Archive for Sanctions

Former Obama Admin. official: Our N. Korea sanctions are weak and our policy is stuck

The Obama Administration’s North Korea team is stuck. Its thirst for fresh blood is so dire that it recently asked Keith Richards whether he still has the number of that secret clinic in Switzerland.* Don’t take my word for it. Last Friday, former Assistant Secretary of State Kurt Campbell spoke at the Center for Strategic and International Studies, as a friend and spy of mine was sitting in the audience (thank you). Campbell’s remarks are worth listening to in full, but the money quote — which went unreported in the press despite its significance, and despite the fact that Campbell emphasized it and closed with it — starts at 20:19:

And I must say — I’ll just conclude with this — when we think about our overall tool kit, there is one element of our strategy that I don’t think people fully appreciate. We often think of North Korea — I certainly did — as one of the most sanctioned countries in the world, with almost impossible objective … obstacles for people wanting to travel, invest, or the like.

It turns out, when I was at the State Department, working on Myanmar, or Burma, comparing Burma to North Korea is night and day. Burma has MUCH more in the way of sanctions and challenges associated with interactions. And I do think if we faced a set of further challenges with respect to North Korea, it would be possible for us to put more financial pressure on North Korea.

And I think we need to let our Chinese friends know and understand that some of the things that have been contemplated by the new regime, if followed through on, would entail and involve a reaction that is much more strenuous than [what] we’ve seen in the past. And I think that element of our diplomacy is likely to be necessary as we go forward. [Kurt Campbell, Speech at CSIS, Sept. 5, 2014]

Hallelujah: someone actually read the sanctions regulations for once. From this day forward, you’ll no longer have to take my word for that, either. Campbell may not know that Treasury recently relaxed Burma sanctions regulations, but his point stands — until quite recently, Burma sanctions were comprehensive, reached all kinds of trade and investment that used the dollar-based system, and included strong financial sanctions. Unlike North Korea, Burma is listed as a primary money laundering concern. Unlike North Korea, Burma’s human rights violators were specifically targeted.

Thus, contrary to a widespread misconception, our North Korea sanctions are not maxed out; in fact, they are relatively weak. Those of you in the news business owe it to your readers to challenge that assumption before you print it. Start by asking the “expert” who repeats it whether he’s actually read the sanctions laws or regulations. Factual ignorance is not entitled to a place of equivalence in any policy debate.

It gets worse. Yonhap did quote another part of Campbell’s speech, in which he described how “many U.S. government officials handling North Korea are suffering from ‘fatigue and a sense of exhaustion’ in terms of strategies, after various tools, including pressure, have failed to make progress.” That’s interesting, but without the other part of his quote for context, it could leave you thinking that sanctions have failed as an instrument of policy. What Campbell really said is that we’ve never fully harnessed their potential.

Campbell also said, “We are in a set of circumstances now where it’s not clear fundamentally the way forward.” He observed that Kim Jong Il’s playbook, and the State Department playbook for responding to it, really aren’t working anymore, and that many of the North Koreans we used to talk to aren’t around any more, for various reasons. Efforts by a generation of policymakers to effect changes, including domestic reforms in North Korea, haven’t worked. As a result, sentiment here and in Northeast Asia has shifted, and people in the U.S. and other countries have migrated to the view that reunification, not continued separation, is in the best strategic interests of most of the major players in Northeast Asia. He called for more subversive information operations, including broadcasting, and for stronger diplomatic efforts with China, and especially with South Korea, to pave the way for reunification.

At which point, a gargantuan white mustache sprang from Campbell’s upper lip.

Yes, I’m aware that other former State Department types, specifically Robert Gallucci and Stephen Bosworth, are out there saying very different things. Yet despite the relative recency of Campbell’s tenure and his relatively higher place in State’s hierarchy, the press largely ignored the key part of Campbell’s remarks, but covered Gallucci and Bosworth’s widely.

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I have to think that if the Obama Administration disagreed with Campbell’s assessment, it wouldn’t have just transfused its North Korea team so thoroughly that the reader benefits from a diagram. Notably, Chief Negotiator Glyn Davies will move along to an ambassadorship elsewhere (possibly Thailand), Syd Seiler has moved from the White House National Security Staff to replace Davies, Allison Hooker will move from State to the NSS to replace Seiler, and Sung Kim will be a “special representative,” whatever that means.

The first thing Seiler did was to do no harm, by making it clear that the U.S. would not, contrary to rumors, hints, and China’s increasingly noisy demands, lower the bar on North Korea’s denuclearization to resume six-party talks, something that would effectively recognize North Korea as a nuclear state.

“We are not ideologically opposed to dialogue with North Korea, nor have we placed insurmountable obstacles to negotiations in our insisting that North Korea simply demonstrate it will live up to international obligations and abide by international norms and behavior,” he said in a speech at the Center for Strategic and International Studies.

“The bar has not been set too high by insisting that denuclearization talks be about denuclearization,” he said. [Yonhap]

That’s a lovely sentence for its elegance and clarity, and under the same circumstances, I probably wouldn’t have put it any differently. Seiler then summarized by saying that, “clearly, the ball is in Pyongyang’s court.” See also.

OFK regulars know that I haven’t been fond of Glyn Davies since this episode several years ago, and that the OFK archives have an elephantine memory. Josh Rogin described Davies as “a nuclear technology and Europe expert, having most recently served as the U.S. permanent representative to the IAEA in Vienna.” By contrast, Seiler has a very deep background in Korea. He’s a graduate of Yonsei University, has a Korean wife, and had nearly three decades of Korea experience at CIA and DNI before he went to the National Security staff. You’d expect such a man to know what a mackerel should cost, and how to haggle for a fair price. It helps that Seiler is no fool, either:

Like his predecessor, he agrees with the South Korean government’s North Korea policy and believes that the North should not be allowed to stall for time or be rewarded simply for talking.

A diplomat who has known Seiler for more than 10 years said, “He knows how the North cheated the U.S. and South Korea in the process of nuclear development.”

