N. Korea sanctions update: I sense a great disturbance in the force, as if billions of dollars cried out in terror and were suddenly frozen.

[First, thank you for your patience with the light blogging recently. Most of my limited spare time has been consumed by a project that must take a higher priority than this site. That project has been perpetually at the verge of completion for weeks now, but should be done soon.]

North Korea’s fourth nuclear test in January was a watershed in sanctions law and policy. Until then, the U.S. and the U.N. had mostly pretended to have tough sanctions against North Korea. Until then, South Korea’s policy was to subsidize and sanction the same government at the same time. Since March, with Congress’s passage of H.R. 757, the closure of Kaesong, the U.N.’s approval of Security Council Resolution 2270, and President Obama’s signature of Executive Order 13722, it has been at least plausible to claim that on paper, there are tough sanctions against North Korea. Whether reality will conform to the law will depend on political will, and the political will of many U.N. member states will depend on whether they believe the U.S. has the political will to use its own secondary sanctions against them if they flout the U.N. sanctions.

Here, the signs continue to be mixed. Almost as soon as Congress moved forward with H.R. 757, and even before the Security Council approved UNSCR 2270, big Chinese banks began to freeze North Korean accounts and close down the branches of North Korean banks. North Korea’s mineral exports to China have, at the very least, dropped sharply, and the drop-off in trade across the Yalu River has emptied office buildings in Dandong. Companies are scrambling to cleanse their supply chains of gold from the Central Bank of the DPRK. Elsewhere, I’ve written extensively about China’s hit-and-miss compliance with shipping sanctions, although the latest reports tell us that there are leaks, and that some designated North Korean ships are approaching Chinese ports with their transponders switched off.

This should be a topic of discussion between U.S. and Chinese diplomats.

Unfortunately, there is little publicly available evidence that the Obama Administration is making the same diplomatic effort to get countries to enforce the sanctions that the Bush Administration did between September 2005 and February 2007. It has now been two months since the U.S. government designated anyone under its North Korea sanctions programs, with the splashy launch of Executive Order 13722. Already, election season is consuming Washington’s attention. Political appointees who should be visiting Brussels, Shanghai, Windhoek, and Cairo to deliver veiled warnings act like they’re busy packing their files and job-hunting. If the administration wants to leave its successor more leverage than it had, it must show the world that it hasn’t lost its interest in implementing U.N. Security Council Resolution 2270.

Fortunately, South Korea has done much to fill this void. Park Geun-hye, ably aided by Foreign Minister Yun Byung-se, has followed her closure of Kaesong, and her lobbying of the European Union to implement sanctions, by lobbying France, Germany, Mexico, India, and even Iran. At least some of this has been effective. Park’s visit to Mexico seems to have played some role in its decision to finally seize the Mu Du Bong, although that action was also held up by questions of legal authority that UNSCR 2087 had already answered clearly and explicitly. India, which had shown signs of cozying up to North Korea, is now promising to implement UNSCR 2270 faithfully. (The outreach to Iran was admirably bold of her, and probably for the consumption of American audiences, but it’s unlikely that Park can offer Iran a replacement for what it really wants from North Korea.) The things Park doesn’t do well are obvious enough, but Park has proven herself a very skillful diplomat. It’s fair to say that she and her Foreign Minister have put our State Department to shame.

Meanwhile, implementation of the most important element of the sanctions — the financial sanctions — is finally beginning in earnest. We have just hit UNSCR 2270’s 90-day deadline for banks worldwide to close the correspondent accounts of North Korean banks. The EU has published strong new regulations implementing the resolution (h/t), and has also just announced a new round of designations, freezing the assets of 18 individuals and one entity, “mostly high-ranking military officials involved in agencies responsible for North Korea’s nuclear and ballistic weapons programs.” This will add pressure on the Obama Administration to follow. (Note to the EU: you’d send a clearer message if EU development funds weren’t being used at Polish shipyards that employ North Korean slave labor.)

Switzerland, which is not an EU member, has also just announced a new round of sanctions to implement 2270:

Measures in the financial sector include freezing assets and a ban on providing financial services. The group of people affected will now be widened. Any funds that are connected to North Korea’s nuclear or missile programmes have been affected, as have the finances of the country’s government or the Korean Workers’ Party.

The cabinet said that an exception has been made for the funds of diplomatic representations.

The sanctions mean that Swiss banks cannot open any branch or subsidiaries in North Korea, and existing banks and even accounts will have to be shut down by June 2. The same is also true in reverse – North Korean banks operating in Switzerland will have to leave.

An existing ban on exporting luxury goods will now include more products, and goods that would “increase the operational capabilities” of North Korea’s army are banned.

Any imports or exports will be checked at a customs point for the prohibited products, and exports to North Korea will require advanced authorisation from the State Secretariat of Economic Affairs (Seco). [SwissInfo]

This could be very important. For years, Switzerland had been one of North Korea’s most promiscuous suppliers of luxury goods, and was also rumored to be a haven for large regime slush funds — perhaps as much as $4 billion — under the control of former Ambassador to Switzerland and master money launderer Ri Chol. North Koreans in exile had called on the Swiss government to freeze those assets. Let’s hope that that’s what just happened.      

Even Russian banks are showing signs of compliance.

Radio Free Asia said in a report posted on its website that Russia’s central bank recently ordered other local banks and financial institutions to halt transactions with North Korea.

The central bank also said that transactions of bonds held by North Korean individuals, organizations and other groups subjected to United Nations’ sanctions should be banned immediately.

In addition, Russian financial institutions should close any accounts deemed to be linked to Pyongyang’s nuclear and missile programs, the report said. [Yonhap]

Kudos to South Korean Foreign Minister Yun Byung-se for exercising more global leadership than I’ve seen from a middle power in my memory. Even as the U.S. looks punch-drunk, the South Koreans are fighting above their weight.

“A perception has taken hold in the international community that sanctions and pressure of a different kind compared to the past should be applied to get the North to change and seek denuclearization,” Foreign Minister Yun Byung-se said in a speech at a forum.

“In the last couple of days, Switzerland the European Union took their own sanction measures. Our government will keep leading the international community’s pressure on the North from all possible directions going forward,” he added. [Yonhap]

Although the Obama Administration isn’t showing much strength now, a key test will come in July, when under section 304 of the NKSPEA, the President will have to report back to Congress on which North Korean officials, to include Kim Jong-un himself, will be designated for human rights abuses. Already, the State Department is saying that it will “identify and sanction those responsible for human rights abuses in North Korea.” It also offered these welcome words.

“The reason that that provision is in the executive order is to make it possible for us first to develop the evidence and second to act on it. The principle of accountability is a feature of U.N. Security Council Resolution 2270 as well,” Russel said. “I think that the prospect of officials being held to account for systemic abuses of universal human rights is a serious one and that is one way in which we and the international community can keep faith with the North Korean people.”

Russel also said he believes that North Korean people, when they are eventually liberated, will “ask who stood by them” and the U.S. is firmly committed to be among the supporters for them.

On Monday, Amb. Robert King, special representative for North Korean human rights issues, made a similar remark.

“We’re looking at the issue of how we might identify individuals that meet our legislative requirements to apply sanctions against individuals and there are a whole range of issues that we’re looking at. People involved in abductions will be one that we are looking at,” he said. [Yonhap]

A designation triggers the freezing of assets, which will further increase the financial pressure on the regime. And if, as now seems likely, Hillary Clinton is elected this fall, her words (and those of her advisors) offer Kim Jong-un no encouragement that this pressure will ease anytime soon. That’s good, because it will likely take between one and two years before Pyongyang starts to show signs of serious financial distress. It will take careful attention and patience to build the pressure needed to change Pyongyang without war. The greater challenge will be to maintain the determination to keep that pressure in place until Pyongyang shows that it will meet the hard conditions set forth in section 402 of the NKSPEA. Until Pyongyang is prepared to accept that level of basic transparency, no deal it signs will be worth the paper it’s printed on.

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Update: The UK and Swiss governments have published guidance for their banks on their new sanctions regulations, here and here, respectively. Also, here’s more information about Russia’s sanctions implementation rules.

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Please, Kurt Campbell, save Korea (and us) from the Trumpocalypse

For conservative North Korea watchers who are rightly depressed about the intellectual and moral death of the Republican Party, let me palliate your depression with a few observations. First, parties come and go. What matters is that democracy endures. Any casual observer of South Korean politics knows that democracies can outlive the dissolution of parties just fine. 

Second, what matters to Korea policy is coalitions, not parties. On the Hill, there isn’t much of a partisan divide on North Korea policy at all these days. Democrats and Republicans are in equally hawkish moods. Just look at how they voted. Republicans have never been less united, but on North Korea policy, Congress has never been more united behind stronger pressure to force Pyongyang to disarm or perish. 

Third, Victor Cha’s sober and plausible analysis of Hillary Clinton’s North Korea policy is nothing to be particularly depressed about. Finally, take heart from the words of a man who is likely to play an important role President Clinton’s North Korea policy.

In the opening speech of the Asan Institute for Policy Studies’s 2016 Plenum, Campbell – who also works closely with presidential candidate Hilary Clinton – refuted the notion that North Korea is one of the most sanctioned countries in the world.

“I would argue that in fact there are many countries that are more heavily sanctioned than North Korea. There are a number of steps we could take that would send a much clearer message about (their) activities to gain hard currency.”

The current chairman and CEO of the Asia Group added that implementing further sanctions would also likely involve going after institutions that conduct at least some of their operations in China.

Campbell pointed to the difficulties that many negotiators had experienced when dealing with North Korea over the last 20 years, but also said the door should never be closed on negotiating.

“I would be of the view of that the U.S, South Korea, Japan and Russia should leave the door open for talks. It’s in our best interests to solve these issues diplomatically.” [NK News]

I don’t disagree with any of that. Not even the last part.

Along with sanctions, the international community should step up efforts in other areas to pressure Pyongyang to renounce its nuclear ambitions, such as supporting its refugees, a former senior U.S. official said Tuesday.

During his remarks at a foreign policy forum in Seoul, Kurt Campbell, former assistant secretary of state for Asia, also expressed his support for a five-party dialogue format involving South Korea, the U.S., China, Japan and Russia to discuss Pyongyang’s denuclearization.

“We have to step up our efforts in other areas. What we have done in the U.S. to support North Korean refugees could be substantially increased. I think our ability to send more information into North Korea could be dialed up substantially,” he said during a dinner session of the Asan Plenum 2016, an annual forum hosted by the Asan Institute for Policy Studies.

“I think more work can be done on preparing for uncertainty for friends surrounding North Korea, and I would be much clearer with Chinese interlocutors about what our expectations with respect to North Korea are going forward,” he added. [Yonhap]

Even Wendy Sherman, of Agreed Framework infamy, is now trying to sound hawkish, although I suspect that in Sherman’s case, this is election-year posturing. At a recent conference, Sherman called for the U.S. and its allies to plan for regime collapse in North Korea, something that Sherman would not have said publicly a few years ago, out of deference to the delicate sensitivities of His Porcine Majesty, and the others who share his Safe Space in Pyongyang. NK News’s Jiwon Song (previous link) misreads Sherman’s call as a call for a plan to cause the collapse of North Korea’s regime. Far be it for me to object to this notion, but Sherman is merely saying that we should plan for what may now be inevitable. Then, Song “balances” this imaginative interpretation by finding a South Korean expert who is even farther left than Sherman. This sort of “balance” belongs in the Hankyoreh or in an opinion piece, not in a news article.

I predict the greater problem will come when Pyongyang tempts us to lift sanctions for a quick deal. For all the hope one draws from Campbell’s comments, I fully expect the next administration, like this one, to continue to be hobbled by internal debates among those who want to apply pressure and let it work, and those who want to cut a deal as quickly as … as The New York Times editors would have them cut one. Here we are, just three months after the same editors endorsed H.R. 757, and now they’re saying this:

While sanctions are important and China, more than any other country, has the power to make North Korea feel their effects, sanctions alone are not enough to mitigate the threat. Backing an inexperienced and reckless leader like Mr. Kim into a corner is risky and might lead to even more dangerous responses, like aiming a weapon at South Korea or Japan, with potentially catastrophic results.

At some point, the United States, along with China, South Korea, Japan and Russia, will have to find a way to revive negotiations aimed at curbing North Korea’s nuclear program. The Obama administration earlier this year had secret contacts with the North that foundered over a disagreement on whether to focus on denuclearization (America’s priority) or on replacing the current Korean War armistice with a formal peace treaty (North Korea’s priority). But the idea of talking with the North is politically unpopular in America, and this is an election year. [Editorial, New York Times]

The Times then quotes Bob Carlin, who has advocated do-nothing freeze deals at every turn, and who has an awful track record for reading peace overtures that aren’t there into cryptic North Korean statements.

Note well, NYT: Congress passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) in 2010. It took three years, and another sanctions law to close the CISADA’s loopholes, until your newspaper reported that sanctions had created “a hard-currency shortage that is bringing the country’s economy to its knees.” It took two more years until (for better or for worse) John Kerry inked his grand bargain. The editors of the Times show no sign of having thought through what sanctions are supposed to achieve, or how they fit into a greater strategy. Nor, for that matter, have they bothered to read the conditions for lifting those sanctions at sections 401 and 402 of Public Law 114-122.

