Archive for Proliferation

Open Sources, March 6, 2014

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THANK YOU TO THOSE WHO CAME to this event on Capitol Hill yesterday and helped make it a huge success. We filled the room well beyond its capacity. There was an energy in the room that went beyond the question of numbers. It was who was there — young, old, in-between, conservatives, liberals, and a variety of ethnicities, including a very sizable Korean-American contingent. I don’t have words to express my admiration for the leadership of Suzanne Scholte, Greg Scarlatoiu, and Judy Yoo of the Federation of Korean-Americans. Human Rights Watch also made a very welcome contribution to the discussion.

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ADRIAN HONG, in The Christian Science Monitor:

We teach our children the heavy legacies of humanity’s grave past injustices: Nanjing. Auschwitz. The Killing Fields. Rwanda. Srebrenica. Darfur. Implicit in such education is the belief that had we been alive, or had we been in positions of influence while the great atrocities of the past century had been perpetrated, we would’ve acted decisively to stop them.

But the moral clarity with which we judge those who preceded us is elusive when we see our world today. Museums and memorials to the fallen victims of yesterday’s tyrants are meaningless if they do not translate to stands against the perpetrators of brutality today.”

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ANDREW W. KELLER, an American lawyer in Korea, writes in The American Thinker:

The United States Congress should pass H.R. 1771, the North Korea Sanctions Enforcement Act of 2013, which is currently in committee.  Sanctions restrict the export to and import from North Korea of goods and technology for the use, development, or acquisition of nuclear, chemical, and biological weapons.  Sanctions also ban the export of luxury goods to North Korea, a tactic that could help undermine the North Korean regime, which bribes its VIPs in Pyongyang with imported luxury goods while people in the countryside starve. 

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THE WASHINGTON POST writes a strongly worded denunciation of the Obama Administration’s foreign policy, and of the isolationist escapism of too many Americans recently:

The urge to pull back — to concentrate on what Mr. Obama calls “nation-building at home” — is nothing new, as former ambassador Stephen Sestanovich recounts in his illuminating history of U.S. foreign policy, “Maximalist.” There were similar retrenchments after the Korea and Vietnam wars and when the Soviet Union crumbled. But the United States discovered each time that the world became a more dangerous place without its leadership and that disorder in the world could threaten U.S. prosperity. Each period of retrenchment was followed by more active (though not always wiser) policy. Today Mr. Obama has plenty of company in his impulse, within both parties and as reflected by public opinion. But he’s also in part responsible for the national mood: If a president doesn’t make the case for global engagement, no one else effectively can.

The White House often responds by accusing critics of being warmongers who want American “boots on the ground” all over the world and have yet to learn the lessons of Iraq. So let’s stipulate: We don’t want U.S. troops in Syria, and we don’t want U.S. troops in Crimea. A great power can become overextended, and if its economy falters, so will its ability to lead. None of this is simple.

But it’s also true that, as long as some leaders play by what Mr. Kerry dismisses as 19th-century rules, the United States can’t pretend that the only game is in another arena altogether. Military strength, trustworthiness as an ally, staying power in difficult corners of the world such as Afghanistan — these still matter, much as we might wish they did not. While the United States has been retrenching, the tide of democracy in the world, which once seemed inexorable, has been receding. In the long run, that’s harmful to U.S. national security, too.

These isolationist interludes are a feature of our history, just like our interventionist excesses. They remind me of Trotsky’s adage that you may not be interested in war, but war is interested in you (hat tip). These interludes eventually end with unpleasant awakenings, and I worry that we haven’t seen the last of those yet.

While this certainly counsels against the dramatic reduction in our armed forces that the President has proposed, I also wonder when we’ll realize that the best way to protect U.S. interests abroad is often to ally ourselves with the people of the affected country who share our interests and values, arm them to the teeth, and train them well. If the Russian experiences in Finland, Afghanistan, and Chechyna tell us anything, it’s that the Russians are especially bad at fighting determined opponents who use unconventional tactics. If a messy border war eventually forces Putin out of power, Russia gaining control of the historically and ethnically Russian Crimea would be a small price to pay.

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I AM IN RARE AGREEMENT WITH JOHN KERRY when Kerry says that North Korea is “an evil place,” but then, there isn’t much we know about North Korea now that we didn’t know in 2003, when John Bolton made substantially similar comments about the North, and the North Koreans went histrionic on him. Now it’s Kerry’s turn. Does this disqualify Kerry as an effective diplomat?

“This is another vivid expression of the U.S.’ hostile policy toward the DPRK,” a spokesman for North Korea’s foreign ministry said, according to Pyongyang’s Korean Central News Agency. DPRK stands for North Korea’s official name, the Democratic People’s Republic of Korea.

Kerry’s remarks “are no more than a manifestation of his frustration and outbursts let loose by the defeated as the DPRK is winning one victory after another despite the whole gamut of pressure upon it over the nuclear issue,” the spokesman said.

“Before blaming others, Kerry had better ponder over what to say of the U.S., a tundra of human rights, as it commits horrible genocide in various parts of the world in disregard of international law under the signboard of ‘liberty’ and ‘democracy,’” the spokesman said.

Kerry should “bear in mind that no pressure is workable” on the North, he said. [Yonhap]

What’s dramatically different, of course, is that when Bolton said it, it was more evidence that Bolton was “a crazy neocon” and further reason to derail his nomination as U.N. Ambassador. Since Kerry said it, and since the North Koreans went histrionic on Kerry, there’s been almost complete media silence. Some of this is certainly because the consensus on North Korea has shifted, but the consensus has shifted because (quelle surprise) North Korea kept right on being North Korea after January 21, 2009. Bolton was right all along, but too many of us allowed our political polarities to blind us to the truth he spoke.

