Archive for Anju Links

Three Cheers for Obama’s Sony attribution, a golf clap for his “proportional” response.

In The Washington Post, Ellen Nakashima describes how Sony’s decision to cancel the premiere of The Interview catalyzed the Obama Administration’s decision to blame North Korea publicly:

The next day, alarmed by the surrender, President Barack Obama convened his top officials in the White House Situation Room and, based on their unanimous recommendation, decided to take an action the United States had never dared before in response to a cyberattack by another nation: name the government responsible and punish it. [….]

The blocking of Sony’s freedom of expression, on top of a highly damaging hack, is what ultimately compelled officials to act, in the name of deterrence.

“The argument I made was the whole world is watching how we as a nation respond,” said Adm. Michael Rogers, the director of the National Security Agency, who, other officials said, was at the previously undisclosed meeting.

“And if we don’t acknowledge this, if we don’t name names here, it will only — I’m concerned — encourage others to decide: ‘Well, this must not be a red line for the United States. This must be something they’re comfortable [with] and willing to accept,’ ” Rogers said at an international cybersecurity conference at Fordham University last week.

There “was a significant debate within the administration about whether or not to take that step” of naming North Korea, a senior administration official said. “Attribution is hard, and there are all sorts of reasons we don’t normally want to do that,” including setting a precedent that would increase pressure to name other countries in future incidents and antagonizing the offending governments.

But the attack on Sony’s right to screen a movie struck a nerve. The entertainment company may not be “critical” to national security, but free speech is “a core value,” said the official, who spoke on the condition of anonymity to describe internal discussions. “Yes, it was a Seth Rogen comedy, but next time it might not be,” he said. What he described as the hack’s “destructive” nature combined with the element of coercion against Sony “crossed the threshold,” he said. “It took us into a new realm.”

The attack was a violation of U.S. sovereignty “coupled with an attempt to interfere with freedom of expression,” said Christopher Painter, State Department coordinator for cyber issues. “You had, in many ways, the perfect storm of all these things coming together that were really important.” [WaPo, Ellen Nakashima]

I applaud this unreservedly. It was the right decision for the right reasons.

~   ~   ~

The administration has stumbled twice since then, however. For several weeks, the administration failed to challenge inside-job theories from some IT security experts. Some of them challenged the sufficiency of the publicly available evidence, which is fair enough. But to argue that North Korea didn’t do it is much more problematic. Some of the inside-jobbers lost sight of the possibility that they were arguing based on incomplete information. Others may have been motivated by grudges against the administration over the Snowden revelations, or other biases. Yet others, including inmates of the Alex Jones, Christine Ahn, and Ron Paul asylums, shared the sort of skepticism that’s unique to the world’s most gullible people.

The administration continued to lose this argument for several weeks before FBI Director James Comey publicly reaffirmed that he was certain that the North Koreans did it. Comey’s call to declassify more of the evidence is now being answered by the National Security Agency:

Spurred by growing concern about North Korea’s maturing capabilities, the American spy agency drilled into the Chinese networks that connect North Korea to the outside world, picked through connections in Malaysia favored by North Korean hackers and penetrated directly into the North with the help of South Korea and other American allies, according to former United States and foreign officials, computer experts later briefed on the operations and a newly disclosed N.S.A. document.

A classified security agency program expanded into an ambitious effort, officials said, to place malware that could track the internal workings of many of the computers and networks used by the North’s hackers, a force that South Korea’s military recently said numbers roughly 6,000 people. Most are commanded by the country’s main intelligence service, called the Reconnaissance General Bureau, and Bureau 121, its secretive hacking unit, with a large outpost in China.

The evidence gathered by the “early warning radar” of software painstakingly hidden to monitor North Korea’s activities proved critical in persuading President Obama to accuse the government of Kim Jong-un of ordering the Sony attack, according to the officials and experts, who spoke on the condition of anonymity about the classified N.S.A. operation. [N.Y. Times, David E. Sanger & Martin Fackler]

The CIA’s malware was built on its highly successful Stuxnet worm:

For about a decade, the United States has implanted “beacons,” which can map a computer network, along with surveillance software and occasionally even destructive malware in the computer systems of foreign adversaries. The government spends billions of dollars on the technology, which was crucial to the American and Israeli attacks on Iran’s nuclear program, and documents previously disclosed by Edward J. Snowden, the former security agency contractor, demonstrated how widely they have been deployed against China. [N.Y. Times]

For those incapable of wrapping their heads around the idea of North Korea being technologically sophisticated enough to hack someone, the Times story also provides an extensive history of Unit 121, and an interview with two defectors with insider knowledge of the unit’s operations.

