in this town, a morbidly obese high school dropout and NBA fan who has never been to Washington and barely speaks English.

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Senate Foreign Relations Committee agrees on, passes North Korea sanctions bill

Last week’s big news was that the Senate Foreign Relations Committee, the last real legislative obstacle to a North Korea sanctions law, reached a compromise and unanimously approved a tough new version. Both Republicans and Democrats gave supportive statements before and after the vote:

“We have a bill that, in many respects, is stronger than the House bill,” said the Senate committee’s top Democrat, Ben Cardin of Maryland. “What we do is put pressure on not just the government, but on those who want to do business with North Korea — if they do in these areas, there will be sanctions imposed.”

The House bill requires the president to investigate and sanction persons and entities contributing to North Korean weapons of mass destruction, money laundering, censorship or human rights abuses.

The Senate bill adds provisions targeting North Korea’s sale of minerals and precious metals, a major source of hard currency. Corker said the legislation also places a greater emphasis on Pyongyang’s human rights record.

“I think we’ve enhanced it [the House bill] significantly,” Corker said. “It takes into account other issues that we have with North Korea, not just the nuclear testing, but also some human rights issues.”

Cardin stressed that the sanctions legislation would not affect international aid to Pyongyang.

The bill “is not aimed at all at humanitarian needs,” he said. “The North Korean people are in desperate need. We regret that the country doesn’t spend its resources on its people.” [VOA]

You can read Corker and Cardin’s official joint statement on the legislation here.

I’ll agree that the Senate bill is not only stronger than the House version but also stronger than what I’d expected. Under the compromise bill, the sanctions in sections 104(a) (for conduct such as proliferation and human rights abuses) and 104(c) (blocking all North Korean government assets) are now mandatory. Under the Menendez bill, 104(a) was discretionary and 104(c) didn’t exist as such. Under the Gardner bill, 104(a) was mandatory and 104(c) was discretionary. 

Marcus Noland should be pleased that section 302 of the new bill requires the administration to implement a diplomatic strategy to combat North Korea’s use of overseas slave labor, and that section 304 may well trigger mandatory sanctions against its use.

The Foreign Relations Committee has posted its amendment-in-the-nature-of-a-substitute on its website, although you have to put it together with some helpful amendments, proposed by Democratic Senator Ed Markey of Massachusetts, to get the full text. According to Senator Cory Gardner, the Colorado Republican who led the charge for this legislation, the full Senate will probably vote on it in the next two weeks.

Because the House and Senate bills are not identical, the House will have to act next to put the legislation on the President’s desk. It will probably vote on the Senate bill, rather than taking it before a Conference Committee. I’ve been told by a source I trust that President Obama has signaled that he won’t veto the bill. 

Here ends the good news. I promise you that all the other news is dreary, but I’ll save that for tomorrow’s post.

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Senate sanctions bills pick up new co-sponsors

It may be of no more than symbolic value at this point, with intense behind-the-scenes discussions ongoing over a bipartisan compromise bill, but symbols do matter, and a few more senators have lined up behind different versions of the North Korea Sanctions Enforcement Act in the Senate.

One of the Senate bills, S. 2144, has picked up Republicans David Perdue and Johnny Isakson of Georgia, Tom Cotton of Arkansas, Steve Daines of Montana, Mark Kirk of Illinois, Kelly Ayotte of New Hampshire, John Cornyn of Texas, Orrin Hatch of Utah, Roy Blunt of Missouri, Shelly Moore Capito of West Virginia, Pat Roberts of Kansas, and Mike Rounds of my home state, South Dakota. Kirk’s co-sponsorship is interesting, in that he has a background in naval intelligence and is a recovering North Korea engager.

Senators Cory Gardner of Colorado, Marco Rubio of Florida, and James Risch of Idaho were original co-sponsors of S. 2144, which makes a total of 15.

Meanwhile, the Menendez-Graham bill, S. 1747, has picked up two more Democratic co-sponsors, Dick Durbin of Illinois and Michael Bennet of Colorado.

Absent some unanticipated delay, the Foreign Relations Committee is expected to mark up a bill on Thursday. Interestingly, the schedule shows that they’ll be considering a 2015 version of the House bill, “with an amendment.”

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In The Weekly Standard: Ed Royce’s Bipartisan Coup Against a Bipartisan Failure

If President Obama ends up signing a North Korea sanctions bill in the next 30 days — and at this point, I don’t know what interest he has in vetoing one — it will effect the biggest change in our North Korea policy since the 1994 Agreed Framework. That, in turn, will have been due to years of principled dissent and patient, bi-partisan coalition building by Ed Royce, the California Republican who chairs the House Foreign Affairs Committee.

A certain, too-prevalent type of Republican who sees all Democrats as enemies could learn a few things about winning policy arguments from a man who defied his own party for conservative principle, and yet had the strategic sense to see Democrats, including some very liberal ones, as allies to be won over.

Read the rest of the story here.

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WaPo: Senate Foreign Relations hopes to mark up N. Korea sanctions bill next Thursday.

Via the Washington Post this morning, we’re still pretty much where I said we were last week, but at least we have an expected date for a committee markup. The Senate is still trying to work out a bipartisan compromise between Senator Bob Menendez’s (D, NJ) weaker S. 1747 and Cory Gardner’s (R, CO) tougher S. 2144, rather than voting on the House bill that passed last week “with huge bipartisan support.”

While the House and Senate bills contain generally the same sanctions options, there are differences between them — key among them that a compromise Senate measure is likely to leave more decision-making authority in the president’s hands and carve out more humanitarian assistance protections than the House bill.

Senate Foreign Relations Committee Ranking Member Ben Cardin (D-Md.) said in an interview while there was “nothing fundamentally wrong with the House bill,” he would like to tackle human rights in North Korea more comprehensively.

The House bill would only serve as a backup if the Senate can’t work out one outstanding issue between the its two measures, Chairman Bob Corker (R-Tenn.) said Wednesday.

“I’m 99 percent sure it will be a Senate bill,” Corker said, adding his committee will likely consider the measures during a Jan. 28 markup. [WaPo, Karoun Demirjian]

There is more pressure for the Senate to get its act together this time. Demirjian notes that in contrast with the House, which also passed a similar antecedent to its recent sanctions bill in the 113th Congress by a voice vote, the Senate “dropped the ball” on moving its own bill in the last Congress. It notes that “working through a separate bill may slow down the pace with which Congress responds to the latest nuclear provocation from Pyongyang.”

