Introducing the OFK sanctions explainer and law library

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

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U.N. & Obama vacillate as our last chance to stop Kim Jong-un runs out

Have you ever heard the late Christopher Hitchens speak about his visit to North Korea, and how he promised himself that he would not use the “1984” cliche? “Eventually,” Hitchens said, “They make you do it.” I believe it was sometime around 2007 that I made the same promise to myself about the Hans Blix scene in “Team America” when speaking of the U.N.’s response to North Korea’s increasingly brazen behavior. It has become another cliche, but they also make you do it.

This week, Samantha Power went to the Security Council and said this:

The DPRK’s missile tests help it to threaten the territory of even more countries in the region, whether through its land-based missiles or now via its recently tested submarine-launched ballistic missiles.

Once the DPRK has the capability to do so, we know what they intend to do with these missile systems, because they have told us. They are explicit: they intend to arm the systems with nuclear weapons. Kim Jong Un said this himself yesterday, according to the DPRK’s official news agency. [….]

The Security Council must remain unequivocal and united in condemnation of these tests, and we must take action to enforce the words we put on paper – to enforce our resolutions.

Meanwhile, at the State Department, words words words or something. At least the White House made a feint at meeting the test posed by Power’s last clause when it refused to rule out more sanctions, but there aren’t any signs that it means to impose any, either. Contrary to the overwhelming evidence, spokesman Josh Earnest (whose name is an oxymoron) said that the U.S. and China have worked “cooperatively in a coordinated fashion” to “steadily ratchet up” the pressure on North Korea. Unless Earnest really means that we’re cooperating with Beijing because we’ve capitulated to it, this is just more bullshit.

Despite the evidentiary and analytical challenges of calculating North Korea’s trade with China, the best evidence we have suggests that China continues to exploit the “livelihood” loophole for coal and iron ore exports to prop up Kim Jong-un’s rule. Despite the importance of drawing distinctions between trade that feeds the North Korean people and trade that props up the regime, bilateral trade hasn’t fallen much overall, and the small decline may owe more to China’s sagging economy than to its enforcement of sanctions. To make up for the drop in the coal trade and falling prices, China is sending more tourists to North Korea and accepting more slave labor from North Korea, including those formerly employed at Kaesong. Beijing is also engaging in public displays of affection with Pyongyang to show how much more worried it is about South Korean missile defense than it is about North Korean missiles.

China’s recent purchase of North Korean fishing rights was unconscionable and inhumane. It took away a source of food that should fill the markets that feed North Korea’s poor, and replaced it with another source of unrestricted cash for the ruling class in Pyongyang. By doing so, it arguably violated the U.N. Security Council resolutions.

To state what should be obvious, Kim Jong-un is politically invested in his weapons programs and won’t change his behavior unless the world can unite to coerce that change. Evans Revere, a recovering engager whom I probably wouldn’t have cited approvingly a few years ago, is almost certainly correct when he says, “The only way to get North Korea’s attention is to put at risk the one thing that North Korea values more highly than its nuclear weapons. That’s the future existence of the regime.” Revere now concedes that positive incentives haven’t worked on Pyongyang, and with North Korea “rapidly improving its ability to deliver nuclear and other weapons toward specific targets accurately,” we can’t rule out the possibility that it “might seek to use nuclear weapons to blackmail one or more of its neighbors.” Well, yes.

Japan and South Korea are both calling for more sanctions to prevent this outcome, but it’s fairly clear that the Obama administration isn’t pushing for any, and is mostly concerned with avoiding any sort of crisis before it slinks out of town, after having wasted eight critical years. South Korea’s foreign and defense ministers will visit Washington in October to make their case for “specific measures” again. Seoul thinks this may be its last chance to prevent North Korea from reaching nuclear breakout and subjecting it to the slow strangulation of nuclear blackmail, and I suspect that they’re probably right about that. Hopefully, when President Obama met with President Park instead of the President of the Philippines, she made that case forcefully. Nothing less than South Korea’s survival as a democracy depends on it.

