Category Archives: Sanctions

Scott Snyder: increase sanctions, including secondary sanctions, on Pyongyang

In a new paper for the Council on Foreign Relations, Snyder has called for increasing pressure on Pyongyang through sanctions, to persuade it that it must disarm or perish:

Since defecting from Six Party negotiations on denuclearization in 2008, North Korea has pursued nuclear development unchecked by international constraints. Barack Obama’s administration has demanded that Pyongyang make a strategic choice to denuclearize and tried to build a regional consensus opposing North Korea’s nuclear efforts, but it has been
unable to halt the country’s nuclear weapons development. Instead, North Korea’s continued nuclear and missile development is designed to force U.S. policymakers to make an undesirable choice: either acquiesce to the reality of a nuclear North Korea or mobilize international support for the destabilization of the North Korean regime.

To stop the North Korean nuclear threat, the United States should take three steps. First, Washington should increase pressure on Pyongyang so that the regime recognizes its existential choice between survival and nuclear status. Second, the United States should pursue five-party talks (Six Party framework members minus North Korea) to develop a viable pathway for North Korea to survive and benefit from denuclearization. Such a regionally supported consensus on a route to denuclearization would seek to induce a debate inside North Korea regarding the costs and benefits of its pursuit of nuclear status. And third, the United States should encourage China and Russia to withdraw political support for and increase pressure on North Korea until the regime commits to denuclearization. [Scott Snyder, Council on Foreign Relations]

Read the rest on your own; it’s only a few pages long (HT: Yonhap). Whatever my small quibbles with Scott Snyder’s writings on occasion, there’s no question that he’s one of the most respected Korea scholars in Washington, and any shift in Snyder’s thinking is likely to reflect or catalyze more shifting opinions within the conventional wisdom here. I find much more to agree with in this paper than Snyder’s previous take on sanctions policy.

The paper still raises some questions. The first of these is how we can “encourage” a recalcitrant China and Russia, when both countries have engaged in a pattern of willful non-enforcement. In China’s case, I recently described that pattern in great detail. I’ll present a similar case about Russia later this week. Would Snyder be willing to go as far as taking up Andrea Berger’s call for secondary sanctions? I’d say “yes,” based on this:

The Obama administration should apply increased political and economic pressure on North Korea to convince its leaders that a nuclear North Korea is a dead-end option. The United States should work with its allies to expand sanctions to target businesses and banks that refuse to cease cooperation with North Korea. At the same time, the United States and its allies should emphasize to Pyongyang that expanded sanctions will be relieved if North Korea takes meaningful, concrete steps toward denuclearization, such as resuming cooperation with the International Atomic Energy Agency (IAEA) by allowing the return of international inspectors to the country. The United States should also remind North Korea that military provocations risk escalation that could lead to the country’s demise.

We know from past experience that whatever the objections of the Chinese government to secondary sanctions — and I was recently regaled over dinner with how furiously some of its representatives reacted to this paper, much to my amusement — historically, Chinese banks have been responsive to the threat of secondary sanctions. It’s reasonable to believe that Russian banks would respond to the same forms of “encouragement.”

Then, would Snyder focus our demands exclusively on the nuclear issue, excluding concerns about North Korea’s chemical and biological weapons, its cyber-warfare, its money laundering, its increasingly dangerous artillery rocket arsenal, and its crimes against humanity? It may be that our interests demand that Pyongyang commit to a more fundamental change of its world view than disarmament alone; after all, its expansion into uranium enrichment makes disarmament much harder to verify, especially without Pyongyang’s acceptance of much more transparency.

The human rights issue is of growing importance to policy debates in Europe and elsewhere. This also points to one flaw of the five-party formulation. The use of progressive diplomacy instead would allow us to enter talks with a coalition behind us, rather than by going straight to talks with governments that are disunited or (in the case of China and Russia) hostile to our interests.

Overall, however, Snyder’s paper is refreshingly realistic about Pyongyang’s intentions, and about the need for us to be more aggressive about curtailing them.



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Treasury blocks assets of North Korea’s ambassador to Burma

Although I suppose it’s probably a complete coincidence that Treasury finally blocked the assets of four North Korean proliferators in Burma last Friday, I’d like to think it stung a bit when, a few weeks ago, at this conference at the Johns Hopkins School of Advanced International Studies, I said this:

Here’s a link to Treasury’s announcement of the designation of four individual North Koreans, including Pyongyang’s Ambassador to Burma:

HWANG, Su Man (a.k.a. HWANG, Kyong Nam); DOB 06 Apr 1955; nationality Korea, North; Passport 472220033 (Korea, North) (individual) [DPRK2] (Linked To: KOREA MINING DEVELOPMENT TRADING CORPORATION).

KIM, Kwang Hyok, Burma; DOB 20 Apr 1970; nationality Korea, North; Passport 654210025 (Korea, North); Korean Mining Development Trading Corporation Representative in Burma (individual) [DPRK2] (Linked To: KOREA MINING DEVELOPMENT TRADING CORPORATION).

KIM, Sok Chol, Burma; DOB 08 May 1955; nationality Korea, North; Passport 472310082; North Korean Ambassador to Burma (individual) [DPRK2].

RI, Chong Chol (a.k.a. RI, Jong Chol); DOB 12 Apr 1970; Passport 199110092 (Korea, North) expires 17 Mar 2014; alt. Passport 472220503 (Korea, North) expires 06 Jun 2018; alt. Passport 654220197 (Korea, North) expires 07 May 2019 (individual) [DPRK2] (Linked To: KOREA MINING DEVELOPMENT TRADING CORPORATION).

The bracketed “DPRK2” means the designations were under the potentially sweeping but still barely used new Executive Order 13687, which allows Treasury to designate any North Korean government or ruling party official, entity, or enabler. This means Treasury doesn’t have to publish detailed reasons for its designations. According to GAO, this should make the process of designating North Korean entities much easier, although we’ve seen relatively little action from Treasury since the order was signed on January 2nd, shortly after President Obama blamed Pyongyang for the Sony hack and cyberterrorist threat.

Treasury’s announcement doesn’t give a specific reason for the designations, but does say that the targets are linked to the Korea Mining Development Corporation (KOMID), which has been designated for WMD proliferation since the George W. Bush administration. Treasury also designated a North Korean trading company in Egypt.


According to Yonhap, EKO is “a North Korean government entity located in Egypt,” and was designated “for helping KOMID market North Korean weapons systems to foreign countries.” You can find references to similarly named entities through a Google search.

“Today’s action is designed to counter North Korea’s attempts to circumvent U.S. and United Nations (UN) sanctions, as well as maintain the effectiveness of U.S. sanctions on individuals and entities that are linked to the North Korean Government’s weapons of mass destruction procurement network,” the department said. [Yonhap]

Let’s start by accentuating the positive. The designation of a sitting ambassador represents a notable and long-overdue escalation in Treasury’s designations.

The Ambassador was reportedly paid by the sanctioned DPRK company and arranged meetings on their behalf.

“‘The designation of the DPRK Ambassador to Burma is unprecedented. It is a strong signal to the new Burmese government that the US has persistent concerns about the relationship between North Korea and the country’s military which it expects to be promptly addressed,” Andrea Berger of the Royal United Services Institute (RUSI) told NK News.

“The January EO is much broader in scope and therefore involves a different standard of evidence: it is only necessary to demonstrate that a person is a North Korean official or has materially assisted the North Korean government. There is no doubt that the Ambassador meets these criteria,” Berger added. [NK News, Leo Byrne]

Ordinarily, the Vienna Convention protects the activities of diplomats as inviolable. North Korea’s abuse of these protections, however, is so widely acknowledged that even the U.N. Security Council’s latest North Korea sanctions resolution calls for the “targeting the illicit activities of diplomatic personnel,” expresses concern that Pyongyang “is abusing the privileges and immunities accorded under the Vienna Convention on Diplomatic and Consular Relations,” and calls on member states “to exercise enhanced vigilance over DPRK diplomatic personnel so as to prevent such individuals from contributing to the DPRK’s nuclear or ballistic missile programmes, or other activities prohibited by” U.N. resolutions. By itself, however, the designation of four individuals and one trading company represents a small dent in a global network.

“North Korea’s continued violation of international law and its commitment to the proliferation of ballistic missiles and weapons of mass destruction pose a serious threat to the United States and to global peace and security,” Acting Under Secretary for Terrorism and Financial Intelligence Adam J. Szubin said in the statement.

“Today’s designations underscore our ongoing efforts to obstruct the flow of funds used to augment North Korea’s nuclear capabilities,” he said. 


To get an idea of what a serious and sustained sanctions enforcement program would look like, you need look no further than Treasury’s own sanctions search tool, which reveals that there are no less than eleven sanctions programs dedicated exclusively to Iran, compared to two dedicated to North Korea. The number of designations is even more telling. Hold down your “control” key and click “561List” (signifying 31 C.F.R. Part 561), EO13622 (signifying the executive order of the same number), EO13645, FSE-IR, HRIT-IR, IFSR, IRAN, IRAN-HR (human rights), IRAN-TRA (under this statute), IRGC (Iran Revolutionary Guards Council), and ISA. You should get 845 results. Because these programs still exclude designations under other sanctions programs, such as “NPWMD” (for WMD proliferation) and “SDGT” (for terrorism), it’s entirely possible that Treasury has designated more than 1,000 Iranian and Iranian-linked entities, compared to around 90 in North Korea’s case. 