But Senate leaders stressed they have every intention of moving North Korea legislation quickly this month.

If the negotiations process falls apart, Corker said, “we still have the House-based text we could take up and certainly pass with a strong bipartisan majority.” [WaPo]

From what little we know here, it sounds like the negotiations are headed in the right direction.

Menendez said last week the compromise bill should feature “a mix of mandatory and discretionary sanctions” and added on Wednesday that he expected the final list would be a combination of the two.

If I’m guessing this right, the Senate is thinking of retaining the mandatory sanctions in Section 104(a) and making the sanctions in Section 104(c) discretionary, and perhaps even conforming that subsection to the text of Executive Order 13687. That would be a reasonable compromise that would keep the bill tough while preserving a structure that would be easy to amend and toughen in response to future provocations.

The bills also differ in what kinds of cybersecurity threats would be sanctioned, and emphasis put on North Korea’s minerals industry — a unique feature of Gardner’s bill.

The measures also approach human rights and humanitarian activities differently, with Menendez’s bill going the furthest to ensure that humanitarian aid and assistance receives special protection from enhanced sanctions, which is a key concern for some Senate Democrats. [WaPo]

Judging by some of the off-line discussions I’m having, the Senate really is working actively on this, with some of the most conservative and some of the most liberal senators taking leading roles. One issue I can confirm Senate staff are giving careful consideration is the shape of the humanitarian waivers and exemptions, such as those you can see in Section 207 of the House bill. That’s an important issue, deserving all the careful draftsmanship the world’s greatest deliberative body can muster.

From my vantage, this continues to be a case of a hawkish and mostly united Congress — yes, I really said “united Congress” — pitted against an administration that can’t decide what to do, and has decided to do nothing. For example, while Senator Gardner is criticizing the President for not mentioning North Korea in his SOTU speech, Gardner’s own toughness finds a serious competitor in this letter from Senator Ed Markey, a liberal Massachusetts Democrat, to the Secretary of State.

Here’s hoping that the final shape of the Senate’s bill is worth the wait.

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N. Korea sanctions bill passes the House 418-2, Senate seeks compromise bill

By now, you’ve probably read the news about last night’s lopsided vote. Interestingly, it was the Democrats, not the Republicans, who were unanimous in their support. The two dissenting votes were Justin Amash and Thomas Massie, both isolationist Republicans from the Ron Paul mold. 

Dissent may be patriotic, but it’s never beyond some well-deserved ridicule.

[Reminder: The views expressed on OFK are the author’s alone.]

You have to hand it to Nancy Pelosi for running a tight ship. In the end, even Charles Rangel and Barbara Lee voted “yes.” John Conyers didn’t vote. 

Here’s a link to the final bill the House passed.

Today, all eyes turn to the Senate, which has very little time to reach unanimous consent on its own bill in this election year. The good news is that all of the right senators — with the exception of Harry Reid, so far — are saying that it’s a priority:

Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that the upper chamber will soon take up sanctions legislation against North Korea after the country claimed it detonated a hydrogen bomb.

“Sen. [Cory] Gardner has been working on a North Korea sanctions bill. We anticipate it will come out of the Foreign Relations Committee very soon, and I intend to schedule floor time on it shortly,” he told reporters.

The Republican leader met with Gardner, a Colorado Republican, and Sen. Bob Corker (R-Tenn.), the Foreign Relations Committee chairman, on the issue earlier Tuesday. [The Hill]

Said Corker:

“We have members on our side, and the other side, that have bills here, so we’re going to go through it methodically,” Sen. Bob Corker (R-Tenn.) told reporters.

Sen. Ben Cardin (D-Md.) added, separately, that two proposals have been introduced in the Senate — one from Sens. Lindsey Graham (R-S.C) and Robert Menendez (D-N.J.) and another from Sen. Cory Gardner (R-Colo.) — and that he’s already had “some conversations with [with Corker] to make sure we have one bill.” [….]

Corker said that while the briefing with the administration didn’t specifically focus on what sort of sanctions Congress should impose, he added, “I think they believe that action by Congress would be helpful.” [….]

“I think we’re working with Senator Gardner, who has a bit of a different version, to reconcile it, and see if we can bring it to the chairman in a bipartisan effort,” the New Jersey senator said. [The Hill]

Both Corker and his Democratic Ranking Member, Ben Cardin, insist that action in the Congress should not be a substitute for action in the U.N. Security Council. They’re right, of course. U.N. sanctions and member state national sanctions work best in concert with each other. U.N. sanctions unite member states and help smooth out international enforcement gaps, but they have no force of law unless the member states enact and enforce sanctions of their own. All of the sanctions bills on the table now stress that by calling for the State Department to step up its diplomatic game.

Sen. Bob Corker, R-Tenn., chairman of the Senate Foreign Relations Committee, said he expected the Senate to vote on a measure to sanction North Korea soon, though he emphasized that the United Nations should also act.

“We’ve got to step up our game, be proactive and I think you’re going to see Congress over the next short period of time taking its steps, but it’s my hope the international community and our administration will be much more bold,” Corker told reporters following a closed briefing with officials from the State and Defense departments and Office of the Director of National Intelligence. [The Examiner]

Now that a sanctions bill has passed the House, the administration seems to have softened its line on whether Congress should meddle.

Corker also said the witnesses were open and said the administration “is probably more open in this case to Congress taking action and putting in place a toolkit to deal with this issue.”

Sen. Ben Cardin, D-Md., also said he expected Congress to take action against North Korea.

“It’s important that the [United Nations] Security Council takes action, we hope that they will. It’s also important for the United States to show international leadership to strengthen our sanctions regime against North Korea. So I think you’ll see action,” he said. [The Examiner]

The comments followed a classified Senate hearing on North Korea’s nuclear capabilities.

“I think they believe action by Congress could be helpful,” said Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.), emerging from a meeting on North Korea with administration officials. “It’s my sense anyway that Congress taking action on this issue could be beneficial and I think you’re going to see that happen.” [WaPo]

All of which gives hope that the Senate will get its act together, reach a compromise, and pass a bill out of Committee. Once that happens, I doubt the bill will attract opposition in the full Senate. What’s less certain is what the Senate’s compromise bill will look likeHaving reviewed both Senate bills, compared them to the House version, and had some discussions with Senate staff, my guess is that the Senate won’t just pass the House bill. Its own negotiations are probably too delicate for that. Senators will want to add their own language on diplomacy, human rights, human trafficking, and funding of humanitarian programs. That’s what’s supposed to happen when bright minds add good ideas. But the final content of the Senate bill will be 80 to 90 percent of the same DNA as H.R. 757.