We are very far from backing Kim Jong-un into a corner. It takes more than three months to go from “sanctions never work” to “OMG sanctions are working WE’RE ALL GONNA DIE!” Sanctions are an essential part of a policy that’s designed to weaken the cohesion, control, and survivability of the North Korean regime, in a way that presents Pyongyang with a clear choice: disarm and reform, or perish. We’ll know that the conditions are right for a diplomatic solution when Pyongyang is ready to accept fundamental transparency in its dealings with the world. It will take more than inserting a few U.N. inspectors at Yongbyon for us to know that Pyongyang has made that decision. It will mean free and nationwide access by food aid monitors. It will mean Red Cross workers in North Korea’s prison camps. It will mean the de-escalation of conventional forces, including artillery and rockets, along the DMZ. It will take more than a few months to exert the pressure needed to achieve that.

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Does our State Department want denuclearization or an exit strategy?

I’ve long wished that I could attend more ICAS events, but they tend to coincide with busy times in my work schedule. That was also the case when Assistant Secretary of State Danny Russel spoke to ICAS earlier this week. The State Department has since published this transcript. A reader (thank you) forwarded it, and asked for my views. 

Sending a consistent message to North Korea and China is very important at this moment, and it hardly serves that purpose to try to be Jimmy Carter and John Bolton in a single speech. Russel’s message begins with a lengthy defense of Jimmy Carter, Chris Hill, and the failed Agreed Frameworks of the past, and strongly suggests that our goal now is a freeze deal and another agreed framework — in other words, a return to business as usual. He eventually gets around to threatening stronger sanctions enforcement, but says that sanctions are designed “to bring [North Korea’s] leaders to their senses” but “not to destroy North Korea.”

As one of the designers, I’d respectfully ask Assistant Secretary Russel to speak for himself. But the greater problem with Assistant Secretary Russel’s statement is that it reveals a fundamental misapprehension of the nature of our problem. North Korea’s leaders haven’t taken leave of their senses; they’re deliberately and methodically pursuing nuclear weapons to extort their way to hegemony, and with obvious success. As long as we mirror-image their interests in terms of our own logic, we will continue to misapprehend them. If Kim Jong-un is as invested in his nuclear weapons programs as most observers think he is, and if we’re unwilling to use sanctions to undermine and destroy his misrule, then the message we’re sending to Pyongyang and Beijing is that they should cut a freeze deal, get the sanctions relaxed, wait a few months for the administration to leave town, and renege on the next president’s watch.

The irony is that diplomacy stands little chance of success unless we openly consider other alternatives — alternatives that frighten Pyongyang and Beijing more than the idea of a negotiated denuclearization.

In my youth back in South Dakota, on the way to the used car lot one day, I learned an expression that’s as wise as it is ungrammatical: if you want a deal real bad, a real bad deal is what you’re going to get. Next year, we will have another president. Let’s not throw away her leverage just yet.

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European Union publishes new N. Korea sanctions regulation to implement UNSCR 2270

I’ve previously written about the importance of Europe’s role in enforcing U.N. sanctions against North Korea. On March 5th, the EU designated 16 people and 12 entities under its existing North Korea sanctions program. Yesterday, it finally announced the publication of a new “restrictive measures” regulation to implement UNSCR 2270. Based on the summary, the new regulation follows last month’s Security Council resolution right down the line.

The measures extend, inter alia, export and import prohibitions to any item (except food or medicine) that could contribute to the development of the operational capabilities of the DPRK’s armed forces. Member states will be required to inspect all cargoes to and from the DPRK on their territories, to ban DPRK chartering of vessels or aircraft and to de-register vessels. They will have to ban flights carrying prohibited items and port calls of vessels engaged in violation of the relevant UNSC resolutions. They will also be required to ban exports from the DPRK of certain mineral products (including coal, iron and gold) and exports to the DPRK of aviation fuel. Member states will be required to expel DPRK representatives and third country nationals involved in the DPRK’s illicit programmes (as identified by the relevant UNSC resolutions).

Moreover, additional financial measures being introduced include:

  • an asset freeze on government entities associated with the DPRK’s nuclear or ballistic missile programmes or other activities prohibited by UNSC resolutions

  • an obligation to close:

    • existing branches, subsidiaries or representative offices of DPRK banks;
    • existing joint ventures, ownership interests and correspondent banking relationships with DPRK banks; and
    • existing branches, subsidiaries or banking accounts in DPRK if they could contribute to DPRK’s illicit programme
  • a ban on private financial support for trade if such financial support could contribute to DPRK’s illicit programmes

The new regulation will become effective when it’s officially published in the EU’s official journal later today. The restrictions on exports and the requirement to inspect all cargo going to North Korea should also limit the supply of European luxury goods to North Korea, although some will invariably continue to leak in through China. It will be interesting to see if the new regulation also expands the definition of “luxury goods.”

The provisions that bear the most careful watching, however, are those that affect finance. The termination of correspondent relationships and the closing of certain accounts should trap large sums of money in European banks. If the dollar is by far the world’s most important reserve currency, the Euro is the second-most important, so this action closes off the most important remaining avenue of escape for those funds.

The Wall Street Journal also quotes EU foreign policy chief Federica Mogherini as saying that the EU “is still considering additional EU-only sanctions on top of the U.N. measures,” and cites unnamed officials as saying that “some preparatory work has started on this.” Previously, the EU has gone beyond U.N. requirements by blocking North Korea’s national insurance company, which is suspected of defrauding European insurers out of millions of dollars.

One important measure the EU could take would be to expel North Korean forced laborers. This working paper, by the North Korean Alliance for Human Rights in North Korea, documents the surprisingly widespread use of North Korean labor by EU nations, and notes that North Korean laborers in the EU earn more cash for Pyongyang per capita than those in China, Africa, or the Middle East. Two of the worst offenders are Malta and Poland.

The EU could also ban the sale of equipment that can be used for surveilliance or censorship, or by the security forces for political repression. According to multiple reports in the Daily NK, a German company is supplying North Korea with equipment to track down illegal cell phones. The EU should also implement the U.N. Commission of Inquiry’s recommendations by freezing any assets owned or controlled by individual North Korean officials found to be responsible for human rights violations.

The single most important step Europe could take would be to cut off North Korea’s access to the SWIFT financial messaging service. In the case of Iran sanctions, that measure was one of the most effective in putting financial pressure on that regime.

The new regulation will not completely terminate North Korea’s financial shenanigans on the continent, however. For example, Switzerland and Liechtenstein, two states where large North Korean slush funds are reportedly held, aren’t EU members. North Korean prison camp survivors have called on Switzerland to freeze North Korean assets. The new EU regulation should increase pressure on both states to fully implement UNSCR 2270, and both the U.S. and South Korea can add their own diplomatic voices to that pressure.

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China’s reaction to North Korea shipping sanctions shows strain, confusion

Two weeks ago, I surveyed the evidence of China’s compliance with new U.N. sanctions and found  mixed, yet hopeful signs.” One area in which the signs has seemed especially hopeful was the enforcement of shipping sanctions. The Philippines had already seized one designated ship, the Sierra Leone-flagged M/V Jin Teng, and detained another, the non-designated, North Korean-crewed, Tuvalu-flagged tanker M/V Theresa Begonia. There was also some evidence that Chinese ports were complying, but we’ll get to that later. 

Under the resolutions, all member states are required to seize designated ships, like the Jin Teng, but the reasons for the detention of the Theresa Begonia aren’t clear. A report that an unnamed U.N. member state had cancelled its registrations of North Korean ships could be a clue. If the state in question is Tuvalu, the ship might have arrived in port without a valid registration. North Korea’s reflaggers of choice have been Mongolia, Cambodia, Liberia, Sierra Leone, Tuvalu, and Kiribati. 

Since then, however, China has pushed the U.S. into supporting the removal by the U.N. of four ships’ designations — the Jin Teng and three other North Korean ships — on the basis that China “discovered” that they were not owned or controlled by U.N.-designated Ocean Maritime Management Company at all. It’s worrying that this decision doesn’t appear to be based on any finding of the Panel of Experts, but on a unilateral conclusion by the Chinese, who pressured the U.S. to accede.

The U.S. did not accede easily. Reuters obtained several diplomatic messages between U.S. and Chinese diplomats, revealing that China threatened to hold up reauthorization of the U.N. Panel of Experts unless the U.S. agreed to removing the designations. This led to what Reuters called a “frustrated back and forth between Washington and Beijing,” in which Samantha Power accused the Chinese of “blackmail.”

The removal of the Jin Teng‘s designation presumably means that Filipino authorities will allow the ship to depart with its crew after the mandatory inspections are completed. Reuters had previously reported that a U.N. inspection team was on the way to the Philippines to inspect the Jin Teng.

It bears careful watching just how often the U.S. will be willing to cave to Chinese demands like these. On balance, it’s probably better to recognize and adjudicate exemptions, designations, and removals of designations than to just go back to what we all used to do — ignore China’s cheating. But there is also a great deal of confusion over how Chinese ports are enforcing shipping sanctions. According to a detailed report in the Asahi Shimbun, the ports of Tainjin, Yingkou, Rizhao, Penglai, Weifang, and Nantong have all barred North Korean ships from entering.

Sources close to Chinese port authorities and trading firms said the port authority in Yingkou, Liaoning province, initially prohibited the entry of all North Korean vessels to Yingkou port based on verbal instructions from the nation’s maritime affairs authority on March 16.

In addition, local port authorities had imposed a ban on entry by North Korean ships at the ports of Rizhao, Penglai and Weifang in Shandong province as well as Nantong port in Jiangsu province and Tianjin port as of March 21.

The five newly-added ports are all major gateways for China’s imports of natural resources from North Korea, while Yingkou port serves as a major hub for coal imports from the belligerent neighbor.

Port authority sources at Penglai and Weifang ports acknowledged that entry by North Korean vessels is prohibited.

“We received a verbal order out of the blue from the customs authority on March 19, and all North Korean vessels are anchored outside the port awaiting permission to enter,” said an official of the Penglai port authority on March 21. [Asahi Shimbun]

Note well that the sources quoted are all local port authorities and traders, rather than national authorities.

According to officials at trading firms involved in China-North Korea commerce, China’s maritime affairs authority has demanded that the operators of North Korean freighters stranded outside the six ports resubmit documents that are required for a port entry application. [Asahi Shimbun]

As a result, North Korean freighters are reportedly hovering offshore, waiting for the Chinese port authorities to review their documents. If the documents check out, they may be allowed to dock. The delays alone will be disruptive to Pyongyang’s finances. Increased inspections could also have a strong impact on North Korea’s lucrative counterfeit cigarette smuggling industry. NK News adds:

While NK News was unable to get confirmation from port authorities at the time of writing, live shipping data shows irregular groupings of North Korean vessels in anchorage off and in close proximity to the listed ports, a possible indicator that the measures are being implemented.

A group of 10 North Korean flagged ships is clustered around Longkou harbour, which is only 40km from Penglai, with a further five North Korean affiliated ships among them. The North Korean flagged Tong Chon is also in close proximity and is around 9km from the port of Penglai.

Four North Korean flagged vessels are also near Bayuqaun, which is within 50km of Yingkou, and are joined by a further eight North Korean affiliated vessels sailing under foreign flags of convenience.

According to the website of China’s Maritime Safety Administration, Yingkou’s port authority also has jurisdiction over Bayuquan port.

“There are an unusually large number of North Korea linked ships near Bayuquan and Longkou, which indicates they could have been rerouted from other ports,” Leo Byrne, Director of Data and Analytics at NK News said.

Another grouping of five DPRK flagged vessels has been seen near the port of Lanshan within the last 24 hours. Lanshan is 35km from the port of Rizaho, which is also on the alleged list of ports banning North Korean vessels from entering. Several of the North Korean flagged ships have since headed away from the anchorages of Lanshan and Rizaho.

“It’s worth noting that if accurate, the Chinese embargo would go well beyond what’s required in Resolution 2270,” Byrne said.

“But questions remain, it’s unclear why North Korean ships would be barred from those ports, yet not Dalian – the most visited port of call for North Korean ships in the area.” [NK News, Hamish Macdonald]

So what do the national authorities say? Beijing has denied implementing “a blanket ban” on North Korean ships, saying, “The reports have no truth,” and that the media should “not invent stories.”

The accusation is preposterous, typical of China’s hostility toward foreign media, and revealing of the pressure China is feeling. The Asahi and NK News reports are well supported and credible. They aren’t inventions, but they are inconsistent with other reports. Last week, for example, Reuters reported that China had banned only U.N. designated ships, and Yonhap reported that the port of Dandong had turned away a North Korean ship “as part of a broader ban on North Korean ships.” Adding to the confusion is the fact that North Korean ships have been turning off their transponders while at sea to avoid tracking.

As I’ve noted before, a complete embargo is more than either U.N. or U.S. sanctions require. U.N. sanctions bar coal imports except for “livelihood” reasons (whatever that means in practice) and require member states to seize ships owned or controlled by designated entities, such as Ocean Maritime Management and the Reconnaissance General Bureau.

U.S. sanctions authorize U.S. Customs and Border Protection to raise inspection requirements for cargo coming from ports and airports where “inspections of ships, aircraft, and conveyances originating in North Korea, carrying North Korean property, or operated by the Government of North Korea are not sufficient to effectively prevent the facilitation of any of the activities described in section 104(a).” Those activities include arms smuggling and WMD proliferation. They also mandate secondary sanctions against Chinese buyers of North Korean coal and other minerals.