Update: The North Koreans make a similar comparison.

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NOW, THE U.N. PANEL OF EXPERTS is investigating Dennis Rodman’s gifts to Kim Jong Un.

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THE PANEL MAY ALSO DESIGNATE two more North Korean companies over the Cuba MiG-21 smuggling deal, which will eventually result in the blocking of their assets once Treasury and the EU get around to listing them:

The two include Ocean Maritime Management (OMM), a Pyongyang-based company with links to the North Korean government that is also the registered manager of the Chong Chon Gang. The other is Chinpo Shipping Co., registered in Singapore, allegedly used for the payment of costs for the Chong Chon Gang’s operation.

Chinpo Shipping? Really? So I take it the Urban Dictionary is blocked in North Korea. Pity.

I often ask myself why North Korea goes to so much risk and expense to buy up equipment that hasn’t had a combat advantage since the Johnson Administration. I often worry that North Korea’s doctrine for the use of these aircraft concentrates on low-altitude, one-way missions. After all, it’s clear that some of their airfields are fit for take-offs, but not really fit for landings.

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OVERALL, SANCTIONS ENFORCEMENT has a mixed record since the approval of UNSCR 2094, and my lapse of optimism about sanctions enforcement last summer was probably premature. First, via Yonhap and IHS Janes, we learn that North Korea is still able to trade in weapons, exporting $11 million and importing $63 million in weapons last year (that we know about). Admittedly, this isn’t very much, and some of these imports are probably pursuant to a loophole in the Security Council resolutions allowing North Korea to import light weapons from China. It isn’t clear whether that sum includes technology transfers and technical assistance, or North Korea’s recent acquisition of six road-mobile ICBM transporter-erector-launchers.

Second, and more worrisome, we see that despite signs of a banking crackdown last spring, trade between North Korea and China continues to increase. Obviously, the North Koreans have (1) found Chinese banks willing to accept their deposits and handle their financial transactions, and (2) avoided any significant financial disruption of their network of commercial agents in China after the Jang Song -Thaek purge.

This sort of rope-a-dope game is typical of China. They pretend to comply with sanctions for a few weeks, and go right back to the same old dirty business. That’s why we need H.R. 1771.

North Korea approaching provocation phase of its “vicious cycle”

North Korea’s bipolar cycle is now familiar to most Korea watchers, including the President of South Korea. The North pursues its nuclear weapons capability with consistent determination in all phases of that cycle, but not always with consistent ostentation. There are periodic acts of satellite theater — a new excavation here, a new launch pad there, or steam from a cooling tower. Words vacillate between conciliation (often cryptic) and belligerence (but mostly, belligerence).

You can’t really time North Korea’s cycles with a calendar — although it does strike me that it would be interesting to try — but it is possible to identify some broad patterns. The cycles have higher tides and lower ebbs when the North wants to test a new or weakened administration in the United States or South Korea. The tides ebb when the North calculates that it’s about to get a payoff, or that it has gone as far as it can without suffering some consequence that it fears. They probably rise due to a combination of domestic political motives, a desire to keep its opponents off balance, and simple extortion. As for how the tone of North Korean propaganda has changed under Kim Jong Un, I’ll recommend this analysis by the Daily NK.

What is increasingly clear is that North Korea’s current moon-faced tyrant has entered a waxing phase.

Three years ago the retaliation was limited to Yeonpyeong, but in the future it will include the presidential office of Cheong Wa Dae and other centers of the puppet South Korean government,” said the statement carried by the Korean Central News Agency.

The KPA command, which is responsible for units facing the sea demarcation line in the Yellow Sea, claimed that if Seoul has forgotten the “crushing defeat” it received in the past, it will face greater tragedy for making any kind of impudent provocations.

A senior North Korean official has also threatened the U.S., South Korea, and Japan with “a nuclear catastrophe.” (North Korea was removed from the list of state sponsors of terrorism on October 11, 2008. Discuss among yourselves.)

By the end of the Lee Myung Bak administration, the North had posted banners on the KCNA website calling for the slitting of Lee’s throat. We can already see that Pyongyang has begun the process of making Ms. Park its new Emmanuel Goldstein. Last week, KCNA called Park “a political prostitute.” This week, it’s Uriminzokkiri’s turn:

Uriminzokkiri, North Korea’s main Internet-based media and propaganda website, said a Pyongyang printing house released a booklet called a “diagnosis of the South’s theory of principle” that dissected the follies of policy goals being pursued by the conservative Park government.

It said the so-called principled approach lauded by the chief executive who took power in late February effectively aims to change the North, and is based on the arrogant idea that the South can dictate actions of the North.

According to the website, the booklet claimed South Korean hardliners want to wrestle the initiative in inter-Korean dialogue and use this advantage to strive for unification based on a free and democratic political system.

Where else is this headed? For one thing, we continue to read rumors that the North is ready to conduct another nuclear test. Recent strains between the U.S. and China may tempt Pyongyang to see a moment of opportunity to get away with a provocation.

Personally, I hope North Korea does test a nuke. If it can be said that the Obama Administration has a North Korea policy at all, that policy clearly isn’t working, and is allowing North Korea to rush toward nuclear breakout almost unimpeded. The administration seems disinterested in North Korea, perhaps because it has quietly resigned itself to a nuclear North Korea, or perhaps because it’s distracted by domestic troubles or Iran. Whatever the cause of the administration’s apparent lack of a coherent policy, it’s not going to change unless busy policymakers stop thinking about immigration reform, Obamacare, the 2014 elections, or Iran long enough to focus on this problem for a week or two. Every time they do, it becomes more obvious to them that the old approach has failed and that a new, tougher approach is needed.