My greater concerns are, first, that some of the Senate language in Section 104, the key enforcement trigger, lacks the coherence of what the House ultimately passed, and even (accidentally) leaves out the mandatory sanctions for arms trafficking. I don’t expect that to be controversial or difficult to fix.

Second, the National Committee for North Korea asked for some amendments to the language because of its fear that the House version could adversely affect humanitarian programs. Unfortunately, those requests came three months too late for consideration in the House markup. Myself, I think the concerns are overblown. The humanitarian waivers and exemptions in Section 207 of the House version are broad enough to deal with all of them, particularly if Treasury gets off the dime and starts working on implementing guidance now, assuring bankers that transactions in food and medicine are safe to handle, as it belatedly did with Iran. But NCNK’s recommended amendments were also conscientious, well written, and harmless to the bill’s effectiveness. In that case, if we all share the same concerns and goals, why not compromise? For whatever my view matters, I hope the Senate takes most of them aboard, and have said so to the right people.

Third and finally, one of the two competing Senate bills has mandatory sanctions for the worst conduct — proliferation, human rights abuses, money laundering, etc. — and one does not. In a perfect world, Congress could defer such matters to the President’s discretion, but this isn’t a perfect world. President Obama won’t use the discretion he has, and his predecessor, George W. Bush, threw his away because he didn’t know how to use sanctions as part of a comprehensive policy or a competent negotiation process. That gives Congress the responsibility to help the President lead. The fact that such targets as Chinpo Shipping, KNIC, NADA, Unit 121, Ri Chol, 88 Queensway, Hwang Pyong-so, and Kim Jong-un himself haven’t been designated by now — yet Robert Mugabe, Alexander Lukashenka, and Bashar Assad all have been — shows you just what’s wrong with this picture.

It’s as if someone in the State Department secretly granted Kim Jong-un transactional immunity, or (more likely) just decided to outsource the problem to our Chinese frenemies. I can’t quite explain it.

The only real opponent now is the calendar. It’s entirely possible that the House and Senate could both act, their attention spans could expire, and they could both disperse to their respective campaigns before they get agreed language through a conference committee. Certainly the Senate bill could make the House’s good bill even better. Each of the pending Senate bills contains endemic language that I hope to see in the final version. I’m sure you could find hundreds of people in this town who would express their own subjective opinions in that regard. The greatest danger now is that the perfect will become the mortal enemy of the good.

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House Subcommittee Chair calls for re-listing North Korea as a terror sponsor

poeLast month, I posted video of a hearing before the House Subcommittee on Terrorism, Non-proliferation and Trade, where Chairman Ted Poe of Texas and Ranking Member Brad Sherman of California grilled a hapless State Department official about North Korea’s sponsorship of terrorism, and why North Korea wasn’t listed. State’s performance at the hearing wasn’t just bad, but exceptionally so. Poe and Sherman were both visibly exasperated with State’s stonewalling, and seemed convinced that State was ignoring the law. Now, Poe has put his views in writing, listing the justifications for a re-listing at length:

Pyongyang has known links to the tyrannical regimes in Tehran and Damascus, and there have been several instances in the past decade in which North Korea’s two Middle Eastern clients transferred North Korean arms to Hezbollah and Hamas. In 2009 alone, three North Korean arms shipments were seized by UAE, Israeli, and Thai authorities.

In all three cases, press reports indicated that the arms were bound for terrorist groups. In July 2014, Western security sources told media outlets that Hamas brokered an agreement to purchase communications equipment and artillery rockets from the Kim regime. Sure enough, North Korean anti-tank guided missiles surfaced in Gaza that same year.

But weapons sales are not the whole picture of North Korea’s ties to terrorist groups – there is growing evidence of Pyongyang’s advisory role to these violent organizations. Press reports in 2014 suggested that North Koreans advised Hezbollah in the construction of tunnels in Southern Lebanon in 2003-2004. Israeli military commanders believe that North Korea also provided logistical advice on Hamas’ tunnel network which it infamously used to attack Israeli civilian populations.

North Korea is also still a major proliferator of weapons of mass destruction. Its ongoing collaboration on ballistic missiles with Iran, the world’s number one state sponsor of terrorism, is well known. According to reports the two countries are presently working on the development of an intercontinental ballistic missile that could allow North Korea to deliver a nuclear warhead far beyond its shores. [Fox News]

If I have one regret, it’s that Poe didn’t raise North Korea’s kidnapping and assassination plots against human rights activists and exiled dissidents in China and South Korea. But when the evidence for a state’s sponsorship of terrorism is extensive enough to fill a 100-page report, you can’t fault a man for not being able to squeeze it all into one op-ed.

Poe’s call adds to other prominent members of Congress of both parties who want North Korea re-listed, including Congresswoman Ileana Ros-Lehtinen and Senator Robert Menendez.

Meanwhile, we’re approaching the first anniversary of North Korea’s cyberterrorist threats that forced a stupid movie called “The Interview” out of theaters all over America. It was the first time in U.S. history that a foreign government successfully used terrorism against the American people, in their own country, to censor our freedom of expression. The Obama Administration’s response so far has been to sanction ten low-level arms dealers and three other entities that the Treasury Department had already sanctioned previously. A year later, I still wonder when our President will keep his oath to preserve, protect, and defend the most important freedom guaranteed to us under our Constitution.

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Congress to hold hearings on N. Korea & terrorism, human rights, nukes this week

The first hearing, entitled, “The Persistent North Korea Denuclearization and Human Rights Challenge,” will be held Tuesday at 10 a.m., before the full Senate Foreign Relations Committee. The witnesses will be Sung Kim, the State Department’s Special Representative For North Korea Policy And Deputy Assistant Secretary For Korea and Japan, and Robert King, State’s Special Envoy For North Korean Human Rights Issues.

The second hearing will be before the House Foreign Affairs Committee’s Subcommittee on Terrorism, Nonproliferation, and Trade, on October 22nd at 2 p.m. It will be entitled, “North Korea: Back on the State Sponsor of Terrorism List?” 

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(Coughs, clears throat, looks down at shoes.)

