NYT: How China helped N. Korea buy ski lift cable cars, and break U.N. sanctions

Yesterday, I posted about hunger in North Korea, the fact that Kim Jong-un is spending the nation’s lunch money on missiles and ski resorts, and the importance of helping the North Korean people make that connection though a comprehensive information operations strategy. The New York Times has bolstered the evidence of North Korean and Chinese culpability for this tragedy with a detailed report on North Korea’s purchase of the equipment for its ski resort through China.

Previously, NK News revealed that the Masikryeong Ski Resort was filled with foreign-sourced equipment, and identified most of the manufacturers (if you aren’t a subscriber, there’s a version here, at The Telegraph). The question left unanswered, however, was whether the North Koreans obtained the equipment directly from the manufacturers, or through China. The Times found evidence in China’s own customs data proving that it was the source of at least some of the equipment.

The cable cars for the Masikryong ski resort, which are at least 30 years old and out of fashion on European ski slopes, were made by Doppelmayr, an Austrian company, and used for years in Ischgl, a skiing town in Austria. After the resort decided to install new cable cars, the old ones were sold to an Austrian secondhand dealer, Pro-Alpin, according to Ekkehard Assmann, head of marketing at Doppelmayr.

Pro-Alpin, in turn, sold the cable cars to an unidentified Chinese company, according to Pro-Alpin’s website. The Chinese company then arranged for the equipment to be shipped to North Korea. [NYT, Jane Perlez & Yufan Huang]

The Times also examines China’s lame and risible excuses for ignoring the U.N. luxury goods sanctions it repeatedly voted for at the Security Council.

By almost any estimate, the sale of such items appears to violate the intent of United Nations sanctions meant to punish the North for its nuclear weapons program — specifically, sanctions targeting luxury goods, intended to cover products like Champagne and caviar, yachts and expensive cars.

But China, whose companies were involved in providing the equipment for the Masikryong ski resort, which opened in 2013, told a United Nations panel that those sanctions did not apply because skiing is a “normal activity” in North Korea, a country where most of the population is impoverished and food shortages are common. “Skiing is a popular sport for people, and ski equipment or relevant services are not included in the list of prohibited luxury goods,” the Chinese said, according to last year’s annual report from the United Nations panel, which monitors sanctions violations. [….]

The luxury goods sanctions have a glaring loophole: Each country is permitted to define what it considers luxury goods. The United States has published a detailed list, down to such items as vanity cases, binoculars and television sets larger than 29 inches. The European Union says “articles and equipment for skiing, golf, diving and water sports” are luxury goods and bans them from export to North Korea. [NYT]

Here is the U.S. list (see Supplement 1), and here is the EU list (see Annex III). Yet, nearly a decade after the U.N. Security Council approved resolution 1718 ….

But China has failed to publish such a list and has not honored those of other countries, the documents of the United Nations panel show. Because it has never said what it considers to be luxury goods, China can argue that cable cars for Mr. Kim’s prestige resort were permissible, even justifying them as equipment for the masses.

“China appears impervious to shame,” said Marcus Nolan, of the Peterson Institute for International Economics in Washington, who said there were no penalties for flouting the luxury goods sanctions. [NYT]

The Times also traces the genesis of Xi Jinping’s obstructionist policy toward sanctions enforcement generally.

The Chinese hope to prevent tougher sanctions for fear that the North will become a hostile neighbor, a policy that diplomats said appears to have been shaped by President Xi Jinping last summer. In talks last week with his Chinese counterpart, Foreign Minister Wang Yi, Secretary of State John Kerry made little headway in persuading China to toughen sanctions against North Korea, and he warned that the United States would most likely move ahead on its own. [NYT]

The policy isn’t entirely a new one. Diplomatically speaking, Xi is more openly obstructionist than his predecessors, but China has a longstanding pattern and practice of violating sanctions against North Korea related to proliferation, arms sales, deceptive financial practices, and luxury goods.

What neither Xi nor President Obama counted on, however, was that Congress would seize the initiative.

Tougher sanctions legislation is moving through Congress that, among other things, would target Chinese banks that do business with North Korea. The administration has been reluctant to call for such sanctions, known as secondary sanctions, and it is not clear what the White House would do about the legislation, American experts said.

“Given the broad and variegated bilateral relationship between the United States and China, U.S. officials have been reluctant to confront and economically punish China with secondary sanctions in case it should undermine other key priorities in the bilateral relationship,” said Elizabeth Rosenberg, senior fellow at the Center for a New American Security. [NYT]

The Times also gives us some absolutely breathtaking data on what Kim Jong-un is wasting on luxury goods, while most of his subjects are food-insecure, malnourished, stunted, or starving.

Chinese customs data showed that North Korea imported $2.09 billion in luxury goods between 2012 and 2014, according to recent congressional testimony by Bonnie S. Glaser, senior adviser for Asia at the Center for Strategic and International Studies. Among the items that have slipped through the sanctions are Mercedes-Benz S-Class cars, photographs of which appeared in last year’s United Nations report. An unidentified American company armored the cars, the report said. It also said that a luxury yacht worth as much as $6 million, made by a British company, Princess Yachts International, made it into North Korea and has been used by Mr. Kim.

In 2014, China exported $37 million worth of computers; $30 million of tobacco; $24 million of cars; and $9 million of air-conditioning equipment to the North, according to trade statistics from the United Nations Department of Economic and Social Affairs. In all these categories, China was the top exporter, the United Nations said. [NYT]

As the Times notes, “luxury goods may seem a relatively minor issue,” but “they help to ensure the loyalty of the tiny elite around” His Corpulency, thus helping to preserve its cohesion. Their availability also sends a signal inside Pyongyang that the regime is financially secure, bolstering the confidence of the elites in the regime’s survival.

There is also another, more important, reason why luxury goods sanctions matter. It bears repeating that the World Food Program’s operations in North Korea cost just $100 million a year, to feed just 2.4 million women and children, a figure that undoubtedly includes substantial salary and overhead costs. If the period from 2012 to 2014 is inclusive, that’s a three-year period, and an expenditure of almost $700 million a year — an even higher estimate than the one I cited here.

Yesterday, I posted evidence that for many North Koreans, the food situation remains desperate. No government has a sovereign right to steal and waste the wealth of its people when the people are hungry. Viewed this way, North Korea’s luxury goods imports and missile tests aren’t just a sanctions violation, they’re a crime against humanity. What’s especially frustrating is that it’s a crime the world has the power to prevent, by putting North Korea’s assets into financial receivership. The world’s financial regulators should put Kim Jong-un and his minions on notice that their offshore bank accounts are available to buy food, medicine, and humanitarian supplies, but not for ski resorts and luxury cars.

Continue Reading

Ed Royce’s North Korea sanctions bill is already giving President Obama leverage over China

Kim Jong-un’s Groundhog Day message to the world was the announcement of a long-range missile test, and as you’ve no doubt heard, he has since made good on that threat. Like the movie “Groundhog Day,” this provocation cycle has been a variation on an endless loop. In 2006, 2009, and 2013, the missile test came before the nuke test, but if reports that His Corpulency is preparing yet another nuclear test are true, that will still technically be the case.

Otherwise, events have played out much as they did then: emergency meetings at the U.N., shuttle diplomacy, calls by the U.S. for tougher sanctions, and calls by China for everyone to just chillax and talk it out.

The Obama Administration is pushing China to push North Korea, but China has pushed back, stalled, and obstructed. For all the talk about a downturn in relations between Beijing and Pyongyang, Xi Jinping is being exceptionally stubborn in shielding Kim Jong-un from the consequences of his provocations. As the Brookings Institution’s Jonathan Pollack observes, “The sense of silence from China on this issue is really quite extraordinary.” It’s no great wonder why. Our President has done little of consequence to pressure Pyongyang or Beijing, so naturally, Xi and Kim have learned not to take him seriously. Whenever President Obama sees Kim Jong-un’s shadow, our State Department makes six more weeks of empty threats.

Will this time finally be different? Maybe so. 

Thanks to quick action by a united and bipartisan Congress — and how often do you read those words anymore? — the U.S. now has leverage with China that it didn’t have before. President Obama and the State Department may have been caught off-guard by Kim Jong-un’s nuclear test on January 6th, but Congress wasn’t. Since 2013, Ed Royce, the Chairman of the Foreign Affairs Committee, had been preparing a North Korea sanctions bill (full disclosure) and quietly building a bipartisan coalition to support it in the House and the Senate. Six days after the test, Royce pounced. Now, the administration isn’t even waiting for the bill to pass the full Senate (projected next Wednesday, if there are no “poison pill” amendments) to use its secondary sanctions provisions as leverage over the Chinese.

Mr. Kerry warned the Chinese that if they didn’t toughen their response to the North the U.S. might have to use secondary sanctions or deploy an advanced U.S. missile defense system to the region, according to U.S. officials. [WSJ, Jay Solomon & Josh Chin]

Separately, the New York Times quotes Deputy Secretary of State Antony J. Blinken as saying that “[t]he United States and its allies will bolster sanctions and go on the defensive against North Korea in ways that China may not like” if it doesn’t put the screws to His Corpulency.

Some of those steps “won’t be directed at China, but China probably won’t like them,” he said. Mr. Blinken refused to go into detail. But he said that “everything is on the table,” including so-called secondary sanctions, of the type the United States most recently used against Iran, which would target third-party countries doing business with North Korea. [N.Y. Times, Choe Sang-hun]

As you’d expect, that discussion and the exchanges between State and the Foreign Ministry since then have been contentious. They needed to be. North Korea’s financial links are concentrated in China. Despite China’s new propaganda meme that it really can’t control North Korea, most of North Korea’s money is in Chinese banks, and the vast majority of North Korea’s trade is with China.

That means the new sanctions could fall heavily on Chinese firms, which current and former U.S. officials have long accused of complicity in Pyongyang’s military development. [WSJ, Jay Solomon & Josh Chin]

The Chinese government says it’s opposed to “any efforts to unilaterally impose sanctions on North Korea.” So they’re unhappy. Which is sort of the idea here.