With our time quickly running out, the idea of settling for a piece of paper from the U.N. is madness. Although the U.N. statement hints at “significant measures,” a Japanese diplomat is quoted as saying that “many council members supported the idea of further measures,” but “fell short of a consensus.” So presumably, China continues to be unhelpful and obstructionist, the Obama administration continues to be weak and indecisive, and no further resolutions will be forthcoming until Pyongyang does something else, like another nuke test. And perhaps, not even then.

~   ~   ~

As for what sanctions we should impose now, I posted my own wish list in July. It includes:

(1) the designation of North Korean entities, such as Air Koryo, the DPRK Central Bank, and North Korea’s state insurance companies, all of which are facilitating sanctions violations;

(2) the closing of loopholes left over from UNSCR 2270, including the “livelihood” loophole for coal and iron ore exports; and

(3) new measures, including a ban on labor and food exports by North Korea, and a requirement to disclose beneficial ownership by North Korean nationals to the Panel of Experts.

In the case of Air Koryo, there’s no question that it flagrantly violates the luxury goods ban; journalists have tweeted photographs of huge flat screen TVs being loaded aboard its flights. The U.N. Panel of Experts has implicated Air Koryo in the proliferation of SCUD missile parts, and notes that the dual civilian and military use of some of its aircraft could itself constitute a violation of the arms embargo. The Panel of Experts has also noted that Air Koryo holds a number of suspicious debts to recently formed shell companies, implying that Air Koryo is involved in money laundering or sanctions evasion. According to South Korean press reports, Air Koryo is also used to ferry bulk cash to evade U.N. sanctions. 

As for concerns that Air Koryo also engages in legitimate civilian business, I would respond that if Air Koryo were to be designated, third-country airlines would take over its routes, because Pyongyang needs to have air commerce of some kind. The same can be said of North Korea’s financial, shipping, and insurance industries. Pyongyang has repeatedly used all of these state-owned industries for sanctions evasion and proliferation. If those industries were sanctioned and shut down, then third-country airlines, insurers, ships, and banks — which would presumably have more incentives to follow the law — would take up the slack. That would make it much more difficult for Pyongyang to violate U.N. sanctions.

Above all, however, U.N. member states must be willing to use their national laws to impose secondary sanctions on entities — especially Chinese entities — that knowingly help Pyongyang violate U.N. sanctions. This is now a requirement under U.S. law, and I remain concerned that the Obama administration isn’t following it. Without secondary sanctions — and most critically, the strict enforcement of secondary financial sanctions against North Korea’s bank accounts in China and elsewhere — North Korea will find ways around the sanctions, because plenty of Chinese companies will be willing to help it find those ways. Are we serious about global nonproliferation, the security of the world’s most economically vital region, and the protection of the democratic system of our treaty ally in South Korea? I’m searching in vain for any evidence that we are.

~   ~   ~

Update: Stop the presses. Maybe President Park was persuasive after all.

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

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

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

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

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

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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.

~   ~   ~

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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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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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:

Screen Shot 2016-03-14 at 7.06.30 AM

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

Screen Shot 2016-03-14 at 7.05.32 AM

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.

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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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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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At the U.N., China shields Kim Jong-Un from prosecution, but not isolation (updates)

In February, two years will have passed since the U.N. Commission of Inquiry released its historic report on human rights in North Korea, finding “human rights abuses on a scale ‘without parallel in the contemporary world,’ comparable to the atrocities of Nazi Germany.” The bad news is that we’re still just talking about this. The good news is that America, and most of the world, are uniting around the importance of holding Kim Jong-Un accountable for those crimes.

samantha power

[Samantha Power addresses the Security Council on North Korea last year. Via.]

Last December, the U.S., with support from the U.K., France, and Japan, succeeded in having the North Korea’s crimes against humanity added to the U.N. Security Council’s permanent agenda. Today, the U.S. leveraged its presidency of the Security Council to convene a meeting on that subject. There, U.N. Ambassador Samantha Power gave an address whose words lived up to her name. You really should read it in full, but this will give you the flavor of it:

It is not only the blanket denial of enjoyment of freedom of expression and these infernal conditions in the prisoner camps that persist – but all of the grave human rights violations perpetrated by this regime: the summary executions; the use of torture; the decades of enforced disappearances with no accountability, including of citizens from neighboring countries, whose families continue to suffer from not knowing the fate of their loved ones. The list is long, the abuses vast, and the anguish profound.