The witnesses will be Sung Kim and Ms. Hilary Batjer Johnson, State’s Deputy Coordinator for Homeland Security, Screening, and Designations. 

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Pro-North Korean group denies that it’s under investigation for tax evasion

According to the UPI, which in turn cites reports from Yonhap and SBS, one of America’s most infamous and influential pro-North Korean groups is under investigation “for tax evasion and political activities that violate U.S. tax laws.”

The nonprofit Korean American National Coordinating Council in New York is under investigation according to local Korean American and diplomatic sources, but it was unclear which government agency was conducting the full-scale investigation, South Korean news agency Yonhap reported.

The investigation also is the first reported case of a probe into a group that previously has expressed views sympathetic to the Pyongyang regime. [UPI, Elizabeth Shim]

That’s more than a mild understatement.

Investigators arrived on Thursday at the office of KANCC in the Interchurch Center building near Columbia University to begin their query, South Korean television network SBS reported.

A New York-based diplomat who spoke to Yonhap on the condition of anonymity said the organization was under investigation because of an alleged violation – and that U.S. investigators were probing other organizations that have expressed pro-Pyongyang sentiments.

The mere expression of pro-Pyongyang sentiment, without more, is protected by the First Amendment, and would not be a basis for a criminal investigation in the U.S., but is illegal in South Korea. I wonder if that means our “diplomatic sources” are South Koreans. Clearly, the report doesn’t tell the whole story, but then, KANCC’s president was unavailable for comment when the story broke. He was in North Korea for the big Liberation Day celebrations.Screen Shot 2015-08-18 at 9.02.20 PM

[KANCC President Yoon Kil Sang in Pyongyang last week. Front row, fourth from left]

KANCC has since posted an angry denial of Yonhap’s story, calling it a malicious lie and a total fabrication, threatening a libel suit, and demanding an apology. KANCC denies having been searched or even contacted by the feds. It claims that it merely advocates for human rights, peaceful reunification, and meetings of separated families. As early as 2003, after KANCC arranged for Suki Kim to travel to North Korea, its then-President, Michael Hahm, took exception to her characterization of it as “US-based organization of pro–North Korea activists.” (Kim’s story is well worth reading.)

I don’t know if KANCC is really under investigation or what for, and they’re innocent of tax evasion or any other crime until proven guilty. What’s incontrovertible is that KANCC is, at the very least, strongly sympathetic to North Korea. Its contribution to the North Korea human rights discourse has been to publish claims that the whole issue is a fabrication and a “racket,” criticizing the establishment of a U.N. human rights office in Seoul, and arguing that the world’s greatest human rights violator is (of course) the United States. Its relations with Pyongyang are, to use the Rodong Sinmun‘s quaint term, “compatriotic.”

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The reports don’t specify why the feds might be interested in KANCC’s political activities, but this public database has posted some of its tax returns online.* On its 2013 return, which is marked “open to public inspection,” KANCC claimed tax exemption as a 501(c)(3) nonprofit, and described its work this way:

TO EXERCISE AND PROTECT THE PRIVILEGES AND INTEREST OF THE RESIDENTS OF KOREAN-AMERICAN COMMUNITY IN THE NEW YORK, NEW JERSEY, CONNECTICUT AND TRI -STATE AREA, TO FOSTER A HEALTHY INTEREST IN THE CIVIC AFFAIRS OF THE COMMUNITY

Section 501(c)(3) grants tax-exempt status to organizations “operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition,” but limits their ability to engage in political campaigning, lobbying, or — here’s the kicker — “carrying on propaganda.” Now, words don’t always mean in law what they mean in daily usage, and you should not read anything in this post as a legal opinion. I’m not a tax lawyer, and you can parse or stretch a legal definition of “propaganda,” but as far as the daily use of the term goes, I know propaganda when I see it:
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Post after post praises Kim Il-Sung, sows anti-American conspiracy theories, or generally portrays North Korea as an earthly paradise. The content consists almost entirely of pro-Pyongyang tracts, republished propaganda from Uriminzokkiri and KCNA, and assorted maniacal batshite (“Kim Il Sung, Iron-willed Commander,” “Pyongyang Mass Rally Marks Day of Struggle against US Imperialism,” “Information Songun politics Beneficial to People,” and “Zionist-Anglo-Saxon Caliphate vs BRICS“). Also, don’t miss the letter, published on KANCC’s site, that compares the U.S. to Josef Mengele and Unit 731.

What I did not find on KANCC’s web site is much evidence of its “civic affairs” work.

Interestingly enough, KANCC’s web site also caught the attention of the New York Times back in 2003, for its many “selections from the writings of the Great Leader, as Kim Il Sung is known, and his son, Kim Jong Il, the Dear Leader.” KANCC’s then-President, Rev. Michael Hahm, told the Times he was “not happy with the site,” and that it was “run independently out of the group’s Washington office,” which did not return the reporter’s calls. And yet the web site doesn’t seem to have changed much in the last 12 years.

UPI’s report claims the feds are also looking into KANCC’s contacts with North Korean officials, including a visit to the North Korean U.N. mission “on the first anniversary of Kim Jong Il’s death in 2012 to deliver condolences,” and a possible attempt to contact members of Foreign Minister Ri Su Yong’s entourage during a visit to the U.S. last year.

These things, by themselves, would not necessarily violate U.S. law, either, although there are legal restrictions on contacts with foreign officials, which the Justice Department helpfully summarizes here. One of these is the Foreign Agents Registration Act, which requires “publicity agents” and “information-service employees” acting “subject to the direction or control of a foreign government or official” to register with the Justice Department. I can’t say one way or another whether KANCC is acting under Pyongyang’s direction or control; perhaps it’s just independently sycophantic. According to DOJ records, however, it isn’t FARA registered.

On the other hand, there’s no question that KANCC officials have met with senior North Korean officials. KANCC’s 2013 tax return lists one Yoon Kil-Sang as the President of KANCC. For your reference and identification, here are two photos of Yoon from KANCC’s web site. The Korean Central News Agency lists a “Yun Kil Sang” as a frequent visitor to Pyongyang leading delegations of “Koreans in the U.S.”** The most recent such report is dated last Friday.

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In the KCNA photo below, Yoon is on the left, and Kim Yong Nam, President of the Presidium of the DPRK Supreme People’s Assembly, is on the right. Pyongyang doesn’t usually give this kind of photo op to ordinary tourists or community activists.

