Sens. Gardner & Markey call on Trump administration to enforce North Korea sanctions law

Here’s the kind of story you hear too seldom in Washington today: A conservative Republican (Cory Gardner of Colorado) has joined forces with a liberal Democrat (Ed Markey of Massachusetts) to write a letter to the new secretaries of State and Treasury, asking them to fully enforce the North Korea Sanctions and Policy Enhancement Act (NKSPEA), which passed Congress with the overwhelming support of both parties last year. (Even Bernie Sanders would have voted for it had he not been campaigning in New Hampshire at the time.)

Gardner emerged as the Senate’s leader on North Korea policy just under two years ago, and went on to lead the Senate’s efforts to pass the NKSPEA. Markey, arguably the Foreign Relations Committee’s most liberal member, has also been keenly interested in North Korea for some time, particularly on human rights and the risk that loose talk about preemptive strikes might lead to miscalculation and war. His decision to become more vocal on sanctions enforcement is welcome, particularly for those of us who believe that human rights must be at the core of our policy.

The senators’ letter drives directly at the very issue I raised in last Friday’s post — it’s no use for Congress to pass new laws unless the President puts enough cops, lawyers, and intelligence analysts on the job to enforce them. The letter asks the new secretaries for detailed reports on how many people they’ve assigned to North Korea sanctions investigations and enforcement, how many investigations they’re currently conducting, how much money they’ve asked Congress for to staff up, and whether they agree that the government should form an interagency task force to enforce the NKSPEA.

I know a few people who’d love to answer those questions. I’ll take a shot at the last one myself: yes, if Trump wants to avoid the paralysis-by-analysis that consumed all eight years of the Obama administration. For years, cabinet departments tripped over one another on North Korea policy for the same reason different parts of the Chinese government are also imperfectly aligned — they deal with different people and prioritize different interests. The difference is that China has exploited our differences skillfully, while we’ve mostly failed to exploit China’s conflicts of interest.

It’s old news that State has taken a deferential approach to China. Treasury is (somewhat understandably) keen to guard its authorities, avoid litigation, and maintain good relations with the banking industry. The enforcement agencies are frustrated that too often, after a great deal of hard work, they aren’t allowed to clean and fry the big fish they think they’ve hooked.

I also suspect that other agencies aren’t taking full advantage of the data the intelligence agencies could add to a shared map of North Korea’s finances. It’s too easy for DNI, CIA, and NSA to become victims of the tyranny of small distances. They’re sited out in northern Virginia or Maryland, which makes it logistically burdensome for them to share classified information with State, Treasury, Justice, and FBI, despite the fact that each may hold the missing pieces that the other might need to perfect cases they’re working on. A task force, as contemplated in NKSPEA 102, isn’t just needed to coordinate priorities at the cabinet and executive levels; smaller inter-agency strike teams are also needed to coordinate possibilities at the working, civil servant level.

When we drafted the NKSPEA, we knew that a fire-and-forget approach wouldn’t work. We knew that Congress’s aggressive oversight would be essential to overcoming bureaucratic resistance and prioritizing enforcement. That’s why it’s gratifying to see Chairman Gardner and his Ranking Member, Sen. Markey, make good use of the law’s oversight provisions.

Read their letter in full below the fold (click “continue reading” –>).

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What the Trump administration’s first North Korea sanctions designations tell us

Last Friday’s designations of 11 individuals and one company by the Treasury Department are the first North Korea designations of the new Trump administration. So what do they tell us about the direction of the administration’s North Korea policy?

On the positive side, the designation of a North Korean coal company affiliated with the military should, in theory, send a strong message to its Chinese clients, although they don’t seem to have taken the last hint. Also on the positive side, the designated individuals are mostly front-men for North Korean banks, trading companies, arms dealers, and shippers in Russia, China, and Vietnam. It’s good that North Korean operatives in China — and Russia — aren’t off-limits. As I explained here, those governments are already obligated to expel most of these people by U.N. Security Council resolutions.

These are the kinds of targets we should be focused on to uproot His Porcine Majesty’s proliferation and money laundering networks, particularly in China. The designations will send a strong message to Russia and China to kick them out. They’ll also fill the Treasury Department’s SDN database — and consequently, the anti-money laundering compliance software the banking industry uses — with the names and addresses of North Korean agents and front companies. That will help make it harder for those agents’ bankers to defend their due diligence and compliance later, if and when Treasury files civil penalty cases against them.

On the not-so-positive side, this still isn’t what needs to be done — holding the Chinese banking industry accountable for breaking our laws and laundering North Korea’s money through our financial system. For a critical reaction to the new designations, see Anthony Ruggiero’s tweetstorm. As Anthony notes, all 12 entities designated last Friday are North Korean, so these are not the secondary sanctions we need to make North Korea sanctions effective.

Maybe it was too much to expect that some of North Korea’s Chinese front-men would be designated right before Xi Jinping arrives at Mar-a-Lago. I’ll be very interested in seeing what happens after Xi departs. If Trump really is the corrupt empty suit his harshest critics say he is, Xi Jinping will come to Mar-a-Lago, offer to turn a few Lotte stores into Trump hotels, and do what China always does when under sufficient pressure about North Korea — lie like a cheap rug until our national case of Attention Deficit Disorder sets in again.

Overall, however, I may be slightly less pessimistic than Anthony. For one thing, there is this report on the outcome of the administration’s policy review, which sounds like what I’d expected. For another, I interpret Trump’s statement that he’ll act against North Korea with or without China’s help as a threat to act against Kim Jong-un’s Chinese bankers and freeze his accounts. For another, although I might have expected Treasury to sanction Chinese enablers and trading companies now, I would not expect it to start nuking banks just yet. Instead, Trump’s message to Xi should be that the Bank of China is under investigation by the Treasury Department, soon to be followed by the Bank of Dandong and the 12 other banks that held accounts for Dandong Hongxiang and its many front companies and shell companies.

Finally, Trump can drop a veiled hint that ports that don’t inspect North Korean cargo, as U.N. Security Council resolutions require, can expect to be targeted with extra customs inspections. That could drive shippers away from those ports and damage the economies of those cities. Then, Trump would have someone leak that to the press and watch for signs like this.

As of today, however, it’s possible that none of those banks are under investigation because the investigative agencies simply don’t have enough staff to do it all. We’ll turn to that topic, and to this letter from senators Cory Gardner and Ed Markey, in tomorrow’s post. A full list of those designated last Friday below the fold (“continue reading” –>).

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Congress is marking up North Korea bills faster than I can write about them

Congress’s sentiment about Pyongyang today equates roughly to Cato the Elder’s sentiment about Carthage. (I mean this figuratively, for now, although I increasingly fear that sanctions are our last plausible strategy to prevent war.) It’s now moving more North Korea legislation than it has in the entire decade leading up to the passage of the North Korea Sanctions and Policy Enhancement Act just over one year ago. I can no longer keep up with all of the bills, amendments, markups, and resolutions in what little spare time I still have.

  • H.R. 1644: The Foreign Affairs Committee has moved very quickly in marking up H.R. 1644, the KIMS Act, which toughens the NKSPEA to match or exceed new U.N. sanctions under UNSCR 2270 and UNSCR 2321. It would impose tough new secondary sanctions on foreign ports that fail to inspect North Korean cargo, foreign banks that discreetly connect North Korean banks to the financial system, governments that allow the use of North Korean slave labor, and states that reflag North Korean ships. The Committee Chair, Ed Royce, amended the bill at an action-packed Committee markup earlier this week. I haven’t had a chance to do a line-by-line comparison, although I noticed that the newer version expands a humanitarian exception for North Korean imports of gasoline and diesel fuel.
  • H.R. 479: Ted Poe and Brad Sherman’s bipartisan bill to force the Secretary of State to re-list North Korea as a state sponsor of terrorism was amended to look like Ted Cruz and Cory Gardner’s bill. That means the House and Senate are coordinating their efforts and are serious about putting that bill on the President’s desk. I continue to predict that the Secretary of State will act on his own before that happens, but only because that legislation is advancing toward the President’s desk at such a deliberate pace. Frankly, I’m surprised the Secretary of State hasn’t already acted. This bill may be a necessary incentive to focus the administration’s priorities.
  • H. Res. 223: Ted Yoho, the new Asia Subcommittee Chairman, says China has been sanctioning the wrong Korea, and has introduced a new resolution calling for Xi Jinping to knock it off. (China’s escalation of this crisis, by waging economic war on South Korea, may call for a deterrent escalation of our own. The closure of a South Korean factory in China gives me the idea that our secondary sanctions against North Korea should focus their impact on regions in China that already have higher rates of unemployment. By joining forces with Japan and South Korea to concentrate the effect of sanctions on those regions, we can raise the political pressure on Xi Jinping. As with Kim Jong-un, it may take a threat to Xi’s political control to influence his behavior, or the behavior of those around him.)
  • H. Res. 92: Another bipartisan House resolution condemns North Korea’s missile tests, calls for the quick deployment of THAAD and the improvement of our missile defenses, and calls for the full enforcement of the new sanctions authorities that the U.N. and the U.S. have approved over the last year.
  • S. Res. 92: By a striking numerical coincidence, S. Res. 92, introduced by Senator Mike Lee of Utah, is also North Korea-related. It calls on the government to investigate the disappearance of David Sneddon. Members of Sneddon’s family have raised suspicions that North Korea may have been behind his disappearance in China in 2004.
  • What’s still missing is a reauthorization of the North Korean Human Rights Act, which has to happen this year or the law will expire. Expect to see that effort begin in the Senate and work its way back to the House later.

If there’s another nuke test in North Korea, you can expect to see a flood of member amendments and resolutions. There is, of course, still more that Congress can do, including:

  • tourist travel ban authority,
  • provisions that would require the public disclosure of which companies have investments in North Korea,
  • immunity and encouragement for fund managers to divest from those companies,
  • requiring the public disclosure of any North Korea-related beneficial ownership interests,
  • a flat-out ban on access to the dollar system by any bank or person that transacts with North Korea, and
  • perhaps most importantly for now, a comprehensive transaction licensing requirement for North Korea, although this loophole would be closed by putting North Korea back on the list of state sponsors of terrorism.

Congress could also name and shame more of the banks and other entities that were dishonorably mentioned by the U.N. Panel of Experts. It could also make its voice heard on Kaesong, which Moon Jae-in has promised to reopen, despite the fact that this would violate multiple U.N. Security Council resolutions. If South Korea violates U.N. sanctions, China, Malaysia, and Africa will draw the conclusion that the world isn’t serious, and a global enforcement coalition will never coalesce.

As with the U.N. resolutions, although there is still more Congress can do to create legal authorities for sanctions, Congress is approaching the point where it will have completed its to-do list, and the focus must shift to enforcement and implementation of the existing laws. Making sanctions work is increasingly about putting enough of the right people into the right positions to make an enforcement program effective. The slow pace of political appointments isn’t encouraging. Many of the necessary improvements to our North Korea policy await those key appointments: how we award grants, what we broadcast to the North Korean people, which refugees we admit, how we exploit the intelligence they provide, who coordinates the broader policy among squabbling agencies, and what we do about foreign governments that violate sanctions, use North Korean slave labor, or repatriate refugees to North Korea.

The vast majority of federal employees, of course, aren’t political; they’re career civil servants appointed under Subchapter I of Title 5. They’re the technocrats and experts who faithfully execute the laws and the President’s policies, regardless of who the president is. Although President Trump’s hiring freeze may be affecting their numbers to some degree, the freeze has broad exemptions for national security and public safety, which most eligible agencies have already invoked. The key enforcement agencies are badly understaffed with the career employees needed to enforce sanctions, but not because of the new hiring freeze. Many are working late nights and weekends out of dedication alone. The simple truth is that North Korea investigations, sanctions, and prosecutions just weren’t a priority for previous administrations, so most career employees were assigned to other duties. If personnel is policy, the new administration hasn’t yet changed that policy. Let’s hope it does soon. The administration says North Korea is a top priority, but so far, I’ve seen little evidence that its actions have matched its words.

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WSJ: Feds may indict North Koreans in Bangladesh Bank fraud

This story just gets more interesting by the day:

Federal prosecutors are building cases that would accuse North Korea of directing one of the biggest bank robberies of modern times, the theft of $81 million from Bangladesh’s account at the Federal Reserve Bank of New York last year, according to people familiar with the matter.

The charges, if filed, would target alleged Chinese middlemen who prosecutors believe helped North Korea orchestrate the theft, the people said.

The current cases being pursued may not include charges against North Korean officials, but would likely implicate North Korea, people close to the process said. [Wall Street Journal, Aruna Viswanatha and Nicole Hong]

Traditionally, robbery has meant theft by means of force or intimidation. I thought this case sounded like a better fit for bank fraud until I read the Criminal Code section on bank robbery, which is much broader than the common law definition and covers the whole life cycle of the criminal course of conduct.