A Foreign Ministry official said, “If Russell, an expert on Japan, takes charge of Chinese and Japanese affairs as senior advisor at the NSC, Seiler will have enormous influence in Korean affairs.” [Chosun Ilbo]

If personnel is policy, then, the replacement of Davies by Seiler could herald modestly better policy. (If only we could have Kurt Campbell back….) At State, Seiler joins Danny Russel, his former White House colleague, who is now Assistant Secretary of State for East Asian affairs. The White House says that this shake-up doesn’t foreshadow a change in its North Korea policy, but that’s standard White House talk; the consequence of any other response would be a year of briefings, hearings, interviews, listening tours, and op-ed wars.

Seiler said the U.S. policy on North Korea is composed of three key elements — diplomacy, pressure and deterrence, and that Washington will continue to seek robust implementation of U.N. Security Council sanctions resolutions and its own sanctions on Pyongyang.

But he also held out the prospect of easing sanctions.

“If DPRK makes the right choice, returns to the negotiating table and embarks on a credible path of irreversible denuclearization and begins to comply with its international obligations and commitments, the appropriateness of sanctions will of course be reviewed,” he said. [Yonhap]

There’s little good that I could say about the robustness of that enforcement so far, or the quality of the diplomacy that’s been trying to hold our regional coalition together, but one can always hope. And not without some basis:

Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace, also said that the United States is unlikely to lower the bar for restarting the nuclear talks. Reported personnel changes in the U.S. government rather point to the opposite, he said.

“Overall there is nothing that I can see that suggests the U.S. government is even considering softening its stance on the many issues between Washington and Pyongyang. The new U.S. personnel changes suggest, in fact, the opposite,” he said. [....]

“Neither can be viewed as soft toward the North,” the expert said of Seiler and Kim.

Paal also said that the “secret trip” that American officials reportedly made to North Korea, even if it is true, must have focused only on the three American citizens detained in the North. The three men’s appearance before CNN cameras a week later reinforces this suspicion, he said. [Yonhap]

If Russel, Kim, and Seiler have similar views and work well together, they have the potential to make significant policy changes while a politically weakened administration is otherwise distracted by crises in the Ukraine, Iraq, Syria, Libya, Afghanistan, Pakistan, and Gaza. That almost mirrors the situation of Chris Hill in 2006, when he ran away with a politically weakened Bush Administration’s North Korea policy while Bush was distracted by Iraq, Iraq, Iraq, and Afghanistan. And as I’ve noted, there are some signs that the administration could be laying the groundwork for a harder line, although I doubt that it will be more than incrementally harder.

There are alternative theories, too. One that seems plausible to me is that Washington’s tactic of strategic patience, the trend of ‘not doing anything,’ has not changed.” That’s likely because doing nothing is what governments usually do when no single view prevails. And I’m far from certain that any single view prevails.

The Hankyoreh‘s analysis isn’t as plausible, but it’s much richer in amusement. It begins with rumors of another secret diplomatic trip to North Korea and runs feral with them. Although the administration would neither confirm nor deny the rumors, they probably have some basis in fact. Even so, they almost certainly do not mean “that the US will make an effort before the mid-term elections to improve relations with North Korea in order to manage the situation on the Korean peninsula” and ransom out Kim Jong Un’s new hostages. According to what insider or authority, you ask? “[S]ome predict,” says the Hanky, after a three-block sprint from the pojangmacha behind the bus station, gochujjang-stained notepad in hand.

Maybe I shouldn’t be too dismissive of something that’s been tried before, but in light of today’s political environment and North Korea’s conduct since 2012, this is so delusional that it’s adorable. The Hanky really seems to believe that a significant number of Americans (a) cares about North Korea at all, (b) wants better relations with North Korea, and (c) would be more likely to vote for the President’s party if its cuts a pre-election deal with North Korea, rather than much, much less likely. That the President’s pollsters have identified Peace Studies grad students as a decisive voting bloc in Arkansas, Louisiana, West Virginia, Alaska, and North Carolina. That, after the Bo Bergdahl ransom, the President basked in the gratitude of a grateful nation.

I don’t have any special insider knowledge here, but I’ll go out on a limb and express my doubt that the White House would want that experience again between now and November 4th, especially for the likes of a doofus like Matthew Todd Miller, or anyone else who’d be dumb enough to visit North Korea of his own diminished volition. I’d be surprised if there’s a deal at all, and I’d be astonished if its terms are made public before the election, including the Louisiana runoff, is safely in the rear-view mirror.

*  Or so I’ve heard somewhere. It may have been Alex Jones. I lost the link.

U.N. Panel of Experts to investigate M/V Mu Du Mong

A U.N. panel that upholds sanctions against North Korea’s nuclear weapons program is sending personnel to investigate a North Korean cargo ship moored at a Mexican port, U.N. diplomatic sources familiar with the matter told Kyodo News. [Yonhap]

“Sending personnel” suggests that the POE will inspect the ship. The POE also sent personnel to inspect the M/V Chong Chon Gang after Panamanian authorities found it smuggling weapons last year.

The travels of the M/V Mu Du Bong were first brought to our attention by investigative journalist Claudia Rosett, while it was crossing the Gulf of Mexico after a stop in Cuba. When the ship ran aground in a Mexican port, I called on the U.S. government to ask Mexico to search it, explaining that under UNSCR 2094, Mexican authorities had the authority, and arguably a duty, to do so (see paragraphs 16 and 17).

The Treasury Department has since sanctioned the Mu Du Bong and 17 other North Korean vessels, probably for their associations with Ocean Maritime Management, the North Korean front company that brokered the shipment of arms from Cuba to North Korea aboard the Chong Chon Gang. NK News’s Leo Byrne has also done an excellent follow-up report, finding that Mexican authorities had impounded the Mu Du Bong for lack of proper insurance.

See also Capitol Hill Cubans.

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Update: This post was edited after publication to correct the spelling of “Chong Chon Gang.”

N. Koreans are bootlegging liquor in Muslim countries

Last week, NK News published a detailed report on a black market in alcohol run by North Korean diplomats in Pakistan. Almost simultaneously, The Daily NK also reported that two North Korean “chauffeurs,” dispatched by the regime to Qatar, and nominally working for private companies there, had been arrested for bootlegging.