An effective sanctions program will require years of sustained and determined effort, and the political will to designate North Korea’s banks, higher-level ministries, senior officials, and third-country enablers. Such an effort begins by requiring all transactions with the North Korean government to be licensed by OFAC, which is one way Treasury can begin to gather financial intelligence on where North Korea’s money is, and how it moves. As of now, however, there’s no such comprehensive requirement. The most optimistic way to view this is as a small but welcome start.

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Sam Pa, 88 Queensway, KKG & Bureau 39: A case study in how China helps N. Korea evade sanctions

Last week, I highlighted Andrea Berger’s excellent post at 38 North, calling for the U.N. Security Council to sanction North Korea’s third-party enablers. Berger named some of those enablers, but I’d like to name another one of the most important ones — the Hong Kong-based 88 Queensway Group, headed by one Sam Pa, also known by his birth name “Xu Jinghua” or any of “at least eight aliases,” each with its own matching passport. According to multiple news reports, Pa has extensive connections to Chinese politicians, and with its intelligence services.

The mystery over his origins may be related to his former career as a spook. “All his life he’s worked in Chinese intelligence,” one source told the Financial Times. [The Independent]

An FT investigation last year found that Mr Pa and his fellow founders of the Queensway Group have connections to powerful interests in Beijing, including Chinese intelligence and state-owned companies. [Financial Times]

On the web, you’ll find a lot written about Mr. Pa, mostly about his notorious business dealings in Africa. Most of that reporting focuses on what could be described, conservatively, as conflicts of interest. The Economist writes that Pa’s deals “appear to grant the Queensway syndicate remarkably profitable terms,” “would be depriving some of the world’s poorest people of desperately needed wealth,” and “may also have indirectly helped sustain violent conflicts.” These include close partnerships with the governments of Zimbabwe and Angola in their diamond mines, and with Angola’s oil ministry, via an entity called China Sonangol, that was “deemed so corrupt in 2003 that Citibank closed all its accounts.”

The routine need to bribe officials is not a deal-breaker for Queensway either. Chinese investigators found that Queensway’s leaders had bribed high-level officials in Nigeria and several other countries. [J.R. Mailey, 38 North]

Queensway’s deals often traded Africa’s resources for promises to build infrastructure — promises on which Queensway ultimately failed to deliver. The exchange of Africa’s commodities for services has the additional advantage of avoiding the dollar system, and with good reason: the Justice Department and the SEC have opined that making a payment through a U.S.-based correspondent account gives them jurisdiction to prosecute non-U.S. companies under the Foreign Corrupt Practices Act. Even if the feds never make an arrest, they can still forfeit assets “involved in” any predicate offense for a money laundering transaction.

Deals with Zimbabwe would be especially risky. Most of its top officials’ assets are blocked for “subverting or undermining democratic practices and institutions.” One of the Zimbabwean officials with whom Sam Pa has met, Happyton Bonyongwe, heads its dreaded Central Intelligence Organization, its internal security branch. In 2008, the Treasury Department blocked Bonyongwe’s assets for “political repression.” In 2011, opposition members of the Zimbabwean government cut funding for the CIO, but soon, according to The Economist, the CIO was “suddenly flush with cash,” and had “doubled the salaries of agents” and “acquired hundreds of new off-road vehicles and trained thousands of militiamen” who could then help “intimidate voters during next year’s elections.” The Economist adds, “Several sources who have looked at the deal concluded that the money came from Mr Pa.” According to Mailey, Pa financed the CIO, which paid Pa in diamonds, which Pa then smuggled out of Zimbabwe.

Pa and Queensway have also had extensive dealings with North Korea. According to the Financial Times, that relationship started in 2006, right after Treasury’s action against Banco Delta Asia, when most banks wouldn’t touch North Korean customers.

Shortly after establishing contact, Queensway representatives began making frequent trips to North Korea. During these visits, China Sonangol lined up a series of projects in North Korea, including the construction of a gigantic riverfront commercial district called “KKG Avenue” in Pyongyang. Sam Pa also procured 300 Nissan Xterra SUVs for Kim Jong Il’s regime, some of which had “KKG” inscribed on their exterior. [J.R. Mailey, 38 North]

In October 2006, U.N. Security Council Resolution 1718 required member states to “ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any persons or entities within their territories, to” persons providing support for North Korea’s WMD programs.

According to The Financial Times, however, Queensway’s North Korean partner was none other than the notorious Bureau 39 of the ruling Workers’ Party of Korea, via a front company called Korea Daesong General Trading Corporation. Both Daesong and Bureau 39 are designated by the U.S. Treasury Department for “engaging in illicit economic activities,” including drug dealing and currency counterfeiting; managing regime slush funds; money laundering; and luxury goods imports, in violation of U.N. Security Council resolutions. As Treasury noted when it designated Bureau 39 five years ago, “deceptive financial practices” play an important role in North Korea’s nuclear and missile proliferation, and arms trafficking.

In March 2013, after North Korea’s third nuclear test, the Security Council passed Resolution 2094, which tightened the financial due diligence requirements applicable to North Korea, prohibiting the provision “of any financial or other assets or resources, including bulk cash, that could contribute” to Pyongyang’s WMD programs or other prohibited activities. Still, Queensway continued to send a stream of mysterious payments to North Korea.

A document request attached to a June 2013 Hong Kong court decision lists US$11,143,463 (HK$86,505,484) in payments from July 2008 to November 2009 described as “Budget for North Part” or “Kumgang Budget.” The records also describe almost US$2 million in “consulting fees” paid in relation to KKG during 2008 and 2009. [J.R. Mailey, 38 North]

In April 2013, Pa flew to Pyongyang on a charter jet. Mailey quotes a Korean-language report from the Naeil Sinmum that around this time, Pa “visited North Korea up to five times … to discuss the development of an oil field in Seohan Bay.”

Mr Pa struck a deal with Daesong for an eclectic range of North Korean projects, the Asian official says, ranging from power plants to mining to fisheries. Money started to flow — although it is unclear how much flowed directly into North Korea. A ledger published in a 2013 Hong Kong high court ruling in a dispute between some of Mr Pa’s business associates refers to Queensway Group payments including “Pyongyang city bus system”, “Korea airport”, “Korea: 5,000 tons of soyabean oil” and “exhibition sponsored by the Korean consul”. There are no further details. But the list of payments also contains references to KKG. [Financial Times]

In November of 2013, shortly after the end of the Kaesong Industrial Park’s six-month shutdown, Queensway broke ground on a new Kaesong Hi-Tech Industrial Park, which adds concerns about technology transfers to other concerns previously expressed by the Treasury Department: “Precisely what North Koreans do with earnings from Kaesong, I think, is something that we are concerned about.” Even a South Korean official has suggested that the new high-tech annex to Kaesong “could be a violation of UN Security Council sanctions on the regime.”

As recently as last year, KKG began running a new fleet of taxis in Pyongyang, collecting all of the fares in yuan, euros, or dollars. A taxi business working on a cash basis might have a utility beyond the income it earns. As with Pyongyang’s chain of overseas restaurants, it’s a “perfect vehicle” for commingling “legitimate” cash earnings with more questionable payments, to conceal the true origin of the funds.

In the end, however, it wasn’t Sam Pa’s dealings with Pyongyang’s most notorious money launderers that cost him. Instead, in April of 2014, the Treasury Department designated Mr. Pa under its Zimbabwe sanctions program, for “illicit diamond deals” that helped the CIO evade sanctions. (On the SDN list, Pa appears under his birth name, Xu Jinghua, and several other aliases.) Then, last week, the Chinese authorities arrested Pa at a Beijing hotel, in connection with a corruption investigation into the state-owned oil company Sinopec and a former Sinopec official, who also happens to be the governor of Fujian Province.

Why did Pa fall afoul of Beijing after a life spent as a loyal and well-connected spy and arms trafficker? One possibility is that Pa was attracting too much of the wrong kind of attention, and that his arrest was a demonstration for foreign consumption. Another theory is that “[s]ome in Beijing had long been vexed by the insistence from some African rulers that Chinese groups use Mr Pa as a middleman.” Whatever Mr. Pa’s personal fortunes, to this day, 88 Queensway and KKG are still not designated by the Treasury Department.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Congress wants answers on N. Korea and terrorism. The State Dep’t doesn’t have any.

As you may have heard somewhere, President Bush removed North Korea from the list of state sponsors of terrorism on October 11, 2008. Despite overwhelming evidence to the contrary, the Obama Administration’s official view is that North Korea is “not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987.” Since I collected and published that overwhelming evidence last year, I was looking forward to the day when the State Department would be called to Congress to confront it. Today was that day, and it did not go well for the State Department.

It’s only Thursday, but I don’t think it’s too early to nominate Ms. Hilary Batjer Johnson, the State Department’s Deputy Coordinator for Homeland Security, Screening, and Designations, for “worst week in Washington.” At today’s hearing, before the House Subcommittee on Terrorism, Nonproliferation, and Trade, an increasingly exasperated Rep. Ted Poe (R, Tex.) and Rep. Brad Sherman (D, Cal.) tried to get straight answers out of Johnson about the rationale behind State’s position, its reaction to the evidence — including this federal court decision — and an explanation of how State applies the law.