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[Peace activism!]

Also, here’s Yoon (second from right) at the Liberation Day rally in Pyongyang.

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Here’s video grab of Yoon at a big North Korean rally at the DMZ (see this link for the Boston Globe‘s report on that rally).

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Unless my eyes deceive me, that’s also him in the center of the image below, wearing sunglasses and a black windbreaker, at a propaganda rally at Mt. Paektu, Kim Jong-Il’s mythical birthplace.

Yoon

[Let’s carry out Kim Il-Sung and Kim Jong-Il’s reunification philosophy!]

This KCNA report from January quotes Yoon praising His Porcine Majesty:

Kim Jong Un’s Personality Praised by Overseas Koreans Pyongyang, January 16 (KCNA) — Overseas Koreans are praising the personality of the dear respected Kim Jong Un as a great man. [….]

Overseas Koreans said in general that they felt “kind-heartedness” and “high-spiritedness” from Vice-Chairman Kim Jong Un when they were received by him after paying their respects to the bier of Kim Jong Il, chairman of the DPRK National Defence Commission, displayed at the Kumsusan Memorial Palace, the article noted, saying:

Yun Kil Sang, chairman of the Federation of Koreans in the U.S., said: His image gave other persons something comfortable. It gave a dignified yet gentle impression. When I looked at his face, I could feel that his hand shaking was based on warm sincerity, not casual manner.

KANCC’s officers were also behind this “open letter” to President Obama, calling on him to lift sanctions against North Korea, normalize relations with it, and (sit down for this) sign a peace treaty with it. The letter is dated December 2014, the same month President Obama accused North Korea of being behind the Sony hack and terrorist threat. The letter is signed by Moon J. Pak, as “Senior Vice President” of KANCC, and was posted on KANCC’s web site. It was also published by the rabidly pro-North Korean blog Minjok Tongshin, whose publisher, Roh Kil-Nam, is the recipient of the coveted (by some) Kim Il-Sung Prize, has a degree from Kim Il Sung University, and had visited the Workers’ Paradise a whopping 62 times as of last October.

According to this site, Pak’s open letter was also published as a full-page color ad in the New York Times last March. An ad like that could easily have cost $200,000. That’s about triple what KANCC reported to the IRS in total revenue in 2013 ($71,650, including $15,050 in “program service revenue, including government fees and contracts”) and $70,178 in expenses, leaving about $1,500 net. KANCC’s balance sheets and past tax returns report between $50,000 and $80,000 in gross income and almost no net. A group calling itself “Korean-Americans for Peace for the U.S.A. & North Korea & South Korea” lists 66 individual donors who supported the ad. The first three names are KANCC officers Yoon, Moon J. Pak (the author), and Michael Hahm. The letter also references a Korean-Americans for Change PAC, which reported total receipts of $7,650 to the Federal Election Committee in 2008. Did these individual donors really scrape together 200 grand for this ad? Hey, anything’s possible. KANCC reported no foreign donations on its 2013 return, and I have no evidence to the contrary, but I’ll never underestimate its influence again.

The point of this post isn’t to argue that KANCC violated its tax-exempt status or any other law. If there’s any substance behind UPI’s report, the legal process will decide that. Furthermore, most Americans would agree that the IRS shouldn’t target nonprofits for tax enforcement because it disapproves of their political views, although any law that grants tax exemption to the likes of KANCC is overdue for an amendment. My point is simply to document what KANCC stands for, and to illustrate why one should be wary of accepting self-serving claims of innocent peace activism at face value. The First Amendment protects your right to lick the feet of murderous totalitarians all you like, but it isn’t an exemption from the scrutiny and criticism of your fellow citizens for the repellent and — to use an archaic term I inexplicably cling to — unpatriotic views you express while doing so.

~   ~   ~

* The tax return is filed under the name “Korean American National Council Inc.,” but lists the same employer ID, and exactly the same income and expenses, as this balance sheet for the Korean American National Coordinating Council. Both list Kil Sang Yoon as President or “in care of name.” The tax return for the Korean National Council, Inc., gives an address of “475 Riverside Drive, Room/Suite 1369,” New York. The balance sheet gives an address of “475 Riverside Dr Ste 1368,” New York.

** There is an actual organization called the “Federation of Korean Associations, U.S.A.” It most certainly is not pro-North Korean.

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Senators Graham, Menendez introduce companion to N. Korea Sanctions Enforcement Act

Senators Lindsey Graham (R, SC) and Robert Menendez (D, NJ) introduced the bill, numbered S. 1747, last night. I haven’t had a chance to read the full text yet, but from my initial read, it looks similar to S. 3012, which Senator Menendez introduced in the 113th Congress.

Like S. 3012, S. 1747 makes the designations in Section 104(a) discretionary, rather than mandatory. The problem with that approach is that so far, President Obama has exercised his discretion to sanction North Korea as little as possible. The State Department has been patently dishonest in its refusal to hold North Korea accountable for its terrorist threats against Americans, to say nothing of its terrorist attacks against human rights activists and dissidents in exile.

Also like S. 3012, S. 1747 retains key provisions to fund the enforcement of the legislation in a time of shrinking budgets, and to fund humanitarian and human rights promotion programs, using assets forfeited from those who violate the prohibitions in section 104. That language was stripped out of the current House version, probably due to inter-committee jurisdictional drag. If only for keeping that important language in the conversation, S. 1747 is a welcome opening bid from the Senate.

Overall, S. 1747 is an imperfect but a good bill, and an important, bipartisan step toward putting a sanctions enforcement bill on the President’s desk this year. Like Senator Gardner’s S. Res. 180, S. 1747 sends a clear message to the President, urging him to abandon the old, failed approach of North Korean exceptionalism–of refusing to hold North Korea accountable for its threats, attacks, crimes, and atrocities lest we spoil a mood that exists only in the collective imagination of Foggy Bottom.

I wouldn’t assume that S. 1747 is the last bill we’ll see in the Senate before the August recess, either, despite Congress’s present preoccupation with Iran. Senator Corker (R, TN), the Chairman of the Foreign Relations Committee, hasn’t spoken yet.