The systematic human rights violations persist for a simple reason: the North Korean government wants them to. They continue because the State still seeks to intentionally dehumanize, terrorize, and abuse its own people. The regime depends on this climate of fear and violence to maintain its grip on power. [….]

We must continue to take steps that one day will help us hold accountable the individuals responsible for the horrors like those experienced by our guests today. We cannot let immediate obstacles to accountability undermine our determination to document atrocities and identify those who order and carry them out, so that one day the perpetrators will be brought to justice. [….]

Our continuing spotlight on this situation sends a clear message that we hope will reach the North Korean people, tight as the regime’s control over information may be: We will not turn a blind eye to your suffering. You, like all human beings, deserve to be treated with dignity. And we will continue to press for the nightmare you are living to end. To the regime, our message is just as clear: We are documenting your crimes, and one day you will be judged for them. [U.S. Ambassador to the U.N. Samantha Power, Dec. 10, 2015]

I’ve never heard an American diplomat denounce the tyranny in Pyongyang so … powerfully. The language is even more confrontational than that of a former U.S. diplomat who, in 2005, called North Korea “a hellish nightmare.” The former diplomat’s words caused a small uproar then, among politicians and members of the commentariat who thought this was an undiplomatic thing to say to a murderous despot. Shortly thereafter, this diplomat was also nominated to be our U.N. Ambassador. Then, the Junior Senator from Massachusetts opposed his nomination, in part because of the mean things he said about Kim Jong-Il.

Now, the ex-senator is our Secretary of State and the boss of the current U.N. Ambassador. Ambassador Power’s strong words just might give Kim Jong-Un’s minions reason to hesitate in the pursuit of their atrocities, so I hope there won’t be an uproar against her. If there isn’t, a charitable interpretation of the disparate reaction is that the global consensus has shifted.

~   ~   ~

Power also addressed North Korea’s threats against the U.N. itself:

North Korea continues to demonstrate that regimes which flagrantly violate the human rights of their own people almost always show similar disdain for the rules that help ensure our shared security. We see this in the DPRK’s flouting of prohibitions imposed by the Security Council on its nuclear and ballistic missile activities, including by undertaking launches. We see it in the destabilizing rhetoric the DPRK routinely uses to threaten the annihilation of its neighbors. And we see it in the DPRK’s aggressive response, as the High Commissioner has mentioned, to the opening of an office in Seoul by the OHCHR – an office aimed at gathering ongoing information on human rights conditions in the DPRK.

In March of this year, before the OHCHR office opened, the Pyongyang Committee for the Peaceful Unification of Korea – a DPRK-sponsored group, like every other group allowed to exist in the country – said that, “as soon as the nest for an anti-DPRK smear campaign is in place in the South, it will immediately become the first target for our merciless punishment.” In May, a DPRK-controlled newspaper issued a near identical threat. And in June, the regime issued a statement accusing “hostile forces” of using the UN office to “make confrontation under the pretext of protecting human rights.” It is hard to imagine another UN Member State making such threats against a UN office or staff; and we as a Council cannot take them lightly.

This is part of a well-established pattern of intimidation and escalation by the DPRK in response to criticism of its human rights record.

Hmm — a pattern of using threats of violence to intimidate non-combatants for political purposes. Someone should come up with a word for that sort of thing. Also, someone should teach it to Ambassador Power’s State Department colleagues in Washington.

~   ~   ~

China and Russia “worked behind the scenes to block the debate.” They convinced Angola and Venezuela to join them in voting against holding the meeting, but they were outvoted 9 to 4, with two abstentions. Before the meeting, a Chinese Foreign Ministry mouthpiece said, “We have always opposed the involvement of the U.N. Security Council in a country’s human rights issues.” (Has anyone in Beijing read the U.N. Charter? One of its first stated purposes is “promoting and encouraging respect for human rights and for fundamental freedoms for all.”) Power had an answer for this, too:

I would like to address those who believe that what is happening in the DPRK is not a threat to peace and security. I would like to ask whether those countries think that systematic torture, forced starvation, and crimes against humanity are stabilizing or good for international peace and security? I assume they don’t think that. So, could this level of horror be seen as neutral? A level of horror unrivaled elsewhere in the world. Is it neutral – have no effect at all on regional and international peace and security? Really? None? It stretches credulity and it sounds more like cynicism. These arguments – some of which we’ve heard here today – will not go down well in history, particularly when North Korea opens up. For those who have charged double standards, I would ask: where are there in the world conditions like these ones, like the conditions behind the lines of the DPRK? Where? This regime has no double.