See also CNN and CBS News (quoting Comey, “We could see that the IP addresses that were being used to post and to send the e-mails were coming from IPs that were exclusively used by the North Koreans.”).

Interestingly enough, just a few weeks before the Sony hack, Director of National Intelligence James Clapper had dinner with Kim Yong-Chol, the head of North Korea’s Reconnaissance Bureau (RGB), the man responsible for overseeing North Korea’s hackers, and also for multiple attempts to assassinate human rights activists and North Korean dissidents in exile. The RGB’s assets are blocked, but Gen. Kim’s are not. I can’t help wonder if Gen. Kim smiled at the thought of how Clapper would react to the Sony attacks. Let’s hope that the Obama Administration gives Gen. Kim cause to regret this lapse of malignant egomania.

It amuses me some to wonder whether there was a small bandage on Mr. Clapper’s right palm when the two men shook hands.

~   ~   ~

Which brings us to the President’s second stumble: his failure, so far, to respond credibly, to deter others from crossing the red line that North Korea crossed in November, and also to deter others from blunting President Obama’s response by undermining sanctions.

It did not take long for American officials to conclude that the source of the attack was North Korea, officials say. “Figuring out how to respond was a lot harder,” one White House official said. [N.Y. Times]

That’s becoming more painfully obvious by the day. President Obama has said that Executive Order 13,687 and the designations of January 2nd were only a beginning, and let’s hope he’s right about that. Sanctions work better when they hit with a shock than when they’re applied incrementally, and give the target time to adapt. If my guess is right, however, Treasury needs more time to do that, because this administration hasn’t made North Korea a priority in its financial intelligence targeting. But so far, as former CIA Director Michael Hayden said, the administration’s new sanctions have been “symbolic at best,” for reasons I explained here. Worse, our apparent lack of determination is inviting troublemakers to undermine the administration’s negative reinforcement.

Here is Vladimir Putin’s cue to enter stage left.

According to this article, Russia has recently begun to service transactions for the U.S. Treasury-sanctioned Foreign Trade Bank of North Korea in rubles. Treasury sanctioned the FTB in March 2013 for its involvement in servicing WMD-related financial transactions. The article’s author, whose work reads like that of a Putinjugend fangirl, may not have considered the possibility that the Russian businesses involved could still be cut out of the financial system under EO 13,687 or (one day in the not-too-distant future, according to Chairman Royce) the North Korea Sanctions Enforcement Act. However unwittingly, fangirl has done us a great public service by bringing this information to our attention.

In his State of the Union speech, President Obama promised to defend us against cyberattacks. He didn’t mention North Korea by name, but the reference was obvious. Deterrence is a critical part of defense. Imposing new cybersecurity laws and regulations on industry alone will not be a complete answer, and the new requirements will come with massive costs to American industry. Even if the administration has good reasons to delay the main thrust of its response to Kim Jong Un until it finds a critical mass of North Korea’s financial nodes, it still needs to make a bold demonstration that it’s unwilling to tolerate the willful subversion of its policies by Russia and others. If the sanctions of January 2nd are the only price a foreign enemy pays for a devastating and chilling attack on the central principle of our political system, those sanctions will mean less than no deterrent at all.

House Foreign Affairs Committee holds briefing; members demand tougher sanctions on N. Korea, China (updated with video of full hearing)

The House Foreign Affairs Committee held a briefing on North Korea and the Sony hack today. Three witnesses appeared:

The Honorable Sung Kim
Special Representative for North Korea Policy and
Deputy Assistant Secretary for Korea and Japan
U.S. Department of State
[full text of statement]

The Honorable Daniel Glaser
Assistant Secretary for Terrorist Financing
Office of Terrorism and Financial Intelligence
U.S. Department of the Treasury
[full text of statement]

Brigadier General Gregory J. Touhill, USAF, Retired
Deputy Assistant Secretary for Cybersecurity Operations and Programs
U.S. Department of Homeland Security
[full text of statement]

Here’s Chairman Royce’s opening statement.