What will make this test different from every other test is that this time, there is a ready policy alternative at hand that threatens to cause severe (and possibly fatal) damage to North Korea’s ruling class. At the very least, a sudden case of bankruptcy should convince an unsteady new North Korean leader that time isn’t on his side.

How the Iran deal affects North Korea policy

You would think that the world’s biggest government would be capable of handling more than one global proliferation crisis at a time. Unfortunately, Washington isn’t wired for that kind of bandwidth. Major policy initiatives require political capital, and it will take all of this administration’s dwindling reserves to fend off a new round of Iran sanctions in Congress.* The administration couldn’t defend a deal with North Korea now if it had one, and that goes double for the sort of non-disarmament deal being pushed by the likes of Robert Gallucci and Stephen Bosworth.

Regardless of your subjective views, the Obama Administration’s political position has eroded significantly in the last month. Its approval ratings on foreign policy are almost as low as they are on Obamacare. I suspect that the administration’s approval rating on foreign policy will get a short-term bump — reporters are using words like “historic” and “euphoria,” word choices that have proven to be poor predictors of longer-term success. Opposition to the deal, however, is already significant. Even key Democrats like Bob Menendez and Charles Schumer reason that the deal fails to freeze Iran’s enrichment or do enough to stop its progress toward the Bomb to merit billions of dollars in sanctions relief, and the lost leverage that entails. It can’t help that Iran’s President Hassan Rouhani is saying this:

Let anyone make his own reading, but this right is clearly stated in the text of the agreement that Iran can continue its enrichment, and I announce to our people that our enrichment activities will continue as before.

Unlike Agreed Framework II in 2007, this deal will exacerbate, rather than mollify, opposition to the President when the President is weakened politically. Agreed Framework II was the Bush Administration’s way of deferring a North Korea debate when it was weakened by Iraq. The Iran deal will intensify the Iran debate when it is weakened by Obamacare. All bets are off, of course, if the Democrats lose the Senate next year, but in the meantime, Democratic senators in swing states will face tough pre-election votes and won’t want to be portrayed as soft on regimes that most Americans loathe. It seems unlikely that the administration would expend more of its capital on appeasing North Korea at a time like this.

Iran could also shape the North Korea debate in other ways, but first, you need to understand the difference between Iran sanctions and North Korea sanctions. Every time North Korea provokes, bands of “experts” emerge to say that our North Korea sanctions are already maxed out (so what can we really do except try to appease them?). What all of these experts have in common is that none of them know what they’re talking about. They’re repeating a consensus formed in an echo chamber — a consensus with little basis in the relevant executive orders (123), statutes, or regulations. In fact, North Korea sanctions are relatively weak — far weaker than the ones that forced Iran to bargain with us.

What made Iran sanctions so devastating wasn’t just their targeted attack on Iran’s regime-linked banks, its oil sector, and the shipping lines that carry Iranian oil to markets in Europe and Asia. It was the fact that they also targeted third parties — Iran’s oil customers, and those who maintain correspondent relationships with its banks. There is nothing comparable to this in the North Korea sanctions regulations at 31 C.F.R. Part 510. By all means, go to Title 31 of the Code of Federal Regulations and do what I’ve spent the last few weeks doing — compare the various sanctions regulations for yourself. We have travel sanctions against Cuba, but not against North Korea, which is holding two U.S. citizens captive, and which abducted and murdered a lawful permanent resident in 2000. We have human rights sanctions against those who stifle free expression in Iran and Belarus (but not North Korea). We sanction those who commit crimes against humanity in Sudan (but not North Korea). We specifically target the oil sectors of Iran and Sudan, but not North Korea’s mineral sector, which has long been associated with its proliferation programs. To get a contract with the U.S. government, you have to certify that you don’t do business with the government of Sudan (but not North Korea). The Burma JADE Act allows Treasury to ban correspondent relationships with Burmese banks (no such authority applies to North Korea). Iran and Burma are listed as primary money laundering concerns, restricting their access to the global financial system. North Korea, the world’s most notorious counterfeiting and money launderer, is not.

Instead, our North Korea sanctions target only a narrow list of individuals, trading companies, and banks that have been specifically linked to WMD proliferation. Although Treasury recently blocked two additional North Korean banks from the financial system, the third-country banks that facilitate North Korea’s illicit and prohibited commerce haven’t been targeted since 2007. We have import and export sanctions against Cuba, Iran, and Sudan. Import sanctions were not applied to North Korea until 2011, and you can still export to North Korea, provided you aren’t shipping any sensitive technology and obtain the requisite license (you might also want to get your money up front). The tough third-party sanctions that disconnected Iran and Burma from the financial system and stranded its assets overseas aren’t in force against North Korea. Overall, our North Korea sanctions are more comparable to those we have against Belarus and Zimbabwe than to those we have against Iran, or even Cuba.

Understanding that difference unlocks some obvious comparisons.

First, it’s no longer possible to make a serious argument that well-crafted sanctions don’t work. By “well-crafted,” I mean the kind of sanction that isolates key sectors of the target’s economy from global trade and finance, not simple bilateral trade sanctions, which are just a beginning.