The Commission of Inquiry Report itself said that the human rights situation in North Korea “does not have any parallel in the contemporary world.” [….]

No member of this Council, or of the UN, can afford to ignore this situation.

Power also called on “UN Member States, and particularly members of this Council,” to “stop sending people who try to flee” back to North Korea, where “gruesome punishments” await them. Not much doubt about who she meant there.

In the end, China couldn’t shield North Korea from the bad publicity. Instead, it shared it.

~   ~   ~

For most of the journalists covering the meeting, the big headline was the call by Zeid Ra’ad Al Hussein, U.N. High Commissioner for Human Rights, to bring North Korean officials responsible for these crimes before the International Criminal Court.

In a strong speech, Hussein called Pyongyang’s human rights violations dangers to “international peace and security,” and denounced its threats to the U.N.’s Seoul Field Office as “wholly unacceptable.” He spoke of the continued “vulnerabilities” of North Korea’s poor to hunger due to the “systemic failure” of state distribution system, and “social inequalities.” He cited widespread “gender-based violence,” which he attributed to a lack of “awareness that such violence is unacceptable.” (Gloria Steinem, take note.)

Hussein’s call for criminal accountability followed calls by both the U.N. Commission of Inquiry and the Human Rights Council’s Special Rapporteur on North Korean human rights.

~   ~   ~

Depending on your perspective, the consequences of the Commission of Inquiry’s report have been either negligible or profound. True, neither the U.S., Japan, South Korea, or the EU has passed a resolution, imposed effective sanctions, or changed its policies materially. Chinese and Russian obstructionism has prevented the Security Council from acting, and there is little chance that Kim Jong-Un will face justice anytime soon. Our banks are helping His Corpulency fatten himself on foreign delicacies, and he continues to shore up the foundations of his palaces, if only by packing their crawlspaces with the corpses of those who once served his father.

But language like Power’s and Hussein’s can contribute to a crisis of legitimacy for Kim Jong-Un, a leader whose consolidation of power has shown some signs of unsteady progress. The COI report has cost him his international legitimacy by defining him as a mass murderer. It has also given an elucidating context to his nuclear tests, cyberattacks, and other provocations — after all, if he has so little regard for North Korean life, what regard could he possibly have for ours?

In 2012, a large share of the commentariat spoke of him as a Swiss-educated reformer; today, only a few sycophants and lunatics still do. This shift of perceptions will also have policy and financial consequences. It will transform North Korea into an international pariah, isolate it, and deny it access to hard currency it needs to survive. Eventually, the loss of that access will force Pyongyang to choose between reform and extinction.

~   Updates, Dec. 11   ~

In this video, Hussein answers reporters’ questions after the Security Council meeting. In response to Chinese arguments that the UNSC shouldn’t address human rights, Hussein argued, in effect, that North Korea’s defiance of standards is likely to engulf the region in war (and look no further than Syria or Libya for examples of how that could happen). He also made the point that a country that kidnaps the citizens of neighboring countries is a clear threat to international peace and security.

Hussein also reveals that the North Koreans invited him to visit, separately from the invitation they had extended to Ban Ki-Moon. This represents a change of strategy for the North Koreans, who denied or ignored repeated requests by the Commission of Inquiry and the Special Rapporteur to visit. Recently, after a General Assembly resolution called for holding the North’s leaders accountable for their crimes, the Rodong Sinmun called the vote a U.S.-orchestrated plot to use “the non-existent ‘human rights’ issue,” “fabricated with falsified data,” to “discredit the DPRK and ultimately bring down by force of arms the social system the Korean people chose themselves.” Naturally, they threatened to answer this “ill-intended inveterate repugnancy” by building more nukes.