I’m sure Ms. Johnson is a nice person, but I’ve been watching these hearings for about a decade now, and I’ve never seen an agency witness so ill-prepared to answer member questions. Watch it all if you can bear it. Or just watch Poe’s questions at 30 to 34 minutes in. Or Sherman’s at 46 to 50 minutes in, until he just gives up.

Perhaps it wasn’t Ms. Johnson’s fault that things went this way. She seemed to have no authority to dignify the members’ questions with straight answers, falling back on stock statements that State would have to “review the intelligence.” But then, she didn’t seem to understand either the designation or rescission processes, either. She was unfamiliar with the court decisions finding North Korea liable for acts of terrorism, so she wasn’t prepared to discuss them. She didn’t understand the consequences of an SSOT listing, including the transaction licensing requirements that would apply under 31 C.F.R. Part 596, the probability that securities issuers would have to disclose their North Korean investments in their SEC filings, or the loss of loans from international financial institutions.

It got so ugly that Sung Kim, State’s Special Representative for North Korea Policy, even stepped in to save her a couple of times. The hearing ended with frustrated members having more questions than answers. Rep. Sherman wanted State to send a written explanation of how it applies Section 6(j) of the Export Administration Act. Both Sherman and Poe openly contemplated whether the statute needs to be amended for clarification (it does). There will be another (classified) hearing, and without the cameras present, it could be even uglier.

The key outcome of today’s hearing, however, is that the evidence forced State to retreat from its refusal to designate Pyongyang:

The United States continues to review intelligence to determine whether to put North Korea back on the list of states that sponsor terrorism, Washington’s top envoy on the communist nation said Thursday.

Amb. Sung Kim, special representative for North Korea policy, made the remark in a written statement submitted for a terrorism subcommittee hearing of the House Foreign Affairs Committee, as he outlined U.S. policy on the communist nation.

“We also continually review the available intelligence to determine whether North Korea is subject to additional measures. Naturally, this includes reviewing available information to determine whether the facts indicate the DPRK should be designated as a state sponsor of terrorism,” Kim said. [Yonhap]

This was the second time Kim has been called before Congress this week. On Tuesday, Special Coordinator for North Korea Policy was at the Senate Foreign Relations Committee, making the case that the Obama Administration has a North Korea policy:

“Holding North Korea responsible for its own choices does not mean just waiting and hoping the regime will one day come to its senses,” Kim said. “We are committed to using the full range of tools — deterrence, diplomacy, and pressure — to make clear that North Korea will not achieve security or prosperity while it pursues nuclear weapons, abuses its own people, and flouts its longstanding obligations and commitments.”

The envoy also said that the North’s bad behavior has earned no benefits from the U.S.

“Instead, we have tightened sanctions and consistently underscored to the DPRK that the path to a brighter future for North Korea begins with authentic and credible negotiations that produce concrete denuclearization steps,” Kim said. [Yonhap]

For a detailed legal analysis of why that’s complete twaddle, see this. For those interested, here’s a link to the video of the full Senate committee hearing. (House hearings make better television.)

Kim said the U.S. has also sustained pressure on the North to “increase the costs” of its destructive policy choices. He cited an executive order that Obama issued in January to impose fresh sanctions on Pyongyang in the wake of the regime’s hacking of Sony Pictures.

Yes, and so far, the Obama Administration has used that sweeping new Executive Order to sanction a grand total of 13 entities — ten low-level arms dealers (no doubt, ten other low-level arms dealers have since taken their places) and three entities that had been sanctioned years ago.

He stressed that sanctions enforcement has improved over the past two to three years, causing some pain in the North.


[Can you believe it? This was the biggest yacht he could afford!]

He added that revenues from North Korea’s illicit activities overseas have gone down as a result.

“Our financial sanctions are always more effective when supported by our partners, and so we’ve also focused on strengthening multilateral sanctions against North Korea,” he said. “We will continue to press for robust implementation of U.N. sanctions and enhanced vigilance against the DPRK’s proliferation activities worldwide.” [Yonhap]

But not to worry, says South Korea’s U.N. Ambassador. Doing approximately nothing should work just fine. Eventually.

U.N. sanctions and human rights resolutions will eventually cause pain to North Korea, even though such effects are slow in coming, South Korea’s ambassador to the United Nations said Tuesday.

“The way I see it, sanctions work, but they work only in an accumulated form. So, you continue sanctions year after year and eventually it takes a toll,” Amb. Oh Joon said during a security seminar, pointing out doubts about the efficacy of sanctions on the North. [Yonhap]

Or so says the representative of a government that’s piping real dollars into the DPRK Central Bank’s vault through the Kaesong Industrial Park, for God-knows-what budget priorities. I don’t see how you make a coherent policy by sanctioning and subsidizing the same target at the same time. You can do one or the other, but not both. That isn’t a policy; it’s a diagnosis.

To further fuel your skepticism, recall last July’s Wall Street Journal report that the Obama Administration was “working on increasing pressure on Pyongyang through a range of measures designed to stem money flows to the regime, such as cracking down on illegal shipping and seeking to tighten controls on North Korea’s exports of laborers that work in near slave-like conditions around the world.” Which hasn’t happened.

It’s not just that they seem congenitally incapable of making decisions. It’s the sinking feeling that they just don’t know what they’re doing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

~   ~   ~

Update, October 25, 2015: Wow:

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

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

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

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

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

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

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U.N.’s 1718 Committee does NADA about N. Korean missile agency; Update: Membership revoked!

NK News is reporting that North Korea’s National Aerospace Development Administration, whose name yields the unfortunate acronym “NADA,” has been accepted as a member of the International Astronautical Federation, a group that describes itself thusly:

Founded in 1951, the International Astronautical Federation (IAF) is the world’s leading space advocacy body with 246 members from 62 countries on six continents including all leading agencies, space companies, societies, associations, universities and institutes worldwide.

Hat tip to Chad O’Carroll for the link. As O’Carroll concedes, however, the source of his story is “an attendant of an annual congress event organized by the federation,” and the IAF itself hasn’t confirmed this. Let’s hope it backs off promptly, because in a report published earlier this year, a U.N. Panel of Experts monitoring compliance with international sanctions on North Korea found extensive links between NADA and North Korea’s banned missile programs, and recommended that NADA be designated and sanctioned by the Security Council.

First, the Panel’s findings:

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Now, the Panel’s recommendations:


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A designation would require all U.N. member states to immediately freeze all of NADA’s assets, and to expel its representatives from their countries.

As conspicuous a blunder as this is on IAF’s part — assuming this isn’t just the statement of one rogue member — the systemic problem it points to is the failure of the U.N. bureaucracy to act on the consistently superb reports of its own Panel of Experts. Eight months after the publication of the Panel’s latest report, the U.N.’s 1718 Committee, which is responsible for approving the designations, still hasn’t designated NADA. Meanwhile, NADA is free to pursue sensitive technology and international legitimacy, and to conceal its funds and operations.

Nor is this the first time the 1718 Committee has dropped the ball. It took the 1718 Committee a full year after the Chong Chon Gang incident to designate Ocean Maritime Management, the North Korean shipping company that was smuggling MiGs and missiles from Cuba to North Korea, in flagrant violation of U.N. sanctions. Each time the 1718 Committee is inexcusably slow in reacting to Panel of Experts reports, it becomes more apparent that it is a weak link in U.N. sanctions enforcement, either for political reasons, or because of the simple incompetence of its management.

Either way, as Security Council members continue to consider possible responses to a North Korean missile or nuclear test, they should be thinking about more than passing new sanctions. New sanctions on financial messaging, shipping, reflagging, air cargo, and insurance might be useful, but the Security Council should also focus on making the existing sanctions work better.

The obvious alternative is to simply do away with the 1718 Committee entirely, although that would depart from standard U.N. procedure. This panel-committee formulation isn’t unique to North Korea. A similar committee was also set up to approve Iran (and other) sanctions designations. The political reality is that member states will want to retain some control over designations. In that case, why not allow the recommended designations of the Panel of Experts to go into effect within 30 days, unless a majority of members of the 1718 Committee vote to disapprove them? That would have the advantage of forcing China and Russia to engage in their obstructionism more openly.

Another suggestion, which isn’t mutually exclusive with the last one, is to do what the Security Council’s resolutions did in the case of Iran — require the Committee to report to the Security Council regularly on its enforcement actions. That will ensure that the P-5 keep a careful eye on the enforcement of the sanctions resolutions, and hold the 1718 Committee accountable for the slovenly pace of its actions.

(By the way, I’d like to give my special thanks to the U.N., proprietor of possibly the world’s worst website, for effing up all of its hyperlinks and all of my bookmarks to its committees and designations. Sanctions geeks may wish to update their bookmarks with the U.N.’s consolidated sanctions list.) 

In the end, however, it will be up to individual member states to impose national sanctions in appropriate cases, without waiting for a dilatory U.N. Committee. That’s not only plausible, it has happened. The EU sanctioned the Korea National Insurance Corporation, which is not designated by the U.N., and the U.S. Treasury Department has sanctioned the Foreign Trade Bank of North Korea, also not sanctioned by the U.N. A good first step would be for the U.S. and the EU to harmonize their own designations mutually. Next, they should seek the cooperation of Japan, South Korea, Switzerland, and other key middle powers holding North Korean property. Finally, they can reach smaller states, such as those that reflag North Korean ships and buy its weapons, and convince them to shun North Korea’s business. That strategy of progressive diplomacy will make it harder for the Chinese and the Russians to succeed in their obstructionism.