Sen. Cory Gardner (R., Colo.), who sponsored the North Korea legislation that was approved Jan. 28 by the Senate Foreign Relations Committee, said it aims to “send a strong message to China and others that the United States will use every punitive economic tool at its disposal to punish the regime and its enablers, wherever they may be.” [….]

“China is the place we really want to send a signal to,” said a congressional official working on the North Korea sanctions. [WSJ, Jay Solomon & Josh Chin]

President Obama has since called Xi Jinping personally “about how to coordinate efforts in response to North Korea’s provocations.” If the new sanctions legislation didn’t come up in that conversation, it surely hovered in the background. According to the WSJ, not only is the bill “unlikely to meet with a White House veto,” but the administration is threatening to do something unprecedented — enforce the law. 

Senior administration officials said they were receptive to vigorously enforcing the unilateral sanctions being developed by the Congress, despite some technical concerns.

Congressional officials working on the legislation said they’ve sought to replicate elements of the financial campaign the Obama administration used against Iran. Those sanctions cut by more than half Tehran’s crude oil exports and largely froze Tehran out of the global financial system.

The North Korea legislation aims to sanction any foreign firms aiding Pyongyang’s nuclear and cyberwarfare programs. It also is designed to block North Korea’s ability to export minerals, a key foreign exchange earner, and blacklist its entire financial system for its alleged role in illicit businesses. [WSJ, Jay Solomon & Josh Chin]

The administration is sending a clear message to China through various channels.

The United States would clearly prefer that China actively cooperate on a much fuller spectrum of measures. But Washington’s message to Beijing is clear: America will act with or without China’s concurrence.

The United States has long believed that China has the means to more decisively oppose North Korea’s nuclear and missile development, including restrictions on China’s financial, economic, and energy assistance to the North. By sharpening the choices confronting Beijing, Washington shows it believes that equivocation or indecision by China is no longer acceptable. [Jonathan Pollack, Brookings Institution]

Don’t be surprised if, when the next provocation cycle comes, Congress is ready to pounce again. 

In the end, I don’t expect Xi Jinping to agree to significantly tougher U.N. sanctions. He’ll try to wear us down, weaken any draft resolution, and eventually, if only to let us save face, agree to a watered-down resolution that nominally increases sanctions. Then, within a few months, China will go right back to violating them(We’ll almost certainly see further evidence of China’s pattern and practice of non-enforcement when the U.N. Panel of Experts monitoring North Korea sanctions releases its next report in March — sooner if one of you leaks me a copy). He’ll also fight the new sanctions law tooth-and-nail, such as through barter and yuan-based transactions, although I have to wonder how many Chinese companies are interested in that kind of business.

What happens next depends on whether the Obama Administration (a) puts the new bill on a shelf for the next President to find, like both George W. Bush and Barack Obama did with the North Korean Human Rights Act of 2004, or (b) actually enforces it, like it wants us (and the Chinese) to believe it will. If the answer is (b), there may not be much Xi Jinping can do about it. In practical terms, even small Chinese banks and companies can live without access to North Korean markets, but not without access to ours. Even companies that don’t deal directly with the U.S. market need banking services, and banks won’t touch them if they’re designated. When China’s banking system is as shaky as it looks right now, no sane bank manager is going to risk secondary sanctions over transactions with North Korea. Once they see that the Treasury Department is serious, Chinese bankers will drop North Korean customers like so many hot potatoes.

~   ~   ~

How will we know that the administration is serious? I can think of several signs to watch for. First, the Treasury Department could finally declare North Korea, a notorious counterfeiter and money launderer, to be a jurisdiction of primary money laundering concern, and impose harsh special measures on its banks. This is the single most powerful tool in the President’s arsenal.

Second, it could declare North Korea to be a state sponsor of terrorism, which would immediately invoke the tougher transaction licensing regulations at 31 C.F.R. Part 596, thereby closing a major sanctions loophole. If nothing else, that would help to appease Congress.

Third, it could launch criminal indictments against North Korean entities that have committed crimes. The government has expressed “very high confidence,” for example, in North Korea’s culpability for the Sony cyber attacks, which are violations of 18 U.S.C. 1030. An indictment would allow the government to issue an Interpol Red Notice for Kim Yong-chol, the assassin and terrorist who formerly headed Unit 121, until his recent promotion. Another potential basis for action could be that big meth smuggling conspiracy in New York, if any of the defendants have cut deals with DOJ and implicated North Koreans. More importantly, a conviction would allow the Justice Department to use 18 U.S.C. 981(k) and 982 to forfeit any North Korean assets involved in any crimes for which defendants were convicted, right out of the correspondent accounts through which those assets flow.

Fourth, it could take civil enforcement actions against entities that are propping up Pyongyang financially. The extraordinary reporting of George Turner at Finance Uncovered, for example, shows us that Orascom’s Naguib Sawaris, while building a cell phone network for the North Korean government, also set up a bank, Orabank, in partnership with North Korea’s Foreign Trade Bank. The U.S. Treasury Department blocked the FTB in 2013 for WMD financing. Turner’s article implies that Treasury knew less about Sawaris than he did, including Sawaris’s U.S. citizenship and links to a major defense contractor. If Sawaris or his companies are designated under Section 104 of the new sanctions law, they and their subsidiaries could face the blocking of their assets, civil and criminal penalties, and debarment from receiving government contracts. Sawaris’s U.S. citizenship is not a prerequisite to Treasury blocking his dollar assets,  but if the Justice Department finds evidence that he broke the law, his U.S. citizenship will make it much easier for DOJ to assert personal jurisdiction over him. Another potential target is China’s 88 Queensway, which worked in direct partnership with North Korea’s money laundering agency, Bureau 39. Even the Bank of China has reason to be nervous.

Fifth, the President could direct the Securities and Exchange Commission to require issuers with investments in North Korea to disclose those investments in their public filings. The reputational risks associated with investments in North Korea could have the effect of driving investors out of North Korea, if those investments become a matter of public record. And given what happened with Orascom’s catastrophic gamble on Koryolink, who can seriously argue that the risks of investing in North Korea aren’t “material?”

~   ~   ~

One last question: did the North Koreans consider the potential impact of this before going through with these provocations? After all, they have the experience of Banco Delta Asia behind them. Of course, with the amount of turnover inside the regime since His Corpulency’s succession, there may be plenty of people in his inner circle who don’t remember Banco Delta Asia. Maybe the North Koreans don’t think President Obama dares touch them. Maybe the explanation is mostly psychological. Mabye Kim Jong-un’s domestic pressures are forcing him to take risks despite the consequences. Most likely, given Kim Jong-un’s record of brutality toward his inner circle, his advisors don’t dare try to restrain him. If Treasury enforces this law, the reality won’t set in until the checks start to bounce. That’s when the hard part comes — knowing how to use that pressure, and if and when to relax it for the deal Beijing and Pyongyang will inevitably offer us to get the sanctions relaxed.

Continue Reading

The biggest loser from North Korea’s nuke test? China. (updated)

When I was in high school, my favorite TV show was “Miami Vice.” Until it jumped the shark in Season Three, I’d count the minutes until each episode began. One of its best episodes was called “Golden Triangle,” in which the show developed the main characters’ boss, Lieutenant Castillo, played by Edward James Olmos in his breakout role. Olmos played Castillo deep and dark. To me, at that age, Castillo personified cool.

In this episode, Castillo revealed his past as a DEA agent in Thailand, where he’d gone native, learned to speak Thai, met and lost his life’s great love (played by the delectable Joan Chen), and then barely survived a deadly ambush at the hands of his nemesis, a Nationalist Chinese general turned Golden Triangle drug lord named Lao Li.

Lao Li’s character was played by the late, great Keye Luke, an actor who deserved vastly more memorable roles than were available to Asian-Americans for most of his long life. Luke played this role brilliantly, with an impeccably icy sagacity. (Watch the whole episode below if you doubt me). In his career, Luke was probably most famous for playing Master Po in “Kung Fu,” but I’d have remembered him for the talent he showed in this one “Miami Vice” cameo if he’d never done anything else.

This being a blog about North Korea, you may be wondering whether I will be making a topical point. We’re coming to that; trust me. In this episode, Castillo learns that his old nemesis, General Lao Li, has decided to move his smuggling operation to Miami by posing as a respected retiring businessman, putting down strong roots in the community, and gaining the favor and patronage of the political establishment. (Yes, Joan Chen is there, too.) To do this, he gives strict orders that his subordinates behave like paragons of legality, maintain low profiles, and avoid attracting the attention of law enforcement — and especially of Lieutenant Castillo — at all costs.

Lao Li soon learns that his grandsons have defied him and are driving around in a Lamborghini. Most unforgivably, they have been selling heroin. Castillo is watching, and his men arrest the grandsons. This is a risk, and a defiance of his authority, that Lao Li cannot accept. In terms of its plot, acting, and production values, this episode could have been a movie, but the scene that illustrates my topical point starts at 41 minutes.

[If only one of the grandsons had been fat. Really fat.]

That Lao Li’s character happens to be Chinese is as incidental to the analogy as the fact that Castillo’s character doesn’t. Xi Jinping may not inhabit a higher moral plane than the fictional Lao Li, but he almost certainly inhabits a lower intellectual one. Xi may have a predator’s instinct for weakness, but he’s also a cumbrous, boorish nationalist who has managed to turn most of his democratic Asian neighbors against him. His legacy may yet be an Asian analogue to NATO that contains several newly-minted nuclear powers in an arms race with his ally (and him), along with a lot more port calls by the U.S. Navy.

Xi may not see this, but anyone can see that he has been humiliated by the perception that he cannot control his lawless dependent. That perception may be nothing more than a disguise for a more duplicitous agenda, but the perception itself is costly. Xi has greater schemes in mind, but his (metaphorical) grandson threatens to upset his plans by causing his neighbors to mobilize their defenses. His paternal benevolence should end here. It won’t. And that means Kim Jong-un will continue to be costly for Xi Jinping.

History will probably record that North Korea’s fourth nuclear test did more damage to the Obama Administration’s North Korea policy than it did to the the geology under Punggye-ri. In doing so, it also obliterated China’s credibility here. One of the more devastating criticisms of the administration’s policy came from The Washington Post‘s David Nakamura, who effectively accused the administration of outsourcing its policy to China. No wonder the State Department is feeling burned by China:  

In a striking public rebuke of China, Secretary of State John Kerry warned Beijing on Thursday that its effort to rein in North Korea had been a failure and that something had to change in its handling of the isolated country it has supported for the past six decades.