There are still no details on the timing, agenda, or venues, and one wonders if this really will happen. I’ve long feared that the North Koreans would take a (another?) page from the Nazis’ book and “prepare” one of their camps for a guided tour — and later, a propaganda movie — the way the Nazis did with the Danish Red Cross at Theresienstadt. With the ruse successfully completed, the SS sent everyone who appeared in the film to the gas chambers at Auschwitz.

Indeed, despite the consensus that, overall, nothing has improved in North Korea, the Daily NK has reported that conditions do seem to have improved “marginally” for non-political prisoners in some of the “reeducation” camps, because of international scrutiny and the fear of accountability.

“Detailed instructions have been handed down, ordering officials not to torture those in for financial crimes, violence, and even narcotics,” the source added. “However, this is not the case for those in because of political offenses such as watching South Korean TV dramas and other ‘non-socialist’ acts, so beatings and violence against them continue.” [Daily NK]

Obedience to the new guidance appears to be uneven, and this report follows earlier reports that conditions had gotten much worse at one of the reeducation camps, at Cheongo-ri. (None of this concerns the much larger political prison camps, such as Camps 14, 15, or 16.) That’s why the Red Cross shouldn’t settle for anything less than a permanent presence at the camps.

~   ~   ~

I had intended (but forgotten) to mention in yesterday’s post that South Korea was recently chosen to lead the Human Rights Council for a year. Although I’d like to see South Korea amend its National Security Law to decriminalize non-violent speech, by almost any measure, South Korea is a much better choice than some of the other alternatives.

South Korea’s election is an inevitable appointment with history and destiny, but when South Korean officials say nonsensical things like this, I wonder if they’re about to flunk it. On the other hand, according to Special Rapporteur Marzuki Darusman, “It would seem that the government of (South) Korea has geared itself towards the eventuality that accountability will have to be taken within the context of the unification process.”

I guess we’ll see just what the South Koreans are prepared to push for. In the end, South Korea is the only country with a claim to jurisdiction over the entire Korean peninsula, which means it could, in theory, circumvent the Security Council and (with a mandate from the General Assembly) convene an independent international tribunal under its domestic laws. This has actually been done, in Cambodia, also due to Chinese obstructionism. Whether South Korea is prepared to defy China and anger North Korea that way is doubtful today, especially under a Park Geun-Hye presidency.

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Video: N. Korea human rights conference at SAIS, with keynote by Hon. Michael Kirby

On Tuesday, I took a day off from the day job to attend an outstanding conference, organized by the International Bar Association, the Defense Forum Foundation, Robert F. Kennedy Human Rights, the Committee for Human Rights in North Korea, the North Korean Freedom Coalition, and the Johns Hopkins School of Advanced International Studies. Rather than describe it, I’ll just give you a little weekend viewing and post the whole thing.

The first video starts with introductions by Jae Ku of SAIS, and speeches by Sen. Cory Gardner, Amb. Ahn Ho-Young, and Amb. Lee Jong-Hoon. After this, there were five panels:

9:45am-11:15am Panel I: Human Rights in North Korea Today

  • Moderator: Greg Scarlatoiu: Exec. Director, Committee for Human Rights in North Korea (HRNK); 
  • Robert Herman: VP for Regional Programs, Freedom House
  • Amb. Lee Jung-Hoon: Ambassador for Human Rights, Republic of Korea
  • Amb. Robert King: Special Envoy for North Korean Human Rights Issues, State Department
  • John Sifton: Asia Advocacy Director, Human Rights Watch

11:30am-1:00pm Panel II: Sanctions

  • Moderator: Sung-Yoon Lee: Professor, Fletcher School of Law and Diplomacy
  • Frank Jannuzi: President & CEO, The Maureen and Mike Mansfield Foundation
  • Bruce Klingner: Senior Research Fellow, The Heritage Foundation, Asian Studies Center
  • William Newcomb: Former Member, UN Security Council Panel of Experts on DPRK Sanctions
  • Joshua Stanton: One Free Korea

1:00pm-2:00pm LUNCHEON AND KEYNOTE SPEECH: Hon. Michael D. Kirby, Chair, U.N. Commission of Inquiry on Human Rights in the Democratic Republic of North Korea.