Two North Korean men are being detained in Qatar under suspicions of the distribution of illegal liquor; Voice of America [VOA] reported on September 4th, citing the Gulf Times, Qatar’s English language newspaper.

The men were alleged to have been selling the liquor to North Korean laborers there, as well as to citizens in surrounding nations, and if found guilty of the crime, will be deported back to North Korea. The Gulf Times was unable to confirm when or where the men were first arrested. [Daily NK]

Selling moonshine to thirsty construction workers is a novel, and typically exploitative, way to supplement those “loyalty” taxes expatriate workers must pay to the regime.

The report also references previous North Korean bootlegging arrests in Qatar, and arrests or investigations in India, Bangladesh, and Kuwait. According to a separate Gulf Times report from July of this year, another North Korean, who was working as an interpreter and has access to a car, was also arrested by Qatari police for selling alcohol and illegal drugs. (See also.)

North Korea’s bootlegging operations are not new, and probably as old as North Korea using diplomatic pouches to smuggle contraband and cash. Curtis Melvin points to a 1976 article in Time magazine about North Korean liquor and cigarette smuggling in Sweden and Denmark.

The earliest such report I found from the Middle East is from 2008, when “three North Koreans who converted their apartment into an alcohol factory” were arrested by Kuwaiti police, who also “seized 186 bottles of alcohol, 34 brewing barrels and gallons of alcohol.” There’s even a photograph.

Two other articles from The Arab Times, both undated, may describe separate seizures of 80 bottles and 200 bottles of liquor in Kuwait. Alcohol-related arrests of North Koreans are frequent enough there that annoyed South Korean diplomats monitor the local newspapers and ask them to clarify any reports that “Koreans” have been arrested for bootlegging.

With the exception of the NK News report from Pakistan, the reports do not directly implicate North Korean diplomats, but it’s difficult to imagine that overseas North Korean workers, whose movements and remittances are always carefully monitored — indeed, who have no means to send money home to their families directly — would engage in such activities without tacit official approval, and without being expected to hand the proceeds over to their regime handlers. The Chosun Ilbo described the arrangement this way, in a 2009 interview with a source in Abu Dhabi, in the UAE:

One source in Abu Dhabi said, “North Korean workers make between $300 and $500 a month, but the North Korean government confiscates $150 and even $250 as loyalty payments, leading to a lot of conflict.” North Korean labor export companies skim off an excessive amount of money from salaries. The level of discontent recently prompted the North Korean government to dispatch security agents who trawl construction sites on weekends to provide ideological “cleansing” sessions to workers. [....]

“The North Korean companies that sent the workers abroad are aware of the bootlegging but are turning a blind eye as long as the laborers pay portions of the profits,” one local source said. [Chosun Ilbo]

The construction companies, in turn, are almost certainly under the direct control of the local North Korean embassies. This arrangement has the advantage of putting two layers between the embassies and the retailers. That gives the embassies plausible deniability, and avoids disruption to the other business operations the embassies are involved in.

The real test of the regime’s culpability, of course, is how the profits move. At the end of the day, I’d wager that nearly all of the profits end up deposited in regime-controlled accounts, co-mingled with the proceeds of legal businesses to disguise their illicit origins, and wired through multiple shell companies to other regime-controlled offshore accounts.

I confess to some ambivalence about this line of business. I can certainly think of worse things North Korean diplomats have smuggled, but you can’t pick and choose what you allow a criminal organization to sell. You have to uproot all of it or none of it. And on balance, I don’t suppose North Korea’s bootlegging is any more likely to liberalize the Middle East than a few ChocoPies are to liberalize North Korea.

Yet again, as with the recent and not-so-recent arrests of North Koreans for illegal gambling (second section), we see that North Korea has no moral objection to capitalism, as long as it’s state capitalism. It just objects to granting economic liberty to its subjects, and to freeing them from hunger and dependency.

Just like France had an unparalleled defense wall on the German border in 1940

The spokesman said that the U.S. has instituted an “unparalleled international sanctions regime that has successfully impeded proliferation, constrained the growth of North Korea’s nuclear and missile programs, and driven up the cost Pyongyang’s misbehavior.” [Yonhap]

What utter nonsense. It would be charitable to accuse him of lying. I doubt he has any idea what he’s even talking about.

Radio Free Asia interviews me about North Korea sanctions.

Link here; hat tip to Adam Cathcart.

Top N. Korean money man defects to “third country”

A senior North Korean banking official who managed money for leader Kim Jong Un has defected in Russia and was seeking asylum in a third country, a South Korean newspaper reported on Friday, citing an unidentified source.

Yun Tae Hyong, a senior representative of North Korea’s Korea Daesong Bank, disappeared last week in Nakhodka, in the Russian Far East, with $5 million, the JoongAng Ilbo newspaper reported. [Reuters, Ju-Min Park and James Pearson]

Daesong Bank is sanctioned by both the U.S. Treasury Department and the European Union, and is closely linked to the infamous Bureau 39. This guy could know where a lot of bodies are buried, metaphorically speaking. Also, literally.

The Joongang Ilbo, which broke the story, says that Yun “officially worked as president of the bank” and “was in charge of raising and managing slush funds for Kim in Northeast Russia.” Apparently, Yun made a withdrawal of about $5 million from that slush fund before his defection, and North Korea has a substantial penalty for early withdrawal.

North Korea’s activities in the region include its infamous logging camps and the recently-sanctioned, Vladivostok-based Ocean Maritime Management, the agent for the Chong Chong Gangthe Mu Du Dong, and other sanctioned vessels. And, God-knows-what else.

“We were tipped off that Jon Il-chun, the first deputy director of the Central Committee of Workers’ Party who was effectively in charge of Office 39, is currently in a very unstable position in an ongoing power struggle [in the ruling party] following several recent incidents,” another source said. 

The allegation suggests to Seoul officials that in his third year of power, Kim Jong-un may be having problems managing his financial affairs.

Some sources said Yun’s defection could be part of the aftermath of the brutal execution of Kim Jong-un’s uncle, Jang Song-thaek, in December 2013.