The FBI’s Los Angeles Field Office and the U.S. Attorney’s Office for the Central District of California have the lead, which means the indictments would most likely issue in the Central District of California (and consequently, the Ninth Circuit). It’s not an ideal place to pick venue if you’re the government. The USAO for the Southern District of New York is also investigating other bank fraud cases it suspects of being the work of the same North Korean hacking group, known as “Lazarus.”

As I noted in my report on North Korea’s sponsorship of terrorism, the U.S. government thinks the Reconnaissance General Bureau (which is designated by both U.S. Treasury and the U.N. Security Council) did the Sony cyber attack. Recent reports have also linked the code used in the Bangladesh fraud to the code used in the Sony attack. That would make the RGB a prime suspect in both attacks, which means it would have been a violation of the International Emergency Economic Powers Act (IEEPA) for anyone to knowingly engage in dollar transactions with the RGB’s agents after August 30, 2010, when that agency was first designated.

If charges are filed against alleged middlemen in the Bangladesh theft, they are expected to be similar to charges unsealed in September against a Chinese businesswoman, Ma Xiaohong, some of these people said.

That makes sense. The “Chinese middlemen” could be charged with violating the IEEPA and money laundering whether the feds can pin the bank fraud on the North Koreans or not. Here’s my post on the Ma Xiaohong/Dandong Hongxiang case, with links to the indictment and the civil forfeiture complaint.

There is, apparently, a “minority view” among the feds that the North Koreans may have sold the code to third parties without being directly involved. Depending on the evidence, that might still be a crime — most likely conspiracy to commit bank fraud or a violation of the Computer Fraud and Abuse Act, or aiding and abetting one of those crimes. That might even be a smarter charging strategy.

The report also says the Treasury Department may freeze the assets of those under investigation (I’d guess under Executive Order 13722, implementing the NKSPEA, or EO 13757, Obama’s eleventh-hour cyber executive order).

A decade ago, the feds were ready to indict North Korean officials for counterfeiting, but political pressure from the State Department got the case shelved — permanently. That was the George W. Bush administration. I don’t get the impression that the Trump administration would do any such favors for Kim Jong-un.

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Royce introduces bill to toughen sanctions on N. Korea; subcommittee holds hearing

The big news yesterday was that Ed Royce, the Chairman of the House Foreign Affairs Committee, has introduced a sequel to the North Korea Sanctions and Policy Enhancement Act, or NKSPEA. You can read the full text here, but briefly, the bill —

  1. Expands the mandatory and discretionary sanctions in NKSPEA 104 to match the sanctions added by UNSCR 2270 and UNSCR 2321. It also adds a few more, like authorizing Treasury to sanction anyone who imports food from North Korea — a gravely immoral thing when so many North Koreans are going hungry, and when the state obviously isn’t using its food export revenue to buy gbrain to feed them.
  2. Provides new authorities to ban North Korea from financial messaging networks. Of course, SWIFT is reportedly disconnecting all North Korean banks, but this provision now becomes important to prevent SWIFT’s less reputable competitors from taking that business on.
  3. Codifies the Treasury Department’s new regulatory ban on providing indirect correspondent account services to North Korean banks.
  4. Toughens the NKSPEA 203 provisions denying aid to states (mostly in Africa and the Middle East) that buy weapons from North Korea.
  5. Toughens the NKSPEA 205 provision allowing U.S. Customs to increase inspections of cargo coming from ports that aren’t meeting their UNSCR 2270 obligations to inspect North Korean cargo. It also creates a blacklist of non-compliant ports, including Dandong and Dalian. That could put pressure on those ports to either meet their inspection obligations or shun North Korean cargo altogether. Think of it as the customs equivalent of Banco Delta Asia. But I haven’t even told you the best part yet.
  6. Creates the authority for secondary shipping sanctions against North Korea by giving the Coast Guard the authority to ban ships, shippers, and flags that violate U.N. shipping sanctions from U.S. ports and waterways. That will make for some lively discussions with the Ways and Means and Transportation committee staffers. It also takes a page from the South Koreans and Japanese who’ve enacted similar measures. That would effectively bring the U.S. into a coalition with those nations to isolate North Korea from the global trade system. Given that this coalition would now include China’s three largest trading partners, that’s potentially quite a powerful measure. And as I’ve noted more than once, let there be no doubt that it was China that started the trade war over North Korea. This is how we stand by our allies and deter economic bullying.
  7. Increases sanctions against companies that employ North Korean slave labor, and threatens to raise the tier status of those governments under the Trafficking Victims Protection Act.
  8. Adds a new condition for the suspension of sanctions — that North Korea permit Korean-Americans to have unrestricted and unmonitored meetings with their North Korean relatives before they die.
  9. Offers rewards to defectors, and maybe other informants, who provide information leading to the arrest or conviction (in any country) of persons involved in North Korean WMD, cyberattacks, or money laundering.
  10. Piles on more pressure to designate North Korea as a state sponsor of terrorism.

And we still haven’t even seen the member amendments, which promise to be lovely. (On a related note, the Senate is also moving separate legislation to sanction the companies that have participated in China’s island-building in the South China Sea.) This promises to be an action-packed year for all you sanctions geeks out there. The dark circles under my eyes should be proof enough.

~   ~   ~

The other big event yesterday was the first hearing run by the new Chairman of the Asia-Pacific Subcommittee, Ted Yoho of Florida. As of yesterday morning, I hadn’t really viewed Yoho as a thought leader on Asia policy, but after his performance yesterday, I’ve reassessed that view. Yoho ran a tight ship, kept the proceedings on time, and despite this being his debut, projected a sense of calm command of the proceedings. More importantly, both Yoho and new Ranking Member Brad Sherman came in extremely well-briefed on the issue, and in full command of the facts. There was undoubtedly some first-rate staff work behind that. They’ve clearly digested the Panel of Experts’ latest, something that I’m still in the process of doing. You should really watch the whole thing:

The panel members were Bruce Klingner of the Heritage Foundation, Professor Sung-Yoon Lee of the Fletcher School, and former State/Treasury official Anthony Ruggiero, who has added much-needed expertise to the debate about sanctions policy and administration. I thought all three were extremely effective in breaking through to the members, but then, I consider all three men to be good friends, so I won’t even pretend to be objective. I’ll just post a money quote from each of them. First, Klingner sets the stage for where we find ourselves today, and why Americans should care:

Professor Lee’s statement, frankly, is some of his best work. It’s a must-read, not just for its historical insight about the often-strained relationship between China and North Korea and what that doesn’t mean, and not just for its insight into North Korea’s political objectives, but for the beauty of its prose (which Chairman Yoho also praised).

Ruggiero then brings his practical experience and careful research to the often-underinformed discussion of sanctions as a policy tool. And if I had to pick one panelist whose testimony really seems to have broken through to the Committee members, it’s probably Ruggiero, who reformatted their c-drives about a lot of junk analysis about sanctions:

Thanks for that!

Ruggiero also had some choice words for SWIFT, which I’ll let you read on your own.

With the Trump administration about to conclude its policy review and clearly headed in the direction of a harder line that will emphasize sanctions without sparing Chinese violators, this advice will undoubtedly find audiences in the White House, the National Security Council, and the State and Treasury Departments. My guess is it’s going to be a tense dinner at Mar-a-Lago when — or if — Xi Jinping comes around. But as I’ve said before, our relations will China may have to get worse before they can get better.

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Ted Cruz introduces Senate bill to re-list N. Korea as a state sponsor of terrorism

Ted Cruz, who has emerged as a leading advocate for a harder line against North Korea, has introduced a Senate companion bill to Rep. Ted Poe’s bill, calling for North Korea’s re-listing as a state sponsor of terrorism. According to a press release from Senator Cruz’s office,* Cruz’s bill has six original co-sponsors: Sens. Thom Tillis (R-N.C.), Dean Heller (R-Nev.), Lisa Murkowski (R-Alaska), Marco Rubio (R-Fl.), Dan Sullivan (R-Alaska), and Cory Gardner (R-Colo.).

Compared to the House bill, the Senate bill has a shorter list of North Korean conduct justifying a re-listing, relying almost exclusively on conduct in which U.S. or South Korean courts found the North Korean government responsible for acts of international terrorism. The obvious exception is that the Cruz bill raises the murder of Kim Jong-nam with VX, a persistent nerve agent, in that crowded airport terminal in Kuala Lumpur, which would be the first state-sponsored terrorist attack with a weapon of mass destruction.

The bills also differ in their approaches. The Cruz bill (still no number, but here’s the text) simply asks the Secretary of State to make a determination whether North Korea has repeatedly sponsored acts of international terrorism. The Poe bill (H.R. 479) forces the administration to go through a series of alleged North Korean acts, and then say whether (1) North Korea did it, and (2) whether it’s international terrorism.

Both bills, however, omit the case of the Rev. Kim Dong-shik, a lawful permanent resident of the United States with a family in Illinois, whom North Korean agents kidnapped from China in 2000, and starved or tortured to death (or both) a few months later. In that case, the U.S. Court of Appeals for the D.C. Circuit held that, despite the fact that there were no direct witnesses to Rev. Kim’s death inside North Korea, the evidence was still sufficient to support a judgment against the North Korean government (case number 13-7147), and remanded the case back to the District Court. The District Court then entered a $330 million judgment for Rev. Kim’s family (case number 09-648). In 2005, of Rev. Kim’s kidnappers, Ryu Young-Hwa, was caught and convicted by a South Korean court for his role in the kidnapping. He was sentenced to ten years in prison. Click here to see where Senator Obama signed a letter promising that he would not support removing North Korea from the list until North Korea accounted for Rev. Kim’s fate. Click here to see where presidential candidate Obama reneged on that promise.

Overall, however, both bills make a strong case in favor of a decision that ought to have been made years ago as a matter of the evidence, the law, and the policy reason behind the list — to discourage and deter states from sponsoring terrorism. Indeed, as I argued here, North Korea never convincingly renounced terrorism and never should have come off the list to begin with.

The bills aren’t identical, so there are two ways to reconcile them. If one of the bills passes its respective chamber, the other chamber can pass that bill and send it to the President (easier, and overwhelmingly more likely for a simple bill like this). If both chambers pass their respective bills, they could resolve the differences at a conference committee. The most likely alternative, however, is that the Secretary of State will put North Korea back on the list before either chamber passes its bill. When Congress this clearly wants the Secretary of State to take an action within his discretion that’s well justified by fact, law, and policy, the Secretary of State usually takes that action. John Kerry might not have wanted to do this as a matter of policy, but I doubt Rex Tillerson shares that view. Now that Tillerson is back from his visit to Seoul and Beijing, I’d guess that diplomatically speaking, the decks are clear for this.

While I’m on this topic, I have a few things to say about former State Department official Joseph DeThomas’s 38 North post, arguing against a re-listing. DeThomas starts by conceding that the VX attack on Kim Jong-un might have been an act of state-sponsored international terrorism, which goes a step beyond what another former State Department official said here:

Daniel Benjamin, who served as the US State Department’s counterterrorism coordinator under the Obama administration, says the murder lies in a “gray zone.”

While the suspected use of the deadly VX nerve agent is within the legal parameters of designating the North as a terrorist state, Mr. Benjamin told Voices of America, assassination by itself cannot be interpreted as an act of terrorism. 

“So this is a very unusual case,” said Benjamin, now director of the Dickey Center for International Understanding at Dartmouth College. [Christian Science Monitor]

Well. If directing your diplomats and clandestine agents to murder a nonviolent political critic with a persistent nerve agent in an airport terminal crowded with mothers, fathers, babies, and children in a friendly country doesn’t qualify as international terrorism, your definition needs some adjustment.

DeThomas then muses whether North Korea’s sponsorship is “repeated,” a question he could have resolved easily with more careful research. He’s welcome to mine, in fact, but he did cite Bruce Klingner’s excellent summary, which is more than sufficient. But DeThomas’s argument really comes down to this:

However, strategically, there should be no rush to designate Pyongyang. In the larger regional context, the North Korean issue does not need any additional ignition points. Tensions are already running high on the North Korean missile front with its tests of ballistic missile strikes on Japan and with both US and Japanese sources floating stories about preemptive military options to deal with it, not to mention the somewhat more rapid deployment of THAAD than outside observers expected. [….]