Special thanks to Shaquille for taking this photo:


2:00pm-3:30pm Panel III: Accountability for Human Rights Violations

  • Moderator: Roberta Cohen: Non Resident Senior Fellow, Brookings Institution, Committee for Human Rights in North Korea (HRNK)
  • Param-Preet Singh: Senior Counsel, Human Rights Watch, International Justice Program
  • Morse Tan: Associate Professor of Law, Northern Illinois University College of Law
  • David Tolbert: President, International Center for Transitional Justice

3:45pm-5:15pm Panel IV: Indigenous and Cross-Border Activities Aimed at Advancing Human Rights in North Korea

  • Moderator: Suzanne Scholte: President, Defense Forum Foundation
  • Jieun Baek: Fellow, Harvard University, Belfer Center for Science and International Affairs
  • Scott Busby: Deputy Asst. Secretary, State Department, Bureau of Democracy, Human Rights, and Labor
  • Kang Cheol-Hwan: President, North Korea Strategy Center
  • John Fox: Founder, I-Media
  • Kim Seong Min: Founder, Free North Korea Radio

The unsung heroine of the conference was a young woman named Sosseh, who works for the International Bar Association. Sosseh handled the organization, scheduling, and logistics of all of the events, and made it all run like clockwork.

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Must read: Andrea Berger calls for U.N. to sanction N. Korea’s 3d-country enablers

When I was a single man, there was a certain magazine that I only read for the interviews (I swear). Now that I’m an older, married man, I console myself with a certain website I mostly just read for the (satellite) pictures. Much of its commentary consists of echoes in the corridor of a hospice of ideas, of things Selig Harrison might have said in 1993, but here and there one finds something fresh, substantial, and useful, including sanctions expert Andrea Berger’s excellent posts.

Just as I’ve argued that there is much more that the U.S. Treasury Department could do to strengthen U.S. national sanctions, Berger writes that there is much more the U.N. Security Council could do to strengthen international sanctions on North Korea:

Numerous options for strengthening the sanctions regime still exist. As a first order of business, the Security Council could offer clarification regarding some of the grey areas which persist in the sanctions regime, as previously discussed on 38 North.

Yet clarifications alone will not alleviate the pressures mentioned above. As a more concrete step, the Security Council should take action against those non-North Korean entities and individuals who consciously facilitate North Korean proliferation by introducing targeted sanctions against some of them. Doing so would remind countries along North Korea’s proliferation pathways—those that are not the source or destination countries for illicit goods, but rather host “middlemen”—that they must ensure that their citizens and residents comply with UN resolutions when they do business with Pyongyang. [Andrea Berger, 38 North]

As I pointed out recently, one reason U.N. sanctions aren’t working very well is that the 1718 Committee isn’t acting promptly on the recommendations of the Panel of Experts, either because of Chinese obstructionism or simple incompetence. The Security Council must take Pyongyang’s next provocation as an opportunity to fix the 1718 Committee (or better yet, its last provocation). Failing this, an alliance of like-minded member states should cooperate to impose national sanctions on violators, in accordance with their respective laws, as soon as the Panel of Experts produces credible evidence of a violation.

The list that the Security Council has agreed to target is remarkably short, considering the extent of the activities prohibited: 12 individuals and 20 entities. The UN’s own Panel of Experts on North Korea has already shown that many more are known to have materially assisted either WMD or missile programs, or arms sales overseas. By contrast, the soon-to-be-disbanded sanctions list for Iran contains 43 individuals and 78 entities.

Though designations fall out of date because the sanctioned parties change or create new aliases, formally designating North Korean individuals and entities is an important step. Resolutions concerning North Korea require UN Member States to take action against the affiliates of sanctioned parties. The 2014 designation of the North Korean shipping firm Ocean Maritime Management (OMM) has already provided grounds for Singapore to charge and try Chinpo Shipping, and its owner Tan Cheng Hoe, who assisted with OMM’s shipment of arms and related material from Cuba to North Korea in July 2013. Yet these cases are rare. Many governments only act if the UN requires them to, namely by designating a new entity or individual and providing an accompanying explanation. Countries that choose to take independent action against unnamed affiliates of sanctioned parties must rely on their own information gathering, demonstrating a legally convincing link with a UN-sanctioned party. Few appear willing to do so.