In all the years I’ve gone to these things, I don’t think I’ve ever seen more bipartisan unity about, or rage toward, North Korea. Some members continue to labor under misconceptions about what our sanctions are and what they can do, but all of them want sanctions intensified. One Democrat, Rep. Brian Higgins of New York, said the solution to the North Korea problem is “to end North Korea’s existence as an independent entity and reunify the Korean Peninsula.”

If anything, there was even more rage directed at China, for knowingly hosting the hackers who attacked U.S. interests and threatened Americans from Chinese soil, and for failing for years to enforce U.N. sanctions against North Korea. Congress could not have been more united and emphatic that it wants North Korea’s Chinese enablers sanctioned. Chairman Royce pushed Kim and Glaser hard on secondary sanctions. Brad Sherman (D-CA) called on China to be designated as a currency manipulator. He questioned whether China would give sincere cooperation on cybersecurity, when “their hands are dirty” and they’re involved in cyberespionage “all four hands and snout.” (Russia was also criticized by some members for its closer ties with North Korea.)

Sherman, always the funniest guy in the room, said, “I’d like to give [North Korea] a double dose of free speech.” He called for 24-hour broadcasting into North Korea and suggested that the State Department look into “satellite television broadcasting into North Korea … because I particularly want to broadcast a particular movie … the director’s cut.” (Right idea, Brad, but wrong movie.)

Darrell Issa (R-CA) is a member of the Committee again, and Issa may be the most frightening man on Capitol Hill to be questioned by. He called on China to be sanctioned under a new cyberespionage sanctions authority (scroll to the bottom of page 893). Issa noted that China doesn’t have a free internet, that it gives North Korea all of its internet access, and that that access is narrow. There’s simply no way China didn’t know.

To all of this, Glaser said that if evidence implicates Chinese entities, “We’re fully committed to holding entities in China accountable.” Sung Kim tried to say that he saw a change in China’s attitude, but Glaser said it best, in response to a question from Rep. Reid Ribble (R-WI): “China’s not going to do us any favors. China is going to work with us because it’s in their interests.” “We’ve seen that with China’s commercial banks time and time again.”

About that new executive order, now numbered as Executive Order 13,687: you saw that I struggled with two possible interpretations, one broad and one narrow. The narrower interpretation turns out to be the correct one. So while EO 13,687’s potential is sweeping, its present impact is minuscule. In other words, Kim Jong Un’s assets are not blocked yet; the Pope is Catholic when John Kerry says he is.

Having said that, the dialogue between Chairman Royce and Glaser sounded like the old Danny Glaser we once knew and loved. Talking about the effect of Banco Delta Asia, Royce said, “I later talked to defectors who worked on the missile program … that program came to a halt” because of the BDA sanction. “They couldn’t buy gyroscopes.” Royce wanted to see an “impact on the the family itself that runs that country” until “the generals are not paid, the army is not paid,” and they conclude that “there has to be a better way” than following Kim Jong Un.

To this, Glaser said that in 2005 and 2006, “hundreds of banks at the time” cut the North Koreans off. But then, Glaser said that because of the “chilling effect” of this, that was the “world in which we’re still living.” (I thought it was 1984 again, and we’ve always been at war with Eastasia.) Glaser called the Foreign Trade Bank, which Treasury blocked in 2013, North Korea’s “primary source of access to the international financial system.” Even so, he allowed that EO 13,687 “gives us the ability to really step … up” the process of identifying and cutting off North Korea’s “financial nodes.”

Glaser didn’t seem worried about our ability to influence Chinese banks. He cited their behavior after Treasury acted against the Foreign Trade Bank of North Korea as an example.* He said the main challenge was identifying North Korea’s “financial nodes.” (My guess is that if Treasury doesn’t know, it’s because Treasury never put enough investigative resources on the task. Sanctions can’t work if you don’t have good financial intelligence. Let’s hope it’s about to get better.)

And lest anyone wonder where North Korea keeps its money, Glaser said, “We shouldn’t take our eye off the ball, and the ball is Asia. That’s where they get their primary access to the international financial system … specifically China.” Glaser chided the Chinese for continuing to allow Korea Kwangson Bank, an entity blocked by Treasury and designated by the European Union, to operate a branch in China.