“China had a particular approach that it wanted to make, and we agreed and respected to give them space to be able to implement that,” Mr. Kerry said a day after North Korea’s latest nuclear test, after a phone call with his Chinese counterpart, Wang Yi. “Today in my conversation with the Chinese I made it clear: That has not worked, and we cannot continue business as usual.” [N.Y. Times, David Sanger and Choe Sang-hun]

If China’s quiet duplicity surprised the Secretary, it was because no one was giving him read-outs of the excellent reports of the U.N. Panel of Experts monitoring those sanctions. Those reports added to a considerable body of evidence that China was willfully violating the sanctions for years. In the short term, this is a big setback for the Obama Administration, but in the longer term, we can hope that a tougher, more engaged, and more realistic North Korea policy will be to the administration’s advantage as it winds down its affairs and transitions to the next one.

For China, the consequences may be more adverse and enduring. It stands to lose influence regionally because of North Korea’s actions. Its adversaries have taken steps to resolve the differences that divided them, and are now effectively allied against it. South Koreans even speak openly of acquiring their own nuclear weapons. As well I would, too, if I were South Korean, Japanese, or Taiwanese.

It also stands to lose credibility globally. As William Newcomb, a former member of the U.N. Panel of Experts, told the AP, “China uses the sanctions committee’s consensus rule ‘to renege on what it agreed to do in the Security Council as well as to block proposed designations.’” Now, the U.S. and China are fighting about both the substance and enforcement of U.N. sanctions. More voices in the U.S. are calling for secondary sanctions that hit Chinese targets. Some South Koreans are also blaming China:

North Korean leader Kim Jong-un went ahead with the fourth nuclear test because it will not cause China to abandon the North, said Kim Hwan-suk, a senior analyst at the Seoul-based Institute for National Security Strategy.

“North Korea used brinkmanship because it knows that China won’t abandon it, given its strategic value,” Kim said. “North Korea does not expect China to fully support sanctions against the North by the U.N. Security Council.” [Yonhap]

The strongest words came from South Korea’s Foreign Minister:

Foreign Minister Yun Byung-se on Sunday called on China to prove its “firm” opposition to the North’s claimed hydrogen bomb test after the North’s largest ally denied responsibility in curbing Pyongyang’s nuclear ambitions.

“The Chinese government must clearly follow through with its promise made to the international community when it votes for the United Nations Security Council resolution,” Yun said on “Sunday Diagnosis,” a KBS current affairs program, on Sunday morning.

“That’s important to stabilizing the Korean Peninsula, Northeast Asia and the international community. It would prove that China hasn’t made empty promises.” [Yonhap]

China, for its part, is pushing back and blaming the U.S. for Kim Jong-un’s decision to test a nuke, thereby revealing much about its fundamental hostility to U.S. interests and utter disregard for the welfare of North Koreans:

In a commentary, China’s state-run Xinhua news agency said, “The U.S.’s combative approach has in effect deepened Pyongyang’s sense of insecurity and prompted the country to go further in challenging non-proliferation restrictions.”

“The Western media and some politicians have piled blame on China for failing to halt the DPRK’s nuclear program,” the Xinhua commentary said, using an acronym for North Korea’s official name.

“But any hasty conclusion to identify China as the crux of the ongoing nuclear crisis on the Korean Peninsula is as absurd as it is irresponsible,” it said.

Another state-run newspaper published by China’s ruling Communist Party also blamed what it calls a “hostile policy” by South Korea, the United States and Japan towards North Korea for the North’s fourth nuclear test.

In an editorial, the state-run Global Times newspaper appeared to defend North Korea’s defiant pursuit of nuclear weapons, saying there will be “no hope” for Pyongyang to give up its nuclear ambitions unless South Korea, the U.S. and Japan change their policy toward the North.

“There is no hope to put an end to the North Korean nuclear conundrum if the U.S., South Korea and Japan do not change their policies toward Pyongyang,” the editorial reads. “Solely depending on Beijing’s pressure to force the North to give up its nuclear plan is an illusion.”

Lu Chao, a research fellow of Korean studies at the Liaoning Academy of Social Sciences, told the Global Times newspaper on Saturday that North Korea has developed nuclear weapons because of a “hostile policy” by the U.S. against the North. [Yonhap]

This sort of rhetoric will not play well in Washington, and will not advance China’s interests. Instead, it will inflame opinions on Capitol Hill and among American voters. In an election year, it will set off a contest among candidates to promise the most anti-Chinese policies. A few of those promises might even be kept. So why does China say such silly things? For the same reason Donald Trump says silly things — because of his emotions, and to exploit the emotions of other mediocre minds.

Historically, China has been an empire that either absorbed or dominated its neighbors. States that remained independent were required to send ambassadors to the Forbidden City to kowtow and give tribute. Chinese political culture is a hierarchical and status-conscious one in which you’re either above or below. Those above condescend and exploit. Those below fawn and obey. With this realization, I suddenly understood the appeal of Maoism. In comparison, Korean society seems positively egalitarian. I certainly know who I’d rather drink with, or have on my side in a street fight, but then, I’m an assimilated wasicu

Because of status-based and institutional arrogance, and because China’s leaders aren’t held accountable by a critical press or free elections, they overestimate their own competence and don’t weed out incompetent or corrupt officials. That’s true everywhere, but it’s especially true in dictatorships. Job security is more closely related to getting along with others, and showing the right deference to superiors. That drives China to make “safe” decisions by continuing with what has worked before, or seemed to. If what worked before stops working, the new plan may come too late, and may be the work of not-very-competent people. See, e.g., the recent performance of the Shanghai Stock Exchange.

The leaders of China are rational, but they’re also operating with limited information, because of both groupthink and censorship. So when Chinese elites say that sanctions won’t work or human rights problems in North Korea aren’t really that bad, they probably believe that, mostly. That’s both because they don’t know, and also because they don’t care that much. To Chinese elites, Koreans are a “down” people, and that goes double for North Koreans. They may be extremely adept at weighing of costs against benefits, but groupthink and institutional resistance are high obstacles to a careful reconsidation of the bubble that’s building beyond China’s northeastern border.

In the case of North Korea, we may yet persuade China to shift course. There might yet be a chance for a face-saving soft landing that avoids regional war and protracted chaos, and protects China’s basic security interests, ours, and those of our allies. For now, that still seems unlikely. That’s unfortunate, because the interests of China, the United States, and a united Korea could be reconciled by skillful diplomacy. I’m not sure if Beijing really agrees, but a nuclear North Korea is bad for China — very bad. To get to that realization, however, China will have to feel enough of a cost to shift its incentives. That means that U.S.-China relations may have to get worse before they get better.

~ ~ ~

UPDATE: Now, the South Korean semi-official news agency, Yonhap, reports that Chinese are complaining that their government needs to take a harder line.

In one opinion poll of some 42,500 people by the state-run Global Times, 81 percent say the North’s nuclear test poses a threat to China’s security.

In another poll of 4,900 people by the same paper, 82 percent responded that they support new sanctions by the U.N. Security Council against North Korea.

Some Internet users posted comments about North Korean leader Kim Jong-un on the newspaper’s website, likening him to an “extremely crazy guy.”

Other users say China must cut its aid of oil and food to North Korea.

China is North Korea’s top trading partner and supplies almost all of the isolated ally’s energy needs, but many analysts believe that China’s Communist Party leadership won’t exert enough leverage on North Korea because a sudden collapse of the North’s regime could threaten China’s own security interests. [Yonhap]

That’s the first thing resembling an opinion poll I’ve seen measuring Chinese sentiments about North Korea policy. The 82 percent support for new U.N. sanctions is stunning, and at striking variance with elite opinion in China. Yonhap also reports “growing public resentment” of North Korea, and that “some social media users criticizing their government for not taking a tougher response to the North’s test.” Imagine how they’ll feel if sanctions start to have collateral effects on China’s fragile economy. What this means is that Xi Jinping’s North Korea policy is probably causing harm to his domestic support, in addition to the harm it’s doing to his international credibility.

Continue Reading

Singapore shipper guilty of funding illegal N. Korean arms deal through Bank of China

In 2013, Panamanian authorities seized a huge haul of surplus Cuban weapons, including MiG fighters and surface-to-air missiles, aboard a North Korean ship at the entrance to the Panama Canal. Multiple U.N. Security Council resolutions prohibit North Korea from buying or selling most weapons, so the Cuban stevedores covered the weapons with sacks of sugar. An investigation by the U.N. Panel of Experts found that a North Korean shipper, Ocean Maritime Management (OMM), owned the ship, and that the regrettably named, Singapore-based Chinpo Shipping handled the financial transactions behind the shipment. According to multiple open-source reports, Chinpo used its account in the local branch of the Bank of China for those transactions.

chong chon gang sugar

After lengthy delays by the U.N. bureaucracy, a Security Council-appointed committee and the U.S. Treasury Department designated OMM. Since then, Treasury has designated multiple OMM offices, agents, and enablers. Chinpo was neither designated nor blocked, but the authorities in Singapore charged it with violating a local law codifying U.N. Security Council sanctions against North Korea, and for running an illegal money transmitting business without meeting the financial due diligence requirements that apply to such businesses. Now, Reuters and the AP are reporting that the court has convicted Chinpo:

In announcing the verdict, Singapore District Judge Jasvender Kaur said the firm, Chinpo Shipping Company, could have contributed to the nuclear-related programs or activities of North Korea.

The company was also found guilty of running a remittance business without a valid license for more than four years.

Chinpo had wired $72,017 from its Bank of China account to a Panama-based shipping agent in July 2013 for the return passage of the MV Chong Chon Gang through the Panama Canal. [….]