North Korean officials in charge of foreign currency in China and other Western countries were allegedly part of Jang’s inner circle, sources said, and some of them felt threatened by Jang’s death and have vanished. [Joongang Ilbo]

After Jang’s purge, there were reports that dozens of North Korea’s offshore financiers had been called home, and (wisely) didn’t come. The Joongang Ilbo has done the best reporting of North Korean money laundering of all of the Korean papers.

God, how I hope the CIA and Treasury will have a chance to debrief this man. And that he brought his laptop with him. And that he isn’t the only one who has reached safety in the embrace of “third-country” intelligence officers.

Hat tip to a reader and friend.

Australian MP calls for divestment from mining venture in N. Korea

To maintain its iron-fisted hold over the North Korean population, the Pyongyang regime needs hard currency, and it is clear that these projects could provide billions of dollars to the North Korean leadership.” [Michael Danby, MP]

It won’t surprise you that I oppose any investment in an unreformed North Korea that continues to slaughter its own people and menace its neighbors. I believe that those who justify investment as a driver of reform have it completely backwards, that investing in the status quo only perpetuates and reenforces it, and that denying the regime the hard currency that sustains it is the only way to force change. As the North Korea human rights movement gains strength, I hope it will catalyze a divestment movement like the one that helped destroy apartheid.

But that’s not the only question I have about this particular investment. The Australian concern peddling this project is a British Virgin Islands-registered company called “SRE Minerals Limited,” which is doing so as part of a joint venture with a North Korean entity known as the “Natural Resources Trading Company of the DPRK,” or alternatively, as “Korea Natural Resources Trading Corporation.” North Korea watchers know that as a general matter, “North Korea’s mining resources are a major source of revenue for its nuclear and missile programs.” But what about this specific entity?

As the U.N. Panel of Experts recently reminded us, North Korean entities are notorious for their use of multiple similar aliases. Recalling something familiar about the name of that North Korean entity, I checked the SDN list and found several entities designated under executive orders 13382 or 13551 that have suspiciously similar names:

KU’MHAERYONG COMPANY LTD (a.k.a. CHO’NGSONG UNITED TRADING COMPANY; a.k.a. CHONGSONG YONHAP; a.k.a. CH’O’NGSONG YO’NHAP; a.k.a. CHOSUN CHAWO’N KAEBAL T’UJA HOESA; a.k.a. GREEN PINE ASSOCIATED CORPORATION; a.k.a. JINDALLAE; a.k.a. NATURAL RESOURCES DEVELOPMENT AND INVESTMENT CORPORATION; a.k.a. SAENGP’IL COMPANY), c/o Reconnaissance General Bureau Headquarters, Hyongjesan-Guyok, Pyongyang, Korea, North; Nungrado, Pyongyang, Korea, North [DPRK].

NATURAL RESOURCES DEVELOPMENT AND INVESTMENT CORPORATION (a.k.a. CHO’NGSONG UNITED TRADING COMPANY; a.k.a. CHONGSONG YONHAP; a.k.a. CH’O’NGSONG YO’NHAP; a.k.a. CHOSUN CHAWO’N KAEBAL T’UJA HOESA; a.k.a. GREEN PINE ASSOCIATED CORPORATION; a.k.a. JINDALLAE; a.k.a. KU’MHAERYONG COMPANY LTD; a.k.a. SAENGP’IL COMPANY), c/o Reconnaissance General Bureau Headquarters, Hyongjesan-Guyok, Pyongyang, Korea, North; Nungrado, Pyongyang, Korea, North [DPRK].

CHANGGWANG SINYONG CORPORATION (a.k.a. EXTERNAL TECHNOLOGY GENERAL CORPORATION; a.k.a. KOREA KUMRYONG TRADING COMPANY; a.k.a. KOREA MINING DEVELOPMENT TRADING CORPORATION; a.k.a. NORTH KOREAN MINING DEVELOPMENT TRADING CORPORATION; a.k.a. “KOMID”), Central District, Pyongyang, Korea, North [NPWMD].

To be clear, neither the “Korea Natural Resources Trading Corporation” nor the “Natural Resources Trading Company of the DPRK” is on the SDN list, but can anyone establish whether it is or isn’t an alias or subsidiary of one of the listed, blocked entities? I’ve put the question to Treasury’s Office of Foreign Assets Control; in the end, it’s their job to clarify that.

Perhaps one of my journalist friends can pursue this further.

Technically, John Kerry and the State Department didn’t violate their own Burma sanctions

… by staying in the hotel of a regime crony whose assets are blocked, but only because of the travel exemption at 31 C.F.R. § 537.210(d). Still, doesn’t patronizing a bloody-handed crony send a pretty lousy message — especially given Burma’s unsteady progress toward reform?

Is Obama’s North Korea policy at a tipping point?

Following of Congress’s resounding, bipartisan vote of no confidence in the Obama Administration’s North Korea policy last month, Secretary of State John Kerry has been traveling around the Pacific. In Australia, while meeting with that country’s Foreign Minister and Defense Minister, he traversed his gargantuan mandible toward Pyongyang and threatened to tighten sanctions “if it ‘chooses the path of confrontation.” If? If?

“The United States — I want to make this clear — is absolutely prepared to improve relations with North Korea if North Korea will honor its international obligations,” Kerry said at a joint news conference, according to the State Department. “But make no mistake. We are also prepared to increase pressure, including through strong sanctions and further isolation, if North Korea chooses the path of confrontation.” 

In a joint communique, the U.S. and Australia underscored their “serious concern” that North Korea’s behavior has undermined the stability of the entire region and called on it to cease its threats and provocations and comply with its international commitments and obligations, including abandoning its nuclear, missile and proliferation activities.

They also expressed deep concern for the welfare of the North Korean people and called on Pyongyang to implement the UN Commission of Inquiry’s recommendations for ending its ongoing systematic, widespread, and extreme violations of human rights. They said that those responsible must be held to account. [Yonhap]

It’s interesting that Kerry is trying to sound concerned about human rights. Sure, you say, President Obama could have issued an executive order targeting the assets and travel of North Korean human rights violators at any stage of his presidency, and could have modeled that executive order on similar ones it has imposed on Iran, Belarus, Zimbabwe, or South Sudan, to name a few. Still, Yonhap reports that the State Department “intends to increase pressure on North Korea to improve its human rights situation.”