In other words, U.N. and (especially) U.S. sanctions directly threaten the interests of local Chinese ports and traders, which is to maintain unfettered access to U.S. markets and the dollar system. Given the choice of trading with North Korea and trading with the U.S., some ports and shippers may — I stress, may — be choosing the latter. That represents a sharp divergence of the ports’ interests from those of Beijing, which is expending diplomatic capital to limit the harm sanctions do to Pyongyang.

This isn’t the only possibility here. The simplest is that Chinese ports and shippers are themselves getting conflicting and confusing instructions from Beijing. There is also some evidence that undercuts this theory. As recently as last week, some Chinese buyers were still accepting North Korean coal, perhaps believing that the “livelihood” loophole applied to their purchases (but see this). And the reported enforcement of cargo inspections at land border crossing almost certainly was based on instructions from Beijing.

If Beijing is now in a contest with Washington to influence the conduct of ports in northeastern China, then Kim Jong-un has indeed become a serious “strategic liability” for Beijing, just as its economy is slowing. It shows. For example, I’ve never seen the nationalist, anti-American Global Times show so much irritation and pessimism about North Korea. Read that last link. It’s precisely the kind of sentiment the U.S. should be encouraging in China. When North Korea becomes enough of a liability for China, China will rethink its interests, and maybe diplomacy will stand a chance.

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North Korean diplomats behaving badly

If you’re a North Korean diplomat, a good general rule is that all publicity is bad publicity. Over the last two weeks, North Koreans, most of them diplomats or former diplomats, have attracted much publicity of the kind they couldn’t have wanted.

The Chinese government reports that “a North Korean consular official” killed two Chinese citizens while driving home drunk in Dandong last month. The North Korean diplomat was on his way home from an “event celebrating North Korea’s launch of a long-range rocket.” So, that’s another way post-launch events may not have worked out quite as His Porcine Majesty might have hoped.

Also this week, Tanzanian authorities expelled a former North Korean diplomat, Kang Sungguk, for using forged passports and for suspected involvement in various unspecified illegal activities. Prior to 2001, Kang had been an “economic councilor” at the North Korean embassy in Dar-as-Salam. Since then, he had been “a prominent North Korean businessman with supposed diplomatic status who ran several businesses from his base in Guangzhou, China.” It’s always China.

The acting Commissioner of Immigration (Border Management and Control), Wilson Bambaganya, said that immigration officers with support from security officers had been watching Kang closely for sometime and observed his various violations of both national and international laws.

“We (Immigration) gathered information about his habit of changing passports with fake names, different dates of births and numbers,” Bambaganya said. “We asked ourselves what his motives were for constantly forging those details, and we realised that for a person of his status to do such things, he must be engaged in some illegal business, although we couldn’t establish exactly what business.”
When Kang was recently interrogated by immigration officers, he failed to produce any traceable legal business links, which only served to raise more suspicions about him, the senior immigration department official said.

“We even tried to communicate with his country’s embassy here in Tanzania, but they also said they had no proper information about Kang and his current businesses. So we finally decided to expel him via a PI note,” Bambaganya explained.

He added: “Even if he (Kang) was a genuine businessman in China or anywhere else, here in our country we have concluded that he was dealing in illegal business activities.” [IPP Media, via The Guardian]

Last week, Sri Lankan authorities detained two North Koreans for carrying $150,000 in cash. That’s U.S. dollars, in case it matters to you which convertible currency discriminating North Korean money launderers prefer. The two — contra the post title, these two probably were not diplomats — were on their way from Oman to China carrying home “wages earned by themselves as well as other co-workers at construction sites in Oman.” Like many governments, Sri Lanka requires persons carrying more than $10,000 in cash to declare it to the authorities.

In China, the two would presumably have deposited the cash into a bank that would have been willing to scrub the subsequent wire transfers of all references to a North Korean affiliation. Not that any Chinese bank would do thatNorth Korea has since demanded the release of the men and the return of the money. Because the money consists of proceeds of North Korean labor exports, it’s subject to blocking under Executive Order 13722, but not under U.N. Security Council Resolution 2270 (unless, of course, it’s associated with WMD programs, weapons trafficking, or luxury goods imports).

North Korean consulates are expected to be self-financing, so North Korean diplomats often find themselves placed under arrest in far-flung, exotic locations, like Mozambique, were North Korean diplomat Pak Chol-jun was arrested in May of last year with ten pounds of rhino horn worth $99,300. South Africa later expelled Pak, who was posted at the North Korean embassy in Pretoria.

Just over a year ago, Son Young-nam, the first secretary of the North Korean embassy in Dhaka was arrested by Bangladeshi authorities carrying 59 pounds of gold, worth $1.4 million, which he hadn’t declared to customs. North Korea later apologized, and Bangladesh expelled the diplomat. Gold smuggling is a traditional method for North Korea to evade sanctions and money laundering crackdowns. UNSCR 2270 requires member states to “prohibit the procurement of” gold by North Koreans.

Also on the slave labor front, the Daily NK has an exposé of the role of North Korean consulates in China in procuring human chattels for rental.

“Starting from about a few years ago, officials in the North Korean consulates in China started to provide young female workers to ethnic Korean owned toll processing businesses for a fee. Recently, one such consulate has been receiving a 200-Yuan per month fee in similar transactions with a wig-making factory. The fee in this case is transferred from the worker’s account in accordance with the contract,” a North Korean source currently residing in China reported to Daily NK on March 18.

This development was corroborated by an additional source close to the issue in China.

The brokering of these deals originated in Shenyang, where ethnic Korean managers of seafood processing and packaging, textiles manufacturing, and wig and artificial eyebrow making factories started hiring young, cheap female workers from Pyongyang. The number of Chinese businesses looking to hire young, pretty, 20-something natives of Pyongyang is so large that the consulates have stepped in to facilitate.

Demand from Chinese businesses in the Northeast cities of Jilin, Heilongjiang, and Liaoning quickly built on the momentum, meeting supply from North Korean authorities looking to export labor for a profit. There is a heavy emphasis on beautiful young girls from big cities like the capital. Even now, in the face of strict primary and secondary sanctions targeting the North Korean regime, the demand for young North Korean female workers has not abated. [Daily NK]

If a plain-looking woman can pack seafood or knit a wig just as efficiently as a pretty one can, it’s unclear why the Chinese employers put such a premium on appearance unless they intend to exploit the women sexually. This goes unstated in the article, but previous reports have alleged that North Korean managers had pimped out female North Korean workers in a food processing plant in Donggang.

Finally, a number of sources are reporting that two countries are about to expel North Korean diplomats who’ve been designated by the U.N. Security Council. North Korea has replaced its Ambassador to Burma after the Security Council designated the incumbent, Kim Sok-chol. The U.S. Treasury Department designated Kim last November for activities on behalf of the Korea Mining Development Trading Corporation, or KOMID, a trading company designated for proliferation.

Egypt is also said to be about to expel North Korean Ambassador Pak Chun-il after his designation. Pak allegedly “played a key role in establishing an Egyptian branch of … KOMID,” and was involved in weapons smuggling and other illegal activities. Egypt has recently come up in multiple reports on North Korea sanctions violations, and was mentioned in the most recent U.N. Panel of Experts report. Last November, the U.S. Treasury Department designated Eko Development and Investment Company, a/k/a, Eko Development and Investment Food Company, a/k/a Eko Import and Export Company, a North Korean trading company based in Cairo, for being a KOMID front. Treasury also designated Egypt-based Ri Won Ho last week, when it first published Executive Order 13722. Treasury describes Ri as “an official of the DPRK’s Ministry of State Security based in Egypt” who was working for KOMID.

Last month, investigative journalist George Turner revealed that Egyptian-U.S. dual national Naguib Sawaris of Orascom/Koryolink infamy was in partnership with North Korea’s Foreign Trade Bank, designated by Treasury for proliferation, through the Orascom-linked, North Korean-chartered Orabank.

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China & Russia alarmed about secondary sanctions, because sanctions never work.

After years of extensive, flagrant, and well-documented violations of U.N. sanctions against North Korea, China is finally reaping the consequences. Americans don’t agree on much anymore, but Beijing’s cheating has achieved a political impossibility — it has united 418 representatives, 96 senators, The New York Times, The Washington Post, and the mainstream of North Korea watchers in support of secondary sanctions on the (mostly Chinese) banks and businesses that are propping up Kim Jong-un financially. That policy is now expressed in law, and the U.S. Treasury Department has taken its first steps toward aggressive implementation.

Not surprisingly, China isn’t happy about this.

The so-called secondary sanctions will compel banks to freeze the assets of anyone who breaks the blockade, potentially squeezing out North Korea’s business ties, including those with China.

Asked whether China was worried the sanctions could affect “normal” business links between Chinese banks and North Korea, Foreign Ministry spokesman Lu Kang said this was something China was “paying attention to”.

“First, as I’ve said many times before, China always opposes any country imposing unilateral sanctions,” Lu told a daily news briefing in Beijing.

“Second, under the present situation where the situation on the Korean Peninsula is complex and sensitive, we oppose any moves that may further worsen tensions there.”

“Third, we have clearly stressed many times in meetings with the relevant county, any so-called unilateral sanctions imposed by any country should neither affect nor harm China’s reasonable interests.” [Reuters]

So far, Treasury hasn’t frozen any Chinese and Russian assets, but it’s delivering a message to Chinese banks to stay away from North Korea, and the banks are listening. Even before the U.N. Security Council approved UNSCR 2270, some Chinese banks and businesses began freezing North Korean assets.

“Any so-called unilateral sanctions imposed by any country should neither affect nor harm China’s reasonable interests,” Lu warned. He said Beijing has stressed this point many times.

The new sanctions “up the ante quite significantly,” said Elizabeth Rosenberg, a sanctions expert at the Center for a New American Security, the new sanctions “up the ante quite significantly.”

“It does impose something akin to a full embargo on persons who do business with North Korea,” she said.

Victor Cha, senior fellow to the Bush Institute on North Korea and director of Asian studies at Georgetown University, said these comments show Beijing is concerned about getting caught in the sanction net. In an interview with Foreign Policy, he said China was especially worried about the slave-labor provisions.

“China imports North Korean slave labor,” he said. “That’s the piece the Chinese don’t like the most, the secondary sanctioning.”

“This is a grade up from the level of sanctions that had been in place before,” Cha added. [Foreign Policy, David Francis]

Russia, too, has actively aided North Korea’s violations of U.N. sanctions, and it’s also upset about “unilateral” U.S. sanctions. Its propaganda machine is churning out tired arguments that sanctions will only hurt the North Korean people, although I don’t recall Russian propaganda outlets complaining that North Korea’s last long-range missile test cost enough to fund World Food Program operations in North Korea for 15 years.

Despite Moscow’s ambivalence about sanctioning Pyongyang, Gazprom just cut its ties to North Korea. Oddly enough, the U.N. sanctions don’t even require this. Sure, it’s possible that Vladimir Putin has had a change of heart and decided to pressure Kim Jong-un, but it seems more likely that Gazprom is concerned about the legal risks from Treasury’s sectoral sanctions on North Korea’s energy industry.

The reports on China’s compliance with the sanctions continue to be mixed. Defense Secretary Ashton Carter says, “China could do much more than it has to get North Korea to ‘stop provocations,’” while a senior State Department official recently told the Senate Foreign Relations Committee that China was “ready to work with us on detailed implementation and consultation on a range of issues.” Both of those things could be true, I suppose, but they yield different headlines.

Until recently, cargo had transited the land border between China and North Korea more-or-less unimpeded, but now, according to both Yonhap and the Chosun Ilbo, China has stepped up inspections at its border crossings, too. With respect to maritime cargo, Yonhap cites South Korean government sources who claim that Beijing has directed local governments to bar the 31 U.N.-designated North Korean ships from its ports. The Asahi Shimbun reports that “China has banned the entry of North Korean vessels to Yingkou port in Liaoning province, a major gateway for China’s coal imports” from the North.

As of March 18, two North Korean ships were stranded outside the port, located about 200 kilometers northwest from the border between the two countries. The vessels have reportedly decided to return to North Korea. “China will likely impose a similar embargo at other ports from now on,” a source familiar with the matter told The Asahi Shimbun. [Asahi Shimbun]

Two press reports dated the same day contradict each other about whether China is enforcing the ban on importing North Korean coal. Reuters says that the Chinese government hasn’t told Chinese coal buyers to stop importing North Korean coal; the Joongang Ilbo says it has. To further complicate matters, the U.N. sanctions have a “livelihood” loophole, while U.S. sanctions have much narrower humanitarian exceptions. A reasonable, middle-ground approach that’s completely consistent with both authorities would be to interpret “livelihood” to require payment in food, humanitarian supplies, or donations to the World Food Program or other humanitarian aid programs. It should prohibit payment in gold, dollars, or other convertible currencies.

U.N. sanctions ban mineral imports from North Korea and require member states to seize property of designated entities, including Ocean Maritime Management and the Reconnaissance General Bureau, which also reportedly operates a small fleet of ships . They do not impose a blanket embargo on North Korean trade. U.S. sanctions do not impose a trade embargo, either, but do authorize U.S. Customs to step up inspections of cargo coming from ports that fail to inspect cargo coming from or going to North Korea. This amounts to a secondary sanction.