Specifically, Berger calls for the U.N. to designate such enablers as Singapore-based Senat Shipping. She notes that the Panel of Experts has identified third-country enablers as “an indispensable part of the North Korean network.”

Without them, Pyongyang would find it increasingly difficult to move goods or process payments. For decades, “trusted” partners like Chinpo Shipping have regularly facilitated North Korean transactions—both legitimate and illegitimate—as part of their broader business. An earlier investigation for 38 North showed that OMM’s other Singapore-based affiliates have similarly deep-seated business relationships with the reclusive state.

More on Senat and Chinpo Shipping here. Berger also links to a news report about British arms dealer Michael Ranger. Read the rest on your own.

At (ironically enough) Johns Hopkins yesterday, I made the point that one does not ask whether a symphony should be played with a tuba or a xylophone alone. In the same way that an orchestra is made of many instruments, effective sanctions are one important element of a credible foreign policy. One can extend this analogy to say that U.S. and U.N. sanctions, like trumpets and trombones, work best in concert. Cuba is an example of how U.S. sanctions aren’t as effective without strong international support. Cuba could (barely) scrape by on euros, Swiss francs, Canadian dollars, and with help from banks that were willing to look the other way and help it move money through the dollar system illegally.

North Korea sanctions present the opposite problem. Nominally, North Korea sanctions are backed by reasonably strong Chapter VII U.N. resolutions, but lack aggressive enforcement by the main stewards of the financial system: the U.S., Europe, and other issuers of convertible currencies. An ad hoc alliance between these states, South Korea, and Japan, could join forces to squeeze a target’s finances.

They would also be able to squelch Russia’s transparent attempt to dodge sanctions with a bilateral trading house. After all, it’s difficult to imagine that the two countries could carry on much trade using the (worthless, non-convertible) North Korean won, or the plummeting ruble. 

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Ban Ki-Moon on N. Korea: U.N. must “hold perpetrators of crimes accountable” (updated)

The U.S., the EU, South Korea, and other “like-minded” governments are renewing their push for a U.N. Security Council resolution to refer “the highest official responsible” for Pyongyang’s crimes against humanity to the International Criminal Court.

South Korea, the U.S., Britain and Japan have launched fresh efforts to adopt a similar resolution this year, the high-level source at the U.N. told Yonhap News Agency on condition of anonymity, adding the countries have been drafting a resolution since last weekend.

The new resolution will include the ICC referral part just like last year’s resolution, the source said.

The countries have also begun collecting views from other U.N. members on what should be included in the new resolution, the source said.

“ICC referral resolutions that the U.N. has adopted so far usually don’t include the names of those responsible,” another source said, also speaking on condition of anonymity. “That’s because more people could be found responsible in the course of the ICC’s investigation.” [Yonhap]

The reports — from Yonhap, UPI, and the Voice of America — quote unnamed South Korean diplomatic sources. Although the new resolution dares not speak His name, Yonhap’s source confirms that “highest official” does, indeed, mean His Corpulency.

The new resolution is also expected to include calls for punishment of those responsible for human rights violations, resolution of abductions and kidnappings while voicing concerns about torture, public executions and other types of human rights abuses in the North, according to the sources. [Yonhap]

Yonhap’s source fully expects China and Russia to block the resolution at the Security Council, but the proponents plan to push on, if only to draw more international attention to the issue. This time, however, China and Russia won’t be the only obstacles. The UNSC’s non-permanent members now include Angola, Malaysia, Nigeria, and Venezuela, all of which have close commercial or diplomatic ties to North Korea, and some of which have been implicated in using North Korean slave labor.

These developments follow the recent opening (despite Pyongyang’s threats) of the Seoul Field Office of the U.N. High Commission for Human Rights, and a very strong new report by the U.N. Special Rapporteur that repeated the Commission of Inquiry’s call to hold North Korean officials accountable. U.N. Member States are clearly under more pressure to answer the U.N.’s calls and lead. (In this case, however, Europe appears be doing most of the leading.)