Chinpo violated a United Nations law adopted by Singapore that prohibits the provision of financial services, assets or resources to North Korea that “may be reasonably be used to contribute to the nuclear-related, ballistic missile-related, or other weapons of mass destruction-related programs or activities.” The maximum sentence is a fine of 100,000 Singapore dollars ($71,000) and five years in jail. [AP]

If you’ve read all of the links I so laboriously embedded in those first two paragraphs, there isn’t much question that Chinpo willfully facilitated the North Korean shipment using deceptive financial practices.

That shouldn’t be the end of the story, however, because financial institutions like the Bank of China are supposed to have compliance and know-your-customer programs in place to ensure that they don’t service illicit transactions. In the specific case of North Korea, the Global Financial Action Task Force has called for “countermeasures” against its money laundering and arms dealing for years.

You would think, then, that one of the world’s largest banks would employ compliance officers competent enough to detect such suspicious activity, which (if denominated in dollars, and in this case, it was) must be reported to the Treasury Department. In fact, the Treasury Department’s Financial Crimes Enforcement Network has published specific guidance on the reporting of suspicious North Korea-related transactions.

The U.N. Security Council’s adoption of specific financial measures to address this conduct reinforces long-standing Treasury Department concerns regarding North Korea’s involvement, through government agencies and associated front companies, in financial activities in furtherance of a wide range of illicit activities. These activities include currency counterfeiting, drug trafficking, and the laundering of related proceeds. FinCEN has previously noted such conduct, most recently in 2007.4 The Treasury Department remains especially concerned about the use of deceptive financial practices by North Korea and North Korean entities, as well as individuals acting on their behalf. Such deceptive practices may include North Korean clients’ suppression of the identity and location of originators of transactions; their practice of arranging for funds transfers via third parties; repeated bank transfers that appear to have no legitimate purpose; and routine use of cash couriers to move large amounts of currency in the absence of any credible explanation of the origin or purpose for the cash transactions. [….]

FinCEN notes that with respect to correspondent accounts held for North Korean financial institutions, as well as their foreign branches and subsidiaries, there is now an increased likelihood that such vehicles may be used to hide illicit conduct and related financial proceeds in an attempt to circumvent existing sanctions. Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring. [….]

Consistent with the standard for reporting suspicious activity as provided for in 31 C.F.R. part 103, if a U.S. financial institution knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity or that a customer has otherwise engaged in activities indicative of money laundering, terrorist financing, or other violation of federal law or regulation, the financial institution shall then file a Suspicious Activity Report. [FINCEN Advisory, June 18, 2009]

FINCEN and FATF have both renewed their North Korea advisories repeatedly in recent years. And yet, from the fact that the transactions went through unimpeded, we can infer that nothing here seemed suspicious to the Bank of China’s compliance officers:

Chinpo had applied for a total of 605 outward remittances totaling $40 million from 2009 to 2013 on behalf of North Korean entities. Chinpo’s director, Tan Cheng Hoe, also heads associated companies Tonghee Shipping Agency and Great Best Trading.

When The Associated Press visited Chinpo’s listed address, another company said it has occupied the premises for more than a year. The case was adjourned until Jan. 29 to give prosecution and defense lawyers time to make submissions. [AP]

As one immediate consequence of this conviction, Treasury will almost certainly designate Chinpo Shipping, and possibly some of its officers. I’d expect to see those designations this week, if not today.

But Chinpo Shipping is a small fish, and no one should view that result as the end of this story. This isn’t the first time the Bank of China has come under suspicion for shady North Korea-related transactions, after all. Just as Treasury has recently taken enforcement actions against other big banks, such as BNP Paribas, Credite Agricole, and Commerzbank, for evading sanctions against other countries, Treasury should investigate whether the Bank of China violated the Bank Secrecy Act by failing to file Suspicious Activity Reports on Chinpo, and perhaps other North Korea-linked customers.

We’ll soon know just how serious the Obama Administration is about enforcing the Security Council’s sanctions by the message it sends — or doesn’t — to the Bank of China.

Continue Reading

China arrests 10 N. Korean refugees, including a family with a baby; protest tomorrow at Chinese embassy

A group of North Korean defectors who were being smuggled across the China-Vietnam border have been detained, and are at risk of being repatriated to North Korea.

A South Korean government official who spoke to News 1 on the condition of anonymity said 10 defectors in total were taken into custody in the Mong Cai region of northern Vietnam. All have been sent back to China, and 9 of the 10 are at risk of being repatriated to North Korea, South Korean outlet Newsis reported. [….]

The group includes a captain of the North Korean army, and a family of three that includes a 1-year-old child, the source said. It is likely the group was seeking asylum in South Korea through an embassy in Vietnam. [UPI, Elizabeth Shim]

If these people are sent back to North Korea, they’re in grave danger of being executed or sent to a political prison camp. A United Nations Commission of Inquiry has condemned China for sending these refugees back to North Korea, instead of allowing them to travel on to South Korea, which gives them asylum.

43. Despite the gross human rights violations awaiting repatriated persons, China pursues a rigorous policy of forcibly repatriating citizens of the Democratic People’s Republic of Korea who cross the border illegally. China does so in pursuance of its view that these persons are economic (and illegal) migrants. However, many such nationals of the Democratic People’s Republic of Korea should be recognized as refugees fleeing persecution or refugees sur place. They are thereby entitled to international protection. In forcibly returning nationals of the Democratic People’s Republic of Korea, China also violates its obligation to respect the principle of non-refoulement under international refugee and human rights law. In some cases, Chinese officials also appear to provide information on those apprehended to their counterparts in the Democratic People’s Republic of Korea. [UN COI]

The NGO No Chain has announced that it will hold a protest at the Chinese embassy tomorrow, Saturday, November 21st, from 1 p.m. to 2 p.m. The address is 3505 International Place NW, Washington DC 20008. Bring your own signs, placards, and banners. Details here.

Please share this post as widely as you can on social media.

Continue Reading

Sam Pa, 88 Queensway, KKG & Bureau 39: A case study in how China helps N. Korea evade sanctions

Last week, I highlighted Andrea Berger’s excellent post at 38 North, calling for the U.N. Security Council to sanction North Korea’s third-party enablers. Berger named some of those enablers, but I’d like to name another one of the most important ones — the Hong Kong-based 88 Queensway Group, headed by one Sam Pa, also known by his birth name “Xu Jinghua” or any of “at least eight aliases,” each with its own matching passport. According to multiple news reports, Pa has extensive connections to Chinese politicians, and with its intelligence services.

The mystery over his origins may be related to his former career as a spook. “All his life he’s worked in Chinese intelligence,” one source told the Financial Times. [The Independent]

An FT investigation last year found that Mr Pa and his fellow founders of the Queensway Group have connections to powerful interests in Beijing, including Chinese intelligence and state-owned companies. [Financial Times]

On the web, you’ll find a lot written about Mr. Pa, mostly about his notorious business dealings in Africa. Most of that reporting focuses on what could be described, conservatively, as conflicts of interest. The Economist writes that Pa’s deals “appear to grant the Queensway syndicate remarkably profitable terms,” “would be depriving some of the world’s poorest people of desperately needed wealth,” and “may also have indirectly helped sustain violent conflicts.” These include close partnerships with the governments of Zimbabwe and Angola in their diamond mines, and with Angola’s oil ministry, via an entity called China Sonangol, that was “deemed so corrupt in 2003 that Citibank closed all its accounts.”

The routine need to bribe officials is not a deal-breaker for Queensway either. Chinese investigators found that Queensway’s leaders had bribed high-level officials in Nigeria and several other countries. [J.R. Mailey, 38 North]

Queensway’s deals often traded Africa’s resources for promises to build infrastructure — promises on which Queensway ultimately failed to deliver. The exchange of Africa’s commodities for services has the additional advantage of avoiding the dollar system, and with good reason: the Justice Department and the SEC have opined that making a payment through a U.S.-based correspondent account gives them jurisdiction to prosecute non-U.S. companies under the Foreign Corrupt Practices Act. Even if the feds never make an arrest, they can still forfeit assets “involved in” any predicate offense for a money laundering transaction.

Deals with Zimbabwe would be especially risky. Most of its top officials’ assets are blocked for “subverting or undermining democratic practices and institutions.” One of the Zimbabwean officials with whom Sam Pa has met, Happyton Bonyongwe, heads its dreaded Central Intelligence Organization, its internal security branch. In 2008, the Treasury Department blocked Bonyongwe’s assets for “political repression.” In 2011, opposition members of the Zimbabwean government cut funding for the CIO, but soon, according to The Economist, the CIO was “suddenly flush with cash,” and had “doubled the salaries of agents” and “acquired hundreds of new off-road vehicles and trained thousands of militiamen” who could then help “intimidate voters during next year’s elections.” The Economist adds, “Several sources who have looked at the deal concluded that the money came from Mr Pa.” According to Mailey, Pa financed the CIO, which paid Pa in diamonds, which Pa then smuggled out of Zimbabwe.

Pa and Queensway have also had extensive dealings with North Korea. According to the Financial Times, that relationship started in 2006, right after Treasury’s action against Banco Delta Asia, when most banks wouldn’t touch North Korean customers.

Shortly after establishing contact, Queensway representatives began making frequent trips to North Korea. During these visits, China Sonangol lined up a series of projects in North Korea, including the construction of a gigantic riverfront commercial district called “KKG Avenue” in Pyongyang. Sam Pa also procured 300 Nissan Xterra SUVs for Kim Jong Il’s regime, some of which had “KKG” inscribed on their exterior. [J.R. Mailey, 38 North]

In October 2006, U.N. Security Council Resolution 1718 required member states to “ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any persons or entities within their territories, to” persons providing support for North Korea’s WMD programs.

According to The Financial Times, however, Queensway’s North Korean partner was none other than the notorious Bureau 39 of the ruling Workers’ Party of Korea, via a front company called Korea Daesong General Trading Corporation. Both Daesong and Bureau 39 are designated by the U.S. Treasury Department for “engaging in illicit economic activities,” including drug dealing and currency counterfeiting; managing regime slush funds; money laundering; and luxury goods imports, in violation of U.N. Security Council resolutions. As Treasury noted when it designated Bureau 39 five years ago, “deceptive financial practices” play an important role in North Korea’s nuclear and missile proliferation, and arms trafficking.