On the financial front, the Chosun Ilbo quotes “sources” as claiming that the Dandong branch of the U.N.- and U.S.-designated Korea Kwangson Banking Corporation has closed. In 2013, it simply went underground for a while, but this time, it actually appears to have closed. The Chosun also reports that “[a] growing number of North Korean restaurants in northeastern China are closing down.”

Meanwhile, the U.S. and South Korea are meeting this week to “review and discuss ways to maximize pressure on North Korea by effectively applying the three axes of the Security Council resolution, unilateral sanctions imposed by South Korea and the U.S., and pressure by the international community.” In Seoul, Sung Kim, the U.S. representative to the six-party talks, says our government intends to enforce U.N. sanctions with “vigor and energy,” but undercuts that conclusion with this:

Asked if Russian and Chinese companies employing North Korean workers would be subject to the sanctions, Fried said the new executive order provides “very broad authorities” to deal with the issue. “It doesn’t mandate anything in particular, but the authorities are there if needed,” he told reporters, standing next to Sung Kim. [Yonhap]

Ambassador Kim is mistaken. The executive order implements a statute whose sanctions are mandatory. Recently, China has expressed interest in three-way consultations with the U.S. and South Korea about enforcement of the sanctions. Expect those consultations to be tense. The left-leaning Hankyoreh Sinmun reports that the South Korean and Chinese foreign ministers “clashed” over the enforcement of sanctions against the North in a recent phone call. Securing our interests will require firmness and resolve, but it would still be preferable for all involved if China implements the sanctions “voluntarily.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Namibia’s prohibited arms deal with N. Korea triggers mandatory sanctions under U.S. law.

Namibia is a beautiful desert country with a turbulent history. Some years ago, when I worked in South Africa, I flew from Johannesburg to Cape Town, took a bus across the border to Keetnamshoop, and hitch-hiked to the isolated town of Lüderitz, which sits where the barren dunes of the Namib Desert spill into the cold waters of the Atlantic Ocean. Lüderitz was established by German colonists in the 19th Century; today, many of their descendants still live in the German-style homes their ancestors built. (Thanks to a friendly local I met on the bus, I was an overnight guest in one of those houses.) Hitch-hiking out proved more difficult than hitch-hiking in, but the hours spent waiting on the roadside, amid the dunes, eventually paid off. I hitched a ride out just before a thermonuclear sunset lit the faces of the dunes with a Martian-red glow that should have had a soundtrack by Igor Stravinsky.

My visit to Namibia came just months after the country became independent, and after the end of a bloody bush war that pitted Cuban-backed SWAPO guerrillas against the South African Army. SWAPO has won every election since then by an overwhelming margin. Evidently, SWAPO’s old ties to fellow alumni of the old Soviet bloc endure. The most recent U.N. Panel of Experts report finds that as early as 2002, the Namibian Ministry of Defence hired Korea Mining Development Trading Corporation, or KOMID, a North Korean entity designated by the U.N. and the U.S. Treasury Department, to build it a weapons factory:

101. KOMID reportedly conducted business activities in Namibia until at least early 2015, including through the construction of a munitions factory at Leopard Valley, in the Windhoek area, in cooperation with, or using the alias of, Mansudae Overseas Project Group companies.56

102. Namibia informed the Panel that it had contracts with the Democratic People’s Republic of Korea concerning arms and related materiel before 2005. One covered the construction of the Windhoek munitions factory from 2002 to 2005, involving a subsidiary of Mansudae. Namibia also confirmed that it had received training and technical assistance relating to arms, but stated that, given United Nations sanctions, the relevant experts had returned to the Democratic People’s Republic of Korea.

103. Namibia confirmed that Mansudae was involved in several military construction projects, including the military academy and the ongoing construction of the headquarters of the Ministry of Defence. It denied knowledge of links between Mansudae and KOMID (see annex 70).

104. However, satellite imagery shows that construction at the military base at Leopard Valley was continuing in September 2014 (see annex 71). The Mansudae company brochure also advertised the 2010 contract with the Ministry of Defence for the construction of facilities at Leopard Valley (see annex 70).

105. The Panel confirmed that, as at August 2015, workers from the Democratic People’s Republic of Korea were undertaking construction activities at another military base in Suider Hof (see fig. 23). At the time of writing, Namibia had not replied regarding the purpose of the facility under construction.

106. The construction of any munitions factory or related military facilities is considered to be services or assistance relating to the provision, manufacture or maintenance of arms and related materiel and therefore prohibited under the resolutions. [Panel of Experts, 2016]

The Panel published this photograph of the factory:

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It also noted that two KOMID representatives have been regular visitors to Namibia.

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Both Kil and Kim were designated by the U.S. Treasury Department under Executive Order 13687 on January 2, 2015.

Since the publication of the Panel’s report, the Namibian government has admitted to the relationship, but denied violating the resolutions, offering a spurious interpretation of them:

DEPUTY prime minister and international relations’ minister Netumbo Nandi-Ndaitwah has confirmed the existence of a North Korean-built munitions factory in the country, but said the factory was not in contravention of any United Nations’ sanctions against the Democratic People’s Republic of Korea.

Nandi-Ndaitwah said the Namibian government was not involved in anything untoward, and that government has cooperated with the United Nations and openly answered and forwarded information requested by the UN. [The Namibian]

The Namibians point out that the ventures date back to as early as 2002, and that “relations between the two countries date back to Namibia’s liberation struggle.” But what is at issue here is conduct occurring after October 2006, when UNSCR 1718 banned the trade in major weapons systems with North Korea, and 2009, when UNSCR 1874 extended the ban to all arms and related material. Over the following years, those sanctions were further clarified to eliminate loopholes. The U.N.’s designation of KOMID in April 2009 removed all doubt that any dealings with it since then have been clear violations of the resolutions.

Today, with the passage of UNSCR 2270, there is no doubt that any arms-related transactions with a North Korean entity are prohibited. Namibia is obligated to terminate its relationships with KOMID, freeze all of its assets and property, and send its representatives home.

Namibia also confirmed that it had received training and technical assistance relating to arms, but stated that given United Nations’ sanctions, the relevant experts had returned to the Democratic People’s Republic of Korea. […]

She added that the sanctions against North Korea covered mainly nuclear weaponry, and Namibia is not prohibited from having diplomatic ties with that country.

This is a blue answer to a green question. Of course Namibia is permitted to have diplomatic relations with North Korea; that is not the issue. Of course the U.N.’s North Korea sanctions don’t just cover nuclear weapons; they also ban North Korea’s arms trade, which almost certainly finances its nuclear and missile programs. The Namibian government needs to read the resolutions and comply with them.

She confirmed that a munitions factory was built, but that it was a Namibian project, adding that the North Koreans worked on projects such as the construction of State House, Heroes’ Acre, the military museum, the Independence Museum and other military construction projects.

If KOMID or another U.N.-designated entity is involved in these deals, they’re also prohibited. As with Kaesong, the arrangements are also arguably violations of UNSC provisions requiring member states to freeze any assets that could be used to further North Korea’s nuclear and other prohibited programs.

The UN report stated that the munitions factory was built at at Leopard’s Valley in the Windhoek area, while government confirmed to the UN that Mansudae was involved in several military construction projects, including the military academy and the ongoing construction of the headquarters of the Ministry of Defence.

The Namibians are having trouble getting their story straight.

The deputy prime minister also came to the aid of her colleague, defence minister Penda ya Ndakolo, who flatly denied the existence of a project between Namibia and North Korea to build an armaments factory.

She said Ya Ndakolo was referring to a project which is underway since the munitions factory’s construction project has long been completed. “We are not hiding it,” she stated.

Perhaps the Namibians doubt that the U.N. will enforce its writ and that this will all blow over. A year ago, that might have been a reasonable assumption. Perhaps they’re simply unfamiliar with what the resolutions require, although I suspect the Panel of Experts has since rectified that through bilateral communications. But even if the U.N. can’t enforce its writ, the U.S. Treasury Department can — and must — because of the new North Korea Sanctions and Policy Enhancement Act. Among the conduct that triggers mandatory sanctions is this:

(a) Mandatory Designations.—Except as provided in section 208, the President shall designate under this subsection any person that the President determines—

[….]

(2) knowingly, directly or indirectly, provides training, advice, or other services or assistance, or engages in significant financial transactions, relating to the manufacture, maintenance, or use of any such weapon, device, or system to be imported, exported, or reexported to, into, or from North Korea;

[Update: Rereading this, a closer fit may be section 104(a)(9), which applies to any person the President determines “knowingly, directly or indirectly, imports, exports, or reexports to, into, or from North Korea any arms or related materiel.” Under the sanctions regulations in 31 C.F.R., the term “arms or related material” typically includes (by inference) technical assistance other than for peace-keeping purposes. In the specific context of North Korea, the U.N. also includes technical assistance within the meaning of the term “arms and related materiel.”]

The Namibian MoD’s violations of “applicable U.N. Security Council Resolutions” could also trigger discretionary sanctions under section 104(b)(1)(A), which authorizes the designation of any person who “knowingly engages in, contributes to, assists, sponsors, or provides financial, material or technological support for, or goods and services in support of, any person designated pursuant to an applicable United Nations Security Council resolution.”

A section 104 designation triggers a series of consequences, starting with the blocking of any assets that enter the U.S. financial system, potential prohibitions on transactions in foreign exchange or credit between financial institutions, and a travel ban on Namibian MoD officials.

Namibia’s open defiance of the U.N. Security Council will be an important test of the Obama Administration’s determination to enforce the new law. I can’t speak for Congress, but Congress would probably allow the administration a reasonable opportunity to use diplomacy to get the Namibians to terminate these relationships with North Korea. Failing this, the law requires that the Namibian MoD officials responsible for the dealings with KOMID, and other designated entities, be designated under section 104.

~   ~   ~

Update: Well! Good morning, Namibia!

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N. Korea sanctions are failing because of China. That’s why we need secondary sanctions.

Last November, I put up a post cataloging China’s long and deep history of breaking U.N. sanctions against North Korea. The post, which relied heavily on reports of the U.N. Panel of Experts monitoring North Korea sanctions, attracted a great deal of attention, including from Senate staff as they considered the North Korea Sanctions and Policy Enhancement Act. The new POE report, released yesterday, is almost 300 pages long (including exhibits) and has more than enough material to make a rich sequel to that post. It has almost as much evidence of China’s willful blindness or outright duplicity as the rest of the reports combined.

Yesterday, I singled out one of the most brazen examples, in which the Bank of China told a North Korea-linked customer to hide those links when it processed $40 million in wire transfers through the U.S. financial system (the Chinese government delayed the release of the report because of its objection to that finding).

And there is so much more. For example, multiple U.N.-designated North Korean arms smugglers and proliferators are still operating openly in China. Leader Trading Company and Korea Taesong Trading operate out of Dalian and possibly Dandong (paras. 169-170), while Korea Tangun Trading Corporation still operates out of Shenzhen, under the alias Ryungseng Trading Corporation (para. 174).

They’re keeping busy, too. A cargo of missile-related parts seized on its way to Syria passed through Dalian, despite being linked to Leader Trading Company and Korea Mining Development Trading Corporation, or KOMID (also designated). The North Koreans “used two companies, Dalian Union International Trading Co., Ltd. and Dandong Yongxinghe Trade Co., Ltd. … to procure the items” from China, Hong Kong, Taiwan, and other locations.

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Few of the suppliers asked who the end users were, but in the one case when one did, the Chinese middlemen didn’t answer (paras. 62-70). In the annexes, you can see multiple documents associated with Leader Trading and KOMID’s shipments to Syria, listing addresses in China.

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In 2013, an unnamed member state intercepted a shipment of SCUD missile parts on their way from Beijing to a trading company in Egypt. (Sharp-eyed readers may wonder if this is the same Egyptian trading company the Treasury Department designated here, under Executive Order 13687 last year. It wasn’t, which suggests that Egypt’s links to North Korea aren’t just a one-off, but an issue that deserves more diplomatic attention than it’s getting.) The North Koreans flew the parts to Beijing aboard Air Koryo. The shipper, Ryongsong Trading Co. Ltd., used the same address as North Korea’s embassy in Beijing (paras. 71-75).

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The North Koreans obtained UAVs with military applications from suppliers in China, or from Chinese intermediaries (paras. 78-91). There are many documents on this in the exhibits, mostly from Chinese suppliers.

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Remember when the South Koreans recovered UAVs that had overflown the Blue House and Baekryeong Island? This seems rather damning.

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Remember those special “logging” vehicles the North Koreans bought from Hubei Sanjiang Space Wanshan Special Vehicle Company — quite possibly the world’s only manufacturer of extraterrestrial logging equipment — until they showed up in a parade hauling missiles through downtown Pyongyang? Senator Cruz gave that one an honorable mention in an angry letter he sent to President Obama this year, calling for secondary sanctions on China.