Glaser ducked a question on whether North Korea should be designated a primary money laundering concern. On the humanitarian effect of sanctions, Glaser repeatedly insisted that the government of North Korea “bears sole responsibility for the suffering of the people of North Korea.”

Rep. Ted Poe (R-TX) did a masterful grilling of Sung Kim on putting North Korea back on the list of state sponsors of terrorism. Sung Kim would only say State is studying the issue. Toward the end of the hearing, Rep. Tom Emmer (R-MN, a new member) asked whether EO 13,687 represents “an increase in intensity” in North Korea sanctions. Ambassador Kim said, “I think that would be accurate.”

All of the witnesses affirmed their confidence that North Korea was responsible for hacking Sony. When Rep. Gerry Connolly (D-VA) asked Kim whether he believed North Korea was responsible for the 2013 Dark Seoul attack, Kim said, “We believe so, more importantly, the South Korean government believes so.”

Royce said twice that the next version of H.R. 1771 would be introduced in the near future, but wasn’t specific.

It’s not clear whether EO 13,687 represent a policy change or an empty threat. The true answer will depend on interpretation and enforcement. Glaser tried to sound like we’ve kept the pressure on North Korea since the days of Banco Delta Asia, but Juan Zarate has already told us that isn’t so, and if it was, Kim Jong Un and his top thugs would be sanctioned by name, just like Mugabe and Lukashenka are.

Here’s how Yonhap covered the story; more here. See also AP and Reuters. The Reuters piece was good, but it incorrectly states that Royce’s new bill will label North Korea a Primary Money Laundering Concern; actually, it will urge the President and the Treasury Department to do that.

~   ~   ~

* The news there is mixed. In May of 2013, two months after Treasury sanctioned the Foreign Trade bank and a little more than a week after the introduction of H.R. 1771, China’s four largest banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China  — all halted money transfers to North Korea. Other, smaller Chinese banks, like the Bank of Dandong, continued to move money for Pyongyang, and at the lowest reaches of the financial ecosystem, North Korean money launderers still operate in Guangdong with impunity, and more discreetly, in places like the British Virgin Islands. Enforcing sanctions is like mowing the lawn. If you don’t do it regularly, things grow back quickly, and it’s the weeds that will thrive the most. Unlike mowing the lawn, you can’t take a uniform approach to different enforcement targets.

~   ~   ~

Update: After all that, here’s the whole thing on video. If you catch any errors in my transcription, kindly drop a comment or email. Thanks.

charlie hebdo

But wouldn’t Su-35s divert money needed for flat-screens and ski resorts?

I could be wrong, but I doubt even Vlad Putin would violate U.N. Security Council Sanctions so blatantly as this:

North Korea made an attempt to purchase advanced fighter jets from Russia by sending a special envoy, a senior South Korean military official told the JoongAng Ilbo on Thursday.

“Choe Ryong-hae, who visited Moscow as a special envoy of North Korean leader Kim Jong-un in November last year, asked Russian President Vladimir Putin to provide Sukhoi Su-35 fighter jets,” the military source said.

Little has been disclosed about the discussions between Choe and Putin. Choe, a member of the Presidium of the Political Bureau and secretary of the Central Committee of the Workers’ Party of North Korea, met with Putin on Nov. 18 and delivered a letter from Kim, the Russian presidential office has said, without providing further details. The Kremlin said the meeting was not open to the press, and no press conference was arranged afterward. [Joongang Ilbo]

According to the report, the Russians gave Choe a tour of the factory in Khabarovsk where the jets are produced. The very fact that the Russians gave Choe a tour of a plant producing something that North Korea isn’t allowed to buy probably suggests what Putin’s real game is — to show much trouble he could make for us if he chose to, even as the Russian economy dissolves on his watch due to all the trouble we’ve made for him.

That would be Choe’s second international visit since a cryptically worded KCNA report caused some of us to speculate that he’d been sent on his final state visit … to the glue factory.

According to the report, “It is unknown how many jets the North attempted to acquire.” Starting at $40 million each, that would mean each aircraft costs about 40% of the one-year cost for the World Food Program to feed just 2.4 million of the kids and pregnant women that Kim Jong Un isn’t feeding.

Hat tip to The National Interest.