In March 2013, after North Korea’s third nuclear test, the Security Council passed Resolution 2094, which tightened the financial due diligence requirements applicable to North Korea, prohibiting the provision “of any financial or other assets or resources, including bulk cash, that could contribute” to Pyongyang’s WMD programs or other prohibited activities. Still, Queensway continued to send a stream of mysterious payments to North Korea.

A document request attached to a June 2013 Hong Kong court decision lists US$11,143,463 (HK$86,505,484) in payments from July 2008 to November 2009 described as “Budget for North Part” or “Kumgang Budget.” The records also describe almost US$2 million in “consulting fees” paid in relation to KKG during 2008 and 2009. [J.R. Mailey, 38 North]

In April 2013, Pa flew to Pyongyang on a charter jet. Mailey quotes a Korean-language report from the Naeil Sinmum that around this time, Pa “visited North Korea up to five times … to discuss the development of an oil field in Seohan Bay.”

Mr Pa struck a deal with Daesong for an eclectic range of North Korean projects, the Asian official says, ranging from power plants to mining to fisheries. Money started to flow — although it is unclear how much flowed directly into North Korea. A ledger published in a 2013 Hong Kong high court ruling in a dispute between some of Mr Pa’s business associates refers to Queensway Group payments including “Pyongyang city bus system”, “Korea airport”, “Korea: 5,000 tons of soyabean oil” and “exhibition sponsored by the Korean consul”. There are no further details. But the list of payments also contains references to KKG. [Financial Times]

In November of 2013, shortly after the end of the Kaesong Industrial Park’s six-month shutdown, Queensway broke ground on a new Kaesong Hi-Tech Industrial Park, which adds concerns about technology transfers to other concerns previously expressed by the Treasury Department: “Precisely what North Koreans do with earnings from Kaesong, I think, is something that we are concerned about.” Even a South Korean official has suggested that the new high-tech annex to Kaesong “could be a violation of UN Security Council sanctions on the regime.”

As recently as last year, KKG began running a new fleet of taxis in Pyongyang, collecting all of the fares in yuan, euros, or dollars. A taxi business working on a cash basis might have a utility beyond the income it earns. As with Pyongyang’s chain of overseas restaurants, it’s a “perfect vehicle” for commingling “legitimate” cash earnings with more questionable payments, to conceal the true origin of the funds.

In the end, however, it wasn’t Sam Pa’s dealings with Pyongyang’s most notorious money launderers that cost him. Instead, in April of 2014, the Treasury Department designated Mr. Pa under its Zimbabwe sanctions program, for “illicit diamond deals” that helped the CIO evade sanctions. (On the SDN list, Pa appears under his birth name, Xu Jinghua, and several other aliases.) Then, last week, the Chinese authorities arrested Pa at a Beijing hotel, in connection with a corruption investigation into the state-owned oil company Sinopec and a former Sinopec official, who also happens to be the governor of Fujian Province.

Why did Pa fall afoul of Beijing after a life spent as a loyal and well-connected spy and arms trafficker? One possibility is that Pa was attracting too much of the wrong kind of attention, and that his arrest was a demonstration for foreign consumption. Another theory is that “[s]ome in Beijing had long been vexed by the insistence from some African rulers that Chinese groups use Mr Pa as a middleman.” Whatever Mr. Pa’s personal fortunes, to this day, 88 Queensway and KKG are still not designated by the Treasury Department.

Continue Reading

That time in 2013 when 100 N. Korean women staged a walkout at a prison uniform factory

Fittingly, our story begins with a Chinese textile company that made prison uniforms. We don’t ordinarily think of Chinese prison-garment workers as overpaid, but then, some North Korean officials paid them a visit. The officials knew of a derelict factory in the extreme northeast of the workers’ paradise, where women would work 12 hours a day for 30 kilograms of rice a month.

For the women, this was still a good wage, especially compared to any wage that might be paid in North Korea’s inflated currency, and at a time when rice had a high market value. There was no shortage of applicants, and by September 2013, the factory had hired 125 women and 10 men, and started up. Then, a month later, payday rolled around:

However, just one month after start of operations a major problem arose. The payment of white rice was not made as promised. Most of the angry female workers refused to come to work.

The white rice for the “monthly wage payments” was to be brought in by the Chinese company, then handed over to the workers via the county officials. That was the agreement. However, the officials first withheld about half of the rice as “army rice” before paying the workers. That’s what made the workers so angry.

The officers, in a panic, visited the homes of the workers to encourage them to come to work.

“The female workers sent the officers packing, saying, ‘How can you expect us to come to work when you will not pay us properly? We will starve!’ In North Korea today, if promises are not kept, any one will leave the workplace at the factory in the same way” says Mr P. [Rimjin-gang]

The incident happened nearly two years ago, but Rimjin-gang held the story until recently “to ensure the safety of the reporter,” known as “Mr. P.” Shortly after the work stoppage, the Chinese investors withdrew from the project, and North Korea’s opening to the world slipped from our grasp once again.

Jiro Ishimaru, the founder of Rimjin-gang, who has been reporting on North Korea for over 20 years, says “this is the first time he has ever heard of something like this that might be called a group labour dispute.” In 2011, however, the Daily NK reported a work stoppage by a brigade of underfed soldiers at a uranium mine.

In my recent essay on “guerrilla engagement,” I wrote of using clandestine communications to empower and organize North Korean workers with clandestine labor unions. If labor organizations proliferated throughout North Korea, they could eventually organize nationwide work stoppages and strikes. Here is an incident where a clandestine labor organization formed locally and spontaneously. It isn’t hard to believe that with a little support, more North Koreans at other factories and mines would organize, too.

Continue Reading

U.N. asks China why it sent 29 refugees, including a 1 year-old baby, to North Korea

The U.N. has requested Beijing for an explanation of its decision to repatriate 29 North Korean defectors last August, and of their current status in North Korea. [….]

The U.N. Commission of Inquiry is particularly concerned about the status of human-trafficking victims and illegal immigrants in China, and the persecution or torture, as well as the long detentions that await returnees in North Korea, South Korean outlet No Cut News reported.

North Korean women also are vulnerable to forced abortions and sexual assault after repatriation, according to the U.N.

The forced abortions on repatriated women have been performed because Chinese men have impregnated the women, according to the Brookings Institution.

In a follow-up to China’s report, the U.N. said it had received information a 1-year-old child was one of the 29 North Koreans repatriated in August 2014.

The U.N. asked Beijing to confirm this notice and where possible provide any information on the status of the returnees in North Korea.

Greg Scarlatoiu of the Committee for Human Rights in North Korea in Washington told Radio Free Asia the defectors should be classified as political refugees, considering the possibility of torture that await returnees forcibly sent back to North Korea. [UPI, Elizabeth Shim]

UPI’s report doesn’t specify which U.N. agency asked the impertinent question, but one U.N. agency that’s been outstanding for its cowardice and uselessness is the U.N. High Commission for Refugees, which sits passively in Beijing doing nothing of consequence for North Korean refugees. It’s long past time for the UNHCR to demand that China grant it free access to the border regions. The results of quiet acquiescence speak for themselves.

The repatriations are in flagrant violation of the U.N. Refugee Convention and its 1967 Protocol, which China signed. Background here, here, and here.

Continue Reading

Kim Jong Un seeks friends and funds abroad as he isolates his people.

In the three years that he has been in power, His Porcine Majesty has found plenty of time for Dennis Rodman, but none for meetings with foreign leaders. Suddenly, in the last two months, he has flirted with (1) a summit with South Korean leader Park Geun-Hye, (2) inviting Japanese Prime Minister Shinzo Abe to Pyongyang, (3) and a visit to Vladimir Putin in Moscow in May. His central bank even “committed itself to implementing the action plan of ‘international standard’ for anti-money laundering and combating the financing of terrorism.” (I’m sure Pyongyang will find some way to reconcile this with its arms sales to Hezbollah and Hamas.)

If you believe that talks with North Korea are immediately capable of solving anything, or that they are an end in themselves, you may be pleased that Kim Jong Un has developed this urgent interest in diplomacy. What accounts for this belated quinceañera, assuming that any of these meetings comes to pass? Only Kim Jong Un knows, but I doubt it has anything to do with a yearning for more intelligent companionship. There’s almost certainly a financial motive, if not more than one.

One motive may be a growing threat of sanctions. Kim’s charm offensive began just after December 19th, when FBI and President Obama announced that North Korea had hacked Sony Pictures and threatened audiences for “The Interview.” Almost immediately, Congress called for stronger sanctions, and centrist figures in the foreign policy establishment, including Richard Haass and Winston Lord, began calling for regime change. President Obama himself suggested that the collapse of North Korea’s system was inevitable, although he didn’t declare an intent to catalyze that result.

On January 2nd, President Obama signed Executive Order 13687, authorizing sanctions against all entities and officials of North Korea’s government and ruling party, and (more importantly) authorizing secondary sanctions against the Chinese, and other entities that provide Pyongyang its regime-sustaining hard currency. The order was potentially sweeping and devastating, but in its actual impact, it reached only three entities that were already sanctioned, and ten mid- to low-level arms dealers. But the President also said that this was only a first step, which left Pyongyang scurrying to secure its financial lifelines.

Pyongyang’s charm offensives always seem to come just as the political will waxes to enforce sanctions against it. The charm offensives play on the individual interest of each interlocutor — Park Geun Hye’s domestic unpopularity, Shinzo Abe’s desire to bring abductees home, Putin’s search for ways to f**k with Obama — to disrupt any coordination among them. It works because we’re dumb enough to let it. And once sanctions enforcement wanes, so will Kim Jong Un’s interest in diplomacy.

One thing is clear enough: a credible threat of sanctions certainly hasn’t done any harm to prospects for diplomacy with North Korea. I could also say, with equal conviction, that they haven’t harmed John Hinckley’s odds of marrying Jodie Foster.

~   ~   ~

Another possible explanation is a series of reports suggesting that North Korea’s trade relations with China are declining. For one thing, fewer North Koreans are traveling there:

Overall figures for North Korean residents entering China annually totaled between 100,000-120,000 until 2010 before jumping to 150,000 in 2011. A steady period of continual increase in visitors followed until 2013, when the number of North Koreans traveling to China reached an all-time high of 200,000, roughly half of whom noted their reason for making the trip as “looking for work.” Aside from finding employment, 34,000 went to conduct business or attend a conference, and 1,500 went purely to travel. This represents a 60% and 50% respective reduction when compared to last year’s figures. Visits to friends and relatives dropped to 1,100–one-third of those making the trip for the same reason in 2013.