Second, if the administration’s position is that more Iran sanctions should be deferred because Iran is negotiating in good faith, what basis does the administration have to argue that North Korea sanctions should also be deferred? Last Thursday, National Security Advisor Susan Rice said that the U.S. won’t resume dialogue with North Korea “as long as it keeps key parts of its nuclear weapons program running.” The next day, Special Envoy Glyn Davies said that “North Korea must ‘cease’ all its nuclear activities, both plutonium and uranium, before a resumption” of the six-party talks. Now, the Park Administration is saying that the North must re-commit to denuclearization and agree to “detailed action plans” before new talks. So it’s settled, then — North Korea clings to its nukes, we have nothing to talk about, and by the way, the clock is ticking. South Korea’s Defense Minister is now saying that North Korea now has the capability to produce weapons-grade uranium.

Third, if sanctions at least gave Iran an incentive to negotiate — an incentive that it had lacked for years — then couldn’t they create a similar incentive for Kim Jong Un? North Korea’s economy has a fraction of Iran’s GDP, is far less diverse, and is far more dependent on foreign currency and imports to fund its priorities. We already know that financial pressure forced Kim Jong Il to negotiate in 2006.

Fourth, if the administration is only opposed to Iran sanctions because they could hurt the prospect for a diplomatic solution with Iran, but there is no immediate prospect for talks with North Korea, doesn’t the administration’s argument on Iran look disingenuous if it opposes sanctions on North Korea? Wouldn’t opposition to North Korea sanctions by the administration allow its critics to argue that the administration is reflexively opposed to sanctions because it’s simply weak?

The consensus today is that tough sanctions forced Iran back to the bargaining table after years of stalling, lying, and obfuscation, yet our North Korea sanctions are a pale shadow of the sanctions we have against Iran. Whether you believe that the purpose of sanctions on Iran was to slow its nuclear progress, open the way to diplomacy, or weaken the regime domestically, you can argue that sanctions were moving us in all of those directions. Why we aren’t using sanctions to move us toward the same goals with North Korea?

 

* With apologies for mixing my metaphors.

Review: Treasury’s War, by Juan Zarate

Let me begin with an apology for the lack of posting lately. While tossing a football around with some friends, I took a direct head-on hit to that finger you need for typing words that contain the letters “l” or an “o,” which turn out to be less dispensable than you might think. The time I didn’t spend typing, I spent reading instead:

Treasury's War cover

[clicking the image takes you to Amazon]

If you want to understand why the Banco Delta Asia action worked so well, how financial sanctions bankrupted al Qaeda, and how they’re bankrupting Iran today, you have to read this book. If you’re reading this site, however, the odds are you’re interested in what Zarate has to say in chapters 9 and 10, where he writes about North Korea, Banco Delta Asia, and Chris Hill.

Zarate, who is usually effusive in his praise for the people he worked with in government, clearly has no use for Hill. Hill comes off looking like a boorish, incompetent asshole who, despite repeated explanations of how Section 311 worked, either didn’t grasp the concept or didn’t care. According to Zarate, Hill’s minions reduced Daniel Glaser to tears by bullying him into simply switching off the section 311 action–and its downstream effects–almost instantly, which is a lot like asking Treasury to instantly give North Korea a new reputation for honest financial dealings with a banking “ecosystem” that’s extremely concerned about reputations and access to correspondent accounts in U.S. banks and dollar-clearing through New York.

Readers of this site already know that I’m no fan of Chris Hill. I’ve written extensively about how Hill played fast and loose with the truth when he sold his deal to Congress in 2007. Two years later, after his deal with Kim Jong Il had collapsed under the weight of its own suspended disbelief, Hill was eventually confirmed as U.S. Ambassador to Iraq, but only after a bitter confirmation fight. After just 16 months in office, Hill retired, having failed to broker a new Iraqi government or to negotiate a suitable status of forces agreement (and you’d think a guy like Hill could have closed a deal if he wanted one badly enough), and with his relations with U.S. military commanders strained.

I’ve already told you that Zarate’s book is indispensable (it’s also a fun read) but I do have two criticisms. First, his treatment of the SWIFT network as sacrosanct, and his implicit criticism of Section 220 of the Iran Threat Reduction and Syria Human Rights Act of 2012 reads like a set of SWIFT talking points. Zarate worries about U.S. laws and EU regulations that forced SWIFT to cut off certain Iranian banks, and wonders how far down this slippery slope we’d go to sanction other countries.

I agree that SWIFT should be commended for helping Treasury after 9/11, and that The New York Times shouldn’t have outed SWIFT for doing it. But SWIFT has significant business operations located in the United States, and it derives significant benefits from the security of our country and the health of our financial system. By Zarate’s admission, SWIFT took the actions it took in 2001 because it knew it would not prevail if Treasury served it with subpoenas for financial information. Should SWIFT be forced to stop financial messaging services to every country that gets low marks for human trafficking or anti-money laundering countermeasures? Clearly not. But when some supranational authority demands countermeasures against specific banks known to be involved in proliferation or money laundering, SWIFT shouldn’t be exempt, either, particularly given that by its nature, SWIFT doesn’t know the purpose of the transactions it facilitates. Here’s paragraph 11, from UNSCR 2094:

Decides that Member States shall, in addition to implementing their obligations pursuant to paragraphs 8 (d) and (e) of resolution 1718 (2006), prevent the provision of financial services or the transfer to, through, or from their territory, or to or by their nationals or entities organized under their laws (including branches abroad), or persons or financial institutions in their territory, of any financial or other assets or resources, including bulk cash, that could contribute to the DPRK’s nuclear or ballistic missile programmes, or other activities prohibited by resolutions 1718 (2006), 1874 (2009), 2087 (2013), or this resolution, or to the evasion of measures imposed by resolutions 1718 (2006), 1874 (2009), 2087 (2013), or this resolution, including by freezing any financial or other assets or resources on their territories or that hereafter come within their territories, or that are subject to their jurisdiction or that hereafter become subject to their jurisdiction, that are associated with such programmes or activities and applying enhanced monitoring to prevent all such transactions in accordance with their national authorities and legislation;