~   ~   ~

Update: Well, well. It seems after the IAF got some mail from concerned citizens in the U.N. Panel of Experts and the South Korea government, they revoked NADA’s membership. Chad O’Carroll has the rest of the story.

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U.N. report demands that N. Korean leaders be held accountable through prosecution, sanctions

marzukiU.N. Special Rapporteur Marzuki Darusman has issued another report on human rights in North Korea (or more accurately, the lack thereof). The bad news is that the situation hasn’t improved, and North Korea and China are still stonewalling:

Regrettably, the situation remains the same, despite the grave concerns reiterated by the international community in different forums. The Special Rapporteur also reflects on issues around accountability for those human rights violations, which should be addressed at an early stage, and on current efforts by the international community to address the human rights situation in the Democratic People’s Republic of Korea in general.

3. The Special Rapporteur wishes to highlight from the outset that in March and again in June 2015 he requested meetings with delegates from the Democratic People’s Republic of Korea to follow up on the discussions that he had with them in October 2014 in New York. He regrets that his requests were declined. He firmly believes in the value of dialogue and hopes that the authorities will answer his future request positively.

The good news is that the report itself is strong — exceptionally so. In clear and strong language, it recounts the reports of North Korea’s recent waves of purges and executions, its failure to make progress on the return of abductees, its refusal let divided families reunite, and evidence that North Korea and China systematically abuse North Korean women, including by forcing them into sexual slavery.

41. The Special Rapporteur notes with great concern from the data provided by the Ministry of Unification on arrivals of defectors in the Republic of Korea that more than 70 per cent of the defectors are women. A striking estimate of 70-90 per cent of those women reportedly become victims of human trafficking and are subjected to, inter alia, forced marriage and sexual exploitation in China and in other Asian countries.14 They are particularly vulnerable to actions by smuggling gangs, whose influence has significantly increased recently owing to the clampdown by Chinese authorities on charities and evangelical groups from the Republic of Korea that used to facilitate their escape through China. 

42. Female overseas workers from the Democratic People’s Republic of Korea sent to China have also fallen victim to sexual exploitation. It was reported that, in June 2014, the Government of China deported a group of female workers in a food factory because they were forced into prostitution at night, upon instructions from an executive of the factory and with the complicity of the security personnel from the Democratic People’s Republic of Korea in charge of their surveillance. The latter was also forcibly repatriated.

The report also denounced China’s inhumane repatriation of refugees, including children, to an uncertain fate in North Korea.

36. In that regard, the Special Rapporteur is strongly concerned by reports indicating that a group of 29 citizens of the Democratic People’s Republic of Korea, including a 1-year-old child, were detained by the Chinese authorities in Shandong and Yunnan provinces between 15 and 17 July 2014 and subsequently forcibly returned to their country of origin.12 Their whereabouts were unknown at the time of writing. In addition, in October 2014, the Chinese authorities reportedly arrested 11 individuals (10 adults and 1 child aged 7) from the Democratic People’s Republic of Korea who were seeking to enter Myanmar in the southern region of Yunnan province.13 Their whereabouts are also unknown.

37. The Special Rapporteur notes that the Committee against Torture included that case in its list of issues in relation to the fifth periodic report of China. It sought information about their fate upon return and enquired, inter alia, whether there were “post-return monitoring arrangements in place to ensure that those returned to the Democratic People’s Republic of Korea are protected from the danger of being subjected to torture” (CAT/C/CHN/Q/5/Add.1, para. 9). He hopes that the Government of China will clarify the matter during the fifty-sixth session of the Committee, in November 2015.

38. The Special Rapporteur regrets that his requests to meet representatives of the Permanent Missions of China in Geneva and New York in March and May 2015, respectively, were unsuccessful. He remains available to engage in constructive dialogue with the Government of China to find a sustainable solution to that pressing issue.

Some of the report’s best language, however, dealt with North Korea’s exports of forced labor for hard currency. Its choice of words in this context — “forced labor,” “slave labor,” “contemporary forms of slavery” — deserves to draw greater global attention and action. And it names names:

26. According to various studies, it is estimated that more than 50,000 workers from the Democratic People’s Republic of Korea operate abroad. 8 The vast majority are currently employed in China and the Russian Federation. Other countries where workers operate reportedly include Algeria, Angola, Cambodia, Equatorial Guinea, Ethiopia, Kuwait, Libya, Malaysia, Mongolia, Myanmar, Nigeria, Oman, Poland, Qatar and the United Arab Emirates.

27. The overseas workers are employed mainly in the mining, logging, textile and construction industries. Their conditions of work have been documented by civil society organizations that conducted interviews with former overseas workers.

They found that:

    (a) The workers do not know the details of their employment contract;

    (b) Tasks are assigned according to the worker’s State-assigned social class (songbun): the lower classes are reportedly assigned the most dangerous and tedious tasks. Workers with relatives in the country are preferred, to ensure that they will fully comply while abroad;

    (c) Workers earn on average between $120 and $150 per month, while employers in fact pay significantly higher amounts to the Government of the Democratic People’s Republic of Korea (employers deposit the salaries of the workers in accounts controlled by companies from the Democratic People’s Republic of Korea);

    (d) Workers are forced to work sometimes up to 20 hours per day, with only one or two rest days per month. In some instances, if they do not fulfil the monthly quota imposed, they reportedly do not get paid;

    (e) Health and safety measures are often inadequate. Safety accidents are reportedly not reported to local authorities but handled by security agents;

    (f) Workers are given insufficient daily food rations;

    (g) Freedom of movement of overseas workers is unduly restricted. Workers are under constant surveillance by security personnel from the Democratic People’s Republic of Korea in charge of ensuring that they comply with the Government’s rules and regulations. Those agents confiscate the workers’ passports. The workers are also forbidden to return to the Democratic People’s Republic of Korea during their assignment;

    (h) Workers are threatened with repatriation if they do not perform well enough or commit infractions. Defectors apprehended are sent back to the Democratic People’s Republic of Korea.

28. It is alleged that the host authorities never monitor the working conditions of overseas workers.

29. It is worth noting that the Government of the Democratic People’s Republic of Korea is paying increased attention to the scrutiny by foreign media and organizations on its overseas workers. In April 2015, it issued instructions to overseas workers and supervisors to prevent anyone from reporting human rights abuses in the workplace. Workers and supervisors have reportedly been ordered to destroy any recording equipment, confiscate the memory cards and even assault the person documenting the abuses. Failure to do so would result in the worker or supervisor being punished, although it is not clear what type of punishment would be applied.

30. The Special Rapporteur notes (with satisfaction) the decision in May 2015 of a construction company in Qatar to dismiss 90 employees from the Democratic People’s Republic of Korea (nearly half of the workforce employed) for alleged repeated violations of domestic labour legislation. According to the company, “supervisors responsible for the well-being of their workers have been continuously forcing them to work more than 12 hours a day. The food provided to their workforce is below standards. Site health and safety procedures are ignored regularly”.

10 One of the workers reportedly died as a result of such treatment. The company agreed to keep the remaining workers from the Democratic People’s Republic of Korea under the condition that they no longer breach any rules. 

31. The Special Rapporteur takes all such reports very seriously. He intends to pay close and sustained attention to the issue in future, with the support of the Office of the United Nations High Commissioner for Human Rights (OHCHR) office in Seoul. To that end, he calls upon the Member States concerned to grant him, his successor and OHCHR staff access to verify all of the allegations.

32. The Special Rapporteur reminds the Democratic People’s Republic of Korea of its obligation under article 8 of the International Covenant on Civil and Political Rights not to engage in forced labour. He stresses that companies hiring overseas workers from the Democratic People’s Republic of Korea become complicit in an unacceptable system of forced labour. They should report any abuses to the local authorities, which have the obligation to investigate thoroughly, and end such partnership.

In other places, the Special Rapporteur’s report shows why his office needs investigative support to keep up with the evidence. Paragraph 16, for example, cites unverified reports that Camp 15 was being dismantled, but we’ve since seen reliable reporting, backed by satellite imagery, that refutes this claim. The report also cites reports that nine North Korean children repatriated by the Laotian government might have been executed or sent to Camp 14, but fails to note that Pyongyang, no doubt mindful of the attention they’ve attracted, later showed (at least some of) the children on television. These are distracting errors, but now that the Seoul field office has started its work, we can expect to see the quality, length, and frequency of the Special Rapporteur’s reports improve.

It’s equally apparent that the Seoul field office, which is working under threats of violence by Pyongyang, needs the Special Rapporteur to offer it some protection from those threats. After all, the Reconnaissance General Bureau is both willing and able to carry out assassinations inside South Korea. Marzuki denounced those threats at length:

65. In relation to the third point, the Special Rapporteur notes with deep concern the series of threats issued by the authorities and media of the Democratic People’s Republic of Korea against the Seoul office. On 23 June 2015, the Ministry of Foreign Affairs of the Democratic People’s Republic of Korea issued a statement accusing the “hostile forces” in the international community led by the United States of America of using the field presence to plot against the Democratic People’s Republic of Korea and “incite confrontation under the pretext of protecting human rights”. On 30 March 2015, the Pyongyang Committee for the Peaceful Reunification of Korea released a statement threatening an attack against the then forthcoming office and accusing the Republic of Korea and the United States of orchestrating a human rights plot against the Democratic People’s Republic of Korea. The statement specifically said: “we will never sit back and watch as South Korea hosts the United Nations office on human rights of DPRK in Seoul. As soon as the nest for an anti-DPRK (North Korea) smear campaign is in place in the South, it will immediately become the first target for our merciless punishment.” In May 2015, the newspaper Minju Joson stated that “[the Democratic People’s Republic of Korea] will never pardon but mercilessly punish those hell-bent on the anti-DPRK ‘human rights’ racket, whether they are the puppet forces or their masters or those going under the mask of any international body”. 18

66. This is not the first time that the Democratic People’s Republic of Korea has issued a threat. On 9 June 2014, a spokesperson for the Pyongyang Committee for the Peaceful Reunification of Korea released a statement protesting against the OHCHR field office in the Republic of Korea, threatening punishment and attacks at those involved in the plan, as well as staff in the office, referring to the plan as a scheme led by the United States and the Republic of Korea. 