While Pyongyang may richly deserve the designation as a state sponsor of terrorism, it would be no sin to follow a deliberative pace in the designation process. A little over a hundred years ago, a state sponsored international terrorist political assassination in a strange city far away lit a spark among major powers that were absorbed in other domestic and international concerns. They unwittingly followed the logic of their responses to the assassination into a global war totally disproportionate to the crime. That war led to the fall of three empires, the death of millions and the end of Europe’s golden age. In the current environment on the Korean peninsula, taking a few weeks or months to sort things through on a terrorist designation will play to the US long-term advantage. [Joseph DeThomas, 38 North]

In other words, let’s not call North Korea a sponsor of terrorism because we’re terrorized. One could make the same argument about the military exercises underway now — those certainly rile Pyongyang. So does the enforcement of U.N. sanctions. So does accepting North Korean refugees and defectors. So does enforcing U.N. sanctions. So does seizing its smuggling ships. So does missile defense. And most of all, so does talking about human rights in North Korea — another issue the State Department spent years trying to downplay or sideline. If all discussions about North Korea policy begin and end with “let’s not rile them,” and if every potential North Korean victim is Archduke Franz Ferdinand, the message Pyongyang will hear is, “Send Gavrilo.” It’s only one example of what Marcus Noland calls “North Korean exceptionalism,” the unique excusal of North Korea from the standards of civilized humanity. If Pyongyang isn’t willing to disarm and you’ve exempted it from consequences that rile it, then your policy is paralyzed at “strategic patience.”

Lest I be accused of taking the views of two former officials as speaking for a department they no longer represent, let’s add this atrocious performance by a State Department witness at a congressional hearing. And for years, the State Department’s argument against a re-listing was, simply stated, a lie: that North Korea is “not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987.”

If the State Department now searches in angst for reasons why its influence (and budget) are diminishing in Washington, the opinions of DeThomas and Benjamin are as good an illustration as any. Based on conversations I’ve had with State Department people (in settings that weren’t appropriate for attribution) Foggy Bottom overwhelmingly opposes re-listing North Korea. State Department officials have told me to my face that North Korea doesn’t sponsor terrorism, despite the overwhelming evidence that it does (and there is no excuse for them not to know this). In some cases, they apply a conveniently narrow definition of “international terrorism” that’s at odds with past State Department precedent and with the legal definitions of the term. Or, they say that re-listing North Korea would be merely symbolic.

But if a re-listing would be merely symbolic, why do its opponents think North Korea would care so much? (DeThomas makes both arguments without reconciling the tension between them.)

The first answer is that a re-listing would be financially significant. It would require U.S. representatives to oppose benefits for North Korea from international financial institutions. It would trigger stronger financial sanctions and close an important loophole left by the Treasury Department’s failure to update and republish the outdated North Korean sanctions regulations a year after the passage of the NKSPEA. It would strip North Korea of its immunity from suit for its acts of terrorism. It would trigger SEC “material riskdisclosure requirements for companies that issue stocks and have investments in North Korea, which would trigger divestment by companies fearing shareholder protests.

A second and more significant answer is that North Korea is a state built on symbolism, and on propagating the idea that it holds the world in awe and terror. It tells its people that the world lives in awe and terror of their leaders to send the message that they should live in awe and terror of their leaders. It sends that message because it gives a terrorized, deprived, and shrunken people a reason to draw a sense of esteem, even greatness, from the state that oppresses them. North Korea is obsessed with the power of symbols because it is built on the power of symbols that maintain that awe and terror. That’s why Pyongyang denounced my report with such venom. That’s why it reacted so strongly to “The Interview.” That’s why KCNA is filled with tributes from Juche Study Societies in Equatorial Guinea, Burkina Faso, and Northumberland. It cannot afford for its subjects to know that the world views its leader with contempt and ridicule.

Lastly, re-listing matters because North Korea has repeatedly provided support for acts of international terrorism. Americans should not allow their government to lie to them. That principle may be the most important one at stake here.

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N. Korea, Lazarus & SWIFT: Are the white hats closing in? (Update: SWIFT cuts off remaining N. Korean banks)

In the last month, major news stories about North Korea have bombarded my batting cage faster than I’ve been able to swing at them. I’d wondered when I’d have a chance to cover Katy Burne’s detailed story in the Wall Street Journal about the empty half of the SWIFT glass — that despite its recent decision to disconnect three U.N.-designated North Korean banks, it’s still messaging for banks that are sanctioned by the Treasury Department, but not by the U.N.:

The U.S. Treasury-sanctioned banks that remain on Swift include the state-owned Foreign Trade Bank of the Democratic People’s Republic of Korea, the country’s primary foreign-exchange bank; Kumgang Bank; Koryo Credit Development Bank; and North East Asia Bank, according to people familiar with the network. A search on Swift’s website listed active bank identifier codes for the institutions as of Monday.

The U.S. designated for sanctions the Foreign Trade Bank in 2013, saying it facilitated weapons of mass destruction programs in North Korea. The other three were sanctioned in December as the U.S. targeted entities it said supported the North Korean government and its weapons programs following the Asian nation’s September 2016 nuclear test.

The apparent sanctions gap raises questions about how easily North Korea could move currency through alternative banking channels, something the U.N. said it has been known to do in the past through fronting companies. [….]

While based in Brussels and regulated by Belgian authorities, the company intersects daily with U.S. financial institutions, processing tens of millions of payment instructions, including through a large facility in Culpeper County, Va. [WSJ, Katy Burne]

I won’t sugar-coat this; the fact that these dirty and important (to His Porcine Majesty) banks can still use SWIFT is a major hole in our sanctions, and whether Congress and the administration are willing to close it will be a test of how serious they are about stranding Pyongyang’s money.

I can understand some of SWIFT’s likely arguments against that, mind you: first, SWIFT has earned much good will from Treasury for favors it has done them on terrorist financing; second, there may be other potential providers of the same service that may be less responsive to U.S. legal pressure. Fair enough, but whoever takes up that slack in SWIFT’s wake should be sanctioned to swift extinction (yes, intended). For a list of North Korean banks indicating which ones are designated by the U.N. and the U.S., see this post, and scroll down.

Meanwhile, Symantec now claims it has additional evidence that the hacker group Lazarus, which it had previously linked to the robbery of the Bangladesh bank using hacked SWIFT software, is responsible for that attack, and more:

A North Korean hacking group known as Lazarus was likely behind a recent cyber campaign targeting organizations in 31 countries, following high-profile attacks on Bangladesh Bank, Sony and South Korea, cyber security firm Symantec Corp said on Wednesday.

Symantec said in a blog that researchers have uncovered four pieces of digital evidence suggesting the Lazarus group was behind the campaign that sought to infect victims with “loader” software used to stage attacks by installing other malicious programs.

“We are reasonably certain” Lazarus was responsible, Symantec researcher Eric Chien said in an interview.

The North Korean government has denied allegations it was involved in the hacks, which were made by officials in Washington and Seoul, as well as security firms.

U.S. Federal Bureau of Investigation representatives could not immediately be reached for comment.

Symantec did not identify targeted organizations and said it did not know if any money had been stolen. Nonetheless, Symantec said the claim was significant because the group used a more sophisticated targeting approach than in previous campaigns.

“This represents a significant escalation of the threat,” said Dan Guido, chief executive of Trail of Bits, which does consulting to banks and the U.S. government. [Reuters]

Further down, the report suggests that one or more Polish banks may also have been hit, but “Reuters has been unable to ascertain what happened in that attack.” The headline having promised evidence of attribution to North Korea, however, the text of the story itself left me wanting more. It’s not news that Symantec has linked Lazarus to North Korea; Symantec did that almost a year ago. Nothing in Reuters’s report adds evidence to that attribution.

Nor does this story suggest that there’s enough evidence for the feds to act against Lazarus, although it does hint that the FBI is investigating. Jurisdiction shouldn’t be an issue in the Bangladesh case; money moved through the New York Federal Reserve Bank. Attribution is the real question. Depending on what they can prove, the feds would have many potential charging options, including bank fraud, wire fraud, the Computer Crime and Abuse Act, racketeering, and money laundering. Furthermore, there are anti-hacking provisions in both the NKSPEA (section 104(a)(7)) and Executive Order 13722, which means that if the feds could find any of Lazarus’s money, or any assets of Lazarus’s co-conspirators — regardless of whether those assets can be traced to any of these specific acts — the Treasury Department could freeze them, and the Justice Department could forfeit them.

And needless to say, the indictment of a state actor would be a big deal, for a lot of reasons.

So far, I don’t see enough in the open sources to support that, but it’s good news that the white hats are working diligently on this. If they can attribute this to senior officials in the North Korean government — most likely, within the Reconnaissance General Bureau — then it would be our legal basis to go after the RGB’s assets, which we’ve recently learned include some sophisticated and global commercial operations. This story bears close watching.

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Update:

Reuters is reporting that SWIFT will disconnect the remaining North Korean banks:

SWIFT, the inter-bank messaging network which is the backbone of international finance, said it planned to cut off the remaining North Korean banks still connected to its system, as concerns about the country’s nuclear program and missile tests grow. SWIFT said the four remaining banks on the network would be disconnected for failing to meet its operating criteria.

The bank-owned co-operative declined to specify what the banks’ shortcomings were or if it had received representations from any governments. Experts said the decision to cut off banks which were not subject to European Union sanctions was unusual and a possible sign of diplomatic pressure on SWIFT. [Reuters]

Now that SWIFT has gotten itself right with Jesus, I would like to implore everyone, everywhere to lay off SWIFT. It’s absolutely true that if we turn SWIFT into a political surrogate for our sundry political conflicts, the world’s dirtiest banks will just take their business elsewhere. That’s not a trend we want to encourage. SWIFT has usually been a responsible member of the financial community, sometimes at great cost to itself.

My argument all along has been that (1) North Korea deserves to be an exception to that rule because (2) North Korea is a unique threat to the financial system — not to mention, to all of humanity — as documented in (3) seven U.N. Security Council Resolutions, a Patriot Act 311 determination, and a call for “countermeasures” by the Financial Action Task Force. You can’t say that about any other country on earth right now — not even Iran. I can’t reconcile messaging for North Korean banks with any of those authorities. And if any competitor tries messaging for the FTB, it’s especially important that the Treasury Department should have the authority to obliterate them (which is why Congress should still proceed with something like the BANK Act).

Having said all that, I wouldn’t be too quick to assume that diplomatic pressure was the main reason for this most welcome decision. “Operating criteria” could mean a lot of things, but it’s a slightly better fit with “massive global bank fraud” than it is with “diplomatic pressure.” If there are more developments in the Lazarus investigation than the Reuters report makes apparent, and if those developments convinced SWIFT that it had unwittingly helped the North Koreans defraud its more reputable clients by sharing its software with them — and their hackers — that would be a perfectly good (and equally plausible) reason for SWIFT to have cut the North Koreans off.

Yet again, the North Koreans are tactically brilliant criminals. And yet again, they’re strategically moronic. It’s a rare and happy day when someone finally holds them to account for it.

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Yay, it happened! Jim Rogers got burned by hyping North Korea!

And just like that, crackpot investment advisor Jim Rogers joins the distinguished company of Hyundai Asan, Volvo, Yang Bin, David Chang and Robert Torricelli, Chung Mong-Hun, Roh Jeong-ho, and Orascom’s Naguib Sawaris, all of whom won Darwin Awards in North Korea. I’ve previously written about Rogers and his enthusiasm for North Korea and its worthless currency. That OFK post caught the eye of a New York Times reporter, who has just published a story on the relationship between Rogers and his self-described business partner, a Chinese entity called Unaforte:

“It’s very exciting. The kid has been opening up North Korea,” Mr. Rogers said in an interview, referring to Kim Jong-un, the country’s ruler.

But North Korea can be a murky place to tread — as Mr. Rogers’s experience shows.

A Hong Kong company called Unaforte that is involved in several North Korean businesses named Mr. Rogers as a shareholder a year ago, according to a corporate filing. Investing in a North Korean business like that would probably violate American sanctions if it happened now, though experts say it was legal at the time. [NYT, Patrick Boehler & Ryan McMorrow]

In this case, “experts” means me. Rogers’s investment came just a month before President Obama signed Executive Order 13722, which imposed sectoral sanctions on North Korea’s transportation, mining, energy, and financial services industries. That E.O. was enough to drive investor and fund manager James Passin out of North Korea. Before that, however, our threadbare North Korea sanctions probably didn’t prohibit what Rogers did. Still, staying one step ahead of the law doesn’t mean one isn’t stepping in something.

Mr. Rogers said he gave Unaforte $100 as a token of good will but never expected that it would name him as a shareholder. Asked about his stake in the company in October, he interrupted an interview with The New York Times to call Unaforte and told the English-speaking sister of its founder that the company had agreed he could not be a shareholder.

Speaking into his phone, Mr. Rogers said, “I know I have told you, ‘Never, never, never.’”