Kerry, in his speech at the East-West Center in Honolulu, described human rights violations in North Korea as “horrific” and cited a U.N. human rights panel’s release in February of a report that chronicled abuses suffered by many of its people.

He said the report, which documented crimes against humanity including extermination, enslavement, enforced disappearance and deliberate starvation, “revealed the utter, grotesque cruelty of North Korea’s system of labor camps and executions.”

“Such deprivation of human dignity just has no place in the 21st century. North Korea’s gulags should be shut down — not tomorrow, not next week, but now. And we will continue to speak out on this topic,” he said. [Kyodo News]

We’ve since seen Pyongyang’s response to that. We’ll soon know just how sincere Kerry’s concern is, when the U.N. General Assembly votes to send the Commission of Inquiry’s report to the Security Council. Words are no substitute for more tangible actions, they are a start, and a necessary part of a campaign to rally allies toward a common objective.

Kerry made the demand in an unusually strong tone in an Asia policy address on Wednesday, saying such deprivation of human dignity “just has no place in the 21st century.” He stressed that gulags must be shut down “not tomorrow, not next week, but now.” The top American diplomat also said the U.S. will continue to speak out on the issue. [Yonhap]

Continue? And merely speak? Or actually do something that would matter, like deploy the Treasury Department to sanction the persons and government agencies that are running a string of concentration camps unlike anything the world has seen since 1945?

Financial and other sanctions imposed on Iran, Russia and North Korea will be among major topics discussed when a senior U.S. Treasury official visits Seoul this week, government sources said Tuesday.

David S. Cohen, Treasury Under Secretary for Terrorism and Financial Intelligence, is scheduled to visit Seoul from Wednesday through Thursday, according to the sources. The U.S. Treasury Department said Monday that Cohen will visit Japan, South Korea, China, the United Arab Emirates and Oman during the period of Aug. 18-25.

Cohen is in charge of Washington’s sanctions on Pyongyang for its nuclear and long-range missile tests. In Seoul, he will meet with Lee Kyung-soo, deputy minister for political affairs at South Korea’s foreign ministry as well as Hwang Joon-kook, the country’s top nuclear envoy, the South Korean sources said. Cohen’s planned visit to Seoul comes on the heels of the recent visit by Peter Harrell, a senior U.S. diplomat on sanctions affairs.

Harrell, deputy assistant secretary for counter threat finance and sanctions at the State Department, visited in Seoul late July to ask Seoul to join Washington-led efforts to impose tougher sanctions against Russia. [Yonhap]

This doesn’t mean that the Obama Administration is laying a foundation for action, or that the action will be effective. If the administration does intend to act, however, a visit like this would be a prerequisite to that. In the wake of Japan’s bilateral lifting of sanctions to the detriment of U.S. and South Korean interests, it’s particularly essential to shore up South Korea’s determination to keep its existing sanctions in place, even as Park Geun-Hye comes under domestic political pressure to lift them. Fortunately for Park, that pressure is somewhat attenuated by her party’s good performance in recent bi-elections:

President Park Geun-hye warned Thursday that South Korea’s sanctions on North Korea are inevitable as long as Pyongyang persists in its nuclear weapons program. [....]

Under the sanctions, South Korea has suspended inter-Korean projects and banned new investments in the North, except for their joint factory park in the North’s border city of Kaesong.

Nonetheless, Park said South Korea will gradually expand exchanges and cooperation with North Korea as far as they do not undermine international cooperation on implementing U.N. sanctions. [....]

Park also said South Korea is seeking to lay the groundwork for peaceful unification with North Korea by gradually expanding exchanges and cooperation. She unveiled her unification initiative in Dresden, the former East German city she traveled to in March.  [Yonhap]

Park has to be thinking that North Korea hasn’t done anything to deserve sanctions relief, and she isn’t one to give away something for nothing. She says she’s interested in a larger bargain with Pyongyang, and that sanctions relief can be one chip in that bargain. North Korea’s unsurprising position is that the South will have to lift its sanctions as a precondition to talks. Park’s answer is that that isn’t going to happen.

That means that on multiple tracks, all talks about talks with North Korea are stuck on the preconditions. As Pyongyang stalls for time and increases its capacity to threaten its interlocutors, the interlocutors struggle to maintain a coherent and consistent position, in furtherance of a policy whose ostensible desired end state, the negotiated denuclearization of North Korea, has never seemed less likely. With nuclear diplomacy in rigor mortis and North Korea advancing its weapons programs at full speed, what those allied against North Korea need desperately is leverage, and they know sanctions are the best way to get it.

Will they finally act? If they do act, will they simply ratchet up the sort of incremental pressure that North Korea has learned to adapt to, or will they deliver enough of a shock to its system to convince Kim Jong Un that time is no longer on his side?

John S. Park of the Harvard Kennedy School thinks North Korea has …

become more adept at sanctions evasion, and sounds bearish about the prospects for success. I have no doubt that the first part of Park’s thesis is correct. I’m sure Pyongyang has diversified its income streams since Banco Delta Asia, which means that it will be harder to get back to where we were in 2005. On the other hand, I don’t think it will be impossible for sanctions to work, either. Al Qaeda, Iran, and the Medellin Cartel all have smart money launderers, and in the end, Treasury was effective against all of them. Unless North Korea has reinvented money laundering in ways that these targets haven’t, sanctions will work if given the appropriate investigative resources.

I’ll withhold judgment on the second part of Park’s thesis until I read it. I did contact Park to ask if he had published a paper or explained the basis for his views in detail, but so far, he hasn’t responded (he might be on his way back from Korea). I’ve read dozens of opinions that argued that sanctions haven’t worked against North Korea, but not one of those opinions showed much understanding of sanctions law, or how weak U.S. sanctions against North Korea really are. Without understanding the limitations of our current sanctions, or the extent of the authorities we still haven’t used, it’s impossible to understand their potential.