67. The Special Rapporteur urges the authorities of the Democratic People’s Republic of Korea to cease issuing such threats. He believes that it is totally unacceptable for the Government of a United Nations Member State to issue a statement that blatantly threatens punishment and attacks on a United Nations office and its staff members. He stresses that the Democratic People’s Republic of Korea, as a member of the United Nations, has a responsibility under the Charter of the United Nations to protect the United Nations, its staff and its assets.

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

Clearly, then, this Special Rapporteur will not let the world forget what the Commission of Inquiry told us about crimes against humanity in North Korea. He repeated his call to hold the responsible North Korean officials accountable:

49. The Special Rapporteur remains convinced that the accountability track must be pursued urgently, in parallel with sustained efforts to seek engagement with the Democratic People’s Republic of Korea. It is an irreversible process that the authorities will have to face sooner or later.

50. In his view, issues around accountability should be addressed at an early stage and with long-term strategies in mind. A process of reflection and discussion on possible accountability mechanisms and processes should start as soon as possible. This should not be done, as in previous instances with other countries, at the last minute of a change process.

Both Pyongyang and Beijing have ignored the Special Rapporteur’s attempts to engage them, and to cooperate with an investigation of the allegations. Beijing still intends to block any attempt by the Security Council to hold Kim Jong-Un accountable. Yet the Special Rapporteur did not yield on the urgency and importance of accountability. In addition to repeating the Commission of Inquiry’s call for a referral to the International Criminal Court, it called for establishing an ad hoc tribunal, and a human rights contact group of member states. Which sounds a lot like what S. 2144, a bill introduced by three Republican U.S. Senators, also called for (see, e.g., sections 302 and 305). The report also called for financial accountability through targeted, bilateral sanctions. 

55. In addition to a possible referral to the International Criminal Court, the Security Council, as encouraged by the General Assembly, should consider the scope for effective targeted sanctions against those who appear to be most responsible for acts that the commission deemed to constitute crimes against humanity. While the Council has yet to consider taking action on the matter, the Special Rapporteur welcomes the steps that some Member States have begun to take on a bilateral basis in that direction.

I don’t know what states other than the U.S. the Special Rapporteur might have had in mind. The logic is clear: if the Security Council won’t act, then it’s up to member states to use their national laws, and to mobilize world opinion, to force Pyongyang to change. And thankfully, that’s exactly where things seem to be headed. Indeed, one sees an almost unprecedented convergence here between a U.N. report and a Republican-led Congress. Meanwhile, President Obama sits passively, like the king of an ancient Asian vassal state, deferring to the emperor in the Forbidden City.

The U.N. has not shown itself to be an effective agent for action, but at least reports like these, and the excellent reports of the U.N. Panel of Experts monitoring sanctions compliance, show that the U.N. can still be an effective fact-finder. Eventually — though too late for far too many North Koreans — better facts will make better policies.

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Sens. Gardner, Rubio & Risch to introduce new North Korea sanctions bill (updated)

The new bill was revealed in this column by Josh Rogin, and includes a link to the full text. The bill, which still has no number, will be the Senate’s second version of the North Korea Sanctions Enforcement Act, following the introduction by Senators Menendez and Graham of S. 1747 in July.

Both bills follow the lead of Ed Royce and Elliot Engel, the Chairman and Ranking Member of the House Foreign Affairs Committee, who introduced H.R. 757 in January. H.R. 757, in turn, is the successor to H.R. 1771, which Royce and Engel introduced back in April of 2013, and which passed the full House on a voice vote, with 145 co-sponsors, in July of 2014, but died when the last Congress ended. All three bills share the same title and most of the same content. Despite its all-Republican co-sponsorship, Gardner-Rubio-Risch takes a middle way between those versions, with some important differences and improvements. Collectively, the three bills suggest growing congressional momentum for the NKSEA, which would legislate the most important shift in our North Korea policy since the 1994 Agreed Framework. Here’s Rogin:

Now that Iran sanctions are on the verge of being rolled back, Congressional attention is turning to increasing and tightening sanctions on North Korea, a country with a growing nuclear weapons program and that continues to threaten and provoke the international community.

Oct. 10 marks the 70th anniversary of the founding of the Workers’ Party of Korea, and Western governments are concerned that Kim Jong Un will mark the holiday by launching a rocket or satellite, or even detonating a nuclear bomb for the fourth time. There’s new activity at  North Korea’s nuclear test site, but nobody really knows what, if anything, the country is planning to do next. [Josh Rogin, Bloomberg]

This, children, is how you eventually attract the wrong kind of attention from Congress. Quoting Gardner:

“This bill actually puts teeth into a policy that has been lacking in action,” he said. “All we are doing right now is talking about what North Korea shouldn’t be doing and following it up with a few cherry-picked sanctions here and there. But that’s not stopping North Korea.”

Of course, the bill is a long way from becoming a law, but support for sanctions against rogue regimes is usually high in Congress, Gardner argued. Even if the bill is enacted, it gives the president national security waivers that could be used to avoid imposing sanctions. In that case, however,  the administration would have to explain its inaction.

Following the cyberhack of Sony last year, the Obama administration did use executive orders to sanction 10 North Korean officials and three state-run organizations, including the country’s intelligence service.  The White House indicated that there would be other non-public responses. North Korea was already one of the most sanctioned countries in the world.

And Rogin was doing so well, right up until that last sentence. If you’re an OFK regular, just skip to the next paragraph. If you’re not, no, North Korea is not one of the most sanctioned countries in the world. The Treasury Department’s financial sanctions against North Korea — the ones that really matter, even more than U.N. sanctions — are not remotely comparable to our sanctions against Iran or Syria, and they’re arguably weaker than our sanctions against Belarus or Zimbabwe.

Gardner also wants to legislate sanctions on any person, organization, or government that has “materially contributed” to North Korea’s nuclear, ballistic missile, WMD or weapons programs, even in an advisory capacity. That could implicate Iran, but Gardner says that shouldn’t affect the Iran nuclear deal, which lifts many sanctions on Tehran.

Royce, with his good policy instincts and his determination to win and maintain bipartisan support in his committee, rightfully deserves the credit for sparking and leading this rebellion in Congress, and for proposing a credible alternative to years of soft-line policies and non-policies that have failed, conclusively.

For now, both H.R. 757 and the new Senate bill are the most likely to pass their respective chambers, although we still haven’t heard from Senator Bob Corker, the Chairman of the Foreign Relations Committee, who will have the final word on what goes to the Senate floor. Because the House and Senate bills are different, the bills that pass would then be referred to a conference committee for the resolution of their differences, before both chambers pass an agreed text and send it to the President’s desk.

What’s good about the new bill:

  • It makes the Special Envoy for Human Rights in North Korea report directly to the Secretary of State. This is a good step forward for advancing the stature of the position, which had recently been swallowed up by the East Asia Bureau’s agenda. There are, however, always ways to get around provisions like this. Regardless of the bill’s mandate, State can still dictate who gives the Special Envoy her assignments of work, where she sits, or who writes her performance evaluation.
  • Section 302, “Strategy to Promote North Korean Human Rights,” is an important and an excellent addition. It requires the President to make the promotion of human rights in the North a greater diplomatic priority, and to build alliances, coalitions, and public support for a stronger approach to the problem.
  • The bill retains the all-important element of personal accountability for Kim Jong-Un and his key minions, requiring that they be individually designated, and that their personal assets be blocked, specifically for their human rights abuses. Which is apparently something that U.N. Special Rapporteur Marzuki Darusman welcomes, in light of the paralysis in the U.N. Security Council:

55. In addition to a possible referral to the International Criminal Court, the Security Council, as encouraged by the General Assembly, should consider the scope for effective targeted sanctions against those who appear to be most responsible for acts that the commission deemed to constitute crimes against humanity. While the Council has yet to consider taking action on the matter, the Special Rapporteur welcomes the steps that some Member States have begun to take on a bilateral basis in that direction.

  • Section 305 is the new bill’s single best contribution. It calls on the State Department to work diplomatically to end other countries’ repatriation of North Korean refugees, and their use of North Korean slave labor (see the same U.N. report for more information about this practice).