In the end, I’m confident that Congress will merge what’s best about both bills in the Conference Committee, hopefully this fall. Unless the President vetoes the bill, at great political cost to himself, that bill would re-shape North Korea policy around a two-track policy of sanctioning the regime in Pyongyang, and engaging the North Korean people. If diplomacy has any prospect of success–a prospect that now rests on the fragile reed of Kim Jong Un’s temperament–it lies in an approach that gives our diplomats enough leverage to win concessions to improve human security for the North Korean people, for the region, and for us.

 

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Sen. Gardner introduces resolution calling for tougher sanctions against N. Korea

It would seem that his speech the other day had a purpose — this. I couldn’t have written it any better myself. Yes, it’s only a resolution, but its clear intent is to gain wider support for policies that a Senate version of the North Korea Sanctions Enforcement Act would enact into law. It’s also the latest sign that Congress wants North Korea back on the list of state sponsors of terrorism, and that in the battle to change North Korea policy, a second front has opened in the Senate. It will be interesting to see who joins as a co-sponsor, particularly among the Democrats.

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GAO: State Dep’t must step up diplomacy to enforce N. Korea sanctions

The General Accountability Office has released a new report on the enforcement of sanctions against North Korea. The report, requested by Senate Foreign Relations Committee Chairman Bob Corker, will probably influence the contours of the Senate’s version of the North Korea Sanctions Enforcement Act. You can read the full report here and a summary here, and listen to a podcast here.

The report correctly points to a key flaw in the enforcement of the sanctions that exist now — a lack of financial intelligence. The reasons for this, however, are multi-layered. The report explains some of those underlying reasons, but not all of them.

Agency officials cited obtaining sufficient information about North Korean persons to be their greatest challenge in making sanctions determinations. Most North Korea–specific sanctions authorities require a determination that a person engaged in a specific activity…

. However, officials said that gathering information on the activities of North Korean persons and personal identifying information can be difficult because of the nature of North Korean society, whose citizens are tightly controlled by the government. Without sufficient information, the United States could mistakenly designate and therefore block the assets of the wrong person, particularly one with a common surname. [GAO 15-485, p. 14]

Executive Order 13,687, signed by President Obama on January 2, 2015, could do much to improve the enforcement of financial sanctions against North Korea, because it is status-based, rather than conduct-based. This would relieve State and Treasury, particularly the overworked staff at the Office of Foreign Assets Control, of the burden of assembling evidence that specific North Korean entities had engaged in categories of conduct prohibited by Executive Orders 13,382 and 13,551, the executive orders under which most North Korean entities are designated today.

“Could” is still the operative word, however. Of the 13 entities designated under Executive Order 13,687, three were already designated, and ten others were individual arms dealers who’ve no doubt returned to Pyongyang and had their places taken by ten other North Korean arms dealers. It’s doubly disappointing to see the administration fail to harness EO 13,687’s potential at a moment of possible political instability in Pyongyang, when our leverage over Kim Jong Un is greatest. The GAO report fails to make recommendations about designations under EO 13,687.

GAO also overlooks another financial intelligence shortcoming — the lack of any broad and detailed requirement to report financial transactions with North Korea to OFAC, except for those incident to imports and exports to or from the United States. And even this doesn’t cover foreign subsidiaries of U.S. companies.

Because sanctions are most effective when enforced multilaterally, the U.N. Security Council’s sanctions resolutions should also be bringing in a wealth of shared financial intelligence about how and where North Korea does its prohibited business. They aren’t, and that’s a problem of political will. Other U.N. member states aren’t making the reports they should be making to the U.N. Panel of Experts (as noted in this post, and this one). Many more of them would if the State Department made it a priority to encourage member states to make them, or to help build capacity in those states that can’t (page 29). GAO found State’s answers about this to be lacking in specificity:

State Department officials informed us that the United States has offered technical assistance to some member states for preventing proliferation and implementing sanctions. However, they were unable to determine the extent to which the United States has provided specific assistance aimed at ensuring that member states provide the UN with the implementation reports it needs to assess member state implementation of UN sanctions on North Korea. [GAO 15-485, p. 30]

State has also failed to press China, Russia, the EU, and other states to harmonize their lists of designated “persons,” or to define simple terms like “luxury goods,” as Section 201 of the NKSEA calls for. GAO should have said more about this, but actually spent more time talking about Uganda’s violations of the resolutions than China’s.

This brings us to another important reason for the slowness of sanctions enforcement — the two usual suspects, Russia and China. Because the U.N.’s sanctions committee operates by “consensus,” either country can hold up a designation indefinitely (see diagram on page 22 for an explanation of the procedure). That’s why it took a full year after the Panama weapons seizure for the 1718 Committee to designate Vladivostok-based Ocean Maritime Management. Even when the U.N. does designate a party, such as Korea Ryonha Machinery Joint Venture Corporation, China and Russia continue to allow that party to operate on their territory. GAO should have mentioned this, too.

GAO’s overall conclusion, however, is correct. State needs to devote more diplomatic resources to getting other member states to implement and enforce UN sanctions. This is the kind of language GAO uses when a government agency isn’t doing enough:

GAO recommends the Secretary of State work with the UN Security Council to ensure that member states receive technical assistance to help prepare and submit reports on their implementation of UN sanctions on North Korea. [GAO 15-485, p. 31]

Failing that, Treasury should impose secondary sanctions on “persons” that flout the resolutions by continuing to buy weapons from North Korea, by failing to block the assets of designated entities, and by failing to carry out “enhanced monitoring” of North Korean transactions. That’s what H.R. 757 will do, and that’s why H.R. 757 is needed. As GAO’s report notes, the panel has no enforcement authority. But because North Korea is still using the dollar system, the U.S. government does:

The panel also identified that in most cases the investigated transactions were made in United States dollars from foreign-based banks and transferred through corresponding bank accounts in the United States. The panel’s 2015 final report indicated that North Korea has successfully bypassed banking organizations’ due diligence processes by initiating transactions through other entities on its behalf. The panel expressed concern in its report regarding the ability of banks in countries with less effective banking regulations or compliance institutions to detect and prevent illicit transfers involving North Korea. [GAO 15-485, p. 27]

There is also the more basic issue of manpower. Treasury either needs more staff at OFAC to collect and act on North Korea-related financial intelligence, or it needs to re-prioritize some of the staff it has working on other sanctions programs.