Unaforte no longer lists Mr. Rogers as a shareholder in its filings but will not release shareholder records that might show more details about the shares given to Mr. Rogers. Officials at Hong Kong’s corporate registry said they were investigating whether Unaforte is complying with the city’s disclosure laws. Unaforte did not respond to emailed questions for comment. [NYT]

The Times chronicles how Rogers quickly distanced himself from Unaforte once its reporters started asking questions (“I make speeches for hundreds of people.”). At one time, Unaforte featured Rogers prominently in its promotional materials. Its founder, Zhao Chunhui, calls himself “Jim Rogers’s business partner in China.” Then, a Unaforte website marketing its North Korea investments — a bank, an office park, and a stake in a gold mine — “went offline after The Times began to ask about its businesses.” On March 17, 2016, two days after President Obama signed EO 13722, Rogers wrote to Unaforte, asking “that it return his $100 and take back an unspecified number of shares.”

To make matters worse, Unaforte also drew a mention in the latest report of the U.N. Panel of Experts, for setting up a bank in the Rason Special Economic Zone. Sorry, my WordPress installation doesn’t read hanja:

221. A Hong Kong, China, company, Unaforte (?????????), with a Yanbian branch (?????) established the First Eastern Bank (????) in Rason in 2014 as a subordinate enterprise to provide financial support and loans to Chinese investors in mining and real estate projects in Rason (see annex 15-11). The bank is licensed by the Central Bank of the Democratic People’s Republic of Korea (see annex 15-12) and provides loans to Chinese individuals and companies in the Rason area. In its promotional materials, Unaforte claims: “The [First Eastern] Bank is fully independent and does not require proof of identity. It is not subject to the jurisdiction of China or [the] Democratic People’s Republic of Korea and is not required to report to the Chinese government or the Democratic People’s Republic of Korea government!” (see annex 15-13). The Panel notes that foreign nationals holding accounts in banks of the Democratic People’s Republic of Korea would be a violation under resolution 2321 (2016).

Under sanctions adopted by the U.N. Security Council last year, the Far Eastern Bank must now be closed. Specifically, Paragraph 31 of UNSCR 2321, adopted on 30 November 2016, requires Member States to close all existing representative offices, subsidiaries or banking accounts in the DPRK within 90 days. UNSCR 2270, paragraph 33, requires Member States to “prohibit in their territories the opening and operation of new branches, subsidiaries, and representative offices of DPRK banks,” to “prohibit financial institutions within their territories or subject to their jurisdiction from establishing new joint ventures,” except with a U.N. Committee’s advance approval, and requires member states “to close such existing branches, subsidiaries and representative offices, and also to terminate such joint ventures [and] ownership interests.”

Previously, Leo Byrne of NK News also reported on Unaforte’s exports of gold jewelry to Hawaii. The gold was allegedly mined in North Korea; thus, exports to the U.S. could have violated a 2011 executive order prohibiting imports from North Korea, except pursuant to a Treasury Department license. Rogers comes across looking like a fool, a charlatan, and a generally amoral person, but from a strictly legal perspective, not even he can be faulted for ex-post facto sanctions violations. There’s no evidence that Rogers knew of the gold jewelry exports to the U.S., but if he did, that might be his greatest legal risk.

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GOP heavyweights push for secondary boycott of North Korea

Six Republican senators — Ted Cruz (TX), Cory Gardner (CO), Thom Tillis (NC), Marco Rubio (FL), Pat Toomey (PA) and David Perdue (GA) — have signed a letter to newly confirmed Secretary of the Treasury Steve Mnuchin* calling for improved implementation and enforcement of the North Korea Sanctions and Policy Enhnancement Act (NKSPEA).

As Kim Jung-un has exposed his willingness to increase ballistic missile testing with the ultimate goal of achieving nuclear breakout, the potential for this regime to attain a developed and capable intercontinental ballistic missile (ICBM) poses an imminent threat that cannot be ignored,” the senators wrote. “North Korea’s test of an intermediate-range ballistic missile this past weekend demonstrates advancement in fuel and launch technology, underscoring the necessity of faithfully executing the law to meet this growing threat. [Sen. Ted Cruz]

The letter (the full text is here, and it’s an absolute must-read) proposes ten actions that President Obama never got around to, that would substantially improve the effectiveness of sanctions: (1) designate North Korea’s remaining banks; (2) hire enough cops and lawyers to enforce the sanctions; (3) invoke more Patriot Act special measures to require record-keeping and reporting on North Korean beneficial owners; (4) talk to Rex Tillerson about re-designating North Korea as a state sponsor of terrorism; (5) replace our weak and outdated North Korea sanctions regulations; (6) strictly enforce Know-Your-Customer and reporting rules on North Korean banking transactions; (7) investigate the banks involved in the Dandong Hongxiang and Chinpo Shipping cases; (8) enforce the law against any bank caught providing North Korean banks with direct or indirect correspondent account services; (9) work to cut North Korea out of SWIFT; and (10) show some willingness to impose secondary sanctions on Chinese sanctions violators.

That’s a good list — a very good list. I couldn’t have written it better myself (OK, maybe slightly, but only slightly).

The instigator and drafter of this letter is the man some now refer to as The New Ted Cruz. Although I’m not nearly as conservative as Cruz is on some issues, Cruz deserves commendation for stepping forward to lead on this issue, despite not even being a member of the Foreign Relations Committee or previously showing particular interest in foreign policy. (Tillis and Toomey aren’t Committee members, either; kudos** to them for signing on.) And while we’ve come to know Gardner and Rubio as leaders on North Korea policy, this episode also teaches us the importance of being willing to follow when someone else proposes good ideas. Rubio and Gardner in particular are highly respected in the Senate for their intellect and understanding of foreign affairs. It’s to their credit that they added their heft and gravitas to the letter by signing on. In doing so, they’re shaping the new administration’s policy at an early and malleable stage, when Trump probably needs all the good advice he can get.

Also deserving similar credit is Edwin Feulner, a (the?) founder of the Heritage Foundation and (so I’ve read in various press accounts) a man Donald Trump listens to. Yonhap also calls Feulner a leading candidate to be our next Ambassador to South Korea. Feulner sat down for an interview with Yonhap’s Chang Jae-soon and Shim In-sung, where he expressed similar views to those of the Gang of Six:

“I think anything that happens post January 20, 2017 is a test and is a challenge to President Trump and that President Trump takes anything that happens while he is the President of the U.S. he is going to take it very seriously,” Feulner said of the missile launch.

Increasing pressure on North Korea, including making China, through secondary sanctions, use more of its leverage over Pyongyang as the main provider of food and energy assistance, would be a key part of Trump’s policy on the North, Feulner said.

“Mr. Trump … will be expecting China to do a lot more. The notion of economic pressure on North Korea is one that Mr. Trump understands. Mr. Trump is not going to be reluctant to use his willingness to invoke secondary boycotts, for example, of organizations in North Korea or in China that are pass-through entities for exports from North Korea to cut off even more economic help,” Feulner said.

“Mr. Trump … will not hesitate to employ more significant measures,” he said. [Yonhap]

Also encouraging was Feulner’s call to bring more attention to North Korea’s crimes against humanity, and to appoint a “widely recognized, respected ambassador” for human rights issues, as mandated by the North Korean Human Rights Act (which is up for reauthorization this year, and will be reauthorized).

The rumor of Feulner’s potential nomination as ambassador may be the most encouraging news I’ve heard about the Trump administration so far. Historically, Korea only got the attention it deserved in Washington when ambassadors have had strong political pull and close relationships with the President. And while it’s hard to think of someone with better judgment or public diplomacy talents than Mark Lippert, Feuler’s combination of close ties to Korea, political strength in Washington, good policy instincts, and understanding of the subject matter would make him an outstanding candidate for the job as the North Korea crisis reaches a critical phase.

Most of what the six senators and Feulner said also sounds consistent with what Rex Tillerson, Yun-Byung-se, and Fumio Kishida said after their first trilateral meeting this week, in Germany.

“The ministers condemned in the strongest terms North Korea’s February 12, 2017 ballistic missile test, noting North Korea’s flagrant disregard for multiple United Nations Security Council resolutions that expressly prohibit its ballistic missile and nuclear programs,” the three countries said in a joint statement.

“Secretary Tillerson reiterated that the United States remains steadfast in its defense commitments to its allies, the Republic of Korea and Japan, including the commitment to provide extended deterrence, backed by the full range of its nuclear and conventional defense capabilities,” it said.

The sides pledged to collaborate to ensure that all countries fully carry out U.N. Security Council sanctions on Pyongyang and that violations of Security Council resolutions will be met with an “even stronger international response,” according to the statement.

The top diplomats urged Pyongyang to refrain from provocative actions and “abandon its proscribed nuclear and ballistic missile programs in a complete, verifiable, and irreversible manner” and comply with all U.N. resolutions, the statement said.

“Only in this way can North Korea be accepted as a responsible member of the international community,” it said.

The sides also agreed to continue to draw international attention to the North’s “systemic, widespread, and gross violations” of human rights. [Yonhap]

That latter point is an important one, not only from an ethical or a legal perspective, but from a utilitarian one. Since the release of the Commission of Inquiry’s report, Pyongyang has shown surprising vulnerability to criticism on human rights, to the point where that criticism may be affecting the cohesion of the elites and the stability of the regime itself. It will not be any single vulnerability that convinces the generals there that they have no future on the path set by Kim Jong-un, but a combination of vulnerabilities — financial, diplomatic, and political, both foreign and domestic — converging at once. It’s gratifying to see that the Americans (Update: well, some of them, anyway) who will have the most influence over the future of Korea understand what those vulnerabilities are.

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* Mnuchin’s confirmation hearing is here. It’s about 5 hours long, in case you have a long weekend coming up and no life.

** Previously said “kudus.” Since corrected, although I wouldn’t mind “kudus” myself. As I can testify from personal experience, kudu is delicious.

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As Trump picks his cabinet, Congress flexes its foreign policy muscle

As we continue to watch Trump’s trial balloons float by on the selection of his national security cabinet, we still don’t know much about the foreign policy Donald Trump would have as President. On the other hand, most of Congress’s key players on foreign policy will still be around next year, and some of them have already begun to assert themselves. Committee chairs are (on one hand) pushing Trump to adopt more conventional foreign policy views, while (on the other) threatening to use their power to undermine any major policy shifts, specifically toward the Kremlin.

Some of the most powerful foreign-policy makers in the U.S. government are outside of President-elect Donald Trump’s control and are already signaling an early end to the honeymoon period over their fellow Republican’s security and diplomatic stances. [Foreign Policy, Molly O’Toole]

Ed Royce, the California Republican who conceived the North Korea sanctions bill that became law in February, and who stayed mostly quiet on Trump’s candidacy this year, will be back as Chairman of the House Foreign Affairs Committee next year. Hopefully, so will his Senate co-champion, Cory Gardner, at the helm of the Senate Foreign Relations Committee’s Asia Subcommittee. (Gardner’s rising star status was cemented this week by his selection to head the National Republican Senatorial Committee.) After some of Trump’s statements last year cast doubt on the alliance, both Royce and Gardner visited South Korea to reassure its leaders. Paul Ryan has also been supportive of the alliance.

Bob Corker, the current Chairman of the Senate Foreign Relations Committee, remains in the running for Secretary of State. Whether Corker is nominated or stays on as Chairman, he’d be a moderating influence. If Corker does leave the Senate, next in line, in terms of seniority, would be Idaho Senator James Risch, who called voting for Trump “distasteful,” but said he’d do it anyway. If congressional Republicans really want to put their stamp on foreign policy, however, they’ll pick the talented and highly intelligent Marco Rubio, who is fresh off a convincing reelection win. 

Also back at the Armed Services Committee is the newly reelected John McCain, who has joined with his close friend, Lindsey Graham, in making clear that any pivot to Moscow will face significant resistance in Congress.

“[Trump] wants to reset with Russia. Maybe he can do it, but here’s my view about Russia: They’re a bad actor in the world, they need to be reined in,” Sen. Lindsey Graham (R-S.C.) said Tuesday, adding that it would be up to Congress to let Russia “know the rules of the road pretty early,” even under a friendlier Trump administration.

“I think [Russia] should pay a price heavier than they’re paying now for what they’re doing in Syria and in eastern Europe,” Graham added. “I will consult with my colleagues what there is appetite for.”

Graham isn’t the only Trump critic who came out swinging on Tuesday on Russian involvement in global affairs. His close friend and colleague Sen. John McCain (R-Ariz.), who chairs the Senate Armed Services Committee, said that “the price of another ‘reset’ [with Russia] would be complicity in Putin and Assad’s butchery of the Syrian people. That is an unacceptable price for a great nation.” [Washington Post, Karoun Demirjian]

What can Congress do, aside from mere words? The Post’s report says that lawmakers are preparing “a battery of legislative measures to hold the line against Russia, regardless of what the president-elect tries to do.” Such as? First, words do matter, and Graham is threatening to hold “a series of hearings about Russia’s misadventures throughout the world” and cyberattacks. Although Republicans balked at holding pre-election hearings into Russia’s meddling in the election, Republicans haven’t dropped the issue, either.