What could be better:

  • Unlike the House bill, the findings lack any reference to North Korea’s sponsorship of terrorism, probably as a palliative to State Department objections. (For new readers, I’ve compiled and published the evidence of North Korea’s repeated sponsorship of terrorism here. That evidence was good enough for three federal district courts, one federal appellate court, and at least one South Korean court. Why not State?)
  • All three bills (Correction: the new bill and H.R. 757) lack some of the more creative funding provisions to use forfeited North Korean property to pay for humanitarian programs, or authorizing the use of blocked North Korean assets to fund carefully monitored food aid programs. (I almost forgot: Menendez-Graham kept them.) There’s a perfectly good argument that those provisions are best dealt with in authorization and appropriations acts instead of a sanctions bill, but let’s remember that the one goal that both sunshiners and hard-liners espouse is the transformation of North Korean society. Empowering North Koreans who share that goal is an important part of a broader policy.
  • The new bill lacks H.R. 757’s detailed transaction licensing provisions. With the removal of mandatory blocking of all property of the North Korean government (see Section 104(c) of H.R. 757) the careful regulation of dollar transactions with Pyongyang becomes particularly important. This should be a high priority for resolution at the conference committee.
  • I’d like to put in a word for the Connolly Amendment, proposed Rep. Gerry Connolly (D, Va.). It adds “significant progress in planning for unrestricted family reunification meetings” as a condition for suspending the sanctions. I hope that will survive in the final bill that emerges from the conference.
  • The rationale for the new exception in Section 106 for the importation of goods is difficult to understand. I see no appetite in either Congress or the executive branch for importing more goods from North Korea; in fact, it was none other than Barack Obama who signed Executive Order 13570 in 2011, severely restricting those imports, and many in Congress seethe with bitter hostility toward Kaesong.
  • Arguably, the enhanced inspection authorities in Section 205 should also apply to persons designated under Section 104(b), such as for arms trafficking, and not just 104(a).
  • Section 207’s call for travel advisories will do nothing to dissuade gullible people from visiting North Korea. A stronger approach would have been to authorize Treasury to ban transactions incident to travel while Americans were arbitrarily detained there.
  • I wish the lifting provision in Section 402 said “U.S. persons” instead of “U.S. citizens,” so that it would cover the Rev. Kim Dong Shik.

Unlike the House’s H.R. 757, both Senate bills remove the mandatory blocking of all property of the North Korean government. Unlike Menendez-Graham, the new Gardner-Rubio-Risch bill puts the key word “shall” back into Section 104(a), which is only logical; the whole logical structure of the bill is based on tiered, conduct-based sanctions. Having two distinct sets of discretionary sanctions with different penalties never made much sense; it just replaced “shall” with “may” to please the State Department. The new Senate bill steers a compromise position that I believe is a sound approach. If the next President enforces Gardner-Rubio-Risch as written, and also takes advantage of the new authority of Executive Order 13687 when necessary, there will be sufficient authority to strand the regime’s offshore billions, while avoiding unintended consequences on North Korea’s poor.

This isn’t a perfect bill, but it’s a very strong one. It’s the work of some of our brightest senators, including freshman rising star Cory Gardner, and Marco Rubio. (At the risk of speaking out of school, I’ll tell you that Rubio personally read every word of a previous version of the bill, clearly understood it, and made many intelligent edits and comments to it. Many members of Congress would simply have relied on their staffs.) Where the new bill is less strong than the House version, it makes smart compromises and leaves room to strengthen the sanctions after future provocations. A combination of all three pending bills, taking the best elements of each, would be an important step forward to slowing Pyongyang’s proliferation, and toward shifting North Korea’s balance of power away from the men with the guns and the food, toward those without.

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Update: The bill is introduced, and has a number: S. 2144. More reporting via Yonhap, The Hill (see also), the Sunshine State News, and the Denver Post. I wasn’t able to attend yesterday’s hearing, but you can see video of it here. (Some sources are calling the bill the “North Korean Sanctions and Policy Enhancement Act,” but that’s not the title that shows on the text I have.)

On a related note, the U.N. Security Council is also exploring what sanctions on North Korea it will strengthen if His Corpulency goes ahead with a missile test, which it apparently isn’t going to do on October 10th, but as Bruce Klingner notes, it eventually will do. The U.N.S.C. members’ current focus seems to be on expanding the luxury good sanctions, and the U.N.’s laughable list of prohibited exports certainly leaves much room for improvement. While I certainly endorse that approach, I also think they should be looking at blocking North Korean air and maritime shippers, including Air Koryo, whose history of dual use has attracted the attention of the U.N. Panel of Experts. In theory, if North Korea had to depend on foreign shippers for its trade, it would have a harder time, say, hiding missiles under sacks of cement, or MiGs under sacks of sugar.

Latest word, however, is that the launch pads are empty. Who knows, of course, what Pyongyang’s intentions ever were, but I wonder if the warnings dissuaded Pyongyang from going through with it, at least for now.

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In its losing battle against N. Korean proliferation, State Dep’t whacks 2 more moles

Yonhap reports that the State Department has sanctioned two North Korean trading companies under the Iran, North Korea, and Syria Nonproliferation Act, a narrow counterproliferation statute entombed in the notes following the International Emergency Economic Powers Act, at the end of Title 50.

The firms are Polestar Trading Company, Ltd., a North Korean entity in China, and RyonHap-2, a trading firm in the North, were among a total of 22 entities sanctioned by the State Department under the Iran, North Korea, and Syria Nonproliferation Act, the department said in a Federal Register notice.

Affiliated with the North’s Second Academy of Natural Sciences, Pyongyang’s main weapons development agency, RyonHap-2 is believed to be involved in weapons exports and parts procurements. [Yonhap]

According to the State Department’s Federal Register notice, the designation means that the sanctioned entities are ineligible for U.S. government contracts, foreign assistance, or military sales (that’ll show ’em!). Oh, and if you were planning on asking the Commerce Department for a license to export anything controlled under the Export Administration Act to Polestar or RyonHap-2, tough luck — for two years, anyway.

Yes, that’s right. As little as these particular sanctions do, the State Department imposed them for just two years, the minimum amount of time allowable under the law.

Here’s the part of Yonhap’s report that made me do a facepalm, however:

But the U.S. Treasury Department maintains more comprehensive sanctions on counties like North Korea and Iran. About 70 North Korean individuals agencies, entities, and vessels are on the department’s Specially Designated Nationals’ list. [Yonhap]

The second sentence is true, but misleading. The first is false. I’ll take them in inverse order. North Korea sanctions are not comprehensive and are not remotely comparable to those in place against Iran. I emailed the reporter, and asked what expert opinion or authority formed the basis of this statement; I received no response. I submit that a journalist who undertakes to write legal conclusions into her reporting undertakes an obligation to find an authoritative source or a legal expert to support her conclusion. (A foreign policy expert doesn’t count, unless he has performed or reviewed a legal analysis.) It is journalistic malpractice to publish a legal conclusion that lacks a foundation in legal authority.

Finally, a small point of order on the relationship between the INKSNA and the blocking of assets by Treasury: an INKSNA designation doesn’t necessarily add the sanctioned entity to the Treasury Department’s SDN list, which would tell banks around the world to block the entity’s property and assets. It’s certainly possible (and one hopes, inevitable) that Treasury will designate Polestar and RyonHap-2 under any of three executive orders (13382, 13551, or 13687) in the coming days, but according to Treasury’s SDN search tool, and its list of recent changes to the SDN List, that hasn’t happened yet. As it stands, then, the Yonhap report also leaves the reader with the impression that Polestar and RyonHap-2 are blocked in the financial system, which isn’t true.

To call these half-measures would be a gross exaggeration. Our losing game of whack-a-mole against Kim Jong-Un goes on.

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NYC insurer agrees to $271K penalty for insuring North Korean ships

This afternoon, the Treasury Department’s Office of Foreign Assets control announced that as part of a settlement, Navigators Insurance Company has agreed to pay OFAC a civil penalty of $271,000 for 48 sanctions violations involving Iran, Sudan, Cuba, and North Korea. Navigators is a New York-based provider of maritime insurance. It also had a branch in London, which evidently decided to cut costs by skimping on lawyers. Here’s how that worked out for them.

Between May 8, 2008 and April 1, 2011, Navigators and its London, U.K. branch (“Navigators U.K.”) issued global protection and indemnity (“P&I”) insurance policies that provided coverage to North Korean-flagged vessels and covered incidents that occurred in or involved Iran, Sudan, or Cuba—some of which led to the payment of claims. Navigators did not have a formal OFAC compliance program in place at the time it engaged in these apparent violations, and personnel within Navigators U.K. misinterpreted the applicability of OFAC sanctions regulations.

Between May 8, 2008 and February 18, 2011, Navigators provided insurance coverage to North Korean-flagged vessels under 24 P&I insurance policies and collected $1,142,237 in premium payments in relation to these policies. In addition, between February 23, 2009 and October 11, 2010, Navigators paid seven claims totaling $12,236 in relation to these policies. The base penalty amount for this set of apparent violations was $577,237. [OFAC]

In considering the amount of the penalty, Treasury considered that Navigators knew that these policy-holders were sanctioned, was “a commercially sophisticated financial institution,” and “did not have a formal OFAC compliance program in place at the time” of the violations. It also considered that Navigators self-disclosed the violation, and that once Treasury came knocking, Navigators cooperated and took remedial action.

The point being: if you do business with North Korea, good lawyers are a wise investment.

One of the few things our North Korea sanctions still do, specifically Section 2 of Executive Order 13466, is to prohibit U.S. persons from “owning, leasing, operating, or insuring any vessel flagged by North Korea.” That executive order was a place-holder for what remained in place as President Bush lifted most of our sanctions against Pyongyang, and removed it from the list of state sponsors of terrorism, in exchange for Kim Jong Il’s promise to disarm.