I also caught some inaccuracies in its report. On Page 7, GAO implies that the Iran, North Korea, and Syria Nonproliferation Act (INKSA) sanctions Pyongyang’s trade in luxury goods. Feel free to read the INKSA yourself, deep within the fine-print notes at the bottom of the International Emergency Economic Powers Act. If you can find any reference to luxury goods there, you may redeem the citation of that language for the carbonated grain-based beverage of your choice. In fact, the INKSA is narrowly focused on the proliferation of WMD technology. The U.S. government does have luxury good sanctions in the Commerce Department regulations, but administrations can always rescind or amend regulations — perhaps in exchange for false promises to disarm — after a process of public notice and comment. Statutes can only be repealed by an act of Congress.

Table 3 on Page 19 says that four North Korean entities are sanctioned under Executive Order 13619, which blocked the assets of “persons” threatening the peace, security, and stability of Burma. This didn’t sound familiar to me, so I control-F’ed by my way through the SDN list (which sounds vaguely erotic, but isn’t) and found no references to any North Korean entities sanctioned under the Treasury’s Burma sanctions (SDN Code, “Burma”). In fact, EO 13619 doesn’t even have an SDN index code, because it relaxes (rather than imposes) sanctions on Burma. I wonder if GAO meant to refer to some other executive order. If so, I can’t imagine what other executive order that might be.

The same table also claims that a total of 86 North Korean entities have been designated, but this number includes some double designations (for example, the 13 “persons” designated under EO 13,687 are added to those designated under EO 13551 and 13382, despite the fact that some of these are the very same entities). I actually count 73, excluding aliases. My count assumes that “persons” designated under the INKSA are also designated under EO 13,382 (SDN Code, “NPWMD”).

Appendix I contains a chart comparing North Korea sanctions to Iran sanctions. The chart could have been a very useful tool, but because it reduces broad categories of sanctions to a binary “X” rather than breaking them down by type and degree, it ends up being more misleading than informative, suggesting a parity that does not exist. It overlooks some of the most important sanctions, including special measures under Section 311 of the USA PATRIOT Act (Iran, yes; North Korea, no), comprehensive transaction licensing requirements (ditto), terrorism-related sanctions (ditto), tourist travel sanctions (Cuba, yes; North Korea, no), and the blocking of assets belonging to the government and its top officials (Belarus, Zimbabwe, Syria, and Russia, but not North Korea).

Worst of all, the chart contains an “X” indicating that there are human rights sanctions against North Korea. This is also misleading. Not one single North Korean person or entity has has been sanctioned for human rights violations (again, in contrast to most of the top leaders of Belarus, Syria, and Zimbabwe). The only possible basis for this claim is the fact that EO 13,687 — the one POTUS signed on January 2nd — finally refers to human rights, along with a host of other evil things Kim Jong Un is doing.

What GAO’s report really tell us, then, is that the administration hasn’t prioritized the enforcement of North Korea sanctions. The lesson for Congress is that if it wants that to change, it will have to force the administration’s hand through legislation and oversight.

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We are all North Koreans now

As far as I know, I didn’t liberate a single North Korean during my four-year tour with the Army in South Korea, although I’ve argued their distant and forgotten cause ever since I came home. The crimes of Kim Jong Un were still distant just five weeks ago, when Professor Lee and I, writing in The New York Times, sounded a lonely warning about Kim’s efforts to censor his critics in the South with terror and violence, writing that “[c]aving into blackmailers merely begets more blackmail.” To some, that probably seemed absolutist, even hyperbolic. It should seem more prophetic now.

One morning this week, I awoke to the realization that the rights I’m arguing for are my own—in my own home, and in my own neighborhood. Here, in America. In the suburbs of Washington, D.C.  Today, in a very small way, we are all North Koreans. Most of us have spent the last several decades ignoring the men who oppress North Koreans. Now, in a small but incalculably important way, the same men have oppressed us. Here is the FBI’s statement about the Sony hack, and the terrorist threats that followed it:

As a result of our investigation, and in close collaboration with other U.S. government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions. While the need to protect sensitive sources and methods precludes us from sharing all of this information, our conclusion is based, in part, on the following:

– Technical analysis of the data deletion malware used in this attack revealed links to other malware that the FBI knows North Korean actors previously developed. For example, there were similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks.

– The FBI also observed significant overlap between the infrastructure used in this attack and other malicious cyber activity the U.S. government has previously linked directly to North Korea. For example, the FBI discovered that several Internet protocol (IP) addresses associated with known North Korean infrastructure communicated with IP addresses that were hardcoded into the data deletion malware used in this attack.

– Separately, the tools used in the SPE attack have similarities to a cyber attack in March of last year against South Korean banks and media outlets, which was carried out by North Korea.

We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there. Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States. Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart. North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves. Such acts of intimidation fall outside the bounds of acceptable state behavior. The FBI takes seriously any attempt—whether through cyber-enabled means, threats of violence, or otherwise—to undermine the economic and social prosperity of our citizens. [FBI Press Release]

The feds sound very confident about their conclusions:

Intelligence officials “know very specifically who the attackers are,” said one individual familiar with the investigation, who like others spoke on condition of anonymity because the case is ongoing. [Washington Post]

As with the Cheonan incident, it’s almost as if North Korea wants everyone to know it did it, while leaving just enough doubt to let its apologists do their work. That strategy worked well for them in South Korea, which never responded to the two deadly attacks on its territory in 2010. Why should Kim Jong Un believe that attacking us would lead to different results? That’s one reason why I’m so glad the President said something about the importance of protecting free speech:

“We cannot have a society in which some dictator someplace can start imposing censorship here in the United States,” Obama said. “Because if somebody is able to intimidate folks out of releasing a satirical movie, imagine what they start doing when they see a documentary that they don’t like or news reports that they don’t like.

Obama said he wished Sony had “spoken to me first,” adding: “I would have told them, ‘Do not get into a pattern where you get intimidated by these criminal attacks.’ ” [Washington Post]

Well, depending on who you believe, maybe they did. Still, that’s a welcome change, coming from the President who asked YouTube to take down “The Innocence of Muslims,” and whose Justice Department hustled Nakoula Nakoula off to jail to appease the whooping loonies who dominate the Middle East’s political culture today. But not to worry—the CEO of Sony Pictures says he’s “considering some sort of release on the Internet.”

I’ve never been much of a George Clooney fan, but he’s one of the few people in Hollywood with the spine to stand against North Korea’s terrorism:

“We’re talking about an actual country deciding what content we’re going to have,” he told Deadline. “This affects not just movies, this affects every part of business that we have.”