Male visitors [150,000] composed five times total amount of females [30,000] visiting China from North Korea. Most North Koreans [77,000] traveled by boat for the trip. [Daily NK]

North Korean agents who do travel to China are also having more difficulty doing business there. There’s no evidence this has anything to do with sanctions. It appears to be because of a combination of a sagging Chinese economy and the lingering effects of the Jang Song-Thaek purge. After that purge, I posted here that the regime had called home large numbers of its China-based money men, presumably men who were loyal to Jang or thought to be, and that the money men had stayed away in droves. Subsequently, I posted about another reported defection of a senior financier in Russia. That trend continues:

A source in a northeastern Chinese city, who spoke on condition of anonymity because of the sensitivity of the issue, said only about 30 percent of the North Korean businessmen have returned to China after being summoned.The summonses are also believed to be part of efforts by North Korea to redistribute the “rights of doing businesses with China,” a key source of earning hard currency, to its ruling elite, the source said.”The replacement of businessmen loyal to Jang Song-thaek has been gradually carried out and a lot of North Korean businessmen were summoned until late last year,” the source said. “Of those being summoned, only about 30 percent returned to China.”There are no official data on how many North Korean businessmen are working in the Chinese border cities.A second source in another Chinese border city with North Korea said that about 170 North Korean businessmen in the city were replaced over the past year.With Chinese investor confidence eroding over the North’s unpredictable behavior, the new North Korean businessmen come under further pressure in building business connections with their Chinese counterparts, the second source said. [Yonhap, via the Korea Herald]

Not only is the sagging Chinese economy hurting Bureau 39, but according to the report, “Chinese investor confidence” is also “eroding.” One reason may be the arbitrary behavior of North Korean officials, including their inclination toward unilateral price increases and demands for bribes and prostitutes. I can’t speak to the latter concern, but the former concern can’t have improved since Kim Jong Un had Jang shot for “selling off precious resources of the country at cheap prices.” This is consistent with evidence of a sudden onset of distress in North Korea’s mining industry, although I can’t say whether poor investor relations are a cause of the problems or a consequence of them.

The report cites Korea Trade and Investment Promotion Agency (KOTRA) figures, according to which, “North Korea’s annual trade with China fell 2.4 percent from a year ago in 2014,” from $6.54 to $6.39 billion, “marking the first decline since 2009.” These figures are sourced to Chinese government statistics, which is one reason to distrust them. For example, we read a lot of reporting last year that China had cut off North Korea’s crude oil supply, only to find that China had merely reclassified its trade as aid, or supplied Pyongyang with refined petroleum products (such as jet fuel) instead.

The report also claims that “North Korea’s exports of coal to China slipped 17.6 percent from a year ago to $1.13 billion, marking the first drop in 8 years.” I see more extrinsic evidence that that report is accurate.

And there are other signs of trouble: it would be a snub for Kim Jong Un to visit Russia before he visits China, and it was a snub for the leaders of China and South Korea to meet before the leaders of China and North Korea met. China didn’t send a representative to Kim Jong Il’s latest birthday party, either. This doesn’t yet mean that China has broken with North Korea. It certainly doesn’t mean that China wants to destabilize North Korea. It bears watching, however.

~   ~   ~

In other ways, Pyongyang is intensifying its isolationism. The ones that have attracted the most media attention are its bans on foreigners entering North Korea for a marathon and its creepy Arirang Festival. (By contrast, it recently granted permission for this “peace” march by a group of left-wing activists, led by Christine Ahn and Gloria Steinem). The dubious pretext for Pyongyang’s isolationism is that it is a precautionary quarantine against Ebola. This has inconvenienced two groups of useful idiots — the North Korea tour companies and the slummers who use them. I don’t see the down side to that. In the long run, it will mean fewer hostages for Pyongyang, and less hard currency for its bank accounts.

Why would Pyongyang shut down this lucrative, low-risk traffic in people with more money than sense or soul? No one knows but Pyongyang. Maybe it really is terrified of Ebola, yet confident that Gloria Steinem isn’t a carrier. Then again, maybe it’s terrified of a contagion of another kind.

For years, the pro-“engagement” argument for tourism in North Korea has been that there is something transformational, even dangerously subversive, about it that minders, deceptions, and other controls can’t contain. (Somehow, I doubt that Koryo Tours and Young Pioneers make the same argument to their contacts in Pyongyang.) I’ve usually been dismissive of this argument, although I’d be genuinely interested in hearing any evidence that Pyongyang thinks it has anything to fear from this kind of tourism. Even if that argument had any merit, Pyongyang knows how to deal with foreign subversive influences. Maybe it just did.

~   ~   ~
Kim Jong Un has been isolating low-caste North Koreans since the very beginning of his reign. His regime continues to do that by terrorizing traders, cracking down on cell phones, and blocking the flight of desperate people:

“A family of four from North Hamkyung Province attempted to escape with the help from a border guard and a smuggler near the end of last month; however, someone tipped off the proper officials, resulting in their arrest,” a source in Yangkang Province reported to Daily NK on February 4th. “To expedite the family’s escape, the smuggler got a number of soldiers, all of whom he deemed trustworthy, involved. But too many caught wind of the family’s plot to defect, which led to the family’s eventual capture.”

The family’s eldest son purportedly fled while being held in custody, leaving behind the parents and their younger son to endure relentless interrogation at a SSD-run detention center, where they are “as good as dead,” according to the source, because not only were they themselves planning to defect, but now their son presumably succeeded in doing so despite being held in custody. [Daily NK]

Human Rights Watch has documented the border crackdown in a new report, which you can read here.

“North Korean authorities are using brutal punishments to shut the door on people fleeing the country, and cracking down on those who share information with the outside world,” said Phil Robertson, deputy Asia Director. “Kim Jong-Un is trying to silence news of his systemic and pervasive rights crimes by going after the messengers, such as people with connections in South Korea or those who can help North Koreans flee there.”

The North Korean leadership has made clear the country must redouble its efforts to remain shut to the outside world.

“We must set up two or three layers of mosquito nets to prevent the poison of capitalism from being persistently spread by our enemies across the border into our territory,” said Kim Jong-Un, North Korea’s supreme leader, during a speech at the 8th Conference of Ideological Workers of the Korean Worker’s Party on February 25, 2014. “We also have to be active to block the imperialists’ plots for ideological and cultural invasion.” The “mosquito net” system Kim referred to was developed in the North to attract the inflow of foreign investment while blocking the infiltrations of foreign ideas, news, and culture. [….]

According to the escapees, the North Korean government has also been actively tracking down unauthorized phone calls from cell-phones operating on Chinese service provider networks being used by people in the North Korean border areas to call to China or South Korea. “The phones have no signal in the cities anymore and I have heard they even have mobile technology to find the exact location of the caller even after you hang up,” said Kim. “I used to call from my living room, but later I had to go high up in the mountains in the middle of the night and I was scared to talk for more than a minute or two.” Park said she used to get calls from North Korea at all times of the day and talk for long periods, but now the number of calls she receives has shrunk by approximately 60 percent since 2012.

“North Korea feels threatened by news and images of the outside world seeping into the country and now is trying to reassert its control by going after people bringing in the information,” said Robertson. “Talking on an overseas phone call, or watching a foreign television show should not be considered crimes, but the government is tightening control through repression and fear.”

More here and here. One backlash of this increased border control is a rise in cross-border violence, and more tension with China. North Korea’s border guards had come to rely on the bribes and extortion they taxed from this localized, illicit cross-border trade. With the loss of that income, the underpaid guards have turned to violent crime, and like all criminals, they go where the money is. China has since raised militias to patrol the border regions, and North Korea has purged an official of the Supreme Guard Command as punishment for the violence. There were also purges at the local level.

There is a very important point here, one that makes Kim Jong Un’s diplomatic outreach completely consistent with his isolationism: it costs money to pay border guards, buy cell phone trackers, and isolate the people you consider “wavering” or “hostile.” North Korea earns that money by extracting aid from foreign sources, and through its officially sanctioned trade relationships. Here is another way that sanctioning the regime can actually open North Korea to outside trade and influence.

~   ~   ~
These reports paint a picture of a regime that is struggling to maintain its financial links to the outside world, while severing the economic, social, and cultural links between its people and the outside world. If a less isolated, less hungry, less brutal, and less provocative North Korea is in our interests, then our obvious policy response is to undermine both aspects of that policy — to facilitate illicit cross-border flows of information, people, money, and goods, while cutting Pyongyang’s hard currency flows.

The first part of this strategy is the more difficult one. Some of it can be done through broadcasting, some requires creative technological thinking, and some will require clandestine operations.

The second part is about sanctions enforcement, which requires financial intelligence, legal tools, effective diplomacy, and political will.

The reports of defections by North Korean financiers suggest a potential windfall of financial intelligence. Each of these men, and each of their laptops, represents a potential Rosetta Stone. I certainly hope some of them have found safety in the care of U.S. and South Korean intelligence agents. I’ll also express my hope that The Guardian and Al-Jazeera will refrain from getting them — and their entire families — killed, by printing their names.

The Obama Administration will also have to find the political will to dissuade South Korea and Japan from subsidizing Pyongyang and loosening their own sanctions. It will have to find the political will to threaten secondary sanctions against the Chinese and Russian interests that prop Pyongyang up. Lacking this, the administration’s policy will continue to fail. My guesses are (respectively) that it won’t, it won’t, and so it will. North Korea’s hostage-taking, threats, and inducements will recoup more modest financial benefits for the regime. That’s about all Pyongyang needs to undermine the effect of U.N. sanctions, and to sustain its provocative and repressive ways.

Continue Reading

If S. Korea’s missile defense worries China, just wait till the neighbors start nuking up.

The deployment of ballistic missile defense systems around North Korea by the United States and its allies could be an effective way to change China’s strategic thinking about Pyongyang, a U.S. congressional report said.