Australian government finds “abandoned” N. Korean funds.

While most of these were accounts held by people in China, Hong Kong, Japan, Britain and the United States, some can be traced to addresses as far afield as North Korea, Syria and the Democratic Republic of the Congo. Some will doubtless never be claimed.” I’ll bet there’s a fascinating story there.

Japan sanctions Ocean Maritime Management, following the U.N.’s designation …

of OMM, and amid its own ransom negotiations with North Korea. One of the terms of that ransom was the lifting of Japan’s national shipping sanctions, which obviously predated the U.N. designation. [link]

About Damn Time: Treasury sanctions 2 N. Korean companies, 18 ships over Chong Chon Gang (updated)

More than a year after Panamanian authorities uncovered a massive shipment of Cuban weapons on its way to North Korea, in clear violation of multiple U.N. Security Council resolutions, the U.N. and Treasury have finally done something about it. That something could contain the makings of one part of an effective sanctions strategy, but it will still probably disappoint some powerful members of Congress in both parties.

As I noted yesterday, and after public criticism by former head U.N. sanctions expert Martin Uden that the U.N. had been slow to respond to the Chon Chong Gang incident, the U.N. Sanctions Committee finally got around to designating a single entity — Vladivostok-based Ocean Maritime Management (OMM), the shipping agent for the arms deal. The U.N. failed to designate other involved entities, including Singapore-based Chinpo Shipping, conveniently co-located with the local North Korean embassy, or any of the Cuban entities involved in the deal.

I wrote yesterday morning that the U.N.’s decision would probably force Treasury to designate OMM, and that prediction was proven correct within hours of my posting. Treasury also designated Chongchongang Shipping Company, evidently a one-ship enterprise, but it declined to strike at Kim Jong Un’s Chinpo.*

At this hour, there’s still no word from Vladimir Putin about whether he intends to comply with U.N. sanctions, close down OMM, and force it to move to Conakry or Dar-es-Salaam under a new name.

The more interesting part of yesterday’s Treasury announcement was treated as an afterthought in reports from Reuters, The Wall Street Journal, and Yonhap — the designation of 18 North Korean merchant ships. A cursory examination of NK News’s North Korea shipping tracker, however, reveals that this is a significant percentage of North Korea’s merchant fleet.

Better yet, one of the ships designated was the OMM-linked M/V Mu Du Bong, which sits stranded in a Mexican port after returning from Cuba. The designation signals that the U.S. government may ask Mexican authorities to search the ship, as I urged in this post.

The authority for the designations was Executive Order 13551, which authorizes sanctions against —

(ii) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

    (A) to have, directly or indirectly, imported, exported, or reexported to, into, or from North Korea any arms or related materiel;

   (B) to have, directly or indirectly, provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea;

The designation of a ship makes it difficult for the vessel obtain insurance, repairs, fuel, and other bunkering services that it needs to operate. Similar sanctions have been reasonably effective against the Iranian tanker fleet. The inclusion of the vessels’ IMO numbers will make it difficult for North Korea to evade sanctions by constantly reflagging its ships, something it is notorious for.

The vast majority of North Korea’s shipping traffic is with China. It remains to be seen whether these ships will continue to ply their trade across the Yellow Sea. It will be worth watching that shipping tracker carefully in the coming weeks.

Expect North Korea to adapt by switching off the transponders on its ships. An interesting question I haven’t researched (but perhaps commenter David knows) is whether a U.S. Navy vessel encountering a Treasury-designated vessel on its way to, say, Bandar Abbas with its transponder and its lights switched off has a right to search it at sea.

In February, Hugh Griffiths and Lawrence Dermody of the Stockholm International Peace Research Institute wrote a very interesting analysis of how sanctions against North Korean shipping companies could be an effective tool against smuggling and proliferation.

Treasury’s action raises the number of designated North Korean entities from 43 to 63, still far less than Zimbabwe or Belarus, whether you measure that in terms of raw numbers or the significance of the designations themselves. Yesterday’s designations closed that gap just a bit, and sent the message that at least North Korea isn’t absolutely immune from all its bad acts — just that genocide stuff.

If expanded, sanctions against North Korean ships could make it more difficult (but not impossible) to smuggle arms by relying on third-country vessels. And of course, there’s always Chinese airspace. If enforced aggressively, shipping sanctions could complement expanded financial sanctions to pressure North Korea and deny it one means to proliferate.

The Administration’s failure to designate any Cuban entities, however, will not please the eight members of Congress who recently signed a letter to our U.N. Ambassador, noted genocide-prevention expert Samantha Power, calling on her to push the Security Council to designate “Cuban officials and entities involved in arms smuggling to North Korea.” 

Whether Power pushed for sanctions against North Korea’s Cuban vendors isn’t clear, but it’s clear the U.N. isn’t going to impose them. The Panel of Experts’ report on the Chong Chon Gang incident didn’t find the evidence against Cuban entities to be as strong as it was against North Korea, mainly because the Cubans didn’t cooperate with the POE, and because it wasn’t their ship that was caught in the act. It’s a well-recognized principle in the law** that when a party hides evidence, fact-finders are entitled to make adverse inferences about just what party is hiding. And designating North Korea’s co-conspirators sends an important message to governments like those in Ethiopia, Somalia, Congo, and Tanzania, which were named in previous U.N. POE reports as suspected North Korean arms clients.

Most of the letter’s signatories are members of the House Foreign Affairs Committee. All but one, Rep. Albio Sires of New Jersey, are Republicans. Sires is also one of Congress’s strongest advocates of human rights in North Korea, and is said to be a close ally of New Jersey’s senior senator, Robert Menendez, the Chairman of the Senate Foreign Relations Committee. Both Sires and Menendez are conservative Cuban-American Democrats.

(While I’m on the topic of Menendez, I have to ask whether the ultra-conservative bloggers who may have been taken in by a Cuban government smear operation against Menendez would really prefer to have Barbara Boxer as Chair of SFRC. Don’t get me wrong — Boxer has a great reputation on human rights, but on national security issues, she isn’t nearly as tough-minded as Menendez. For that matter, neither was Richard Lugar — not by a mile.)