“We cannot sit on the sidelines as a party and let allegations against a foreign government interfering in our election process go unanswered because it may have been beneficial to our goals for the moment,” Graham said Tuesday. 

In the House, Royce also said he would be interested in investigating Russia’s connection to the hacking incidents. “I would hope that all federal agencies are investigating,” Royce said. “If we can get evidence, it’s very worthwhile to pursue any information we have.” [WaPo]

Second, Congress can do what it did to force a reluctant President Obama’s hand on North Korea: impose mandatory sanctions. This week, the House passed the Caesar Syria Civilian Protection Act of 2016, which could force the next administration to sanction Assad’s Russian backers, among others. If the name of the bill sounds familiar, that’s because “Caesar” is the code name for the subject of a chilling Ted talk by his former CIA handler, a man who would later become a House staffer and independent candidate: Evan McMullin. Ordinarily, the calendar would make it difficult for the Ceasar Act to pass this Congress, but even Corker says “there’s going to be much more opportunity for bipartisan passage” of bills pertaining to Russia, and that lawmakers “plan to be aggressive” before the year ends. If the bill doesn’t pass this year, expect to see the same text introduced again in January.

“Regardless of perspectives on Syria, there’s some unanimity of opinion in sending a message on this kind of conduct,” House Foreign Affairs Committee Chairman Ed Royce (R-Calif.) said prior to the vote. [WaPo]

Ditto North Korea, if you’ve been watching the recent oversight hearings in the House and Senate.

Finally, Graham is promising “a package that would help our Eastern European allies better deal with the threats they face from Russia” that includes broad defense aid “to make it harder for Russia to advance beyond where they are today.” If Trump’s rhetoric on cost-sharing helps defray the cost, that aid package may be more palatable in Congress. Ed Royce thinks Trump’s public skepticism about NATO was nothing more than a “very successful negotiating tactic” to persuade NATO allies “to pay their share of the burden” in funding the alliance. Corker claims to have seen an “evolution” in Trump’s views on Russia and NATO.

If Trump can persuade Japan and South Korea to contribute more funds without harming the integrity of the alliance, I’d say all ends well, except that I have no confidence that all ends well if the left wins South Korea’s next presidential election. Another outbreak of anti-Americanism could erode congressional support for the alliance below a critical level, especially if South Korean politicians are seen as feeding or playing into that. 

Historically, the President has enjoyed great deference in the conduct of foreign policy. This Congress is already hinting that it means to push the envelope in that historic power struggle. If Trump prefers to prioritize other matters, we may see an early compromise, especially if Trump appoints a more conventional and moderate cabinet. If not, we may see a period of intra-partisan conflict and gridlock between the executive and legislative branches. If Congress prevails, the result could be a historic expansion of Congress’s power over the conduct of foreign affairs.

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Introducing the OFK sanctions explainer and law library

For those who’ve wanted a compilation of the key U.N. documents, U.S. statutes, regulations, executive orders, general licenses, and third-country sanctions laws, along with a brief explanation of how those authorities work, start here and click your way around. It’s still a work in progress, but the most important authorities are there. I also added section-by-section links to the key provisions of the NKSPEA and an FAQ. Enjoy!

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H.R. 6281, banning N. Korea from SWIFT, would be a powerful sanctions upgrade

Via Yonhap, we learned last week that Rep. Matt Salmon (R, Ariz.), the Chairman of the House Asia-Pacific Subcommittee, has introduced a bill to cut North Korea off from the “specialized financial messaging services” that banks use to send wire transfer orders around the world. The industry leader for financial messaging is SWIFT, whose headquarters is in Brussels, but which also has operations in Geneva and Manassas, VirginiaIf you don’t know what SWIFT does and why it matters, I’ll refer you to this post.

“What we can do is deny them access to services designed to quickly and easily transfer money worldwide. Without access to these services, we can force the North Koreans to purchase supplies and receive support in the way typically favored by state sponsors of terrorism: shipments of anonymous, small denomination bills.” [Yonhap]

You may be able to run a mid-size drug cartel that way, but not a country with a population of 23 million and a large, mechanized army. Although a SWIFT cutoff would be based on a different legal authority from the authority Treasury used against Banco Delta Asia in 2005, Yonhap compares the proposed legislation to BDA.

Should the legislation be enacted, it would have powerful impacts on the North, possibly similar or even greater than the 2005 U.S. blacklisting of a Macau bank for doing business with Pyongyang.

By designating the bank in the Chinese territory, Banco Delta Asia (BDA), the U.S. not only froze $24 million in North Korean money held in the bank, but also scared away other financial institutions from dealing with Pyongyang for fear they would also be blacklisted.

The measure hit Pyongyang hard, and reports at the time said North Korean officials had to carry around bags of cash for financial transactions because they were not able to use banks. The sanctions were later lifted in exchange for a denuclearization agreement that later fell apart. [Yonhap]

A better analogy would be the effect SWIFT sanctions had on Iran’s economy more recently. 

Without SWIFT, global trade and investment would be slower, costlier and less reliable. [….]

The earlier SWIFT ban is widely seen as having helped persuade Iran’s government to negotiate over its nuclear programme. The ban was one of the first sanctions Tehran asked to be lifted, points out Mark Dubowitz of the Foundation for Defence of Democracies, a Washington-based think-tank. Though some of the banks blocked from SWIFT managed to keep moving money by leasing telephone and fax lines from peers in Dubai, Turkey and China, or (according to a Turkish prosecutor’s report) by using non-expelled Iranian banks as conduits, such workarounds are a slow and expensive pain. And the sanctions prompted Western banks to stop conducting other business with the targeted banks. [The Economist]

Keep reading that article to understand some of the good reasons to exercise great restraint in using SWIFT as a sanctions tool. I agree with those reasons; I just happen to believe that there are two cases compelling enough to be deserving exceptions — Iran and North Korea. (In the case of Russia, I’m not yet convinced that this is the right tool; I’d rather see us arm and train the Ukrainians.)

As of posting time, the text of H.R. 6281 was not yet available at Congress.gov, but I’d expect it will bear some resemblance to section 202 of the original introduced version of H.R. 1771, the North Korea Sanctions Enforcement Act, a later version of which the President signed into law in February as H.R. 757, the North Korea Sanctions and Policy Enhancement Act (Public Law 114-122, codified at 22 U.S.C. Chapter 99). The bill already has nine original co-sponsors, including three Democrats.

If you own a calendar and had a television in your home in the 1970s, you already know that the obstacles to getting this bill to the President’s desk this year are signficant. The administration has hinted, however, that it may be asking the European Union, which regulates SWIFT, to effect its own cutoff.

“The SWIFT system which is what I think you are referring to is not a U.S. system, and therefore not under our direct control. I believe it’s an EU system up housed [sic] in Brussels,” Daniel Russel, the Assistant Secretary of State for East Asian and Pacific Affairs at the U.S Department of State said, when asked by how the U.S. administration planned to further penalize North Korea. [NK News, Dagyum Ji]

I’m all for doing things diplomatically if that achieves our objective. No doubt, our diplomats’ work has been made easier by the conduct of the North Koreans themselves, who are suspected of hacking SWIFT to rob its client banks of $80 million and laundering the loot through casinos in the Philippines (Rodrigo Duterte, call your office). Russel’s written testimony is here.

The necessity of far-reaching financial sanctions rose to the surface after the North was suspected to be connected to Bangladesh Bank heist back in May.

“We are in discussions with our partners, including the EU, about tightening the application of sanctions and pressure, including and particularly to deny North Korea access to the international banking infrastructure that it has abused and manipulated in furtherance of its illicit programs,” Russel said.

“I think that our hope is that we will in fact ultimately be able to reach an agreement that would further restrict North Korea’s access.” [NK News, Dagyum Ji]

If this bill doesn’t pass in this Congress and diplomacy can’t achieve the same result, I’m sure it’ll be back in the next Congress. In fact, for reasons I’ll explain below, it might be back even if the EU enacts a SWIFT ban. With the arrival of a new U.S. administration and an election year in South Korea, there will be no shortage of provocations to help pass it. North Korea loves to act up during election years. It makes certain kinds of people write op-eds calling for talks and concessions. 

More recently, however, Kim Jong-un’s election-year antics have made him one of Washington’s most effective lobbyists — for new sanctions laws.

This post by Stephan Haggard has sparked some debate as to whether SWIFT is still servicing North Korean banks. According to Haggard’s post, SWIFT’s processing for North Korean banks fell from 50,000 a year in 2011 to a mere 5,000 a year by 2012. Haggard is always very careful with his sourcing and relied on published SWIFT data, but for reasons I shouldn’t share here, I don’t believe the statistics are accurate. I can’t rule out the possibility that SWIFT cut the North Koreans off in mid-2013 or later, however. By then, UNSCR 2094, paragraph 11, prohibited SWIFT from servicing (at the very least) U.N.-designated North Korean banks.

But in the end, whether North Korea is still using SWIFT or not, H.R. 6281 is still useful. If SWIFT is still providing services to North Korean banks, H.R. 6281 can give the Treasury Department and our diplomats more leverage to persuade the EU and SWIFT to cut the North Koreans off now. If SWIFT isn’t providing services to North Korean banks, someone else is. It would make sense that North Korea’s hacking of SWIFT software to steal from foreign banks was both a way to make money and retribution for a SWIFT cutoff.

Either way, North Korean banks need financial messaging services. One of the strongest arguments against the overuse of SWIFT sanctions is that they might give a less responsible service a competitive advantage. If some less responsible competitor has emerged to take on North Korea’s financial messaging business, then H.R. 6281 would enable the Treasury Department to either “reason with” that upstart service or sanction it to extinction. In which case, the potential rise of a SWIFT alternative turns one of the strongest arguments against H.R. 6281 on its head.

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The Senate does North Korea oversight right; also, sell your Bank of China stock now

It took a few weeks for the Senate Foreign Relations Committee’s Asia Subcommittee to put a hearing together after North Korea’s fifth nuclear test, but when that hearing finally happened on Wednesday, I actually found myself feeling sorry for the State Department witnesses, Danny Russel, the Assistant Secretary Of State at the Bureau Of East Asian And Pacific Affairs, and Daniel Fried, the State Department’s Coordinator for Sanctions Policy. A few years ago, they might have gotten away with showing up unprepared, with index cards filled with stock phrases. For example, after Chris Hill’s confirmation hearing, I wrote, “The degree to which the ‘august’ senators on the Committee have paid no attention to the conduct of policies they are charged with overseeing is depressing and stupefying, and yet it all somehow still makes for dreadfully dull viewing.” Thankfully, this Senate — or rather, this part of it — is a very different and much better body.

Under the leadership of Cory Gardner, at least one part of the Senate is doing policy oversight right. You can watch the whole thing here, and although it’s two hours long, it will hold the interest of anyone interested enough in North Korea policy to read this site. Do what I did and watch it in increments as time permits. 

The main headline from the hearing is that the State Department officials said that they are investigating more Chinese companies for sanctions violations, but it’s clear from the questions that the senators will not be placated by the sacrifice of mere goats anymore. Their mood is of equal parts alarm and fury — both in front of and behind the scenes, and among both Republicans and Democrats — that Chinese banks are breaking our laws, and that this administration is letting them get away with it. As they did before the hearing, they want the administration to sanction the Chinese banks that launder Kim Jong-un’s money.

By now, everyone should have expected Republicans like Gardner and Rubio to question State about that. State should have known by now that both men would be well-prepared and unsparing in their criticism. The intellects of both men, and good behind-the-scenes work by the staff — including arms control experts and one with extensive sanctions administration experience at the Treasury Department — ensured that they would quickly sift away talking points and cut directly to the issues. Gardner mentioned at one point that the senators were given a common set of briefing materials. It showed in both the insightfulness and focus of the questions, and in the bipartisan unity of their questions’ thrust. I’ve never worked in the Senate, so I wouldn’t know if that’s standard procedure there, but past hearings I’ve watched didn’t run this well. Gardner himself was in complete command of both the material and the room, and gave every appearance of being a man with limitless potential. Indeed, all of the senators were well-prepared. All, regardless of their party or tribal affiliations, asked good or excellent questions. 