The Congressional Research Service made the point in a recent report, “North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation,” saying Beijing would find it not in its national interest if provocative actions by the North lead to increased military deployments in the region. [Yonhap]

Here’s the full report, which touches on a series of topics of interest to OFK readers, including refugees, human rights, proliferation, and North Korea’s support for terrorists. The money quote is more subtle than Yonhap’s characterization:

As part of the efforts by the United States and its allies to change China’s strategic thinking about North Korea, the BMD deployments may have an impact. Chinese media made the Patriot deployments a major part of their coverage of the April 2012 launch. A subtext to those reports was that North Korea’s actions are feeding military developments in Asia that are not in China’s interests. Many observers, particularly in the United States and Japan, argue that continued North Korean ballistic missile development increases the need to bolster regional BMD capabilities and cooperation.

China’s concern about South Korean missile defenses is also one of the best arguments for a more permissive approach to South Korea’s long-standing desire to close its own nuclear fuel cycle. The countervailing concern is that South Korea will acquire nuclear weapons. Unless an Asia-Pacific Treaty Organization is in our near future—and I don’t think it is—it’s not a concern I share.

A nuked-up South Korea would be a far better deterrent to Pyongyang than the so-called “U.S. nuclear umbrella.” I can see why an impulsive young leader in Pyongyang might calculate that the Pentagon wouldn’t pull the trigger if it called our bluff. I wouldn’t.

China must be concerned about the possibility that South Korea, Japan, and Taiwan would be insecure enough about U.S. power to acquire their own nuclear weapons. They have every reason to be insecure. If the choice is between nuking up and getting rolled by China, we’ll soon see how much they value their freedom and their independence.

Continue Reading

China to Obama: Drop dead

The best news I’ve heard today is that Sony Pictures has either grown a pair or decided that it would rather wilt under domestic political pressure than wilt under foreign terrorist pressure. That means that some theaters will be showing The Interview on Christmas after all. I won’t stand in line to see it, but when it comes to my neighborhood, I’m taking my son (my daughter might not be old enough).

Fortunately, this sounds like exactly the kind of crappy movie that might just be fun to watch with a twelve year-old. At Epcot Center, we almost punctured our lungs laughing at Captain EO, clearly the worst film I’ve ever seen. How much worse could this possibly be? I expect The Interview to be stupid and distasteful, for the reasons we explained here, but I’m willing to compartmentalize that. There is an even more important principle involved now, and my son is old enough to understand that.

That also suggests one reason why China would harbor those responsible for these attacks, from Chinese soil, routed “through servers in Singapore, Thailand and Bolivia.” China also favors the remote-control censorship of American speech. The editors of The Global Times, for example, believe they have standing to define the acceptable limits of free speech here:

“No matter how U.S. society looks at North Korea and Kim Jong-un, Kim is still the leader of the country. The vicious mocking of Kim is only a result of senseless cultural arrogance,” the Chinese state-run paper said in an editorial.

“The biggest motive for Sony Pictures may be the box office, by putting out a sensational story. However, if the movie really was shown on a large scale, it would further upset the already troubled U.S.-North Korea ties,” it said. [Yonhap]

The editors of The Global Times can go fuck themselves. They’re the first ones to whine about “interference” in China’s “internal affairs” when civilized nations protest that China’s tyrants gun down students, jail dissidents, persecute Tibetans, or send North Korean kids to death camps. It takes some chutzpah for a gang of toadies for stultifying, culture-strangling despots to lecture a free society with a legitimate government about what kinds of speech it should allow.

Good thing whoever hacked North Korea’s internet didn’t also take down The Global Times. Why, that might cause problems for U.S.-China relations! Perish the thought that China should conclude that the U.S. was allowing people to attack its interests from U.S. soil.

China’s foreign ministry spokeswoman, Hua Chunying, also strongly denied media reports that China was involved in the Internet outage in North Korea, slamming such reports as “not trustworthy” and “irresponsible.” [Yonhap]

Yesterday, there was some speculation that the outage of North Korea’s internet service might be the result of China shutting down North Korea’s access at the White House’s request.

“We have discussed this issue with the Chinese to share information, express our concerns about this attack, and to ask for their cooperation,” the official said. “In our cybersecurity discussions, both China and the United States have expressed the view that conducting destructive attacks in cyberspace is outside the norms of appropriate cyber behavior.”

North Korea’s Internet traffic goes through China. President Barack Obama said Friday, “We’ve got no indication that North Korea was acting in conjunction with another country.” [CNN]

But if there was any such “cooperation,” it didn’t last long. The evidence to the contrary is stronger. Not only is Xi Jinping knowingly harboring North Korean hackers who attack U.S. interests, he’s also telling President Obama to leave him out of it and work it out with Kim Jong Un himself:

“We have noted the relevant remarks made by the U.S. and the DPRK (North Korea) over recent days,” Chinese foreign ministry spokeswoman Hua Chunying replied during a regular press briefing, when asked whether China has responded to calls by the U.S. over the Sony hacking.

“We believe that the DPRK and the U.S. can have communication on that,” Hua said, without elaborating further. [Yonhap]

Again, the newspapers are filled with speculation that at last, China is done with North Korea and ready to cooperate with us to pressure Kim Jong Un — the same kind of speculation we see after every North Korean nuke test, missile test, purge, or attack. It makes for interesting reading. I can even believe that some people in China really are annoyed with Kim Jong Un. But I’ll believe that China is ready to cut Kim Jong Un off when I see it. I’d say it’s at least 60% likely that this is disinformation, designed to restrain gullible Americans from taking legal action against North Korea’s Chinese enablers. Which is the only way to change China’s behavior, and North Korea’s.

After 9/11, we didn’t ask the Taliban to “investigate” Osama Bin Laden. We’re obviously not going to invade China, but we should do to those who sponsored North Korea’s hackers and terrorists what we did to Kim Dotcom. In the Kim Dotcom case, the Chinese government saw that its interests favored cooperation, so it cooperated. If China continues to sponsor attacks against American interests in our own country, then it’s time to restrict China’s access to U.S. markets. If push comes to shove, China isn’t going to choose its relationship with North Korea over its relationship with the United States. Its business interests won’t allow that. We must force China to make that choice.

Continue Reading

N. Korea: We didn’t hack Sony, but we’re glad someone did

As suspicions grow that North Korea was indeed responsible for the Sony hack, North Korea offers that oddly unconvincing denial. If the North Koreans really did do it, some commenters think the U.S. will have to respond:

Aitel says the hacks are potentially “a ‘near red-line moment'” because they represent the kind of incident that would almost require a US policy response assuming a rival state was behind it. As Aitel says, “This is the first demonstration of what the military would call Destructive Computer Network Attack (CNA) against a US Corporation on US soil … a broad escalation in cyberwarfare tactics” that would demand some kind of American response. [Business Insider]

Personally, I’d have thought that the 2009 incident when North Korea (or its sympathizers) was suspected of hacking “27 American and South Korean government agencies and commercial Web sites” would have crossed a red line. I’d be interested in knowing what evidence linked those attacks to North Korea, but targets of cyberattacks often avoid publicizing the fact that they were attacked.

Mandiant’s extensive report on China’s state-sponsored hacking was an exception to that rule. Maybe Mandiant should write a second report on North Korea, and especially about what support the North Korean hackers receive from China.

Continue Reading

Dennis Halpin on the suppression of protests in Hong Kong

Writing in The Weekly Standard, Halpin explains why the crackdown in Hong Kong not only portends worse things to come for China’s aggression against democracy within it borders, but also beyond them:

A major Beijing propaganda theme in attempting to deny the democratic aspirations of the people of Hong Kong is that outside agitators, chiefly from the United Kingdom and the United States, are behind the wave of unrest. China’s government mouthpiece, the Global Times, editorialized earlier this fall that “the more [extremists] count on support from Washington and London, the more absolutely they will fail.” President Obama was put on the defensive on Hong Kong by his Chinese hosts at the APEC summit. In a joint press conference with Xi Jinping, Obama declared, according to Hong Kong’s South China Morning Post, “On the issue of Hong Kong, I was unequivocal in saying to President Xi that the United States has no involvement in fostering the protest that took place there.” [….]

According to the Los Angeles Times, Xi had pointed this fall to Hong Kong’s “one country, two systems” as the model for ending the political separation of Taiwan. The Times went on to quote Taiwan’s Mainland Affairs Council as pointing out “that more than 70 percent of Taiwanese people” consider Xi’s suggestion “unfit” for consideration.

Taiwan’s president, Ma Ying-jeou, cut to the crux of the situation by pointing out in a November 1 interview with the New York Times, “If mainland China can practice democracy in Hong Kong or if mainland China itself can become more democratic, then we can shorten the psychological distance between people from two sides of the Taiwan Strait.” Ma, the Times noted, “risked antagonizing Beijing .??.??. by voicing support for protesters in Hong Kong and for greater democracy in mainland China.” [Dennis Halpin, The Weekly Standard]

One day, historians may conclude that the failure of the U.S. and Britain to stand with the protestors in Hong Kong convinced the leaders in Beijing that they could go further and suffer no prohibitive consequences.

Continue Reading

Sony Pictures should go after North Korean hackers’ Chinese enablers

Since the weekend, several of you have e-mailed me about “suspicions” — and really, I don’t think they went further than that — that North Korea may have hacked Sony Pictures and leaked unreleased movies to file sharers to punish it for “The Interview.” Those rumors were covered by many outlets, but frankly, the open-source evidence for North Korea’s complicity was little more than speculation, at least until I read this today:

Hackers who knocked Sony Pictures Entertainment’s computer systems offline last week used tools very similar to those used last year to attack South Korean television stations and ATMs, people briefed on the investigation said.

The similarity would reinforce a hunch among some investigators, which include Sony, the Federal Bureau of Investigation and a team from Silicon Valley security company FireEye Inc., that North Korea played a role in the breach at the film and television studio, one of the largest in the U.S. South Korea publicly blamed the 2013 attacks on North Korea. [….]