Zarate is otherwise pretty big on enforcing international norms and standards, and to be fair, Zarate’s manuscript was probably already with the publisher when this resolution passed. It’s hard to argue today that North Korean banks that have been specifically sanctioned by the U.N. itself, the EU, or the United States because of “credible information” about their proliferation should continue to receive messaging services without interruption. Maybe Zarate wouldn’t argue that now. I hope he wouldn’t. But even before that, we’d seen a long services of messages about the need for “countermeasures” against North Korea from the Financial Action Task Force.

My second criticism is of the opportunity Zarate misses at the end of his book when he calls for the government to help preserve and enhance our economic power. That’s especially unfortunate when Zarate’s explanation of that power and its importance were so effective. His last chapter and his epilogue introduce a series of important concepts concepts about trade, protectionism, technology, foreign investment, and the strength of the dollar, but unfortunately, and perhaps because of the editing process, those concepts aren’t explained or illustrated well, and I finished the book without understanding how more government intrusion would advance, rather than inhibit, our economic competitiveness. I hope that’s something Zarate will explain further, perhaps in a future edition.

(This chapter still stimulated much thought about other key networks, aside from the financial system, that run through the United States. Could the free flow of information through U.S.-based servers, or a cloud network, be another future power source? How about restricting the access to U.S. ports of cargoes originating from ports that fail to take their counter-proliferation or counter-terrorism responsibilities seriously?)

Treasury’s War won’t win any literary awards, but its simple and clear writing style is probably best for a topic this complex. The information, clear explanations, and illustrative examples make it required reading for any student of economics or foreign policy in this age. If you’re a North Korea watcher or congressional staffer who wants to understand how H.R. 1771 would work, and why its strategy is nothing at all like the old fashioned sanctions used against Saddam Hussein, read Zarate’s book (it’s also available on e-book).

Sanctions are working in Iran. They’ll work better against North Korea, and here’s why.

Drag a modest grant check through DuPont Circle and you’ll accumulate at least ten pundits, several dozen grad students, and a multitude of assorted kooks who would willingly write you an academic paper entitled, “Why Sanctions Never Worked.” And that’s true, except for South Africa, Yugoslavia, Burma, Nauru, Al Qaeda, Iran, and North Korea, and only if you limit the argument to trade sanctions and exclude other tools of economic pressure, like coordinated divestment, third-party financial sanctions like those in Section 311 of the Patriot Act, or targeted money-blocking sanctions like those in executive orders 13,382 and 13,551.

The notable counter-example is Iraq, which was willing to let its people and infrastructure suffer while it survived on oil smuggled through Turkey. But the sanctions against Iraq were old-fashioned trade sanctions, and it’s not hard to understand why they failed.

Because trade is mainly decentralized, it is difficult to regulate and control. The finance on which trade depends, however, is centralized–around the U.S. dollar, U.S. financial institutions, and the financial district of New York City–the Treasury Department’s power to restrict the access of bad actors to the global financial system by regulating U.S. financial institutions has emerged as a key tool of global U.S. power. That’s especially true in an age of weariness about the use of military force. Washington is only coming to terms with the potential power of these new legal and financial tools.

Sanctions also require unity of effort. They can only work as part of a comprehensive strategy that may include military deterrence, carefully monitored humanitarian assistance, law enforcement, financial regulation, industry liaison, information operations in the targeted country, and tough-minded diplomacy with the targeted country, domestic opposition, and third countries. They don’t work if they’re at odds with these other tools of national policy. The State Department’s failed 2007 deal with North Korea, which threw away the very leverage that made that deal possible, is an ideal example of this.

At almost every meeting aimed at getting the North Koreans to halt their nuclear weapons program, Pyongyang has demanded that the United States lift its penalties against Banco Delta Asia. This week the Russian government asked the United States to remove the sanctions against the bank, too. [New York Times, Jan. 18, 2007]

Now we know it worked against North Korea, but not long ago, we were told it wouldn’t work against Iran. This 2007 New York Times report quotes a skeptical eurocrat, who explains why the financial sanctions that devastated North Korea’s palace economy and exceeded even Treasury’s expectations would never work against Iran:

The United States has tried to apply similar pressure on Iran in recent years without as much success. The size of Iranian oil exports and the country’s deeper integration into the international financial system make it much more difficult to isolate.

“It is not so easy with Iran, but it has shown great effect on North Korea,” said Benita Ferrero-Waldner, the European commissioner for external relations, during a visit to Beijing on Wednesday.

That an EU official would hold this view shouldn’t have been surprising. Europe has long resisted the use of financial pressure against rogue states and state sponsors of terrorism. Some of its influential banks and businesses enjoy cozy relationships with them. But there was a sound basis for the skepticism in the case of Iran, which unlike North Korea, has a diverse economy. It sells oil, of course, but also automobiles, carpets, fruit, pistachios, carpets, and other things that people want to buy. Diverse economies are harder to isolate than those whose links to the global financial system are fragile.

Harder, but not that hard, as we learn from a Times report this week:

In repeated meetings during the week, Mr. Rouhani and his foreign minister, Mohammad Javad Zarif, said the government’s financial condition was far more dire than the previous president, Mahmoud Ahmadinejad, had let on.