A Poem: On Seeing the North Korean Prison Camps on Google Earth http://t.co/4CoYU2GD6C via @DagdaPublishing

A Poem: On Seeing the North Korean Prison Camps on Google Earth http://t.co/4CoYU2GD6C via @DagdaPublishing

Not only will N. Korea’s next generation be physically and psychologically stunted, it will be fathered by imbeciles. http://t.co/UYcMb5ykla

Not only will N. Korea’s next generation be physically and psychologically stunted, it will be fathered by imbeciles. http://t.co/UYcMb5ykla

Ros-Lehtinen bill to call for N. Korea’s listing as a terrorism sponsor

WASHINGTON, Jan. 5 (Yonhap) — A U.S. congresswoman said Monday she will introduce a bill calling for re-listing North Korea as a state sponsor of terrorism in response to the communist nation’s alleged cyber-attack on Sony Pictures.

“North Korea should have never been taken off the state sponsor of terrorism list and should be reinstated immediately,” Rep. Ileana Ros-Lehtinen (R-FL) said in comments emailed to Yonhap News Agency. “I will soon be reintroducing legislation to redesignate North Korea as a state sponsor of terrorism and to ratchet up the sanctions pressure on the North Korean regime.”

The congresswoman welcomed the latest sanctions that the administration of President Barack Obama imposed on North Korea last week in response to the Sony hack, but she stressed that what’s more important is to enforce those sanctions.

“Simply talking tough on sanctions without enforcing them in order to manipulate public opinion, as this White House has done with regard to North Korea and other rogue regimes, will only diminish whatever credibility and influence the administration has left while putting the security of the United States at risk,” she said. [Yonhap]

Funny how the administration says an SSOT listing would be “symbolic,”yet so stubbornly refuses to do it. If it’s only symbolic, what are they afraid of?

China protests after suspected North Korean army deserter kills four http://t.co/fYwRPBvWj0 via @reuters

China protests after suspected North Korean army deserter kills four http://t.co/fYwRPBvWj0 via @reuters

North Korea Is Being Punished for Hacking Sony. What About Its Responsibility for Killing Millions of People? http://t.co/LGyZg9huoc

North Korea Is Being Punished for Hacking Sony. What About Its Responsibility for Killing Millions of People? http://t.co/LGyZg9huoc

Where are S. Korea’s militant labor unions when they’re needed most? Hideous. http://t.co/MK2R7v8bsL

Where are S. Korea’s militant labor unions when they’re needed most? Hideous. http://t.co/MK2R7v8bsL

“The Killing Fields” meets “The Borgias” http://t.co/uyZcI7nW9J via @WSJ

“The Killing Fields” meets “The Borgias” http://t.co/uyZcI7nW9J via @WSJ

Good old Kim Jong Bill… http://t.co/U84pxVcEto via @WeaselZippers

Good old Kim Jong Bill… http://t.co/U84pxVcEto via @WeaselZippers

President blocks all assets of the N. Korean gov’t, ruling party … maybe. http://t.co/uV76oR3scY

President blocks all assets of the N. Korean gov’t, ruling party … maybe. http://t.co/uV76oR3scY

President blocks all assets of the N. Korean gov’t, ruling party … maybe.

A new executive order signed by President Obama and published at around 2:00 today is either a game-changer in his North Korea policy or a wet paper tiger. On its face, the Executive Order is tough, sweeping, and potentially lethal:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

   (i) to be an agency, instrumentality, or controlled entity of the Government of North Korea or the Workers’ Party of Korea;

   (ii) to be an official of the Government of North Korea;

   (iii) to be an official of the Workers’ Party of Korea;

Emphasis mine. I’ll interrupt the list here to ask the obvious question: Does this mean that Kim Jong Un and his regime’s billions in offshore slush funds are blocked, to the extent those funds are denominated in dollars? If I’d only read the Executive Order, I’d answer “yes” unequivocally. If Kim Jong Un isn’t an “official of the Government of North Korea,” the Pope might as well be a Unitarian. By the same logic, Kim Yong Nam, Choe Ryong Hae, Hwang Pyong So, and the other little grey men who fill Pyongyang’s reviewing stands and funeral details should also be designated under this E.O.

Most of the reporters covering the story, however, only seem to have read Treasury’s press release and its new annex listing whose assets are blocked “concurrently with” the new E.O. And oddly enough, neither His Porcine Majesty nor any of his top caporegimes is named in that annex. Instead, the annex lists just ten mid-level officials working abroad for KOMID, a/k/a, the Korea Mining Development Trading Corporation (a notorious proliferation front), and three entities: KOMID itself, Korea Tangun Trading Corporation (Tangun, another proliferation front), and the Reconnaissance General Bureau (RGB, the North’s main spy agency).