Sony Pictures is set to release this month “The Interview,” a comedy in which U.S. spies enlist a television host played by James Franco and his producer, played by Seth Rogen, to assassinate North Korean leader Kim Jong Un. In June, a spokesman for the Pyongyang government said distribution of the movie would be “the most undisguised terrorism and a war action” and threatened a “strong and merciless countermeasure” if the U.S. government “patronizes the film.” [Wall Street Journal]

It’s hardly proof beyond a reasonable doubt, but it’s something. Interestingly, “The Interview” wasn’t one of the Sony films the hackers leaked — not yet, anyway. For now, Sony Pictures continues to deny that it has direct knowledge of North Korea’s involvement. As I noted here, Sony was previously reported to have made changes to the script to appease the North Koreans. So much for appeasing North Korea, although South Korea seems congenitally incapable of learning that:

“The Interview,” a North Korea-themed satire starring actors Seth Rogen and James Franco, won’t be released in South Korea, a Seoul-based official for Sony Pictures Entertainment said. [….]

South Korean media reports cite a Sony Pictures Korea official as saying the distributor never had plans to release the film due to concerns about inter-Korean relations. A Sony Pictures official declined to comment on the reasons behind the decision not to show the film in South Korea. [WSJ Korea Real Time, Jeyup S. Kwaak]

Cowards. Kwaak’s post notes that South Korean state censors prevented “Team America” from being screened in South Korea, but doesn’t link the suppression of “The Interview” to government censorship. One possibility is that the ROK government asked Sony very politely. Another is that Sony anticipated that the usual gang of pro-North Korean thugs and thought police would try to disrupt screenings.

And what recourse does Sony have against the hackers, assuming it can prove that North Korea was responsible? Hacking is a federal felony, and an attack on a U.S.-based computer system would arguably give the feds subject-matter jurisdiction. If the Justice Department prosecutes, it probably wouldn’t find any live bodies to stick in the dock, but because hacking is a predicate offense for money laundering, DOJ would still be able to forfeit assets of anyone the court convicted. Not that that would do Sony much good.

Sony might be able to sue North Korea by taking advantage of several exceptions to North Korea’s sovereign immunity under 28 U.S.C. 1605(a). Collecting the judgements, of course, would be another matter entirely. Just ask any of the lawyers who won these judgments.

More interesting, however, are suspicions that the hackers may have been operating out of China, which isn’t a novel theory. That almost certainly couldn’t happen without the knowledge of the Chinese government and other Chinese entities, perhaps including entities with assets that could be reached by U.S. courts.

This suggests that a more fruitful legal strategy may be for the feds to prosecute, and for parties like Sony to sue, the Chinese enablers. There are even indications that our government might have the political will do to that. The new Congress could also require the Director of National Intelligence to report on China’s sponsorship of North Korean hacking. Unclassified portions of that report might provide useful evidence for Sony’s case.

~   ~   ~

Update: One reason Sony Pictures might not go after the hackers’ Chinese enablers is that Hollywood has been too preoccupied welcoming its new Chinese overlords and sucking up to its new censors. I thought it was bad enough when Sony Pictures bent over for Japan’s censorship; wait till you see what stultifying delights the Chinese have in store for us.

And the unlikely hero of this alarming and underreported controversy? Oliver Stone, himself a suspected disseminator of KGB propaganda, naturally. So I guess the wounds from the Stalin-Mao rift are still raw in some quarters. Hat tip to a reader.

~   ~   ~

Update 2: According to this report by U.S. Army Major Steve Sin, a defector reported that as of 2004, members of a North Korean military hacker unit called Unit 121 conducted “some of its operations from a North Korean government-operated hotel called Chilbosan in Shenyang, China.” Business Insider sent a reporter there (Update: or, horked the pictures online; see comments) to see what the hotel looks like today.

Continue Reading

China’s bridge to nowhere?

The AP’s Pyongyang Bureau Chief reports that as China completes a $350 million bridge across the Yalu River from Dandong to Sinuiju, and weeks after its announced opening date, the North Korean side is largely an unfinished abutment.

Now, it is beginning to look like Beijing has built a bridge to nowhere.

An Associated Press Television News crew in September saw nothing but a dirt ramp at the North Korean end of the bridge, surrounded by open fields. No immigration or customs buildings could be seen. Roads to the bridge had not been completed.

The much-awaited opening of the new bridge over the Yalu River came and passed on Oct. 30 with no sign the link would be ready for business anytime soon. That prompted an unusually sharp report in the Global Times — a newspaper affiliated with the Chinese Communist Party — quoting residents in the Chinese city of Dandong expressing anger over delays in what they had hoped would be an economic boom for their border city.

The report suggested the opening of the mammoth, 3-kilometer bridge has been postponed “indefinitely.” Beijing and Pyongyang have made no official comment. [….]

The bridge — which, from the start, appears to have been of more interest to China than to North Korea — is intended to provide a new connection between Dandong and the special economic development zone in North Korea’s Sinuiju. More broadly, China wants to develop inroads with North Korea that will allow its landlocked northeastern provinces access to North Korean ports so its goods can be exported or shipped down the Chinese coastline more cheaply. [AP, Eric Talmadge]

It’s an interesting enough report, but so soon after one of Talmadge’s colleagues felt the need to discredit “defectors” and guerrilla media, I can’t help noting that the first report I saw that North Korea wasn’t completing its side of the bridge was in The Daily NK, back in July:

“The Chosun side took on the job of constructing the roads, but they are making painfully slow work of it. Because the roads are still not finished, people are wondering whether their initial aim of increasing trade volumes is on its way down the drain,” a source close to the project told Daily NK on the 1st.

“China provided a lot of materials and machinery to the North, but there is a story that this machinery was sent for use on other projects rather than for the bridge construction. The Chinese traders who did harbor high hopes for [economic] opening brought on by the bridge are showing their disappointment more and more,” the source explained. [….]

This declining enthusiasm is tangible in the property market in Langtou, the region of Dandong that ought to benefit the most from bilateral economic activity across the new bridge. “Apartment prices remain where they were three years ago, at roughly 4000 Yuan per pyeong,” explained the source. Pyeong is a Korean unit of measuring area, and amounts to 3.305785m². [….]

In addition to problems with the bridge, Daily NK established in May that almost no progress has been made on the development of two Special Economic Zones in the Sinuiju area (see linked article).

Then, last month, China’s Global Times further corroborated the story:

In the story headlined, “Opening Day of New China-North Korea Yalu River Bridge Indefinitely Delayed,” the Global Times newspaper reported that the bridge had been “fully completed and put into use on Oct. 30. However, it all becomes uncertain.”

Zhang Hui, chairman of a Chinese construction company behind the bridge, told the newspaper that, “Due to various reasons, construction was delayed for nearly a year.”

It was unclear whether Zhang’s comments indicated that the opening of the bridge has been delayed by one year. [via Yonhap]

In my experience, the most frequent propagators of apocryphal stories about North Korea aren’t guerrilla journalists, but the lower reaches of the British media ecosystem and “established” South Korean papers that cite anonymous sources.

As for the bridge itself, I wouldn’t be too quick to write it off as a failure just yet. China’s real purpose for it may have more to do with contingency planning and future colonial administration than trade.

bridge

[Times of London]

North Korea’s failure to prioritize the project is curious. Maybe, in due course, it will get around to building those road links and customs checkpoints. Even if North Korea regulates the traffic across the bridge strictly and meters it down to a trickle, having this infrastructure available for the use of controlled and preferred trade would seem to serve the interests of the state capitalists in Pyongyang. Still, I can see why Kim Jong Un might think he’s already dependent enough on trade with China, and why he might see the rapid expansion of trade as risky:

“[China]’s not even shepherding anymore. It’s more of just inundating North Korea with all of these influences from the Chinese side where the idea is to essentially corrupt them, show them what it tastes like to make money,” said John Park, a North Korea expert at the Massachusetts Institute of Technology and the Harvard Kennedy School. [Reuters, Apr. 2013]

For whatever reason, this bridge isn’t Kim Jong Un’s highest priority right now, and Kim Jong Un’s highest priorities get done with Masikryeong speed. Time will tell whether he’s actively resisting or delaying it, and how long it will sit unused, like the Ryugyong Hotel. That would be a potent symbol indeed of the failure of the premises behind the Sunshine Policy.

~   ~   ~

Update: More here, at NK News.

Continue Reading

NIS: China oil-cutoff story was bogus

China is secretly providing North Korea with oil, with shipments over the border either intentionally omitted from its export statistics or broadly identified as aid, according to South Korean intelligence officials.

Customs data released by Beijing indicates that no crude oil went over the border to North Korea in the first nine months of the year, although analysts in Seoul say that such a drastic halt in imports would have played havoc with the North’s industrial capability and its military forces.

Instead, analysts point out, industry appears to operating as usual and the military has to be unaffected by any shortages of fuel.

“Without China providing crude oil, the operation of many of North Korea’s industrial facilities and vehicles would have been suspended,” intelligence sources told Yonhap news agency. “But there have been no such indications as yet.” [The Telegraph, Julian Ryall]

Isn’t that what I’ve been saying for months? Frankly, I wouldn’t want to see an oil embargo enforced against North Korea, except with respect to some very specific refined petroleum products that didn’t also have agricultural uses.

Continue Reading

China arrests 11 more N. Korean refugees

Eleven North Korean defectors were arrested by Chinese police while seeking to cross the border with Myanmar, a source said Friday.

Local police rounded up the defectors — 10 adults and a seven-year-old child — at around 3-4 a.m. on the day, shortly before they were to head towards the border in the southern region of Yunnan Province, according to the source.

They were immediately put in custody in a police station there, added the source.

A South Korean foreign ministry official said the government is still trying to determine the exact details of the situation. [Yonhap]

For China to do this, even as the U.N. debates action on a Commission of Inquiry report that called on China to grant asylum to North Korean refugees and stop repatriating them, tells you all you need to know about China’s contempt for human rights, and how it will vote in the Security Council.

Perhaps it’s time to start talking about alternatives like a special tribunal, and actions to block the assets of Chinese officials and agencies responsible for these repatriations. If no one talks about alternatives like these, it’s a sure bet that China will feel safe to veto any U.N. action with impunity.

Continue Reading
1 2 3 19