Well, guess what just happened again? This time, Chinese trucks are being used to haul 300-millimeter rockets, which are a serious threat to Seoul, and to U.S. military installations in South Korea (paras. 96-100). China’s defense is that it told the North Koreans to use these $50,000-a-pop trucks strictly for commercial purposes only. (I’m guessing the trucks North Korea actually uses for strictly commercial purposes have somewhat lower Kelly Blue Book values than this.) Except when North Korea lies about end-uses to normal, law-abiding countries, said countries tend to stop selling them those things. Now, UNSCR 2270 prohibits the sale of dual-use trucks.

Screen Shot 2016-03-08 at 9.55.08 PM

A Chinese middleman, George Ma, procured at least four armored Mercedez S-Class sedans for His Corpulency. The cars were purchased from Germany and customized in the United States (I’m guessing the services included putting in extra-strong rear springs). There’s no evidence in the reports to suggest that the German supplier or the American customizer knew where the cars were headed, but the U.S. shop appears not to have done its due diligence on the Chinese purchaser (paras. 118-121), which revealed its North Korean connections on its website. Depending on the timing and other factors, this could be a violation of Executive Order 13551.

I wonder how many kids you could feed for what one of those cars cost. Remember, it’s the sanctions that are starving North Koreans. Just keep repeating that until you believe it.

Screen Shot 2016-03-08 at 10.16.00 PMMirae Shipping, a subsidiary of U.N.-designated Ocean Maritime Management, helped broker the 2013 Cuba arms deal from its office in Shenzhen. From there, things get so unbelievably weird that I’ll just put it out there and let you read it for yourself:

143. Around the time of the designation, in July 2014, Mirae operated several foreign-flagged vessels as charter parties. However, it failed to make its payments, given that it was experiencing financial difficulties. The vessels’ owner companies and mortgagees (“the claimants”) requested maritime courts in Wuhan and Qingdao, China, in August and September 2014, respectively, to arrest and detain several vessels, including the Great Hope and the Benevolence 2. 71

144. In response, the Harbour Superintendence Authority of the Democratic People’s Republic of Korea arrested and detained the claimants’ vessels in the country’s ports on the pretext of “tax evasion” (see annex 87). Another vessel owned by the claimants was already being detained by the country owing to a prior dispute between the charterer and the Korean Ocean Shipping Agency.

145. Subsequently, the Ministry of Land and Marine Transport intervened on behalf of OMM. The Ministry/OMM then led the negotiation by framing the disputes as a single package deal. The negotiations resulted in a set of complex arrangements aimed at achieving the simultaneous releases of multiple vessels among the various parties. The Panel notes the clear influence exerted by the Ministry/OMM over the Harbour Superintendence Authority and the country’s other shipping companies.

146. The negotiations were settled in December 2014 with the release by the Democratic People’s Republic of Korea of the claimants’ vessels in exchange for the claimants’ release from China of the Mirae-operated vessels (see annex 87).72 The settlement’s terms significantly favoured OMM. Mirae was released from outstanding debts. The claimants were forced by the Ministry/OMM to abandon another vessel, which was then transferred to Korea Tong Hung Shipping and Trading (the vessel’s operator) at no cost.

The upshot:

That OMM and the Ministry of Land and Marine Transport, in particular the Ministry’s senior official, Mr. Kim Yu Il, coerced the claimants to transfer to the Democratic People’s Republic of Korea at least two vessels (Benevolence 2 and Great Hope) operated by Mirae (acting on behalf of OMM), which constitutes evasion of the sanctions imposed under paragraph 8 (d) of resolution 1718 (2006) and paragraphs 8 and 11 of resolution 2094 (2013). The Ministry acted on behalf of OMM and assisted in its evasion of sanctions;74

China wasn’t alone in being implicated in the report:

  • Para. 30-33. North Korea’s KN-08 ballistic missile looks like a clone of the Soviet 9M79. Unfortunately, the report doesn’t say how the North Koreans got the plans for the missiles, or whether they got them after the U.N. first imposed its sanctions in 2006. The KN-11 submarine-launched missile also looks a lot like a Soviet SS-N-6/R-27, because the North Koreans obtained one from the Soviets in the 1990s and reverse-engineered it.
  • Para. 61. Burma continues to purchase suspicious nuclear-related items.
  • Para. 94. Eritrea appears to be doing some kind of arms deal with the North Koreans.
  • Paras. 101-106. Namibia got busted hiring KOMID to build it a weapons factory. The key North Korean personnel are diplomats posted in South Africa, who shuttle back and forth between the two countries.
  • In multiple parts of the report, it’s clear that Syria continues to be a major North Korean arms client.
  • Paras. 112-117. Uganda and Viet Nam have both hired North Korean military or police advisors, something that the Panel of Experts thinks was already a violation of past resolutions (me, too), but which is now a definite no-no under UNSCR 2270.
  • Para. 123-129. Israel sold North Korea $346,726 in gold, India sold them $1,913,677 in precious metals and stones, Thailand sold them$262,908 worth of cars, and Brazil sold them some unknown amount of jewelry. Once again, with feeling: sanctions starve babies.
  • Para. 182-186. A Taiwanese company, Royal Team Corporation, sold pressure sensors to North Korea for its missile program, and not for the first time. RTC has been supplying the North Koreans continuously since 2004, often hand-carrying the merch to Pyongyang through (you guessed it) Beijing and Macau. In 2008, a Taiwanese court even convicted RTC for supplying sensitive technology to North Korea. RTC needs to be sanctioned to extinction. Then, its officials should be locked away Supermax, its factory razed, and the grounds sown with salt.
  • Annex 1. The POE is investigating possible attempted North Korean arms dealing involving the UAE, Malaysia, and Ethiopia.

There is also more evidence of North Korea’s abuse of engagement programs to obtain sensitive technology, including from The Centre for Space Science and Technology Education in Asia and the Pacific (para. 46) and the International Astronautical Federation (paras. 55-58 and this post).

Overall, the Panel concludes that North Korea is as determined as ever to acquire nuclear weapons and ballistic missiles, and that sanctions are failing due to member states’ failure to enforce them.

Given the stated intentions of the Democratic People’s Republic of Korea and its continued efforts to enhance the scope of its nuclear and missile programmes and to seek international acceptance and legitimacy for these prohibited programmes, there are serious questions about the efficacy of the current United Nations sanctions regime.

The Panel’s investigations have shown that the Democratic People’s Republic of Korea has been effective in evading sanctions and continues to use the international financial system, airlines and container shipping routes to trade in prohibited items. Designated entities conceal their illicit activities by embedding agents in foreign companies. They use diplomatic personnel, long-standing trade partners and relationships with a small number of trusted foreign nationals. Its designation in July 2014 notwithstanding, Ocean Maritime Management Company, Limited continues to operate through foreign-flagged vessels, name and company reregistrations and the rental of crews to foreign ships. This enables it to obtain access to foreign ports in the region and beyond, as well as maritime insurance, a prerequisite for operation. [….]

All these activities are facilitated by the low level of implementation of Security Council resolutions by Member States. The Panel has consistently highlighted the problems of non-implementation of the resolutions, which allows prohibited activity to continue. The reasons are diverse, but include lack of political will, inadequate enabling legislation, lack of understanding of the resolutions and low prioritization.

The introduction calls out Africa and the Middle East — and certainly, there is evidence of violations there. Indeed, many other states have failed to turn in their compliance reports, or have provided reports of low quality, including non-permanent members of the Security Council. But for the Panel to fail to mention the one state that’s involved in facilitating just about every last one of these violations, either through its banks, intermediaries, immigration authorities, or ports, is telling, especially given the delay in publishing the report. I can only assume that the Chinese representative pressured the Panel to water down this language.

Despite the otherwise excellent investigative work of the Panel, its report shows us that the moral suasion of U.N. alone isn’t enough to make sanctions work. That will require a credible threat of secondary sanctions to get Chinese banks, ports, and businesses to comply, and that will probably require making some examples. For conduct that happens after February 12, 2016, there will be some new rules, and there should also be some very hard consequences.

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WaPo editorial: “China’s switch” on N. Korea sanctions “had a lot to do with” H.R. 757.

After the President signed H.R. 757 into law, but before the U.N. Security Council approved resolution 2270, sanctions skeptics predicted that the new U.S. law would complicate diplomatic efforts to get China to enforce U.N. sanctions. Events thus far have refuted that view. After the President signed the new law, China, which had inflexibly opposed new U.N. sanctions for weeks, reversed course and voted for the strongest North Korea sanctions resolution so far. Even before China’s official retreat, China’s banks had already begun to freeze North Korean accounts. What explains this shift? The editors of The Washington Post offer this guess:

SECRETARY OF State John F. Kerry emerged frustrated from a meeting with China’s foreign minister in late January after proposing new U.N. sanctions on North Korea. Beijing balked, saying it was not willing to take steps that risked destabilizing the regime of Kim Jong Un even after the regime conducted what it claimed was a hydrogen bomb test. On Wednesday, China seemingly reversed course, joining a unanimous U.N. Security Council in imposing the toughest sanctions applied to North Korea in more than a decade.

What prompted this welcome change? Mr. Kerry and his State Department team spent weeks negotiating with their Chinese counterparts — and North Korea’s launch of a long-range rocket last month over Beijing’s objections may have spurred a U.S.-Chinese convergence. Our guess, however, is that China’s switch had a lot to do with steps taken by South Korea and Congress.

In Seoul, the government of President Park Geun-hye, which Beijing has been courting, decided to move forward on plans for deploying a U.S. missile defense system that China regards as a threat. Meanwhile, Congress adopted new U.S. sanctions that could penalize Chinese companies and banks that do business with North Korea. In other words, the Chinese leadership finally was forced to consider tangible consequences for its coddling of the reckless and increasingly dangerous North Korean ruler.

The result is sanctions that, on paper, could have the most damaging impact in Pyongyang since the George W. Bush administration succeeded in locating and freezing the regime’s foreign financial assets in 2005. The new resolution orders the inspection of all cargoes entering and leaving North Korea, bans its export of some minerals and import of arms, and mandates a shutdown of its international banking activities. It also cuts off supplies of most aviation fuels and expands the list of luxury items the elite cannot receive. [Editorial, Washington Post]

In other words, and as I argued last month, the new U.S. sanctions law actually gave the Obama Administration more leverage to succeed in its diplomacy with China. As I argued last week, U.S. and U.N. sanctions are not contradictory, but complementary and mutually reinforcing. Indeed, the timing of the Chinese banks’ actions suggests they may be more responsive to Washington than they are to Beijing. I can’t overstate my doubts that China has had a willing conversion, and has decided to enforce the spirit and letter of U.N. sanctions. But the evidence increasingly shows that whether or not China’s government can be persuaded to enforce sanctions, its banks and ports can be.

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The U.N.’s new N. Korea sanctions will change the game … if they’re enforced.

The U.N. Security Council has just approved a new resolution, UNSCR 2270, sanctioning North Korea under Chapter VII and Article 41 of the U.N. Charter. Now that the Security Council has approved the resolution, I’m publishing this post, which I’ve been holding. It’s a strong text — very strong. In reviewing it, it’s useful to begin with my own wish list:

  • Requiring member states to report North Korean property, accounts, and transactions to the U.N. Panel of Experts;
  • Shipping sanctions prohibiting the provision of insurance, bunkering, and reflagging services to North Korean ships, thus forcing North Korea to rely on foreign ships for its maritime trade;
  • Designating Air Koryo, thus closing off another avenue for North Korean arms and luxury goods smuggling, and a ban on the export of jet fuel to North Korea;
  • Expanding designations to include more North Korean banks, government agencies, and senior officials involved in violating the resolutions; and
  • Prohibiting the use of North Korean forced labor.

With the exception of the last item, the text meets or exceeds these expectations. It’s not just orders of magnitude stronger than the resolutions that preceded it. If enforced as written, it would put North Korea into something like international financial receivership. The key provisions:

Financial Sanctions. The single strongest provision in the resolution — or any other resolution, or any other sanctions authority, anywhere — is a ban on any bank maintaining a correspondent account for a North Korean financial institution, except with the approval of the 1718 Committee. Member states are required to close North Korean bank branches, joint ventures, and correspondent accounts within 90 days. The practical effect of this will be to destroy North Korea’s banks, and make the regime entirely reliant on foreign banks (which aligns well with NKSPEA section 208(d)). Because foreign banks are more likely to rely on access to the U.S. financial system than North Korean banks, this will certainly freeze a great deal of North Korean money in foreign accounts. It will improve compliance with U.N. sanctions by driving what North Korean cash remains into the international financial system, where banks will be more likely to report suspicious transactions to the U.S. Treasury Department.

Member states are also required to close any North Korean bank accounts and branches if they have reasonable grounds to believe that they could contribute to violations of the U.N.’s sanctions against North Korea.

These provisions go well beyond my expectations. They will have a far greater effect than my own more modest proposal, the mandatory reporting of North Korean accounts and property (although the two ideas would have been complementary). Most reporters who’ve seen leaked drafts missed the significance of this, but it’s probably the single most devastating provision. It will effectively sever much of North Korea’s access to the global financial system. And because section 104(c) of the NKSPEA mirrors it, the Treasury Department has an effective enforcement mechanism that it’s required to use.

U.S. support for this provision is also a strong indication that in July, when the Treasury Department must decide whether to declare North Korea a jurisdiction of primary money laundering concern pursuant to section 201 of the NKSPEA, it is likely to answer in the affirmative. After all, if North Korean banks are supposed to lose their correspondent relationships, there’s no policy reason preventing the Treasury Department from imposing equal or lesser special measures under Section 311 of the Patriot Act. This will be a more powerful blow to Pyongyang than Banco Delta Asia ever was, by a mile.