Mr. Rouhani and Mr. Zarif did not publicly specify the severity of the cash squeeze. But Western economists believe the crisis point may be much closer than previously thought, perhaps a matter of months. Iran news outlets have reported that the government owes billions of dollars to private contractors, banks and municipalities. [N.Y. Times]

What happens in a few months? The businesses and government agencies that have lost their export markets, and that have no domestic customers left, that have been running at losses for months, and that employ most of Iran’s workers will run out of credit and savings. They will have to lay off their workers. Iran’s streets will be full of the unemployed. Most of those people, if asked, would probably say that they want Iran to have nuclear weapons. By a stronger margin, however, they will say they would rather have jobs. When their voices are heard in Iran’s streets and when the regime knows it can’t pay the forces it will need to crush them, diplomacy with Iran will have a chance to work.

It won’t work quite this way in a society as terrorized, physically stunted, and psychologically scarred as North Korea’s. But eventually, the men with guns won’t be able to make up their margin of survival by preying on peasants. They will have to prey on each other.

For a more fulsome explanation of why we can isolate North Korea financial without the cooperation of (and even despite the active resistance of) China’s government, I’ll turn to this Times review of Juan Zarate’s book, Treasury’s War (which I downloaded today):

The genius of Section 311 is that Treasury doesn’t do anything other than apply a financial “scarlet letter.” The actual damage is done by the bank’s peers, which typically refuse to do business with it out of fear that they, too, will be cut off from the financial system. Just the threat of a 311, Mr. Zarate writes, has caused nations as powerful as Russia, and as recalcitrant as Myanmar, to change their money-laundering laws, forcing their banks to conform to international standards. A handful of well-placed 311’s, he says, has put much newfound pressure on governments including North Korea and Iran.

“Geopolitics is now a game best played with financial and commercial weapons,” Mr. Zarate writes. “The new geoeconomic game may be more efficient and subtle than past geopolitical competitions, but it is no less ruthless and destructive.”

The centerpiece of the book, and probably the best example of Section 311’s uses and limitations, is the story of Treasury’s assault, beginning in 2005, on North Korea, which American officials said was involved in activities like counterfeiting and drug trafficking. Mr. Zarate describes how the United States hit one of the banks it linked to North Korea, Banco Delta Asia in Macau, with a 311.

Practically overnight, banks throughout the region, even in China, began turning away or throwing out North Korean government business. By this one simple act, Mr. Zarate writes, “the United States set powerful shock waves into motion across the banking world, isolating Pyongyang from the international financial system to an unprecedented degree.” He adds: “The North Koreans didn’t know what hit them.”

As the depth of its plight sank in, North Korea appeared to panic. First, it fired off a missile into the Pacific, a move that had the additional benefit of freaking out the State Department, which demanded to know what Treasury was up to. Then, Mr. Zarate writes, a North Korean representative contacted the United States, seeking relief from the 311. At the State Department’s insistence, negotiations began in Beijing, and appeared to end when a Chinese bank volunteered to handle a measly $25 million of North Korean money the authorities in Macau had frozen.

Mr. Zarate writes that “the amount of money wasn’t the issue” and that the North Koreans “wanted the frozen assets returned so as to remove the scarlet letter from their reputation.”

Then, he says, something amazing happened. Despite its government’s support of North Korea, the Chinese central bank refused to approve this solution, indicating that it, too, wanted nothing to do with a bank hit by a 311. “Perhaps the most important lesson was that the Chinese could in fact be moved to follow the U.S. Treasury’s lead and act against their own stated foreign policy and political interests,” he writes. “The predominance of American market dominance had leapfrogged traditional notions of financial sanctions.”

Eventually, however, Treasury’s pressure on Pyongyang had to be lifted at the insistence of the State Department, which was far more worried about North Korea’s missiles than its bank accounts. Mr. Zarate deplores the move. “The North Koreans had expertly turned the tables” on the United States, he says. “We were outmaneuvered at the height of international pressure and gave up our leverage.” [New York Times]

If you can’t get enough of this sort of thing, here’s a Q&A with Zarate in the Wall Street Journal, and here’s a must-see video of him explaining how these new tools of financial pressure pressure work:

Stop me if I’ve mentioned this before, but there’s a bill in Congress now that would utilize this very strategy framework to isolate North Korea from its billions in offshore deposits and its sources of regime-sustaining hard currency until it disarms, and makes significant progress on human rights, shuts down its death camps, and allows the open and fair distribution of food aid. And also, allows us to verify these things for ourselves.

We fret constantly about North Korea. We fret that it has restarted the Yongbyon reactor, and that its centrifuges are spinning away, enriching uranium. We fret that it sells nuclear reactors and chemical weapons technology to Syria, and that it might be testing nukes for both itself and Iran. We fret that it starves its people while it blows hundreds of millions of dollars on ski lift equipment, water parks, and yachts. We fret that its new mobile missiles will be able to deliver WMDs, including miniaturized nuclear weapons, and that we won’t be able to find them all in time. We fret that it may have liquidated several thousand people from one of its its prison camps. All this fretting is the constant companion of futility–the implication that there isn’t a thing we can do about any of it.

Except that we can. We could saw the trunk out from under Kim Jong Un’s money tree overnight. A determined campaign of financial pressure would destroy the regime in one or two years. And long before that, Kim Jong Un would come to us and ask for a deal. Only this time, that pressure should only be suspended as long as the progress continues.