The individuals in question are posted in China, Russia, Iran, Syria, and Namibia.

This lends itself to an alternate interpretation — that any North Korean government or party official could be designated and blocked at any time, but not all are … at least until the State and the Treasury Departments sit down to decide that the Pope is indeed Catholic. You’d think an Executive Order would mean what it says, and that under the broad language of the E.O., a name designation of Kim Jong Un wouldn’t even be necessary. But having said that, I’d feel much more confident about that conclusion if Treasury would clarify the point. And maybe it will:

“It’s a first step,” one of the officials said. “The administration felt that it had to do something to stay on point. This is certainly not the end for them.” [N.Y. Times]

Other cases aren’t helpful in answering this question. For example, when President Bush sanctioned Alexander Lukashenka in Belarus and Robert Mugabe in Zimbabwe, those E.O.s listed each of them by name in the annex, but then, those executive orders didn’t use sweeping language designating any official of the government or ruling party, either.

To further confuse matters, all three of the entities designated today were already on the SDN list. Why designate them again? Maybe to cover new aliases, to pad the numbers, or to create the illusion of action. Or to note that the RGB is “North Korea’s primary intelligence organization,” is “involved in a range of activities to include conventional arms trade proscribed by numerous United Nations Security Council Resolutions,” is “responsible for collecting strategic, operational, and tactical intelligence for the Ministry of the People’s Armed Forces,” and runs “many of North Korea’s major cyber operations.”

None of those explanations quite satisfies, somehow.

What the Executive Order doesn’t tell you, by the way, is that the RGB is also responsible for North Korea’s poison-needle assassination campaign against North Korean exiles, human rights activists, and others. The RGB’s recent activities are some of the best reasons why North Korea should also be on the list of state sponsors of terrorism, even if you say (and you’d be wrong if you did) that such a listing would only be “symbolic.” And of course, even symbolic things can be consequential.

Continuing with the list of those designated today, it also includes “persons” the President determines …

(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the Government of North Korea or any person whose property and interests in property are blocked pursuant to this order; or

(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the Government of North Korea or any person whose property and interests in property are blocked pursuant to this order.

That’s standard but necessary language to cover subsidiaries, front companies, aliases, and enablers. How it’s enforced will be the key to whether this Executive Order puts real pressure on the regime or not.

The administration’s press release suggests that it intends to apply serious and sustained financial pressure to North Korea. It’s suspect in that it claims to have done so previously. It also lends more support to the narrower interpretation of this E.O. in the short term — that is, that the Pope is Catholic when we say he’s Catholic.

This step reflects the ongoing commitment of the United States to hold North Korea accountable for its destabilizing, destructive and repressive actions, particularly its efforts to undermine U.S. cyber-security and intimidate U.S. businesses and artists exercising their right of freedom of speech.
Pursuant to the authorities of this new E.O., Treasury today has designated three entities and 10 individuals for being agencies or officials of the North Korean government.
“Today’s actions are driven by our commitment to hold North Korea accountable for its destructive and destabilizing conduct.  Even as the FBI continues its investigation into the cyber-attack against Sony Pictures Entertainment, these steps underscore that we will employ a broad set of tools to defend U.S. businesses and citizens, and to respond to attempts to undermine our values or threaten the national security of the United States,” said Secretary of the Treasury Jacob J. Lew.  “The actions taken today under the authority of the President’s new Executive Order will further isolate key North Korean entities and disrupt the activities of close to a dozen critical North Korean operatives.  We will continue to use this broad and powerful tool to expose the activities of North Korean government officials and entities.”
Targeting the Government of North Korea and the Workers’ Party of Korea
The E.O. signed today escalates financial pressure on the Government of North Korea, including its agencies, instrumentalities, and controlled entities, by authorizing targeted sanctions that would deny designated persons access to the U.S. financial system and prohibit U.S. persons from engaging in transactions or dealings with it.

Interestingly, the President justified this action based on “the provocative, destabilizing, and repressive actions and policies of the Government of North Korea, including its destructive, coercive cyber-related actions during November and December 2014, actions in violation of UNSCRs 1718, 1874, 2087, and 2094, and commission of serious human rights abuses.”