The addition of U.N. sanctions to the NKSPEA will help close a key potential loophole. Although North Korea continues to rely heavily on the dollar system, it has almost certainly tried to use other convertible currencies — the yen, the pound, the Swiss Franc, the Canadian Dollar, the Hong Kong Dollar, the Singapore Dollar, the Australian Dollar — to evade the sanctions. U.N. sanctions will force the regulators of these currencies to freeze suspicious North Korean transactions, and that will add pressure to China, Russia, and other states to comply.

The text expands the financial due diligence of UNSCR 2094, paragraph 11, to include transactions in gold, including North Korea’s use of gold couriers.

Member states must freeze any assets of the North Korean government or Worker’s Party that they determine are associated with North Korea’s WMD programs or other prohibited activities. In my view, the latter clause creates too much wriggle room. It advances the asset freeze provisions little over previous resolutions, and will be subject to creative interpretation or willful blindness. There are also diplomatic and humanitarian exceptions.

The text also expands the ban on public financial support for trade with North Korea to include public or private support for trade with North Korea. Presumably, this is aimed at Kaesong, even if only to give the South Koreans a fig leaf to say that Kaesong didn’t violate the resolutions before, but violates them now. It was likely written into the resolution with Seoul’s consent, and will bind future South Korean governments after Park Geun-hye leaves office. It’s yet another nail in the coffin of the Sunshine Policy.

The early signs are also good for China’s compliance with the sanctions. Here is the latest evidence of that:

Chinese banks in the northern border city of Dandong have suspended the transfer of the yuan currency to North Korean banks, Chinese financial sector officials told Yonhap News Agency on Wednesday. [….]

Employees of the Dandong branch offices of China’s top four state-owned banks, including Agricultural Bank of China and Industrial and Commercial Bank of China, as well as six commercial banks such as China Merchants Bank, told Yonhap that the suspension came after “orders” from their headquarters.

Since North Korea’s third nuclear test in 2013, the Dandong branches of the Chinese banks have halted the transfer of U.S. dollars to North Korean banks. An employee of the Dandong branch of the Agricultural Bank of China said the order came down after North Korea’s fourth nuclear test in January. [Yonhap]

This conflicts with previous (and improbable) reports that the Chinese government ordered its banks to freeze North Korean accounts in December.

Yes, China will be tempted to cheat when things start to cool down, but section 104 of the NKSPEA will hover over the Chinese banks like the Banco Delta Asia measures did before. No sanctions regime is completely airtight, nor does one have to be airtight to work. If Treasury shows a willingness to (a) demand that China enforce the sanctions against small banks and non-bank institutions, or (b) impose unilateral sanctions on entities that cheat, the new sanctions can work well enough to present Kim Jong-un’s generals with an existential decision before the Ides of May.

Cargo Inspections & Shipping. As has been widely reported, all cargo to and from North Korea — or whose shipment was directly or indirectly brokered by North Koreans — will be subject to inspection. Critically for China, this includes cargo that’s merely transiting through the member state’s territory, as was the case for many of North Korea’s recent shipments of arms, WMD-related material, and luxury goods. This should complicate North Korea’s use of Chinese ports and airports to transship banned cargo, while Chinese authorities look the other way.

The new provision complements section 205 of the NKSPEA, which blacklists third-country ports that fail to inspect North Korean cargo (think Dandong and Dalian) and subjects cargo coming from those ports to increased U.S. Customs inspections. (Think of it as the trade analogue of Section 311 of the Patriot Act, a secondary sanction against ports that have insufficient compliance programs.)

The initial signs are good. According to a Yonhap report from last week, “A Chinese businessman here in Dandong said his recent request for a North Korean ship to enter the seaport in the Chinese city has been rejected by port authorities,” as part of a broader ban on North Korean ships. If true, this would exceed the requirement of the UNSC provision, and might reflect either that (a) North Korean captains refuse to let Chinese Customs inspect their cargo, (b) that Chinese authorities simply don’t have enough Customs officers to do the inspections, and prefer to turn North Korean ships away, or (c) the in terrorem effect of NKSPEA section 205 is causing port authorities to decline North Korean port calls. Historically, China has made early shows of compliance, only to relax its compliance later.

Member states may not charter ships or aircraft to North Korea (as was the case with the Bangkok arms shipment, aboard a chartered Ukrainian Il-76), or register North Korean ships except for “livelihood” purposes (and not to generate revenue). This is a loophole that appears in several places in the resolution. While it’s essential to include enough flexibility to avoid starving the North Korean people, there is the clear potential for China and other states to abuse this exception. (See this Wall Street Journal column for a critical analysis that focuses on this point in particular.)

The resolution requires member states to prohibit their nationals from reflagging or registering North Korean ships (such as with the M/V Dawnlight), or from owning, leasing, or operating North Korean ships, except for “livelihood” purposes. Ships that are owned or controlled by North Korea, but registered (= reflagged) by other member states must be deregistered.

States must deny flights permission to take off, land, or overfly their territories if they have reasonable grounds to believe that a flight contains contraband (multiple North Korean arms shipments have overflown, or landed in, Chinese territory).

Member states may not allow ships owned or controlled by U.N.-designated entities, or which a state has reasonable grounds to believe contain contraband, into their ports, except for emergency purposes, or for humanitarian purposes after first notifying the 1718 Committee. The most obvious example is the North Korean shipper Ocean Maritime Management (OMM), a notorious arms smuggler. If an OMM ship enters a member state’s port, the state is required to seize the vessel. (The resolution helpfully clarifies that vessels are “economic resources” subject to seizure). This is aimed at Russia and China in particular, which continue to allow OMM ships to dock in their ports, but also at countries like Mexico, which was hesitant to seize an OMM ship that ran aground in one of its ports. The resolution specifically calls out OMM and designates a series of its ships by IMO number.

One disappointment: the resolution still does not authorize inspections on the high seas (such as with the M/V Light and the Kang Nam I).

Jet Fuel. Last week, I called for a ban on the sale of jet fuel to North Korea, but opposed a broader ban on the sale of other refined petroleum products that are used to grow and transport food. I’m glad to see that the jet fuel ban (and a ban on the transfer of rocket fuel) made it into the final text. There is a humanitarian exception for verified essential humanitarian needs.

At Russia’s insistence, a narrow exception was added, allowing the sale of jet fuel outside North Korea for use by civilian aircraft. The language isn’t entirely clear, but seems intended to create an exception for foreign-flagged airliners to take up Air Koryo’s routes. This would be fine if it’s enforced as intended.

Vislog UN 23 feb 2016

[You’re welcome, United Nations!]

Counterproliferation. The resolution expands the list of proliferation-sensitive items that may not be sold to North Korea, and requires states to ban the import or export to or from North Korea of any materiel that could contribute to North Korea’s WMD programs.

Luxury Goods. The text disappoints by adding only marginally to the list of items defined as luxury goods, leaving that list far shorter than either its U.S. or EU counterpart lists. It may, however, make up for this shortcoming by giving the 1718 Committee 15 days to review the list of items designated per Paragraph 8 of UNSCR 1718 and add to that list as necessary. The items described in that paragraph include weapons, proliferation- and WMD-related materials, and luxury goods. There is a strong focus on items that North Korea might want to import for the Masikryeong Ski Resort. It clarifies, however, that the list is not exclusive. (Note that this paragraph’s reach and effectiveness actually broadened in the version approved by Russia.)

Ban on Mineral Exports. Bans the purchase or transfer from North Korea of coal, iron, or iron ore, except for “livelihood” purposes, and except for coal originating outside North Korea shipped through Rason. (Interestingly, Russia appears to have insisted on this exception, which would seem to benefit China the most, suggesting Russo-Chinese collusion.) The text also bans the purchase or transfer of gold, titanium ore, vanadium ore, or rare earth minerals from North Korea, without exception. 

According to one recent report, China has begun implementing the ban on purchases of North Korean coal, “which account for 42.3 percent of the China-North Korea trade,” but may resume the trade in May. The same report claims that “a Chinese businessman attempted to remit cash to the North via a Chinese bank in Shenyang, Liaoning Province to pay for North Korean iron ores but was informed that he was not allowed to do so.”

Arms Embargo. Member states are urged to identify North Korean front companies and shell companies, and report them to the Panel of Experts for designation. The draft closes the loophole allowing North Korea to import light weapons and small arms. Now, no imports of arms and related materiel are allowed. After the seizure of the Chong Chon Gang in Panama, Cuba denied selling arms to North Korea and claimed that these were merely old weapons being sent to North Korea for refurbishment.

The draft clarifies that transfers to and from North Korea for refurbishment and repair also violate the arms embargo (this was Cuba’s excuse for the Chong Chon Gang incident, although the shipment was obviously a sale by Cuba to North Korea). It also bans the transfer of dual-use materials (those with both military and civilian uses) to North Korea, except for exclusively humanitarian purposes. The provision contains an “exclusively humanitarian” exception, but to invoke the exception, the exporter must first notify the 1718 Committee of the export and submit a description of the exporter’s safeguards to prevent the export from being used for other purposes.

Mandatory expulsion of North Korean proliferators & arms dealers. The draft accuses North Korean diplomats of abusing the Vienna Convention to violate the Security Council’s resolutions. If a state determines that a specific North Korean diplomat or other representative — or any other foreign national — is working on behalf of a U.N.-designated entity, or in violation of the resolutions, the state must expel that person.

The resolution specifically mentions OMM, a notorious arms smuggler, and requires the many states (Brazil, Russia, China, and others) that, until recently, still hosted OMM officers and employees, to expel them.

Member states must expel all representatives of designated entities and may not provide specialized training in disciplines that could contributed to WMD programs. This may be a reaction to Russia’s hosting of scientists employed by North Korea’s General Bureau of Atomic Energy, or to the transfer of technology to North Korea that may have been used to weaponize anthrax. A new ban on advanced computer simulation could affect the Pyongyang University of Science and Technology. Joint ventures with designated entities, such as the North Korean “space” agency NADA, are also banned.

Both Uganda and Zimbabwe have employed North Koreans to train their police and military, respectively. The new resolution will ban the use of North Korean trainers and advisors.

Human RightsWe knew from the beginning that China and Russia would never let strong human rights language into the resolution. It does not mention human rights specifically, other than expressing deep concern about the grave hardship that the North Korean people are subjected to. The draft correctly calls out Kim Jong-un for diverting resources away from the North Korean people to his weapons programs. It underlines that the new resolution does not target the people of North Korea, and incorporates a number of exemptions to avoid affecting them.

Its most disappointing omission is its failure to ban North Korea’s use of forced labor to earn hard currency, although the financial sanctions described above, combined with the pressure of the NKSPEA, which does focus on forced labor, may cause users of North Korean forced labor to rethink those arrangements. After all, if the cash Pyongyang earns from expatriate labor could be used for WMD programs, member states must freeze that cash.

Missiles & “Satellites.” North Korea has offered the ridiculous defense that its missile launches — invariably timed within weeks of nuclear weapons tests — are merely satellite or space launches. The draft clarifies that satellite and space launches are prohibited tests of ballistic missile technology.

Designations. Another disappointment — neither Kim Jong-un, nor his sister, nor his top officials or money launderers are mentioned. But on the positive side, there are mandates for member states to file compliance reports, and for the 1718 Committee to step up its game and designate aliases, front companies, persons, and entities that violate the sanctions. Another bad sign is that, at Russia’s apparent objection, Jang Song-chol, a Russia-based representative of another notorious proliferator, the Korea Mining and Development Trading Corporation (KOMID), was dropped from the list of designated individuals. We’ll see if the Russians expel him, and whether KOMID’s activities in Russia will continue.

In conclusion, let’s give credit to someone who has earned it — Samantha Power, and her staff. She didn’t get everything she wanted — or everything I wanted — but she obviously got most of it, and what she got was very substantial. She seized the moment and the leverage Kim Jong-un gave her and made the most of it. The text of the resolution reflects obvious understanding of where sanctions have failed before, and needed strengthening. Power has proven herself to be as tough and skillful a negotiator as John Bolton, the architect of UNSCR 1695 and 1718. She extracted a strong text from the Russians and the Chinese, who are infamous for their obstructionism. This resolution ought to be counted as one of the greatest achievements of her still-young career. Her performance during this crisis proves that an ounce of character is worth a ton of experience.

Now, it will be up to the National Security Staff to empower the Treasury Department to put teeth into this, and it will be up to the State Department to urge other states, particularly in Europe, Africa, and the Middle East, to enforce it. If the administration does those things, the short-term outcome will be increased tensions and provocations, but the longer-term consequence will be to undermine Kim Jong-un’s consolidation of power, discredit him with his elites, and quite possibly cost him his life.

Or, he can negotiate with us in good faith, for once.

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How the new U.N. and U.S. sanctions on N. Korea can complement each other

It would be futile to post a detailed analysis of the U.N. Security Council’s draft North Korea sanctions resolution before the Security Council approves it. For now, it should suffice to say that the text falls short of some of my expectations, but exceeds far more of them.