H.R. 1771 is the bill that would do this. It has 125 bi-partisan co-sponsors. Some of them are as conservative as Ileana Ros-Lehtinen and Peter King. Others are as liberal as Jim Moran, Joseph Kennedy, and Carol Shea-Porter. You could even call it a rare example of bi-partisan agreement within a Congress that’s often bitterly (and often, unnecessarily) divided. Is your representative on that list? Is your Senator willing to introduce companion legislation?

Can North Korea have both Kaesong and Yongbyon?

Who is the real Park Geun Hye? The uneasy coexistence of two headlines may soon tell us. The first headline tells us that, six months after North Korea withdrew its workers, the Kaesong Industrial Park will soon restart.  The second tells us that North Korea’s reactor at Yongbyon already has. Both of these developments are bad news for those who want to see North Korea disarmed, for reasons I explained here. But if Park is really as tough as some of us wanted to believe she was, she’ll at least make Kim Jong Un choose one.

To some, Park’s tactical success at negotiating the reopening of Kaesong revealed a predisposition to a more conditional variation of Sunshine. To others, it showed that Park was a completely different kind of leader than her predecessors–one who was not only willing to let Kaesong die rather than yield on principle, but perhaps even secretly hopeful that it would die, for reasons not easily attributed to her. As one who previously held the latter view, with declining confidence, over the last few months, I grasped at her insistence that the North “guarantee” that it wouldn’t shut Kaesong down again. Perhaps these guarantees were really poison pills. Perhaps they disguised demands for apologies or compensation–things that North Korea couldn’t possibly accept. But it doesn’t look that way now.

Bruce Klingner of the Heritage Foundation said it best in a conversation over dinner a few weeks ago, when he called Trustpolitik “a Rorschach test.”

~          ~          ~

In early April, just before North Korea was hit by a wave of financial pressure, Kim Jong Un made what turns out to have been a grave miscalculation by withdrawing 53,000 workers from Kaesong.  Kaesong was a source of $80 million a year in hard currency, but in early April, Kim Jong Un calculated that Park Geun Hye would be as easy as her predecessors to manipulate, that the disruption would be brief, and that he had enough cash reserves to weather it.  He would not have withdrawn the North Korean workers from Kaesong had he known what would happen in the following weeks.

The Kaesong affair has taught us all–but Kim Jong Un most of all–that Park Geun Hye’s tactical sophistication is a dimension beyond her predecessors. For years, I’ve watched North Korea lead the likes of Roh and D.J. with nose rings forged from their own beneficent hallucinations.  I’ve watched them stampede every American president to hold office since 1993 with thunderclaps of scary headlines.  President Obama is the only one of them who hasn’t paid Pyongyang off yet, but it’s still hard to see what his policy vision is, or that he even has one.

Park Geun-Hye is not like these others.  Park–who was poised and statesmanlike at an age when most of us were experimenting with facial hair, whose North Korea messaging has been maddeningly consistent for a decade, who coolly questioned her staff as they rushed her to the hospital with a slashed throat–has an actual, calculated policy vision for North Korea.  I’m not sure exactly what that vision is, but I doubt that it’s quite the same as the advertised vision.  I saw hints of it when I was fortunate enough to be in the Capitol for her speech to a joint meeting of Congress.

I’m at the upper center-right of the audience in the beginning of the video (appropriately enough). Recognize me? No? Neither do I. Here’s what I keyed in on:

But as we say in Korea, it takes two hands to clap. Trust is not something that can be imposed on another.

The pattern is all too familiar — and badly misguided. North Korea provokes a crisis. The international community imposes a certain period of sanctions. Later, it tries to patch things up by offering concessions and rewards. Meanwhile, Pyongyang uses that time to advance its nuclear capabilities. And uncertainty prevails.

It is time to put an end to this vicious cycle.

Pyongyang is pursuing two goals at once, a nuclear arsenal and economic development. We know these are incompatible.You cannot have your cake and eat it, too.

The leadership in Pyongyang must make no mistake. Security does not come from nuclear weapons. Security comes when the lives of its people are improved. It comes when people are free to pursue their happiness.

North Korea must make the right choice. It must walk the path to becoming a responsible member in the community of nations.

In order to induce North Korea to make that choice, the international community must speak with one voice. Its message must be clear and consistent.

Is Park now letting that cycle re-play itself? Her tactical achievement in negotiations over Kaesong now threatens to become a strategic setback, both for Park and for her American allies, who expended substantial diplomatic capital securing the passage of U.N. Security Council 2094.

What financial transparency ensures us that Kaesong and Yongbyon aren’t really just two reactors in different stages of North Korea’s nuclear cycle? No one knows that answer. And if Park doesn’t know, she’s violating that Security Council resolution we’ve just fought to secure, and are trying to get other nations to enforce. That would be a major diplomatic victory for North Korea. And weakening the enforcement of Security Council resolutions shortly after their passage is part of North Korea’s playbook.

The Syria-North Korea Axis

After watching North Korea get away with shipping anti-aircraft missiles to terrorists and its past chemical and nuclear proliferation to Syria, it’s gratifying to see people catch onto North Korea’s role in the tragedy in Syria.  There are several more op-eds and stories on this today, all of them well worth reading:

These weren’t necessarily Korea-related, but did provide useful information:

  • Congressional support for a military strike on Syria is collapsing. It’s unfortunate that we seem divided and irresolute, but it’s better that the President steers toward a new strategy, hopefully after he solicits Congress’s views and gets its support. A strike would make us feel like we’ve done something, but the only way it could slow Assad’s use of chemical weapons at this point would be to hit enough artillery to also, incidentally, help Al Qaeda. Better to attack the proliferation network that supplies the weapons to begin with. That network’s source is in Pyongyang, and the best ways to attack it don’t involve the use for military force.
  • It’s a pretty rare week when Tom Friedman writes two columns, and I agree with a majority of what he writes in both of them.