Pyongyang responded by calling the U.N. reports “nothing more than lies from North Korean defectors, whose testimonies cannot be corroborated,” and threatening to take “the toughest counteraction” to “foil the hostile forces’ reckless ‘human rights’ hysteria.”

President Bush removed North Korea from the list of state sponsors of terrorism on October 11, 2008. Despite overwhelming evidence to the contrary, the Obama Administration’s official view is that North Korea is “not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987.” Discuss.

Interestingly enough, however, despite the fact that Seoul’s diplomats are talking up this effort to the international press, Pyongyang still allowed its hostage meetings — the ones Michael Kirby called “barbarous” and “extremely cruel” — to proceed as planned.

There is reason to doubt that all of this talk will amount to anything. After all, back in JulyThe Washington Post’s Anna Fifield reported that the Obama Administration would focus “on human rights to further isolate North Korea.” But of course, as the General Accountability Office recently pointed out, at the stroke of a pen, President Obama could have reached the obvious conclusion that His Porcine Majesty and his top minions are officials of the government of North Korea for purposes of Executive Order 13687, and summarily blocked all of their assets, in full accordance with the Commission of Inquiry’s recommendations. Just like Obama’s predecessor did to the top leaders of Burma, Sudan, Belarus, and Zimbabwe, and their top minions, years ago.

But if this resolution really does go forward, it would be immensely important. Not only are we having a global debate — at long last — about human rights in North Korea, but that debate is clearly building toward a global consensus that North Korea’s leaders must be held to account for their crimes. And as favorably astonished I am about this, nothing could have prepared me for what Ban Ki-Moon said yesterday:

Frankly, when I first read this Yonhap report of Ban’s words, I simply couldn’t believe that Ban Ki-Moon — the godfather of the Sunshine Policy and patron saint of fence-sitters, who has consistently said as little as possible about human rights in the North — said this. Unwilling to post it without confirmation, I emailed a contact at the U.N., who kindly and promptly did confirm it. Here’s the whole statement.

Just about everyone on Earth missed the seismic importance of Ban’s call, especially in the context of growing calls by U.N. Member States, the Special Rapporteur, and the Commission of Inquiry to hold Kim Jong-Un individually accountable. Yes, they’re just words — a few words buried near the end of a very long report — but they represent an important step toward international consensus. They mean that the price China and Russia will pay to keep covering for Kim Jong-Un will rise. They’re an embarrassment to every government that stands in the way of action or makes itself complicit. Furthermore, I doubt that Ban would have said them if he thought it would diminish his chances in the next South Korean presidential election. Ban’s words are sure to put him strongly at odds with the Democratic Party’s hard left, at a time when the DP’s leaders are already struggling to keep them under the porch.

The mills grind slowly, but they are picking up speed.

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Update, October 25, 2015: Wow:

Navi Pillay told an audience in Seoul that North Korea’s caste system discriminates against its own population and is a new example of apartheid, Voice of America reported. Pillay said North Korea should eliminate its “Songbun,” or caste system, and release the tens of thousands of political prisoners who are serving sentences after receiving unfair trials. [UPI]

Despite what these resorts say, a well-informed friend tells me that for now, the resolution is only headed for the Third Committee for now, but with the Security Council being the eventual destination. It was, indeed, Japan that has joined up with the EU to draft the resolution.

Despite protests from Pyongyang, member states of the European Union said Thursday they plan to present a draft resolution on North Korean human rights to the U.N. General Assembly by the end of October. South Korean outlet Newsis reported the announcement offers a preview of the extensive discussion of North Korea human rights abuses expected to be held before the end of the year.

The Austrian foreign ministry told press that the European Union and Japan submitted a draft resolution in September, during the 70th annual U.N. General Assembly. The ministry said it recommends the referral of the North Korea human rights situation to the International Criminal Court.

There is some question, however, whether the resolution will target Kim Jong-Un individually:

Kim Jong Un, however, would not necessarily be the target of any cases brought before the International Criminal Court. A U.N. source who spoke to VOA on the condition of anonymity said that the purpose of any court case would not be to pin blame on Kim Jong Un. That would be an “unreasonable interpretation,” the source said.

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