American liberals often default to the view that unilateral U.S. sanctions are useless or counterproductive, and that only the U.N. can give sanctions global reach and legitimacy. American conservatives often default to the view that the U.S. should act regardless of the U.N., which lacks the political will and means to enforce its writs. Both views are about half right and half wrong. U.N. and U.S. sanctions are both essential elements of an effective sanctions regime; neither can be effective without the other.

The U.S. levied nominally strong sanctions against Cuba, but without the cooperation of Latin America, Europe, and Canada, Cuba was able to limp along and resist major reforms. Plenty of European banks were willing to cheat by stripping any data out of their wire transfer records, helping Cuba to use the dollar system to a limited degree. Others were content to handle Cuban transactions in other convertible currencies, including the Euro, the Canadian Dollar, and the Swiss Franc.

Until now, North Korea sanctions have been an example of the opposite. U.N. sanctions were reasonably strong, but many countries — particularly China and Russia — were willing to violate them flagrantly. Governments like China, Russia, Syria, and Angola don’t care about the U.N.’s writs until violating those writs comes with a cost. That’s where America’s stewardship of the global financial system becomes essential.

With the enactment of the North Korea Sanctions and Policy Enhancement Act (NKSPEA), the Treasury Department becomes an effective enforcer of the U.N.’s resolutions. With the approval of the U.N.’s new resolution, Treasury will gain new partners among the financial regulators of Europe, Japan, and other responsible nations that issue convertible currencies.

Without even reading the new resolution, it would be easy to say that it still won’t work; after all, most things that haven’t worked in the past won’t work in the future. So will it work? The New York Times is characteristically skeptical, and stacks the deck in that direction by surveying “analysts in South Korea and China,” two countries whose interests have sharply diverged. One criticism the Times cites is that the resolution does not shut down all cross-border trade with China, but this would be a terrible mistake. It would empty the markets that ordinary North Koreans depend on for their livelihoods, and would cripple the jangmadang market economy — the only independent institution in North Korea that’s capable of resisting the state’s power.

It also criticized the text’s failure to cut off all supplies of petroleum products, something I strongly opposed here for similar, humanitarian-based reasons.

More on point is the criticism of this Wall Street Journal column, that the new U.N. resolution’s “livelihood” loopholes will be easy to exploit and abuse. Keeping the intent of those exceptions as narrow as they were meant to be will require aggressive Treasury Department enforcement.

Why did China agree? My obvious bias is to say that the sanctions law I helped draft is at least one reason for this. There is some evidence to support that, but other reasons probably played important roles, too. THAAD was probably one of them. For some reason, China feels that an anti-missile defensive system is a dire threat to its interests (the interest being blackmail and hegemony). 

The North’s missile launch also embarrassed Beijing, discredited its strategies, and shifted its policy calculus:

The Wall Street Journal cited the unidentified American official as saying that the North’s Feb. 7 rocket launch was a “turning point in the U.S.-China negotiations” over how strongly to punish the provocative regime for the Jan. 6 nuclear test. [Yonhap]

One American official said that a turning point in the U.S.-China negotiations was when North Korea test-launched a ballistic missile in early February, disregarding international concern over its earlier test Jan. 6 of what it said was a hydrogen bomb. The U.S. and other countries said the blast wasn’t powerful enough to have been a hydrogen bomb. [WSJ]

“The problem is, Pyongyang made a mistake in its first step in developing nuclear weapons. Now the nuclear issue has been pulling China deeper into the mire,” the state-run Global Times newspaper said in an editorial.

“We must determine which scenario hurts China more – either North Korea successfully develops nuclear weapons and prompts a strong reaction from the U.S., Japan and South Korea, or China has a showdown with North Korea by agreeing to the strictest sanctions, but that may lead to other geopolitical consequences,” the editorial reads. [Yonhap]

On January 28th, as Beijing was weighing the costs and benefits of supporting new sanctions, the Senate Foreign Relations Committee cleared the last major legislative hurdle to a tough new U.S. sanctions law by agreeing on a compromise version of the NKSPEA. By early February, columns and editorials in America’s major newspapers were making it clear that this version would impose secondary sanctions on Chinese banks and businesses. A government as sensitive to its economy as China’s must have realized how much it stood to lose. In the end, China values its economic relationships with the U.S. more than it values its political relationship with North Korea.

This time, then, we will have something that we never had before — alignment and synergy between a tough U.S. statute and a tough U.N. Security Council resolution. If the U.S., Japan, and South Korea maintain the political will to enforce these sanctions, the sanctions will be sufficient to put Pyongyang under pressure equal to, or greater than, the pressure that forced Iran to make a deal.

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Hey, China, let’s make a deal about North Korea. You’re going to love it.

Good morning, Vice-Minister Chen. I hope you enjoyed sampling our great country’s authentic cuisine at lunch today. If not, I keep a bottle of Pepto in my desk. As you know, the new Trump Administration is all about cutting government spending, although we know how to invest, too.  The neon signage and gold-leaf bathroom fixtures have been a yuuge morale boost here at Foggy Bottom. And yes, those are real diamonds on my pinkie ring. That was my annual bonus for giving the State Department the class it sorely needed. They love all the changes around here. They tell me so every time I ask them.

The new President, my boss and former client, certainly has made some unconventional personnel selections, but hey, who am I to complain? This is a nice change of pace from schmoozing those goombahs on the Gaming Commission, staring down those sanitation union goons, and haggling settlement agreements with slip-and-fall sharks.Screen Shot 2016-02-24 at 7.26.29 AM

These guys who work for me now may lack in style, but we’ve come to understand each other a little better. A few of them are pretty smart, and for a guy who graduated from the night program at Thomas Cooley, I think I surprised them with what a quick study I am. They’ve schooled me on a few things, and I think I can translate our differences into plain English, which is the only kind I speak. I want to get down to brass tacks on North Korea and close a huge deal. It’s going to be a win-win for you, for me, and for Korea. You’re going to love it, I promise. I won’t even ask you to pay for it.

Let’s start with the elephant in the room. Our economy isn’t great, but at least it’s recovering. Your economy is terrible, and it’s going to stay terrible at least as long as Japan’s did. Your stock market crashed last year because for years, you ignored some deep structural flaws in your economy. For all those years, you made policy decisions that seemed “safe.” In your workplace, it isn’t such a good idea to point out that the safe decisions the boss supports are covering up big problems. It’s so much safer to just go along and keep your head down. But unsustainable trends eventually end. And when they do, the longer they’ve gone on, the more likely they are to end very badly. Eventually, the big shots will come looking for those who allowed the crisis to build. And I don’t have to tell you what a bitch accountability can be in China.

You could say all of this about your North Korea policy, too. It’s a crisis we’ve both spackled over for years while the termites ate away at the beams and the rats ate the insulation off the wires. Their system is unsustainable. It might even be unstable. The little guys know the system is screwing them, just like the little guys in your country knew they were getting screwed in the 1930s. They see the rich getting richer and they hate it, but they have to hold their hate inside. The smart ones keep their heads down and scrape together whatever dough they can on the side, on the down-low. At least that gets them off the state’s dole, which they know they can’t count on anymore. They’re also getting wise about the outside world, and how good we have things compared to them. But they can’t protest it, they can’t vote out the people who are keeping them down, and it’s almost impossible for them to escape, so their anger just builds. 

A few years ago, a lot of people starved there. I used to ask myself why they didn’t overthrow that government, but then, the last thing a starving man thinks about is wasting energy he doesn’t have to fight the system. Plus, over there, everyone rats everyone else out. 

Mao got a lot of things wrong, but one thing he got right is that hunger doesn’t bring down a system, envy does. What makes people overthrow governments is figuring out that a few people are getting rich and keeping them down. A lot of us think the same thing here, as a matter of fact, but every two years, we get an engraved invitation to line up and overthrow our government at the polls. Is this a great country or what? Maybe that’s not your thing, but it’s a lot cleaner without the guns and pitchforks.

We know there are limits to how much pressure any closed container can hold. Eventually, the container explodes. Ever notice how these things tend to start with the little stuff, and aren’t really about politics when they first start? But once they do start, they spread fast. Then, things tend to get political. Of course, people have been saying this about North Korea for a long time. It hasn’t collapsed, but don’t tell me it hasn’t decayed.

We’ve had it with this punk, the South Koreans have had it with this punk, and we’re ready to give him and his whole system a good shove. I gotta hand it to him for getting this far. He cracked a lotta heads. But being a tough punk doesn’t make you smart. His top guys are all scared of him, but that doesn’t mean they respect him, and they sure as hell don’t trust him. Deep down, you don’t think he’s so smart, and neither do we. His caporegimes and consigliori aren’t going to simply wait their turn to get whacked, along with their families. Eventually, they’ll have no choice but to whack him first. Wouldn’t you like to get ahead of that?

Allow me to be blunt about something else — we’ve had it with you, too. We know your game. Every time this fat calzone does something that pisses us off, you rope-a-dope us by voting for some U.N. resolution, and then turn right around and break it to prop this guy up. Even John Kerry, who has to be the biggest freier of all those Harvard feinshmeckers, finally got wise to you. Knowing when you’re being played isn’t the kind of smarts they teach at Harvard, but I’ve seen a hundred guys try it with the Gaming Commission. No one in this town is going to be strung along by you anymore — not Congress, and not me. The more nukes the North Koreans get, the more likely they are to sell them. We’re not going to let this get to the point where they can drive nukes to Atlantic City in a submarine or a shipping container.

So what can we do about it? For one thing, payback. You know how much you hated it when we sold Taiwan all those PAC-3 Patriot missiles and Aegis cruisers. I wanted to sell them gas centrifuges and krytrons, but the pinstripes here almost passed out and begged me not to. We tabled that one, at least for the time being, but I gotta tell you, just between us, the idea of Taiwan, Japan, and South Korea having nukes doesn’t exactly keep me awake at night.

OK, now, you really should take me up on that Pepto. No? You sure? OK, if you say so.

Maybe this will relax you a little — we’re not going to invade North Korea. All they have up there is coal and meth, and if we wanted more of those things, we’d invade Wyoming! Besides, why play to an adversary’s strength when they have so many weaknesses we can exploit far more cheaply? Even the geniuses who let North Korean go nuclear in the first place can see what those weaknesses are — money and legitimacy. My guys here think they can use those weaknesses to put a lot of pressure on Kim Jong-un, and maybe even overthrow him without firing a shot. 

You’re already seeing that between the South Koreans and our banking wizards, we can do some damage to those guys. Your bankers are his bag men. They hold the money that buys his swag, pays his army, and pays the goons that keep everyone in line. They’ve started freezing his accounts because they know we can do some major damage to them. This would be bad for us both, but it would be worse for you — much worse. Your banks aren’t looking so solid these days. Even the collapse of a small bank in China is going to mean a lot of angry depositors. Things could get ugly for you. There could be a ripple effect, even a panic. 

We can stir things up inside North Korea, too. For a long time, that government has invested a lot of scratch in keeping its people ignorant and keeping the news out. You can argue about what those people would do with the truth, but the government over there is obviously pretty scared about that prospect. Things there aren’t as calm and content as I used to think they were. The North Koreans aren’t robots. Just imagine how things would change if we found ways to give them cell phones, smartphones, and the internet. When that happens, well, the possibilities are endless

You can’t want this to get chaotic. That’s a dead end for you. Sure, violence might allow Kim Jong-un to survive in the short term, but there are a lot of guns over there, and parts of the army are corrupt and demoralized. In the long run, if he takes the violent path, you’ll have another Syria right on your border. The more brutal Kim Jong-un is, the more outrage there will be, and the more of it will stick to you. We’ll keep bringing it to the U.N. until you agree to help us disarm him peacefully.

Now, look — just take the Pepto. OK, feel better yet? Good. This is the part you’re going to love. We can avoid all of that unpleasantness. Let’s close a deal instead.

You want this guy Kim Jong-un out, but you’re afraid things could get out of hand. But the surest way for things to get out of hand is to just wait for them to play out. We want him out, too. So do the South Koreans and the Japanese. If we join forces to cut off the money and the swag, we both know he can’t last. All you have to do is stop buying his coal and minerals, and follow the U.N. sanctions for a change. Inspect his cargo and make sure nothing illegal gets through. Freeze the bank accounts you know are dirty. We can share information about the iffy ones. Maybe Kim Jong-un will take the hint and deal. Or maybe, we’ll just arrange some friendly meetings with some of those North Korean generals you’ve been schmoozing, who want to live to see their great-grandchildren. Surely there are some reasonable men among them we can do business with. 

Play ball with us, and there’s something in it for you, too. We can keep Japan and Korea from going nuclear. And if you don’t want the U.S. Air Force building new runways and setting up THAADs all over North Korea, I’m sure we can work something out.

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Obama Administration’s “peace treaty” grasp explains its lax enforcement of N. Korea sanctions

For years, friends have asked me why the Obama Administration hasn’t made a serious effort to enforce sanctions against North Korea when we know they’ve worked before. I’ve resisted most temptations to psychoanalyze or speculate, but when pressed, I’ve supposed that the administration might have thought that a deal was still possible, however long the odds against it. With this revelation, however, everything suddenly makes sense. 

Days before North Korea’s latest nuclear-bomb test, the Obama administration secretly agreed to talks to try to formally end the Korean War, dropping a longstanding condition that Pyongyang first take steps to curtail its nuclear arsenal.