In the end, however, no one can hurt you more than the people who love you. At 58:17, Senator Menendez began questioning Fried by arguing for secondary sanctions against Chinese banks. He then embarked on a well-prepared, determined, and lawyerly cross-examination of Fried about this. Pressured by Menendez’s questioning and clearly unsure of his material, Fried told Menendez that Dandong Hongxiang was a bank (not true). I don’t think Fried was lying, but he didn’t have command of the facts, and when he got out of his depth, he swam into a rip current. Menendez pinned Fried down on his answer. Then, when his time expired, he went back and pulled Treasury’s announcement, probably talked to his staff, and confirmed that this wasn’t true. At 1:35:30, Menendez returned, rearmed. This, ladies and gentlemen, is what it’s like to have a bad day in the United States Senate.

SEN. MENENDEZ: Mr. Fried, I pride myself on my preparation for these hearings, so I went back to your office after your answer, and I looked at OFAC’s statement of Monday. You said in response to my question we’d sanctioned a bank on Monday. Well, I read from OFAC’s statement that they imposed sanctions on Dan-ong Yonhwang (sic) Industrial Development Company and four individuals. Now, is that company a bank? 

A/S FRIED: Sir, it is a financial — it is not a bank — it is the financial company that worked with a sanctioned North Korean bank.

SEN. MENENDEZ: All right, that’s different than saying you’d sanctioned a bank.

A/S FRIED: Yes, sir.

SEN. MENENDEZ: You did not sanction a bank on Monday.

A/S FRIED: Uh, we sanctioned a fi — a Chinese, uh, financial corporation.

SEN. MENENDEZ: All right, well, that’s different than a bank. Let me ask you this. How many banks — banks — has the administration sanctioned as it relates to North Korea?

A/S FRIED: Uh, a nu — do you mean banks in general or Chinese banks?

SEN. MENENDEZ: Chinese — let’s talk about Chinese banks.

A/S FRIED: A number — no Chinese banks.

SEN. MENENDEZ: No Chinese banks.

A/S FRIED: Not in China. We have umm —

SEN. MENENDEZ: That’s my point. That’s the point I was trying to drive at earlier. You have sanctioned no Chinese banks at the end of the day, and they are probably the major financial institutions for North Korea. What this company, as I understand, did was make purchases of sugar and fertilizer on behalf of a designated Korean bank. It’s a trading company, not a financial company. So, when I take testimony as a member of this Committee, I need to make sure that testimony is accurate, because I make decisions based upon it. And I must say that the information you gave me is not accurate. It was not a bank. This was a trading company. And finally, I got the answer that I wanted to hear, which is what I knew, that you’ve sanctioned no Chinese banks that relates (sic) to North Korea. And it is our hesitancy to do so that that takes away one of the major instruments possible to change Chinese thinking. I’m all for persuasion if you can achieve it. But when you can’t, and North Korea continues to advance its nuclear program in a way that becomes more menacing — and its miniaturization and its missile technology — I don’t know at what point we are going to continue to think we can stop them when in fact they’re pretty well on their way. And we allow them to continue to do so. And we don’t use some of the most significant tools that we have. So I’m disappointed that you didn’t give me the right information.

I hold no ill will toward Mr. Fried, but I literally cheered as Menendez calmly bored right to the truth of the matter. Yet on another level, watching this was deeply depressing. Menendez, for all his troubles — and I hope he’ll soon put those behind him — clearly showed us how valuable he is to his state and his country. If the Democrats retake the Senate, I hope he’ll be Committee Chairman again. Markey — watch for him to emerge as a liberal advocate for human rights in North Korea — wisely counseled restraint on South Korea’s military threats. Rubio, who had personally read and commented intelligently on an earlier version of the NKSPEA, had also read and understood C4ADS’s report and its implications. Any one of these senators would have been a better choice as President than the choices before us now. What I can’t help asking myself today is how we elect such good senators, yet such awful presidents.

In the years after the passage of the North Korean Human Rights Act, those who had worked hard to pass that law watched the State Department slow-walk it to a full stop, with Congress seemingly powerless to make it follow the law. That may have been to State’s short-term advantage, but its long-term cost was to plant in many of us a deep distrust of the State Department. We learned that passing a law is only the first step — that laws need robust enforcement mechanisms and a permanent, bipartisan constituency to make sure the executive enforces them. Hence, section 103 briefings, the first installment of which came due just as Kim Jong-un tested his fifth nuke. This Subcommittee is taking full advantage of those oversight provisions. Pray that continues to be the case in the next congress. 

I’ll give The Wall Street Journal the final word, if only to make the point that this issue isn’t going away, and that the next POTUS will come under withering pressure to do what this one has not done — enforce our laws. 

An invaluable report published last week by South Korea’s Asan Institute and the U.S.-based Center for Advanced Defense Studies found that Hongxiang Industrial and its parent company conducted some $532 million in North Korea business from 2011 to 2015. To put that into perspective, South Korean officials have estimated that the North’s main nuclear facility at Yongbyon cost less than $700 million to construct. [….]

In addition to neutralizing Hongxiang, these sanctions are aimed at persuading other Chinese companies to cut off Pyongyang lest they suffer the same fate, as when the U.S. sanctioned Macau-based Banco Delta Asia for about a year starting in 2005. This is the best hope for squeezing Kim hard enough that he might halt his nuclear drive. But China opposes such measures because it fears that squeezing too hard might cause the collapse of its client state.

Chinese trading firms and especially banks are likelier to cut off Pyongyang if the U.S. follows up promptly with further sanctions. One good sign is that the State Department’s Daniel Fried suggested Wednesday to Congress that more penalties are coming for Chinese firms.

Less promising is that in unsealing its indictment Monday the Justice Department said “there are no allegations of wrongdoing” against the banks involved in Hongxiang’s sanctions-busting. So despite imposing billions of dollars in penalties on a range of European banks for violating sanctions on Iran and others in recent years, the Obama Administration is signaling that Chinese banks aiding North Korea are untouchable.

In an open letter this month to President Obama, 19 Senators led by Colorado’s Cory Gardner quoted our Aug. 19 editorial (“North Korea’s Sanctions Luck”) on the evidence, compiled by United Nations experts, that the Bank of China “allegedly helped a North Korea-linked client get $40 million in deceptive wire transfers through U.S. banks.” That’s one of many examples. [WSJ]

If the House and Senate staff believe the administration has held back on specific targets, such as the Bank of China or any of the 12 banks named in the DHID forfeiture complaint, their next step should be to send the President a section 102(a) letter, which triggers a mandatory investigation, and possible designation.

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Senate Foreign Relations Chair to President Obama: Enforce N. Korea sanctions law

Senator Bob Corker’s office issued this statement today:

CHATTANOOGA, Tenn. – U.S. Senator Bob Corker (R-Tenn.), chairman of the Senate Foreign Relations Committee, released the following statement today after reports that North Korea fired three medium-range missiles as the Group of 20 economic summit was underway in China.

“It is highly discouraging that China does little as North Korea continues to test and develop its missile and nuclear programs,” said Corker. “China wants the international respect due a country of its size, yet it refuses to responsibly address a growing threat to stability in its own region and has failed to fully implement United Nations Security Resolution sanctions. Meanwhile, the Obama administration continues to drag its feet, with lackluster implementation of the new sanctions authority Congress provided earlier this year under the North Korea Sanctions and Policy Enhancement Act.”

On February 10, the Senate unanimously passed the North Korea Sanctions and Policy Enhancement Act of 2016 following a day of legislative floor action led by Corker. To date, no Chinese entities or individuals have been sanctioned under the new authorities provided by Congress. Click here for more information on the bill, which was developed by the Senate Foreign Relations Committee. [Sen. Bob Corker]

Well, partially. Let’s not forget to give Ed Royce his due credit for writing and passing the first version on the House side, but it’s also true that without the SFRC staff and Senator Gardner in particular, this bill would still be stuck in the House. Brokering the February compromise in the Senate must have been very difficult work indeed, given the complex Senate rules.

Clearly, the Senate committee staff have also noted the concerns I noted here. Now, the failure to designate Chinese entities by itself might be excusable — temporarily — if the administration simply doesn’t know where Kim Jong-un’s money is. That has become a hard defense to accept at face value, for reasons I explained in the previous link, and here. It would also be excusable if quiet diplomacy could immobilize the funds without needless unpleasantness, but although there are some hints that North Korean diplomats and overseas workers are under some financial duress, pretty clearly, most of those funds are not yet immobilized.

I continue to predict that the section 103 briefing is going to be tense and difficult for the administration. The odds of some very contentious election-year hearings increase with each new provocation from Pyongyang, and particularly if President Obama returns from Beijing empty-handed.

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The Obama administration isn’t following Kim Jong-un’s money. Congress should ask why.

In February and March, respectively, the U.S. Congress and the U.N. Security Council responded to North Korea’s fourth nuclear test with sanctions that were, in theory, an order of magnitude stronger than any sanctions imposed on North Korea until then. Sanctions, of course, are only as good as their enforcement, and in enforcing sanctions against North Korea, the most important rule has always been “follow the money.” Money — along with the contradictions of its political system — has always been one of Pyongyang’s main vulnerabilities. Much of that money sits in banks in China, Europe, and Russia. A sudden cutoff of those funds could shake the increasingly fragile cohesion and discipline of the security forces. It could also shake the wavering confidence of North Korean elites in Kim Jong-un’s capacity to preserve their status, position, and survival. After an inevitable period of backlash, tension, and provocations, an insolvent dictatorship in Pyongyang would confront an existential choice to reform and disarm or perish.

Of course, confronting Kim Jong-un with that choice depends on getting Kim Jong-un’s bankers in China, Russia, and European states to comply with the new U.N. sanctions. Because China and Russia have voted for and subsequently violated U.N. sanctions resolutions for years, Congress concluded that a credible threat of secondary sanctions was necessary to make them enforce the resolutions. Section 104 of the North Korea Sanctions and Policy Enhancement Act requires the administration to block the slush funds that facilitate Kim Jong-un’s proliferation, arms trafficking, luxury goods imports, and human rights abuses, wherever those funds are found. The purpose of the law is to force the administration to cut off the funds that maintain Kim Jong-un’s regime, and to send a clear message to Chinese and Russian banks that the days of business as usual are over. Either they can do business with Pyongyang or New York, but not both.

Congress made those sanctions mandatory — barring the invocation of a presidential waiver in section 208(c), which must be reported to Congress — because had it lost patience with China, and because it had lost confidence in the Obama administration’s will to enforce U.S. law or U.N. sanctions against North Korea. The Obama administration has too a long history of letting Kim Jong-un off the hook for his most egregious conduct to be trusted. It did functionally nothing to sanction Pyongyang after its second and third nuclear tests, multiple missile tests, and two attacks against South Korea. It failed to list North Korea as a state sponsor of terrorism despite multiple attempts to assassinate dissidents and human rights activists, multiple arms shipments to Iranian-backed terrorists, and the Sony cyber terrorist attack against the U.S. homeland. It did nothing to the Chinese and China-based entities that hosted and enabled the North Korean hackers. Yet for years, despite the extensive evidence of China’s bad faith, the White House effectively outsourced its North Korea policy to China. 

More recently, the Obama administration has taken a back seat to South Korea, whose diplomats have conducted a skillful and effective campaign to terminate North Korea’s lucrative arms dealing and labor exports, and to shore up international support for sanctions enforcement. Meanwhile, the Obama administration failed to undertake a serious campaign of financial diplomacy against Pyongyang. 

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The administration has denied knowing where North Korea’s slush funds are, but those denials become harder to believe as the open-source evidence accumulates. For years, open sources have reported that U.S. and South Korean authorities had pursued and identified large amounts of those funds. A recent spate of high-level defections — yet another was revealed just today — has likely added to the U.S. government’s knowledge of those funding streams. Good journalism has done much to expose North Korea’s China-based money laundering. In the coming days, an extraordinary and little-known organization, the Center for Advanced Defense Studies, will release a meticulously researched report, based entirely on open-source information, that will provide a ground-breaking expose of the North Korean overseas procurement networks. Any guesses which country they operate from?

But perhaps “ground-breaking” is too optimistic. Six months after the latest report from the U.N. Panel of Experts, the administration still hasn’t sanctioned any of the dozens of third-country enablers of North Korean proliferation, smuggling, or money laundering named in that report. The Panel’s report added dozens of names to the long list of Chinese and China-based trading companies, middlemen, and assorted death-merchants to the list of those who’ve spent the last two decades helping Pyongyang buy, sell, and trade the instruments of proliferation and extortion. You won’t find any of them listed among this year’s designations by the Treasury Department.

The administration still hasn’t blocked Chinpo Shipping, which was convicted by a court in Singapore of facilitating North Korean weapons smuggling. It has taken no action against the Bank of China, whose local staff knowingly deceived their U.S. correspondents — and may have broken U.S. money laundering laws — by directing Chinpo to conceal any North Korean links to the shipment. It has not sanctioned Chinese ex-spy Sam Pa or his 88 Queensway Group for their dealings with Bureau 39 (sanctioned by both Treasury and the U.N.) although it did sanction Pa for violating Zimbabwe sanctions. The same goes for the North Korean mining companies and their foreign investors I found among the Panama Papers. Under Executive Order 13722, those companies and their enablers should be subject to sectoral sanctions. No action has been taken against any of them, either.