The Chong Chon Gang incident was an opening for North Korea human rights activists to reach out to Cuban-Americans in both parties. The Cuban-American contingent in Congress is one of the most powerful on the Hill, and also includes rising Republican star Senator Marco Rubio, and firebrand Congresswoman Ileana Ros-Lehtinen. And if powerful constituencies matter, last week’s revelation that North Korea is selling rockets to Hamas won’t help Pyongyang’s position on Capitol Hill.

The letter is the latest sign that Congress is increasingly uncomfortable with the pace of the Obama Administration’s enforcement of U.N. sanctions against North Korea. In light of these new developments, these members of Congress should consider calling for additional EO 13551 designations of the Cuban entities involved in Chong Chon Gang.

I’ve pasted a list of Treasury’s new designations below the fold.

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* The Editor preemptively apologizes for this.

** The obvious exception is that in criminal cases, no adverse inference can be drawn from a suspect’s invocation of his right to remain silent. 

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Update, 1 Aug 2014: It’s starting to look good for my prediction that the Cuban-American reaction would be fierce. Capitol Hill Cubans has a furious reaction to Cuba’s omission from the list of designated entities.

Read more

Former U.N. sanctions investigator calls U.N.’s slow response to Chong Chon Gang incident “regrettable”

If you care at all about North Korea sanctions, then NK News’s interview with Martin Uden, the former head of the U.N. Panel of Experts investigating the enforcement of sanction on North Korea, is an absolute must-read. I’ll give you a taste, and then you’ll have to read the rest on your own:

In particular, the seizure of a DPRK cargo vessel in Panama in 2013 – the Chong Chon Gang – highlighted that North Korea remains actively engaged in sanction-breaking behavior.

But even though the most recent Panel of Experts report published in March concluded that the vessel’s cargo of munitions – MiG fighter jets and Soviet-era radar systems – did constitute a breach of sanctions, the response from the UN Sanctions Committee was muted.

“The problem of course is the lack of action by the Sanctions Committee, and that I think is more regrettable. This [case] was a pretty much an in flagrante delicto violation of UN sanctions” Uden said. [Leo Byrne, NK News]

It’s reporting like this that makes me hope we’ll have NK News at least as long as we have North Korea.

Lo and behold, five days after that interview is published, the Sanctions Committee has finally designated Ocean Maritime Management, but not Chongchongang Shipping, Chinpo Shipping, Korea Central Marketing and Trading Corporation, Tonghae Shipping Agency, or any of the Cuban entities involved in the transactions.

Or, the bank that processed the transactions, whose identifying information was redacted out of the documents published in the POE Report. (Although it’s interesting that the sugar transaction, at least, was denominated in dollars.)

At this point, Treasury probably has no choice but to designate OMM, but of course, OMM could fold up and restart in Magadan, Trinidad, or the Seychelles next week.

Another OMM ship, the M/V Mu Du Bong, remains stranded in a Mexican port after running aground and damaging a nearby coral reef.

Where is John Bolton when we need him?

Yonhap interviews Ed Royce, on H.R. 1771

The day after the North Korea Sanctions Enforcement Act passed the House, Royce gave an interview to Yonhap:

“We have tried every approach to engage North Korea and the only time that we’ve ever really had their attention was when we’ve used some leverage on the regime itself,” Royce said in the interview in his office shortly after the bill’s passage on Monday, referring to the BDA sanctions. [....]

Royce said that chances of the bill passing through the Senate are “very good.”

“There’s a lot of bipartisan support for this legislation,” he said. “I know the feelings of many of the senators I’ve talked with. The senators feel as we feel that this is a step that we need to take.”

But the chairman stressed the bill won’t affect humanitarian aid to the North.

“What we are looking at doing is — instead of cutting off the aid to the regime itself — cutting off the institutions that the regime uses, not only to consolidate its power over the people of North Korea and violate their rights but also the institutions they use to build up, continue to build up their nuclear weapons program and their ICBM program,” he said. [Yonhap]

I’m interviewed further down in the piece.

H.R. 1771 passes House of Representatives on a voice vote

Chairman Royce (R, Cal.) and Congressman Gerry Connolly (D, Va.) both spoke strongly in favor. No member was opposed, and no member asked for a vote. The “ayes” had it just after 3 p.m.

If there’s any aspect of this that’s bittersweet, it’s that a lot of people who worked hard for this outcome could not be there to see it because the vote was scheduled on such short notice.

Here is the version that passed the House today.

Now, on to the Senate.

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Update: Jean Arthur explains congressional procedure to Jimmy Stewart in the classic “Mr. Smith Goes to Washington.”

I love that clip.

H.R. 1771 scheduled for a House floor vote on Monday

It’s on the calendar. And while I doubt there will be serious opposition in the House, we’ll need Kim Jong Un’s help to pass the Senate this year. But if not this year, next. Eventually, he’ll do something stupid, and when he does, we’ll be ready.

By itself, passage in the House would be a major symbolic victory. No one will ever be able to say there’s no alternative to standing by and watching a nation be slaughtered, strangled, and starved to death.

You hear a lot about how polarized this Congress is politically, but the Foreign Affairs Committee is a haven from that. The (relative) partisan and ideological balance in this bill’s support reflects that even in the Congress, there’s still a place where the two parties can work together. Royce himself has called our North Korea policy “a bipartisan failure.” H.R. 1771 represents a bipartisan recognition that we need a better strategy.

I can’t overstate my appreciation for so much hard work by Korean-American and other groups that mobilized to pass this bill: the Federation of Korean Associations, the North Korean Freedom Coalition, the Korean Church Coalition (which ran an outstanding event to support this bill two weeks ago), and of course, the Committee for Human Rights in North Korea.

[The Korean Church Coalition, 2014 Leadership Conference, Washington]

Finally, I can’t overstate my appreciation to Chairman Royce for delivering, and to the Foreign Affairs Committee’s talented, overworked, underpaid, and often unrecognized staff members — of both parties, and in the Asia Subcommittee — who did the hard work that made this bill possible.