Instead the U.S. called for North Korea’s atomic-weapons program to be simply part of the talks. Pyongyang declined the counter-proposal, according to U.S. officials familiar with the events. Its nuclear test on Jan. 6 ended the diplomatic gambit.

The episode, in an exchange at the United Nations, was one of several unsuccessful attempts that American officials say they made to discuss denuclearization with North Korea during President Barack Obama’s second term while also negotiating with Iran over its nuclear program. [Wall Street Journal, Alastair Gale & Carol E. Lee]

Despite an uninterrupted series of North Korean outrages, the administration held off because it really believed that appeasement was possible, right up to the end, when Kim Jong-un pushed the plungerReuters puts a slightly different spin on the story …

The United States rejected a North Korean proposal to discuss a peace treaty to formally end the Korean War because it did not address denuclearization on the peninsula, the State Department said on Sunday. [Reuters]

… but it really amounts to the same thing.

“We carefully considered their proposal, and made clear that denuclearization had to be part of any such discussion. The North rejected our response,” he said. “Our response to the NK proposal was consistent with our longstanding focus on denuclearization.”

That is, the White House and Foggy Bottom were ready to enter into talks with Pyongyang with or without any “precondition that North Korea” — which has cheated on multiple deals with past Presidents of both parties — “first take steps that show a willingness to give up its nuclear program.”

In a sense, this isn’t anything new; we saw another report similar to this one two years ago. But it should still shock us — first, because those 2014 reports didn’t shock us enough; second, because of all that has happened since then; and third, because the talks came amid reports of a nuclear test, which suggests that our diplomats offered Kim Jong-un nuclear blackmail to buy him out of the headlines.

In practice, that would have meant giving Pyongyang valuable concessions before Pyongyang took a single step toward disarming. Those concessions might not have been written — the State Department has learned not to reduce its deals with North Korea to writing in any detail. The concessions might not even have been expressed. But whether there was a stated promise or not, to keep the deal from blowing up as it packed its boxes, the administration would have gone soft on sanctions, on calls for accountability over human rights, and on accountability for its cyberattacks and terrorism. Indeed, it’s almost certain that the North Koreans won valuable sanctions relief simply by a combination of threats and talks, by giving our diplomats the false hope that if we appeased them a little longer, there might be peace in our time.

Is our State Department really that gullible? Does it really believe that a regime that can’t abide by an Armistice, five U.N. Security Council Resolutions, two agreed frameworks, a Leap Day deal, the Nuclear Non-Proliferation Treaty, or the Universal Declaration of Human Rights would abide by yet another piece of paper, assuming one were ever signed? For that matter, who believes that this administration could have concluded a peace treaty in its remaining months in office? Not all Korea watchers seem fully capable of believing that, and several alternative theories have emerged.

1. We talk to the North Koreans all the time. This is no big deal.

2. The State Department outsourced its North Korea policy to a noisy little cabal of rabid North Korean sympathizers, fringe kooks from Oakland, and Code Pink, who are almost the only Americans who are calling for a peace treaty with North Korea (I said “almost”). But who would give them the time of day or entertain their views?

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[Via KANCC]

Christine Ahn is in the center, the white-haired man to her right is KANCC President Yoon Kil-Sang, and the man at the head of the table is Robert King, your Special Envoy for Human Rights in North Korea. Of course, “meeting” and “influencing” are two different things, but who would have thought that a man in King’s position would meet with two leading North Korean human rights denialists? Still, as disgraceful as this is, it seems to be a partial explanation at best.

3. David Maxwell hypothesizes that the State Department (despite all outward appearances) is deviously clever and made this offer to discredit calls for a peace treaty. If so, mission accomplished, although it seems like a big political risk to take to appease a few fringe kooks during an election year, despite the lack of support for such an endeavor within the U.S. political mainstream, among our allies, or in Congress. After all, any fool knows that North Korea can’t survive in a state of peace with American and South Korea, right? Could our State Department really be so ignorant about North Korea? Well, just watch their A-team at work before a congressional subcommittee before you answer that.

4. My favorite theory is that President Obama wanted a deal to cover his exit, just like George W. Bush did before him. As these talks were happening, there were already published rumors of a nuke test. Japan and South Korea also seem to have expected a test. This was the administration’s last-gasp offer of concessions to prevent an election-year test and the utter collapse of its North Korea policy, whatever that policy was. In retrospect, what it really looks like is an offer to pay nuclear blackmail.

Kim Jong-un was a fool to walk away from State’s offer. His father made and broke agreements to denuclearize for years, reaping valuable concessions from lame duck administrations in exchange for lies and empty gestures. Inevitably, and as long as the “peace process” survived, Pyongyang could have secured our silence and abstention on its crimes against humanity, the cancelation of military exercises, lax sanctions enforcement, and discussions about the withdrawal of U.S. forces. IAEA inspectors would have come and gone with Kim Jong-un’s mood swings, but there had never been real progress toward disarmament before. What person of any common sense or judgment thinks things would have ended any differently this time?

Related thoughts from Gordon Chang and Claudia Rosett; other reports via Yonhap and the Joongang Ilbo.

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Will Seoul try to kick Pyongyang out of the U.N.?

South Korea’s U.N. ambassador, Oh Joon, raised the question during a meeting Monday of the U.N. Security Council, saying the North pledged to accept and to uphold the purposes and principles of the U.N. as laid out in its charter when it joined the U.N. in 1991, together with South Korea.

“Twenty-five years ago, the DPRK solemnly pledged to comply with the obligations of the U.N. Charter as a new member, but during the past decade, the DPRK has persistently violated all Security Council resolutions on the DPRK,” Oh said, according to video footage of the meeting. He used the initials for North Korea’s official name, the Democratic People’s Republic of Korea.

“This is not only a direct challenge to the authority of the Security Council, but also a contradiction to both the letter and spirit of the pledge it made. This breach of obligation by the DPRK calls into question its qualification as a member of the United Nations,” he said.

[….]

“By repeatedly violating Security Council resolutions, the DPRK has shown contempt and disregard for the functions and powers of the Security Council,” Oh said. [Yonhap]

For reasons I discussed in greater at this post, expulsion seems both warranted and unlikely, and should not affect humanitarian aid programs. My, my … things certainly do seem to have changed in the Blue House, don’t they?

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What the U.N.’s new North Korea sanctions resolution should (and should not) do.

Yonhap reports that the U.S. and China have made progress toward an agreement on a draft U.N. Security Council resolution. Although we’ve seen few hints about exactly what sanctions China is willing to sign up for — much less enforce — China is paying lip service to the notion that North Korea must pay a “necessary price” for its behavior. Has Xi Jinping relented in his unprecedented stubbornness, or was it always China’s plan to relent after stalling us, in the hope that with time, the pressure on it would subside? But the pressure has built, not subsided, and the Washington Post‘s Simon Denyer sees signs that this pressure, including the deployment of the THAAD missile defense system, may be causing China to re-think its “paternal benevolence” toward North Korea.

New sanctions legislation may have also played a role, and the State Department is already using the threat of secondary sanctions in its talks with China. This threat has deep political backing in Washington. Everyone with a megaphone is in a foul mood toward China — Congress, presidential candidates, Korea scholars, and the editorial pages. In recent weeks, The Washington Post and The New York Times have both called for the President to use new legislation to apply secondary sanctions to North Korea’s Chinese enablers. Here’s hoping we’ll keep that pressure on until China acts responsibly.

This new leverage will be helpful if it gets us to a new U.N. resolution that includes (and enforces!) useful measures, such as —

  • Above all: requiring member states to report North Korean property, accounts, and transactions to the U.N. Panel of Experts;
  • Shipping sanctions prohibiting the provision of insurance, bunkering, and reflagging services to North Korean ships, thus forcing North Korea to rely on foreign ships for its maritime trade;
  • Designating Air Koryo, thus closing off another avenue for North Korean arms and luxury goods smuggling;
  • Expanding designations to include more North Korean banks, government agencies, and senior officials involved in violating the resolutions; and
  • Prohibiting the use of North Korean forced labor.

Would accountability for North Korea’s crimes against humanity be too much to hope for? Probably, but we should keep demanding it — publicly — until China relents, even if it takes years.

Other ideas in circulation cause me more concern that policymakers could lose the plot and take sanctions too far, or in the wrong direction. For example, the U.N. should not (and almost certainly, would not) indiscriminately cut off all trade between China and North Korea. That would be counterproductive, ineffective, and inhumane. Sanctions are meant to retard and punish proliferation and show Pyongyang that defiance is a losing proposition. They can be targeted to defund the state’s military and security forces, force cadres to turn to corruption and smuggling for a living, and by default, shift North Korea’s internal balance of power from the men with guns to those without. If properly targeted and administered, they might even force reforms.

Freezing the regime’s trading companies, hard currency businesses, and offshore slush funds serves this goal; hunger in the provinces does not. On the contrary, circumstantial evidence has long suggested that the regime uses food as a weapon to control its subjects. After all, by any reasonable reckoning, North Korea has more than enough money to feed all of its people, but has willfully chosen not to. Perhaps Pyongyang sees liberation from the state’s rations as a first step toward economic liberation, intellectual liberation, and eventually, political liberation. Perhaps it is, which is why we should catalyze precisely this progression inside North Korea.

That’s why sanctions should avoid attacking the trade networks that support the jangmadang markets that are feeding most North Koreans. When regime-controlled networks also supply these markets, they should be assigned a secondary priority for sanctions targeting, until non-regime-controlled networks are capable of supplanting them.

Fortunately, I’ve seen no serious proposals to impose a trade blockade on North Korea, despite North Koreans’ fears of one. North Koreans may not understand how modern sanctions work. You can hardly blame them for this when hardly anyone in Washington, Seoul, or Brussels does either. But those who don’t live in Chongjin or Sinuiju and think “sanctions” means trade sanctions are stuck in the 80s.

There are, however, serious proposals circulating in South Korea for a fuel blockade against North Korea. Some in Seoul believe that this would cause North Korea’s collapse, although I’m not sure why that’s so. China is opposed to a total fuel cutoff because of its potential “impact on the ordinary North Korean people.” I haven’t lost sight of the humanitarian benefits of the collapse of this regime, but here, I find myself in rare sympathy with China’s position on the basic principle. After that, things get more complicated.

First, I’m not sure that China is still exporting crude oil to North Korea, or that North Korea still has the capacity to refine it (I’d welcome the opinions of informed readers). China does export refined petroleum products, such as gasoline, diesel, jet fuel, and heavy fuel oil to North Korea, some of which is pilfered from state stocks and sold on the black market. All of these products have different impacts on the North Korean economy. To add further to the confusion, China has sometimes omits fuel exports from its official trade statistics. Marcus Noland smells a rat, and I also suspect that China is disinforming us to take pressure off itself.

Proponents of a fuel blockade should remember that gasoline and diesel don’t just fuel military vehicles; they also fuel vehicles used to plant, grow, and transport food. (Although many North Korean farmers still use oxen to plow fields, or use wood-gas-powered trucks to transport food.) Often, the same vehicles are used for both purposes.

Heavy fuel oil is used to heat homes in cities. In small towns and in the country, people heat their homes with coal, charcoal, and firewood. Cutting off fuel oil would make a lot of people cold, and perhaps reinforce their xenophobic hatred of us, but His Corpulency would never freeze.

There is, however, one category of fuel that China should stop selling to North Korea — jet fuel. Cutting off the supply of jet fuel would ground the North Korean Air Force and deny its pilots the flying hours they need to stay ready. It would ground Air Koryo, which is effectively under military control, as the U.N. Panel of Experts has noted. It would improve enforcement of the arms trade and proliferation bans, because Air Koryo is known to have used its fleet of (mostly Il-76) transports to smuggle weapons and other contraband. It would improve enforcement of the luxury goods ban, because Air Koryo passengers carry prohibited luxury goods from China to North Korea on its flights. Finally, it would deny Pyongyang some of the revenue it earns from tourism.

I don’t yield to anyone in my wish for Götterdämmerung in Pyongyang, but let’s keep a few things in mind. First, we must never back the regime into a position where war becomes an acceptable alternative or a necessary deterrent. Pressure on the regime must be steady and firm, but calibrated such that good-faith negotiation is always a safer alternative for Pyongyang than either war or the status quo. The strategy must be to convince Kim Jong-un — or those around him — that time is not on their side, and that the path to survival lies through a negotiated disarmament, peace, and reunification. If it becomes necessary to prevent war, we may even have to make the painful choice to grant safe passage, or some form of amnesty, to people who have committed horrific crimes against their own people.

Second, hard-liners should remember that the same soft-liners who never raised a peep as Pyongyang sanctioned and starved its own people are always waiting to pounce and blame them for starving North Korean babies. It’s unfair and disingenuous, but the world has never been fair. No policy can endure for long without the support of the political mainstream.

More fundamentally, we can’t solve the North Korea crisis without a much more sustained and methodical effort to win over the North Korean people. Sanctions will play an important role in changing North Korea, but as I’ve said all along, they are not a complete policy. South Korea, as the only legitimate Korean government, must also devote serious thought, creativity, technology, and political will to breaking through the digital DMZ, and giving North Koreans the means to speak freely to other Koreans from Paektu-san to Halla-san, and spread a message of rice, peace, and freedom to Koreans north of the DMZ.

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