[Update: I changed the wording in the first sentence, which previously read "proliferation" to terrorists, to "shipping anti-aircraft missiles to terrorists," because "proliferation" implies the transfer of WMD, which I don't know to be the case (not that I'd doubt it, either).]

Is North Korea importing oil from Iran?

Remember when Marcus Noland and Stephan Haggard wrote that North Korea, notwithstanding the deepening misery of most of its people, had begun to show a current account surplus in recent years? Their conclusion was based largely on trade data showing that North Korea was importing more foreign goods, mostly through China.  If you believe these official Chinese government statistics for the last six months, however, Pyongyang’s imports from China fell sharply … for the first time in four years.

Is this welcome evidence that sanctions are starting to work? Not so fast. The main thing the North Koreans seem to be buying less of from China is oil.  Noland expressed his skepticism about a similar previous report of falling oil imports from China, suggesting that the drop might have been because of seasonal factors.

Another possible explanation, however, may be the announcement, in April, that Iran and North Korea had reached an oil-for-minerals barter deal.  The deal makes sense for Iran, which is having difficulty finding markets for its oil because of tightening international sanctions, and for North Korea, which had been paying above-market prices for Chinese oil.

The transactions would undermine international sanctions against Iran, and might (depending on the specific financial arrangements) also undermine sanctions against North Korea.  The use of barter, which doesn’t rely on the international financial system, lends itself well to sanctions evasion.

N. Korea builds new pad, support facilities at Musudan-ri

Although it’s certainly possible (maybe even inevitable) that someone else has already noticed this, the first one who pointed it out to me was Jacob Bogle, who posted about it here and emailed me (thanks, Jacob). Here’s an overview of the area showing the old launch gantry and support areas. The new pad is marked with the orange arrows.

Musudan @ 7200 412

The new pad clearly shows the flame channel, similar to the one at the Seohae launch facility.  In April 2010, there was nothing there but empty fields:

Musudan New Pad @ 1000 410

Here’s what it looked like last April:

Musudan New Pad @ 1000 412

The angle of the shadows suggests a disturbing possibility — that rather than an above-ground launch pad, this is a silo, which would would significantly harden the site against air strikes. Whereas the shadow inside the flame channel suggests depth, there is no such shadow at the launch site itself, suggesting the absence of a gantry.  This image also suggests that construction was incomplete, but proceeding rapidly.

A nearby assembly area shows substantial evidence of new construction since the next most-recent image, from April 2010.

Musudan Assy. Area @ 2000 410

Musudan Assy. Area @ 2000 412

Similarly, this support area more ongoing construction … and a substantial amount of demolition, as well.  See the village on the center right?

Musudan Suppt. Area @ 2000 410

 

Now you don’t.  I wonder where those people were shoveled off to.

Musudan Suppt. Area @ 2000 412

Thanks again to Jacob for the find and the tip.

Update:  Imagery from 38 North suggests that this is indeed a silo of some sort.

AP Exclusive! North Korea’s nuke test a cry for peace

I’ve said it before and I’ll say it again — AP Pyongyang has all the logic and perspective of KCNA Pyongyang and none of the guilty pleasures of KCNA’s prose.  

The way North Korea sees it, only bigger weapons and more threatening provocations will force Washington to come to the table to discuss what Pyongyang says it really wants: peace. [....]

North Korea has long cited the U.S. military presence on the Korean Peninsula, and what it considers a nuclear umbrella in the region, as the main reason behind its need for nuclear weapons. North Korea and the U.S. fought on opposite sides of the bitter, three-year Korean War. That conflict ended in a truce in 1953, and left the peninsula divided by heavily fortified buffer zone manned by the U.S.-led U.N. Command.

Sixty years after the armistice, North Korea has pushed for a peace treaty with the U.S. But when talks fail, as they have for nearly two decades, the North Koreans turn to speaking with their weapons.  [Jean H. Lee, AP]

I realize that Lee frequents a place where war is peace, but peace isn’t the first goal one would attribute to a regime that, less than four years ago, renounced the Korean War cease fire agreement, subsequently carried out two sneak attacks against South Korea, killing 50 of its citizens, and attempted to assassinate several defector-dissidents on South Korean soil.

Is this The Onion, you ask?  No, this is The Onion.

The idea that a peace treaty with North Korea is the solution to our problems with North Korea is nonetheless the stated position of a small pro-North Korean fringe, and just about no one else, no doubt because the negotiations would give that fringe the chance to support North Korea’s preconditions for said peace.  Still, I suppose it’s good to have clarity on where Lee stands.

For something a little better grounded in reality, see this Reuters analysis by Paul Eckert and Michael Martina:

A North Korean nuclear test draws international condemnation, modest U.N. sanctions and expressions of hope in the United States that China will finally rein in its brazen ally.

Beijing chides North Korea, but nothing much happens.

The world has seen this movie before and it’s likely to witness another rerun after North Korea’s third nuclear test on Tuesday.

See also this piece by Jeffrey Lewis and this one by Bruce Klingner, citing evidence that North Korea may already have a miniaturized and functional nuclear weapon that it can deliver on a missile.  Say what you want about the accuracy of North Korea’s long-range missiles; its short and medium range missiles are thought to be accurate and effective enough to pose a real danger to South Korea and Japan.

If that’s not bad enough, consider how many terrorist-sponsoring clients North Korea has in the Middle East for its nuclear and missile technology.  Claudia Rosett has an excellent summary in Forbes.