“What happens if a newsroom decides to go with a story, and a country or an individual or corporation decides they don’t like it? Forget the hacking part of it. You have someone threaten to blow up buildings, and all of a sudden everybody has to bow down. [CNN]

Our attention now turns toward what President Obama will do. Let’s hope it exceeds my low expectations, and Pyongyang’s:

Even in my myopic world view, these attacks raise far weightier questions than what our North Korea policy should be. The President’s response must be enough to restore U.S. deterrence of North Korea, and the confidence of our artists, media, journalists, and lowly bloggers that our government will protect them from the world’s petty despots:

“We will respond proportionally,” Obama said, “and we will respond at a place and time that we choose.”

U.S. officials have made clear for several years that they have a range of diplomatic, economic, legal and military options at their disposal in response to cyberattacks. Those steps might include indicting individuals believed to be behind the attack, asking like-minded states to join in condemning the intrusion, and if North Korea persists, undertaking a covert action to dismantle the computer systems used in the operation. [Washington Post]

I’ve already written here about what that response should include. One of those possible responses seems almost inevitable, now that Senator Bob Menendez has asked Secretary of State John Kerry to put North Korea back on the list of state sponsors of terrorism. It’s difficult to see how he could avoid doing that, given the destructive power of the attack, its chilling effect on free speech, and the extensive evidence that North Korea was already sponsoring terrorism even before this incident.

“The United States condemns North Korea for the cyber-attack targeting Sony Pictures Entertainment and the unacceptable threats against movie theaters and moviegoers,” he said in written statement.

“We encourage our allies and partners to stand with us as we defend the values of all of our people in the face of state-sponsored intimidation,” Kerry added.

Separately, State Department spokeswoman Jen Psaki said U.S. and Chinese officials had met in Washington and Beijing to discuss the issue, adding that: “Both China and the United States agree that conducting destructive attacks in cyberspace is outside the norms of appropriate cyber behavior.” [Yonhap]

As is customary among journalists, The New York Times and Reuters printed the standard-issue, off-the-record-senior-State-Department-official talking point that North Korea sanctions are maxed out, without bothering to read the sanctions. This talking point sometimes comes without any citation of authority whatsoever, and sometimes cites “experts” who appear not to have ever read a sanctions regulation. When I pointed out to these Bloomberg reporters that they’d cited a cybersecurity expert‘s analysis of a legal question–and that the analysis was wrong–I received a polite and interested reply, suggesting that the reporters genuinely intend to research the question. In the case of Reuters, in particular, the propagation of this false narrative is disappointing, because most of the Reuters reporters I follow check their facts painstakingly before publishing them.

The Wall Street Journal’s Jonathan Cheng and Jeyup Kwaak did a better job:

On the financial front, the U.S. has wide latitude to target the North’s financial capabilities and its links to the global banking system, says Joshua Stanton, a Washington, D.C. lawyer and blogger who has advised the U.S. House of Representatives’ Foreign Affairs Committee on North Korea sanctions legislation.

Mr. Stanton says the U.S. can designate the North’s banking system as a money-laundering concern, add the country back to a list of state sponsors of terrorism, and move toward blocking U.S. tourism to the North.

“Our North Korea sanctions are weaker than our Zimbabwe sanctions,” Mr. Stanton said in an interview. “All of the top officials in the government of Zimbabwe have their assets blocked, and none of the top officials in the government of North Korea do.” [….]

“The single biggest thing that we can do is to designate the country as a primary money-laundering concern,” Mr. Stanton says, which he says would block the regime from conducting dollar-denominated transactions through the U.S. financial system, as its institutions can now do.

“That would have a very big impact on North Korea—banks around the world are very reputation-conscious,” he says, and would shy away from conducting any transactions with institutions tied to Pyongyang.

Some defectors from North Korea say Pyongyang has learned from the Banco Delta Asia sanctions, and now keeps much of its money outside the traditional banking system, which could limit the impact of such a move.

Mr. Stanton also notes that U.S. sanctions list just 63 North Korean ships, companies and individuals, far fewer than those for Myanmar or Cuba. He also says that U.S. Congress could start moving legislation that would impose similar restrictions blocking U.S. citizens from traveling to North Korea and spending money. [Wall Street Journal, Jonathan Cheng and Jeyup S. Kwaak]

Bruce Klingner of the Heritage foundation was also battling against this myth:

Oh, and for the record:

A North Korean U.N. diplomat said Pyongyang had nothing to do with the cyber attack. “DPRK (North Korea) is not part of this,” the diplomat told Reuters on condition of anonymity. [Reuters]

I think I speak for all of humanity when I sincerely hope this isn’t all Barack Obama’s pretext to advance Joe Biden’s cryptic plot to dominate North Korea’s vast riches of coal, meth, and refugees.

One thing that seems far more likely today is that the House and Senate will make North Korea sanctions legislation a higher priority. Even before the FBI fingered North Korea for this attack, and before President Obama announced his outreach to Cuba, Senator Menendez introduced a sotto voce version of the North Korea Sanctions Enforcement Act, S. 3012. That bill is too weak to be worth passing in its current form, but it’s structurally similar enough to what the House passed last year that it should be viewed as a serious opening bid and a welcome step toward a good compromise.

A friend on the Hill told me yesterday that in terms of seizing Congress’s attention, the events of this week are the equivalent of “two or three nuke tests.” A Chinese Security Council veto of U.N. human rights sanctions–sanctions that were just recommended by the full General Assembly–should be the equivalent of another. At an exceptionally formative moment, Congress’s attention has been focused on North Korea. The administration is distinguishing North Korea from Cuba, is almost certainly considering new sanctions, and has probably just scrapped its plans for Agreed Framework 3.0. If a bipartisan, centrist consensus concludes that the agony of North Koreans is no longer a problem we can treat as remote and irrelevant, and that it’s time to discard the failed solution of appeasement, we will have reached an inflection point in our North Korea policy.

One avenue of response I hope the President won’t overlook is that information warfare works both ways. Certainly, carefully targeted sanctions can play an important part in defunding and disrupting the regime’s capacity to censor and oppress its people. Symbolically and practically, however, no response–not even sanctions–would do more to alter North Korea than to wage a quiet, non-violent war against its information blockade. It is difficult to imagine that despite all of America’s innovative potential, it still lacks the means to bring free speech to the people of North Korea, and to help them find their own way to rid themselves of the accursed men who tread them–and us–down.

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