If the administration — despite the vast personnel, legal, and intelligence resources at its disposal — doesn’t have all of this information, that could only be because it isn’t trying to gather it. What seems much more likely is that the administration has decided not to act on it — on any of it. The fact that the Obama administration won’t act on the information it has makes it harder to believe its denials that it knows where Kim Jong-un’s money is. I have no way of knowing what Treasury knows on the classified or law enforcement sensitive level, of course, but Congress does. We’ll get to that at the end of this post.

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Is the administration simply afraid of the diplomatic consequences of secondary sanctions against Chinese and Russian interests? Clearly not. Just two weeks ago, the Treasury Department designated and blocked a network of traders and trading companies that were helping the Syrian government’s arms procurement and proliferation. One of those traders was a Chinese national and two were Russian; one of the companies is located in Shenyang and one in Moscow. And of course, the Obama administration has directly sanctioned some of Putin’s top officials and financiers over Russia’s invasion of the Ukraine.

The administration can’t credibly claim that China deserves a pass because of its good behavior, either. Recently, China has turned sharply toward authoritarianism, anti-Americanism, and imperial hegemony over neighboring states and waters. It just blocked a toothless U.N. censure of North Korea over missile launches that flagrantly violated a decade-long series of Security Council resolutions by inserting poison-pill language objecting to South Korea’s improvement of its missile defenses. 

Yet instead of accepting responsibility for selling North Korea missile technology and road-mobile missile carriers, among other items, China’s Global Times blames the U.S. for the North Korean threat. Instead of sanctioning Pyongyang, Beijing is threatening Seoul with trade sanctions for having the temerity to want to defend itself from North Korea missiles. It has made a show of cozying up to North Korea and expressing its “significant differences” with the United States.It has even taken to bullying South Korea’s beloved K-pop artists. Korean conservatives are making an issue of this, as they should. Even the far-left, anti-American Hankyoreh Sinmun calls China’s threats “petty.” Scott Snyder is probably right that in the end, this will hurt China’s own economic interests. That is to say nothing of the nationalist backlash it will inspire among Koreans. But the broader point is that China isn’t taking the gravity of this threat to U.S., South Korean, and Japanese security seriously. That’s all the more reason why China must share in the cost of the threat it has done so much to incubate. 

I disagree with John Park and James Walsh on the role of sanctions as often as not, but they are right that for sanctions to slow North Korea’s proliferation, the administration must be willing to pursue and sanction North Korea’s procurement networks in China. They are also correct that weakly enforced sanctions, like half-doses of antibiotics, only serve to strengthen the disease’s resistance to the cure. It should go without saying that in attacking North Korea’s procurement networks, it may be necessary to sanction their Chinese enablers, too. But to go beyond merely delaying Kim Jong-un’s progress toward an effective nuclear arsenal, we must do much more — we must instill the fear of God in Chinese banks that hold (at least) hundreds of millions of dollars in North Korean slush funds, and that allow Kim Jong-un and his cronies to use those funds to maintain his hold over his military and security forces.

In the weeks and months following the imposition of U.S. and U.N. sanctions, I’ve seen and seized on hopeful signs that Chinese banks were freezing North Korean accounts, and that North Korean operatives have been unable to pay their debts. No doubt the administration knows things that I don’t, but these isolated reports still do not suggest that Pyongyang is in the early stages of a liquidity crisis that will confront it with the choice to reform and disarm or perish. Rather, absent more evidence that Treasury is serious about finding and blocking North Korean slush funds, those initial hopeful signs will fade away. It will be business as usual all over again, just as it was not long after Chinese banks briefly froze North Korean funds in 2013.

The fact that Pyongyang continues to sell coal and iron ore to China — in volumes that are increasingnot decreasing — suggests that Pyongyang still has access to bank accounts where it can deposit its coal and iron ore revenues. North Korea’s unsanctioned mineral exports are also rising. Because the mineral trade is under regime control, the fact that it is not directly sanctioned does not absolve China from the duty to ensure that revenue from this trade isn’t used to support Pyongyang’s WMD programs. The rise in this trade reinforces the likelihood that China’s banking industry is open for North Korean business. One South Korean expert opines that it also reflects a rising consensus among Chinese trading companies that China has lost interest in enforcing sanctions against Pyongyang.

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Yes, the administration has taken the long-overdue step of blocking North Korean banks’ access to the financial system. Treasury’s regulation is still not final, and it still remains to be seen what effects U.S. and EU money-laundering blacklisting will have. On one level, the recent surge of defections suggests that the regime is under some financial duress, for some reason. Yes, the administration has designated Kim Jong-un by name for his human rights abuses, while signaling that this action is an entirely symbolic one. Those actions were commendable, so I commended them. But they were meant to be symbolic and much more. The administration must do more than name Kim Jong-un; it must find and freeze the billions of dollars he is not using to provide for his people. Whatever we are doing right, we can do it better.

Fortunately, Congress learned a lesson from the North Korean Human Rights Act: administrations don’t always want to enforce the law, so Congress must make them. When it passed the new sanctions law, Congress included numerous reporting requirements, including a requirement that the administration report to Congress 180 days after the enactment of the legislation on exactly what it has done to enforce the new sanctions. I wonder if the administration forgot about this. Congress hasn’t forgotten it. The time has come for Congress to ask for that briefing. I can think of some very detailed and specific questions the staff should ask about what the administration has done to follow the money. If the administration doesn’t have satisfactory answers, Congress should hold oversight hearings.

We are still in the early phases of implementing these new sanctions authorities. There is still time for sanctions to work, but we are also at the stage where China traditionally stops pretending to enforce sanctions and returns to business as usual. In Washington, the distractions of an election year present a high risk that the administration may prefer a quiet exit to stopping North Korea’s march to nuclear breakout. An administration that wasted eight years while the North Korean threat continued to build has not earned one last “era of procrastination, of half-measures, of soothing and baffling expedients, of delays.” We are entering an era of consequences. The President must enforce the law. Congress must use its oversight authority to ensure that he does.

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Update: Similar thoughts here, from the Heritage Foundation’s Bruce Klingner. And I should note that this Time report from Dandong offers some contradictory (and more encouraging) evidence:

Sipping fruit tea in a Dandong café, Wang, the alias of a Pyongyang-born Chinese trader who speaks to TIME on condition of anonymity, describes how his business importing North Korean coal and minerals and exporting building materials has been eviscerated by the sanctions. “North Korean traders don’t have cash anymore,” he says. “I have to limit the amount of goods I sell to them on credit as the risk of default is so high.”

The report also says that refugees in South Korea have had an easier time sending money to their relatives back in North Korea. There’s nothing wrong with that, as long as Chinese banks enforce sanctions against the regime’s agents.

 

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Why Treasury should require banks to keep records about N. Korean beneficial ownership

In my policy discussions about North Korea, two of the smartest sanctions skeptics I’ve debated are professors John Park and James Walsh. Not only are they both genuinely nice people, their skepticism points to flaws and gaps in the sanctions regime, and that skepticism ultimately serves to improve the quality of the sanctions and their enforcement. They’ve been particularly persuasive about the importance of pursuing “North Korea Inc.,” Pyongyang’s extensive and shadowy network of agents and trading companies in China, who facilitate not only its legal trade, but also act as money launderers and purchasing agents for its WMD programs and luxury goods demands. Such is the nature of money laundering; it uses legal trade to conceal illegal trade.

One answer to Park and Walsh’s criticisms is to add one additional special measure, found at 31 U.S.C. 5318A(b)(2), to the special measures Treasury previously announced on June 1st. This measure would require financial institutions to collect information on the beneficial ownership of property by North Korean persons, or of property in North Korea. That would mirror the European Union’s recent blacklisting of North Korea for money laundering, which triggers increased beneficial ownership reporting rules.

Happily, I’m joined in this view by the most accomplished North Korea sanctions expert I know, William J. Newcomb, who previously served with the CIA, Treasury, State Department, and the U.N. Panel of Experts (here’s a link to an address Bill gave to the Korea Society). Today, Bill and I posted a public comment on Treasury’s proposed special measures against North Korean money laundering. You can read the full text of the comment below the fold, annotated with hyperlinks. It should also be available on the federal regulations portal shortly.

To read the full comment, click the “continue reading” button below.

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What Pyongyang Must Do to Get Sanctions Lifted

If a problem cannot be solved, enlarge it. – Dwight D. Eisenhower

In yesterday’s post, I confronted two unwelcome facts: first, that Kim Jong-un almost certainly will not give up his nuclear arsenal voluntarily; and second, that we cannot learn to live with a nuclear North Korea (or more accurately, it will not learn to live with us). To these, I’ll add a third: things in Korea will certainly get much scarier over the next few years. Pyongyang is blaming sanctions for its own threats, but the inevitability of this crisis isn’t a function of our own policy choices; it’s a function of Kim Jong-un’s psychology, the mass psychology of a system addicted to threats of war, and the fact that as Pyongyang gains more confidence in its weapons, it will feel more freedom of action to provoke and extort without cost. 

Ex-diplomats’ temptation to dialogue, while understandable on certain levels, is an exercise in futility at this point. (Of course, we never really stopped talking to Pyongyang. Not that I necessarily object to talking. I object to paying.) Still, my question remains: if Pyongyang won’t disarm, what’s to talk about?

In yesterday’s post, I ruled out every diplomatic strategy for disarming Pyongyang except one — putting it under so much financial and political duress that its leaders realize that they must change or perish (and it’s much too soon to make effective use of that leverage now). Today’s post will start by answering Sahand Moaref’s question of why the U.S. government chose to sanction North Korea over human rights, thus diffusing what Moaref sees as a necessary focus on disarmament, and denying diplomats the flexibility to achieve a negotiated disarmament. There are two answers to this — a simple legal answer, and the policy reasons behind the legal answer.

The simple legal answer is that section 304 of the North Korea Sanctions and Policy Enhancement Act gave the President 120 days to make a public decision whether to designate Kim Jong-un for human rights abuses. Then, if the President found Kim Jong-un responsible, it was required to designate him and freeze his assets in the dollar-based financial system. State now says that its designation of North Korean human rights violators was years in the making. If that’s true, Congress was pushing against an open door, and the political consensus was already unanimous that there was no diplomatic breakthrough for such a designation to ruin. Still, that consensus went unrequited until three weeks after Congress forced State to say whether Kim Jong-un was responsible for crimes against humanity. Of course, there is only one correct answer to that question.

The reasoning behind the NKSPEA is that our diplomatic strategies — first, appeasing Pyongyang; then, ignoring it — were drifting over a waterfall. There was thus little risk in limiting the flexibility of diplomats to negotiate an agreement that wasn’t happening anyway, and that had little hope of success even if it did. Instead, Congress demanded a comprehensive policy for a comprehensive solution. The NKSPEA requires the President to apply all of our instruments of national power short of military force to coerce Pyongyang to end those behaviors that the U.S. and its allies cannot simply learn to live with. Congress also did something no diplomat has ever done — it told Pyongyang exactly what it must do to get sanctions lifted by writing suspension and termination conditions right into the law. (I’ll get to what those conditions are in a moment.)

To the drafters of the NKSPEA, of which I’m one, State’s negotiating strategy was hopelessly myopic. Its focus on the narrowest of disarmament objectives traded away nearly all of our leverage over Pyongyang to get transitory concessions on just one part of its nuclear program. Thus, that strategy made it more difficult to achieve a comprehensive solution to the greater Korean crisis. It bears repeating that the Korean crisis isn’t just about nukes — it’s about the chemical, biological, thermobaric, and conventional weapons Pyongyang regularly threatens to rain down on millions of South Korean civilians, and the missiles and artillery that would deliver those weapons. It’s about narcotics trafficking, insurance fraud, money laundering, international abductions and assassinations, the sale of weapons to terrorists, cyberterrorism against the U.S. homeland, and the counterfeiting of U.S. currency. It’s also about a system of repression and secrecy so extreme that it renders any disarmament agreement unverifiable.

Thus, by 1998, in pursuit of a freeze of North Korea’s plutonium program, the Clinton administration had lifted most trade sanctions against North Korea and continued to provide it aid, despite a growing body of evidence that it was cheating on the 1994 agreement by pursuing a uranium enrichment program. Both political parties are equally culpable here; by 2008, the Bush administration lifted most financial sanctions in exchange for one blown-up cooling tower and a few boxes of uranium-tainted papers.