That would mark the first time the President has sanctioned North Korea for human rights abuses, and would be consistent with one recommendation of the U.N. Commission of Inquiry on Human Rights in North Korea, provided that the members of the COI don’t feel that the President went too far.

Presumably, this language also means that the White House and the FBI are sure about North Korea’s responsibility for the Sony hack, despite the proliferation of alternative “inside job” theories. I don’t know what the FBI knows that we don’t, and I certainly don’t see a motive for the Obama Administration to fabricate this after ignoring North Korea for so long, but I’d like to see the FBI give us something more solid than, “Trust us.”

~   ~   ~

So what else does this mean? For those of you who are still wondering how blocking North Korean assets could affect Pyongyang, I think Bruce Klingner explained it well here. Skip about halfway down to the part about sanctions as “an important and variable component” of our foreign policy. The key point is that 60% of the world’s currency reserves are denominated in dollars, and that dollars have to flow through U.S. financial institutions, which are regulated by the Treasury Department. North Korea probably still hides plenty of cash flow within the dollar system. More significantly, so do “persons” who “provide[] financial, material, or technological support [to] the Government of North Korea.” And until today, I couldn’t find any authority requiring so much as a license from Treasury to invest millions of dollars in North Korea, as long as the transaction didn’t involve a sanctioned entity, imports into the United States, or exports of CCL-controlled items to North Korea.

For another thing, the Kaesong Industrial Complex uses U.S. dollars to pass hard currency to Kim Jong Un’s regime in bulk cash form, no strings attached, and notwithstanding the prohibitions of U.N. Security Council Resolution 2094. Those arrangements may be in peril unless Treasury grants Uri Bank a license to continue pouring money into Pyongyang through Kaesong, no questions asked, in exchange for what amounts to slave labor.

The fact that there are other media of exchange, such as the Euro, the Yuan, gold, and barter, means that third-party sanctions will also be essential to making sanctions work. Applying them without undue harm to our own interests will require the application of some diplomatic capital.

~   ~   ~

So on the face of it, this EO is tough — very tough. Arguably, it’s more sweeping and less carefully targeted than H.R. 1771 ever was, for fear of causing unintended humanitarian consequences.

What remains to be seen is what everything now depends on — how it’s interpreted, and how aggressively Treasury will enforce it. Even now, there are only about 75 minor North Korean entities on the SDN list. That still pales in comparison to the 300-400 Iranian entities listed. It all depends on how aggressively and diligently Treasury designates other North Korean regime officials and entities, how broadly Treasury applies and interprets Section 1(a)(i)-(iii), how many trips David Cohen makes to visit Chinese and Swiss bankers, and just how quickly foreign banks block or purge themselves of North Korean funds. (We forget that Treasury did much more than sanction one dirty bank in Macau in 2005; in fact, this was a broad campaign of financial diplomacy.) If the answer is “very,” the little gray men in Pyongyang will feel significant financial pain within a year.

Finally, it means that my 3,000-word academic paper on the weakness of current North Korea sanctions may need a substantial revision.

In the short term, North Korea may decide to lash out. Presumably, someone in the White House thought to advise USFK to raise its alert status. In the medium term, if this Executive Order means what it appears to mean, it probably rules out any deal with North Korea until 2017 (not that the prospects for that were very good anyway). In the long term — again, if this is enforced aggressively — either Kim Jong Un will be asking for Agreed Framework III within two years, or his replacement will.

Barbara Demick thinks “The Interview” got quite a few things right. http://t.co/xzPQk2lyeS via @newyorker

Barbara Demick thinks “The Interview” got quite a few things right. http://t.co/xzPQk2lyeS via @newyorker

Last year’s analysis proves that this year’s analysis of N. Korea’s New Year speech will… http://t.co/PxBFeKOpM8

Last year’s analysis proves that this year’s analysis of N. Korea’s New Year speech will… http://t.co/PxBFeKOpM8

Suspected regime thugs try to kill N. Korean refugee in Denmark http://t.co/f02ttk1upb

Suspected regime thugs try to kill N. Korean refugee in Denmark http://t.co/f02ttk1upb

President Park’s unification plan is missing a Phase 2 http://t.co/1yxnTm2FDe

President Park’s unification plan is missing a Phase 2 http://t.co/1yxnTm2FDe