Seven years and two nuclear tests later, we’ve just seen the third action in one busy month to sanction North Korean shipping, following the EU’s designation of the Korea National Insurance Corporation, and the U.S. designation of Chinpo Shipping. This is enough data to show a pattern — Treasury is concentrating on North Korean shipping, and the EU might be, although it’s probably too early to say how broad, persistent, coordinated, or effective this effort will be, or how quickly the administration would back off for any deal Pyongyang offers.

With Pyongyang hinting that it will test some sort of nasty device this fall, feel free to insert your own “shot across the bow” pun in the comments.

The focus on shipping is curious in light of how little Treasury has done to North Korea’s banks recently, with the exception of the 2013 blocking of the Foreign Trade Bank. Surely Treasury doesn’t think shipping sanctions are a way to hurt Pyongyang without antagonizing Beijing. No, I didn’t think they’d think that:

Screen Shot 2015-08-06 at 8.52.26 PM

[As of 8:51 p.m. on August 6, 2015]

One important sign to watch for is whether senior U.S. officials will go on tour to enlist other governments to support a new enforcement effort. The action against Banco Delta Asia wasn’t effective just because we sanctioned a single dirty bank, but because Stuart Levey and Danny Glaser met with bankers and finance ministers across Asia and Europe and politely warned them about the risks of doing business with Pyongyang. Today, we tend to overlook the role of financial diplomacy in the success of the BDA effort. Like good diplomats, Levey and Glaser wore their velvet gloves when they shook hands. But anyone could feel that the iron fist within was BDA.

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Switzerland sells luxury watches to Kim Jong-Un, despite U.N. sanctions and food shortages

Throughout North Korea’s Great Famine, as millions of North Koreans either starved to death or watched their loved ones die, suppliers across Europe willingly sold Kim Jong-Il millions of dollars’ worth of luxury cars, yachts, cognac, and Swiss watches. In 2006, the U.N. Security Council recognized the obscenity of this practice by adopting Resolution 1718, which first banned the export of luxury goods to North Korea.

Among European nations, probably none has done more than Switzerland to enable the democidal kleptocracy of North Korea’s rulers. It served both as Kim Jong-il’s banker, and as a willing supplier of luxuries. According to Vanity Fair, Bureau 39 managed “multi-billion-dollar personal bank accounts in Switzerland and other private banking havens around the world” for Kim. Kim’s former Ambassador to Switzerland, Ri Su-Yong, is also said to have played a key role in the regime’s Swiss finances before his promotion to Foreign Minister. North Korean refugees have called on Switzerland to freeze those accounts.

In 2013, the Federation of the Swiss Watch Industry claimed that its exports to North Korea had fallen to just $76,000 per year. But as NK News’s Leo Byrne reports, Kim Jong-Un is on another Swiss watch-buying spree, even as 70 percent of North Koreans are “food insecure,” and as the World Food Program asks foreign donors for $111 million to feed North Korean infants, children, and pregnant women.

North Korean imports of Swiss watches rebounded to their highest levels in years in the first six months of 2015, according to official figures from the ITC Trade Map.

Swiss exports of the luxury items dropped to zero for the whole of 2014, however have since rebounded to nearly $80,000 since the start of the year. [NK News, Leo Byrne]

That is to say, North Korea spent as much on Swiss watches in the first half of 2015 as it spent in all of 2013. Byrne notes that the jump in exports “coincides with the opening of Pyongyang’s new airport terminal, where watches from Switzerland appear to be on sale.” KCNA recently published these photos of Kim Jong-Un — upgraded by me, and you’re welcome — touring one of the duty-free shops where watches were on sale.

watches4 watches3 watches2 watches1

Those photos, as lovely a juxtaposition as they are, did not show the watches in sufficient detail to reveal their cost or their origins. That question is now resolved.

“Air Koryo watches (for man) – Swiss made – price: (US$220) – they said it is a joint venture product with Swiss company – Sells in new Terminal 2 Pyongyang international airport,” Flickr user Jaka Parker writes under a recently taken picture of one of the watches.

Not the most expensive watch that’s been spotted in North Korea, but you can buy a lot of corn for that. Here’s the photo:

Screen Shot 2015-08-04 at 8.50.04 AM

Byrne’s report did not specify that North Korea imported the watches directly from Switzerland, but his report relies on International Trade Centre (ITC) data published by each exporting country, which implies a direct transfer

Although the Security Council resolution makes no distinction between luxury goods imported for domestic consumption and those imported for resale, the Pyongyang duty-free shop may well be a front for allowing the regime to claim that it is only importing the watches for resale, while gifting its elite with most of the inventory.

The U.N.’s ridiculously short list of luxury items does not list watches, but does list “jewelry of precious metal or of metal clad with precious metal.” Switzerland is not an EU member, but it is surrounded by EU states, and the EU list is instructive. It lists “[l]uxury clocks and watches and their parts.” Thus, with the sole exception of its refusal to sell Kim Jong-Un a ski lift, Switzerland continues to be an outlier among European nations for its failure to abide by U.N. Security Council resolutions, and for its irresponsible and unethical trade with North Korea.

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Treasury designates Singaporean shipping company for N. Korea weapons trade, but what about the Bank of China?

More than two years after the North Korean merchant vessel Chong Chon Gang was caught trying to sneak a shipment of Cuban MiGs and missiles through the Panama canal hidden under 200,000 sacks of sugar, the Treasury Department has, slowly and slightly, expanded its sanctions against the shipping companies involved in the incident.

Yesterday afternoon, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Singapore-based Senat Shipping and its Director, Leonard Lai a/k/a Yong Chian Lai, a Singaporean national. It also blocked Senat’s one-and-only known ship, the Mongolian-flagged Dawnlight, IMO number 9110236. Both designations were under Executive Order 13,551, a 2010 order that allows the Treasury Department to sanction entities linked to violations of U.N. Security Council sanctions against North Korea, and also allows sanctions for North Korea’s money laundering. The designations mean that any property of the designated entities that comes within U.S. jurisdiction must be blocked. Significantly, this includes dollars that pass through correspondent accounts held in U.S. financial institutions.

The most recent report of a U.N. Panel of Experts (UN POE) investigating violations of North Korea sanctions found evidence of Senat’s long-standing (and almost certainly willful) participation in prohibited conduct by North Korea. Senat often acted in concert with North Korean shipping company Ocean Maritime Management (OMM), which arranged for the voyage of the Chong Chon Gang, and which was designated by both the U.N. and Treasury in 2014. During its investigation, the POE asked Senat about its links to OMM and the Chong Chon Gang, but Senat did not respond (see Para. 150). Even after the Chong Chon Gang incident resulted in widespread press coverage of a clear violation of U.N. sanctions, Senat continued to engage in transactions for the OMM-owned Mu Du Bong, which later ran around in Mexico (Para. 191).

Senat performed two main roles. The first of these was acting as a financial intermediary for OMM’s bunkering transactions, conducting dollar-denominated transactions through correspondent banks regulated by the U.S. Treasury Department (Para. 192), in a willful effort to evade U.N. sanctions.

192. The Panel has also obtained evidence of intermediaries issuing instructions for vessel names to be omitted from OMM-related financial transactions, including dollar transactions through United States correspondent banks. Such instructions were issued by Mariner’s Shipping for financial transactions made on behalf of vessels associated with OMM, the Am Nok Gang and the Mu Du Bong, and by Senat Shipping when issuing an invoice to the charterer of the Ryong Gang 2 (then owned by an OMM-associated entity, Taedonggang Sonbak Co Ltd) in January 2009 (see annex XLVII.1-14). Such efforts to obscure the true nature of financial transactions were confirmed by financial institutions contacted by the Panel.

193. The Democratic People’s Republic of Korea has disassociated logistics from the financial aspects of managing its vessels. This frustrates due diligence and allows the country to keep its foreign currency in circulation rather than repatriating it. In the case of the Chong Chon Gang, OMM Dalian arranged for spare parts from a European company to be delivered to Panama, with payments effected through Chinpo Shipping in Singapore (see annex XLVII.15). Mirae Shipping Hong Kong also paid Panama Canal passage costs. Senat Shipping in Singapore has also been heavily used for these types of dissociated transactions (see annex XLVII.1-14).

Senat’s links to Pyongyang are long-standing and extensive, according to Andrea Berger:

Leonard Lai does not hide his affinity for North Korea. In 2008 he went on record for the Singapore Business Federation encouraging companies to do business with the DPRK, adding that “companies can leverage off the strong loyalty and relationship-driven aspects of [North] Koreans.” In fact, Senat Shipping has ten mentions in KCNA, the most recent in mid-2014. Leonard appears to enjoy bringing flowers to the DPRK mission in Singapore and throwing parties in Kim Jong Il’s and Kim Il Sung’s honor. [Andrea Berger, 38 North]

Senat’s second role was reflagging North Korean ships. Berger writes in exhaustive detail about how Lai, along with fellow Singaporeans Chong Koy Sen and Lim Mei Peng, and working through a company called Sovereign Ventures, Inc., arranged for the reflagging of North Korean ships through their offices in Singapore and Panama since the 1980s. In exchange, the North Koreans rewarded Lai, Chong, and Lim with business contracts. The flag states included Cambodia, Mongolia, Tuvalu, Niue, and Kiribati.