APG needs N. Korea like the Vienna Boys’ Choir needs Jerry Sandusky

The Asia/Pacific Group on Money Laundering describes itself as “an autonomous and collaborative international organisation … consisting of 41 members and a number of international and regional observers [who] are committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism, in particular the Forty Recommendations of the Financial Action Task Force on Money Laundering (FATF).”

APG has an Associate Membership in FATF, the world’s primary international organization dedicated to fighting money laundering and terrorist financing, and one of the few international organizations in this world that actually works. Although membership in APG does not confer membership in FATF, it does allow the member (or observer) a degree of secondary influence over FATF’s decision-making. And since 2010, FATF has issued statement after statement cautioning banks and finance ministries about North Korea’s “failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system.”

No doubt, Kim Jong Un’s financiers in Pyongyang understand the potential consequence of being severed from the global financial system, which is why, since February, Pyongyang has “engaged” with FATF to “discuss” its deficiencies. Presumably, those discussions are nothing more than discussions; otherwise, FATF wouldn’t still be urging Pyongyang to “immediately and meaningfully address” the deficiencies. It also explains why North Korea wants into APG.

As always, the flaw in this engagement is the absence of evidence that Pyongyang has made a decision to abide by the rules and common values of the association engaged with. As U.N. Security Council Resolution 2094 points out, FATF also supports “targeted financial sanctions related to proliferation.” North Korea not only remains constitutionally dedicated to developing nuclear weapons in violation of that resolution (and others), it is also dedicated to financing its WMD programs by any means necessary. We saw this most recently when North Korea lost a World Cup match of sorts — no, not that internet hoax, but the one it played against the Cambodian police.

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Earlier this month, Yonhap reported that Cambodian authorities had arrested 15 North Koreans in Phnom Penh for running illegal gambling websites that were booking bets on the World Cup, which North Korea did not win, and for conducting cyber warfare against South Korea. The report was sourced to “a South Korean government source,” who also said the Cambodians “seized computers and other related equipment.”

It’s a far better thing to seize computers, which talk, than to seize North Koreans, who don’t. The computers could provide valuable information about North Korean bank accounts, financial relationships, co-conspirators, and the currencies and media of exchange used. It might even provide proof to support longstanding suspicions that North Korea’s overseas restaurants, including those in Cambodia, are fronts to launder money from the proceeds of activities like illegal gambling.

If the Treasury Department were at all serious about targeting North Korea’s financial enablers — a purely theoretical discussion, because it isn’t — an effective computer forensic analysis could give Treasury the basis to sanction North Korea’s third-country enablers.

North Korea has a long history of using illegal online gambling to finance itself. In 2011, the rheumy-eyed, snaggle-toothed old Trotskyists at The Guardian reported that “an elaborate hacking network” run by 30 North Koreas based in China “broke into online sites hosted in South Korea and stole prize points worth almost £3.7m ($6m)” using malicious code. Authorities also arrested five South Koreans for distributing the malware. Just four months before that report, the Russian Foreign Ministry “reprimanded the North Korean and Belarusian ambassadors for running illegal gambling on their premises in Moscow;” specifically, “a large network of underground casinos.” Even Dennis Rodman’s recent visit to Pyongyang was sponsored by Paddy Power, a (legal) Irish online gambling site. More here, here, here, and here.

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Given North Korea’s long, promiscuous history of counterfeiting, proliferation, arms sales to terrorists, and money laundering – and the fact that this history leads right up to the present day — I can’t help wondering whose bright idea it was to offer North Korea “observer” status in APG, whose “members and … observers” are supposed to be “committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism.”

The arguments against this are as obvious as the reasons why those Craigslist ads say “disease-free.” North Korea will use its usual Jedi mind tricks to make contacts, schmooze, and persuade APG members (and indirectly, FATF) that it’s this close to some endlessly receding horizon that may or may not be a real step toward financial transparency. If, like me, you spent the last ten years watching how well those tricks worked on South Korea and our State Department, you can imagine how they’ll work against APG. The consequence will be the relaxation, rather than the strengthening, of anti-money laundering enforcement standards.

It’s clear enough how accepting this invitation serves North Korea’s interest in perpetuating its money laundering and proliferation.

The APG will decide later whether to elevate North Korea from observer status to a member country once it evaluates Pyongyang based on its annual reports to the organization and visits by the representatives of the group over the next three years.

South Korea and many other members are trying to figure out the motive behind the unexpected move by Pyongyang, because North Korea was previously opposed to joining the APG.

“[North Korea’s motive] is a mystery to us,” said a high ranking government official, who requested anonymity. “We suspect that North Korea, while looking for ways to ease the international financial restrictions imposed on them, decided to show their efforts in improving their global image [by joining the APG].

“But since the lists that they need to follow are long, we will probably have wait and see how sincere and determined they are with their decision.”

In other words, it could be a facade as a way for North Korea to ease the sanctions imposed on it, since the possibility that Pyongyang will give up its nuclear ambitions is low.

The action is particularly suspicious because up until last year’s APG meeting held in Shanghai, North Korea refused to join the organization because of the rule requiring members and observers to follow global standards. North Korea at the time argued that it would join the APG only after the agreement to follow UN resolutions was taken out. [Joongang Ilbo]

It’s hard to see what good this invitation does for APG, FATF, or the financial system. North Korea clearly hasn’t made the fundamental decision to abide by the shared values of any of those associations. And that fundamental decision is what gives “engagement” the potential for those associations to change North Korea, as opposed to the very opposite outcome.

It’s easier to see the dangers this move creates — again, absent evidence that North Korea has seen the evil of its ways and decided to change them. The most obvious is that it gives North Korea undeserved legitimacy in area where it has been the world’s most flagrant recidivist.

Then, there is the example of the U.N. Human Rights Commission to draw from. I suppose that once, long ago, some addlebrained diplomat hypothesized that if only the leaders of China, Cuba, and Libya could be exposed to the principles by which the rest of civilized humanity lives, their leaders would feel compelled to conform themselves to those principles. What happened instead was that China, Cuba, and Libya took over the Human Rights Council, eviscerated its founding values, and destroyed it. So it goes whenever international institutions welcome members who don’t share the common principles of the institutions.