Meanwhile, State never even began negotiations in earnest to disarm North Korea of its chemical weapons, biological weapons, ballistic missiles, or the conventional artillery it had aimed at Seoul and other South Korean cities.

By giving away so much so soon, Washington also damaged the cohesion of the most important diplomatic alliances we would need to achieve a lasting peace in the region. In 2007, for example, the U.S. turned its back on treaty ally Japan by removing North Korea from the list of state sponsors of terrorism without having secured a meaningful commitment by Pyongyang to return Japanese abductees. That betrayal caused great controversy in Japan at the time, and it was still harming the U.S.-Japan alliance years later, when Japan cut a separate deal with Pyongyang for the return of the abductees.

Similarly, the Bush administration’s decision in 2007 to let Pyongyang ship weapons to Ethiopia was a clear violation of UNSCR 1718, a resolution the U.S. had just expended substantial political capital to secure. Allowing Pyongyang to violate that resolution squandered a global diplomatic consensus to limit Pyongyang’s arms dealing, which funds its WMD programs. To this day, the U.S. and South Korea are still expending diplomatic capital to get African and Asian states to comply with UNSCR 1718, and with the resolutions that followed it.

North Korea’s human rights abuses have long been a grave concern for many members of Congress, but since the 2014 release of a U.N. Commission of Inquiry report finding North Korea’s government responsible for crimes against humanity, that concern has resonated globally. The world is no longer prepared to give Pyongyang license to commit murder, rape, extermination, and starvation on a mass scale, nor should it be. And if State and Treasury had designated the leaders of Zimbabwe and Belarus for human rights abuses, they could hardly justify their failure to designate Kim Jong-un for far worse.

There are also sound political reasons why any agreement with North Korea must go beyond nukes. Iran continues to support terrorism and test missiles despite the Joint Plan of Action, and Congress isn’t just going to live with that; it will impose new sanctions in response to new evils. Support for terrorism and missile tests are unacceptable to Congress and to U.S. allies, regardless of whether Iran complies with the JPOA or not. These political and diplomatic realities explain why diplomatic solutions with rogue states must be comprehensive, even if comprehensive agreements are harder to achieve in the short term.

More fundamentally, negotiations are doomed to fail as long as Pyongyang continues to lie its way through them. Pyongyang has repeatedly reneged on its agreements, and we’d be fools to trust it again without compelling evidence that it is prepared to become a fundamentally more transparent society, whose commitments, actions, and adherence to the standards of basic humanity can be verified. How can we verify North Korea’s disarmament, especially now that it has admitted to having a more easily concealed uranium enrichment program, if Pyongyang continues to cage foreign aid workers in Pyongyang, miles from where the hungriest people are? Can we really monitor North Korea’s nuclear program if the vast areas that contain its political prison camps — including Camp 16, directly adjacent to its nuclear test site — remain off-limits to us? How could inspectors expect to hear candid answers from North Korean scientists, engineers, or laborers who live in terror of having their loved ones sent to those camps? A closed, terrorized, and opaque society with a long history of determined mendacity is fundamentally impossible to disarm. To be disarmed, it must first be altered or abolished.

Pyongyang, not Washington or Seoul, made the decision to engage in such a wide range of conduct that is unacceptable and offensive to us, to North Korea’s neighbors, or to civilization as a whole. If that breadth of evil complicates diplomacy, Pyongyang alone is responsible for that. If Pyongyang will not live by the basic standards of civilized humanity, it must live without the benefits of commerce with civilized humanity.

To Moaref, the expansion of sanctions leaves Pyongyang confused as to what it must do to get sanctions lifted. But today, no one in Pyongyang need wonder what they must do to get sanctions relaxed or lifted, because clear and specific goals and benchmarks are written into the law. Under the NKSPEA, sanctions can be suspended for a renewable period of a year if the President certifies that North Korea has done the following:

(1) verifiably ceasing its counterfeiting of United States currency, including the surrender or destruction of specialized materials and equipment used or particularly suitable for counterfeiting;

(2) taking steps toward financial transparency to comply with generally accepted protocols to cease and prevent the laundering of monetary instruments;

(3) taking steps toward verification of its compliance with applicable United Nations Security Council resolutions;

(4) taking steps toward accounting for and repatriating the citizens of other countries—

   (A) abducted or unlawfully held captive by the Government of North Korea; or

   (B) detained in violation of the Agreement Concerning a Military Armistice in Korea, signed at Panmunjom July 27, 1953 (commonly referred to as the “Korean War Armistice Agreement”);

(5) accepting and beginning to abide by internationally recognized standards for the distribution and monitoring of humanitarian aid; and

(6) taking verified steps to improve living conditions in its political prison camps.

Eventually, sanctions can be lifted entirely if North Korea meets the following conditions:

(1) met the requirements set forth in section 401; and

(2) made significant progress toward—

   (A) completely, verifiably, and irreversibly dismantling all of its nuclear, chemical, biological, and radiological weapons programs, including all programs for the development of systems designed in whole or in part for the delivery of such weapons;

   (B) releasing all political prisoners, including the citizens of North Korea detained in North Korea’s political prison camps;

   (C) ceasing its censorship of peaceful political activity;

   (D) establishing an open, transparent, and representative society; and

   (E) fully accounting for and repatriating United States citizens (including deceased United States citizens)—

      (i) abducted or unlawfully held captive by the Government of North Korea; or

      (ii) detained in violation of the Agreement Concerning a Military Armistice in Korea, signed at Panmunjom July 27, 1953 (commonly referred to as the “Korean War Armistice Agreement”).

If Congress agrees that the President has reached an agreement on some other acceptable terms, it can always amend the law, but a future President would be understandably reluctant to ask Congress to do this without bringing a very strong case to a future Congress. The North Koreans have burned us too many times to get another pass.

Note that these benchmarks do not necessarily require North Korea to become a fully “open, transparent, and representative” society, but merely to make “significant progress” toward one. This is not an end-state; it’s an abbreviated dialectic. The President could sign such a certification today with respect to any number of authoritarian states. As long as North Korea progresses toward transparency and openness, the President can continue to grant one-year suspensions of sanctions while our leverage remains in place.

Would North Korea view these conditions as political suicide? It agreed to many of them in 1953, so it’s hardly in a position to object to them now. Its agreement to progress toward becoming “open, transparent, and representative” depends how interested its leaders really are in developing their society and improving the living standards of their people. Until recently, U.S. and South Korean diplomats assessed that interest as high. North Korean propaganda still extols economic development as the half of its byungjin policy that isn’t fundamentally objectionable to the rest of humanity.

Whether Pyongyang would agree to this condition also depends on whether its leaders believe their own propaganda. That propaganda ceaselessly emphasizes how much the people adore Kim Jong-un, their single-minded pride and nationalism, and their belief that only a Supreme Leader can protect them from the packs of ravenous capitalists and carpetbaggers beyond the walls of their safe space. Some of the top officials in Pyongyang probably really do believe this, to varying degrees. Because human beings are individuals, and because individuals vary, some demographics in even the poorest regions of North Korea probably share it, too. I’ve met North Korean refugees who admit to having believed it themselves at one time. You don’t have to go all the way to Pyongyang to find experts who believe we underestimate the popularity of the regime, either: both Brian Myers and Andrei Lankov, who disagree with each other more often than not, have both said this at different times. Whether they’re right or wrong is mostly speculative; it isn’t even the point of the discussion. The point is that the leaders in Pyongyang might just believe it, or that they might, in a moment of sufficient duress, take the risk of believing the things they pretend to believe. But the state’s increasingly repressive policies also suggest its general recognition that many North Koreans despise the state’s exercise of totalitarian authority.

If a diplomatic solution is as unlikely as most people think it is, these conditions are probably moot anyway, and sanctions are merely one part of a broader strategy to either collapse the regime in as controlled a manner as possible, or to limit its capacity to threaten the world by putting it in something akin to international financial receivership. I’ll discuss the latter concept in the next post in this series.

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House Committee marks up bill calling for N. Korea’s re-listing as a terror sponsor

Last month, when it was introduced, I wrote about H.R. 5208, the House bill that would require the Secretary of State to acknowledge some of the extensive evidence — including final U.S. federal court judgments — of North Korea’s sponsorship of terrorism, and to go on the record as to whether North Korea has repeatedly provided support for acts of international terrorism. Yesterday, the House Foreign Affairs Committee took the next step on H.R. 5208, approving it in a committee markup. You can watch the whole markup on video:

At 35 minutes in, Rep. Ted Poe (R, Tex.), the bill’s author, speaks powerfully for the bill’s passage. Chairman Royce (R, Cal.), Ranking Member Engel (D, N.Y.), and subcommittee Ranking Member Brad Sherman (D, Cal.) also spoke in favor of the bill.

The bill that emerged from that markup, as an amendment in the nature of a substitute, is tighter than the original.* The committee staff’s challenge was that there is so much evidence of North Korea’s arms sales to terrorists, terrifying cyberattacks on civilian targets, and plots to kill or kidnap dissidents and activists abroad, that the bill could easily have been 20 pages long. As a rule, a bill’s speed through Congress is inversely proportional to its length. 

After some technical corrections, the bill will go to the Speaker’s office for placement on the congressional calendar. This being an election year, the odds against that would seem rather long, although I’m not quite as pessimistic as the Associated Press’s correspondent. If His Porcine Majesty acts up again, Congress might just reach for the first heavy object to throw at him, and this bill is now within easy reach. Given the bipartisan support for H.R. 5208 in yesterday’s markup, and the reversed polarity of Hillary Clinton espousing much tougher rhetoric on North Korea than His Orange Majesty, this one doesn’t seem so likely to cleave along partisan lines.  

Frankly, I’m pleasantly surprised that the markup went (1) forward and (2) smoothly despite this being an election year, with all the complications that brings (a truncated congressional calendar and the inevitable partisan divisions). Yet the full Committee’s Ranking Member, Elliot Engel, and the subcommittee’s Ranking Member, Brad Sherman, both spoke in favor of the bill. Engel also called Bush’s 2007 Agreed Framework II “a bad deal.” So even if H.R. 5208 doesn’t pass this Congress, much like H.R. 1771, we’re likely to see it again in the next Congress as bipartisan support for it builds.

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Another bill that was marked up yesterday also deserves attention — H.R. 5484, the State Sponsors of Terrorism Review Enhancement Act. The bill makes some necessary procedural reforms to the SSOT rescission (de-listing) process by (1) increasing Congress’s time to review a rescission from 45 to 90 days, and (2) requiring the President to certify that the state hasn’t supported terrorism for two years (currently, that period is a ridiculously short six months). You can read more about how the SSOT rescission process works at page 29 of my report

An additional provision, providing for a congressional resolution of disapproval of a SSOT rescission, could run into constitutional problems. I caught this issue immediately, and later saw that at the 38-minute mark in the markup, so did Rep. Alan Grayson (D, Fla.)). Chairman Royce correctly noted that there are similar provisions in existing laws, although Grayson responded that those provisions haven’t yet been challenged in court.

Grayson is something of an enigma. He has earned a well-deserved reputation for his bombastic rhetoric and personal conduct. Even Harry Reid loathes him openly. But Grayson has also earned my grudging respect for his intellectual rigor. He reads every word of every bill sent to him, and sometimes, he catches serious legal defects in them. (If Grayson would raise those issues privately instead of in full committee hearings, he might be more effective.) Also, despite Grayson’s own abrasive personality, his staffers are some of the nicest people on the Hill.

Despite the problem with one of its provisions, H.R. 5484 makes necessary reforms. Back in 2008, I wrote about my frustration with the ridiculously short congressional review process for SSOT rescission, when the Bush administration and the State Department cynically announced North Korea’s rescission from the terror list just before the summer recess in a presidential election year, which effectively nullified the 45-day review.

The biggest surprise about this bill is its author — Republican Ted Yoho of Florida. Yoho has a reputation as an isolationist and is a made member of the Ron Paul-inspired Republican Liberty Caucus. He was one of the few GOP members of the Foreign Affairs Committee who wasn’t among the 147 co-sponsors of H.R. 1771, the predecessor to H.R. 757. Two Liberty Caucus members, Tom Massie (R, Ky.) and Justin Amash (R, Mich.), were the only votes against H.R. 757. Clearly, then, not even all Liberty Caucus members agree with Doug Bandow‘s policy objections to the list of state sponsors of terrorism.

H.R. 5484 stands almost no chance of passing in the current Congress. Ranking Member Elliot Engel didn’t oppose it, but he expressed discomfort that it could tie the administration’s hands in the future, and noted that the administration was opposed to it. Even so, the pressure for reforms to the terror listing process will continue to build as long as Congress thinks the State Department is abusing its discretion.

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* The legislative counsel will make a technical correction of the repeated language about one of the attempted hits on Hwang Jang-yop.

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