Senat 1

[U.N. Panel of Experts]

The UN POE also found that “Senat’s Director travelled to the Democratic People’s Republic of Korea in 2011 to attend a trade fair.” (Page 130, Footnote 89)

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Also yesterday, Treasury expanded its designation of OMM, adding OMM offices around the world: Pyongyang, of course, but also China (Dalian, Shenzhen, and Hong Kong); Russia (Vladivostok); Thailand (Bangkok); Egypt (Port Said); Singapore; and Brazil. It also added the OMM aliases East Sea Shipping Company, Haeyang Crew Management Company, and Korea Mirae Shipping Company.

Treasury also designated additional aliases of two officials of Tanchon Commercial Bank under a separate 2005 executive order focused exclusively on weapons of mass destruction, Executive Order 13,382.

Overall, the consequences of the July 2013 seizure of the Chong Chon Gang have been stupefyingly slow. A year after the seizure of the Chong Chon Gang, the former head of the U.N. Panel of Experts called the lack of action “regrettable.” Shortly thereafter, the U.N. designated OMM. The U.S. Treasury Department followed suit, and also designated 18 vessels in OMM’s fleet. Even so, OMM continued to operate out of ports around the world by reflagging and renaming its ships. 

The Panel of Experts opined that under UNSCR 2094, all states should seize any OMM vessels entering their ports (see Paragraph 133), but compliance has been mixed. Mexico seized the OMM ship Mu Du Bong when it ran aground in one of its ports. Japan sanctioned OMM, but then allowed an OMM ship to quietly slip in and out of one of its ports earlier this year. As recently as last week, an OMM ship was in the Russian port of Vanino. China has completely ignored the sanctions, as usual. Cuba, the most flagrant violator of them all, got away from the Chong Chon Gang incident scot-free.

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The use of Executive Order 13,551 — rather than the sweeping Executive Order 13,687 — suggests that the Obama Administration is still not ready to cross the key threshold from conduct-based sanctions to status-based sanctions, a move that the General Accountability Office recently found would greatly improve the lagging enforcement of North Korea sanctions.

Together with the EU’s recent designation of the Korea National Insurance Corporation, the actions suggest combined, but uncoordinated, concentration on North Korean shipping networks, a strategy advocated by Hugh Griffiths and Lawrence Dermody of the Stockholm International Peace Research Institute (SIPRI), in this must-read post.

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The designation of Senat again raises questions about another Singapore-based shipping company that Treasury has not designated, the regrettably named Chinpo Shipping, which shares the same address as North Korea’s local embassy. The UN POE found that OMM used Chinpo for the “payment of costs related to the voyage” of the Chong Chon Gang, and that “OMM arranged for payment for the ship’s passage through the Panama Canal to be made by a firm in Singapore, Chinpo Shipping, which told the Panel that OMM had provided it with funds and requested it to pay fees due a Panamanian firm.”

In June 2014, Singapore’s Public Prosecutor filed criminal charges against Chinpo and one of its officers, Tan Hui Tin, a citizen of Singapore, in connection with the Chong Chon Gang incident.

One possible reason for Treasury’s hesitation to go after Chinpo Shipping is the fact that, according to multiple open-source reports, Chinpo ran its transactions through the local branch of the Bank of China, in U.S. dollars. Blocking Chinpo (now, stop that) would raise serious questions about the Bank of China’s compliance with U.N. Security Council resolutions, and also with Know-Your-Customer obligations under U.S. law. According to the POE’s 2014 report, the Equasis database (link here) also associates Chinpo with Pyongyang-based Korea Buhung Shipping Company. 

Banks that use the U.S. financial system — and the U.N. POE reports that most of North Korea’s transactions are still denominated in dollars — must comply with Treasury’s Know-Your-Customer rules, which require banks to make reasonable, due-diligence inquiries into who their customers are, who their beneficial owners are, and whether their business activities seem legitimate. If the transactions seem suspicious for any reason, the banks are required to report them to Treasury, and may also be required to block them.

Since 2011, the global Financial Action Task Force and Treasury’s Financial Crimes Enforcement Network have repeatedly warned banks about North Korea’s deceptive financial practices and misuse of the financial system, and told them to apply “countermeasures” against that misuse. The FATF has specifically warned jurisdictions to “protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices.” The Chong Chon Gang incident also closely followed the adoption of U.N. Security Council Resolution 2094, which directs member states to require “enhanced monitoring” of North Korean transactions to prevent violations, and to freeze any funds that could be used to further prohibited activities.

If the Bank of China was aware of Chinpo’s links to North Korea, then, it would have been obligated to disclose them to its U.S.-based correspondent banksEarlier this month, this blog post at the Wall Street Journal’s China Real Time alleged that Chinese banks, and the Bank of China in particular, have become lax in their anti-money laundering compliance. The Bank of China has come under scrutiny for shadowy dealings with North Korea before. In 2005, the Asia Wall Street Journal reported that Treasury was investigating the Bank of China for laundering funds for Kim Jong-Il’s regime. The Bank of China denied the allegation.

As Acting Treasury Undersecretary Daniel Glaser recently reminded us, “China’s not going to do us any favors. China is going to work with us because it’s in their interests…. We’ve seen that with China’s commercial banks time and time again.” Indeed.

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Update: Additional coverage from NK News (via Leo Byrne), the AP, the Wall Street Journal, and Yonhap. Deutsche Welle contacted Senat, which called Treasury’s allegations “groundless and unwarranted.” It admitted to chartering ships for North Korea — including the Chong Chon Gang — but insisted that all of its dealings have been “legal” and “transparent.”

Treasury’s announcement of the designations contains this very interesting statement:

“Arms shipments transported by OMMC serve as a key resource for North Korea’s ongoing proliferation activities.  Sales from these shipments contribute to North Korea’s other illicit programs,” said Acting Under Secretary for Terrorism and Financial Intelligence Adam J. Szubin.  “We are working to make it as challenging as possible for North Korea to continue its unlawful behavior by actively targeting anyone or any business that supports these illicit arms transfers.”

I wonder whether Treasury bases this statement on specific financial intelligence about Pyongyang’s innermost financial circulatory system, or on the reasonable assumption that Bureau 39 profits from OMM’s arms shipments, and uses those proceeds to fund proliferation. Again, it’s a reasonable assumption, but why isn’t it equally reasonable to assume the same about the Kaesong Industrial Park? If protecting South Korea from North Korean proliferation was the driving motivation for these resolutions, why is South Korea given a special dispensation to violate the sanctions that Singapore isn’t?

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The Korea Development Institute wants to help companies “bypass” U.N. sanctions against N. Korea

Pyongyang’s latest business model for accessing hard currency despite U.N. sanctions is to rent out tens of thousands of its workers to Chinese factory owners. Those workers then labor in exploitative conditions, while Pyongyang steals most of their wages. Now, the Korea Development Institute—an “independent” think tank created under South Korean law in 1970, and “partnered” with several U.N. bodies and at least one South Korean government ministry—is urging small and medium-sized South Korean firms to join these exploitative arrangements.

I’ve often argued that engagement schemes put cash in Kim Jong-Un’s pockets, no questions asked, while the U.N. is ostensibly trying to starve his WMD programs of funds and crimp his lifestyle until he complies with the resolutions. Proponents of these arrangements usually answer these arguments with a see-no-evil approach–hey, we don’t have any reason to think Kim Jong-Un is using our money for nefarious purposes, and all engagement is good engagement! (Is that so?) It’s rare to see them come right out and admit that their deliberate purpose is to help Pyongyang circumvent U.N. sanctions–here, the same sanctions the South Korean government voted for in 2013:

South Korea’s small and medium enterprises (SME) should try to create an industrial park in northeastern China to bypass international sanctions and expand business ties with North Korea, a state-run think tank said Sunday. [Yonhap]

Perhaps the reporter misunderstood them? Well, no:

“More importantly, investment in the city can bypass new investment restrictions imposed by Seoul against North Korea, as well as the United Nations ban on bulk cash reaching North Korea,” it said. The U.N. ban has been imposed after Pyongyang detonated nuclear devices and fired off long-range rockets.

Judging by state-run Yonhap’s report, the reporter sees nothing wrong with this splendid idea, either. He (or she) never cites any of the U.N. Security Council resolutions or quotes their text, nor does he seek comment from any legal experts or South Korean government officials about the legality of this. Least of all, no one bothers to ask a South Korean labor activist about the ethics of this, not that you’d easily find one who isn’t under Pyongyang’s substantial influence anyway.

Instead, everyone seems to blithely accept circumventing U.N. sanctions and enslaving North Korean workers as a swell ideas. What’s not clear is whether they simply don’t care, because they assume China and South Korea won’t enforce the sanctions, or whether they think they’ve found a neat little loophole. Have they? Let’s unpack what the latest of these resolutions, U.N. Security Council Resolution 2094, has to say about this.

First, Paragraph 11 “decides” that all member states “shall … prevent the provision of financial services … by their nationals or entities organized under their laws … any financial or other assets or resources, including bulk cash, that could contribute to the DPRK’s nuclear or ballistic missile programmes.” It also requires member states to prevent “the evasion of” a series of U.N. Security Council sanctions resolutions going back to 2006.

Next, Paragraph 14 “[e]xpresses concern that transfers to the DPRK of bulk cash may be used to evade the measures imposed in” the resolutions, and “clarifies that all States shall apply the measures set forth in paragraph 11 of this resolution to the transfers of cash, including through cash couriers, transiting to and from the DPRK so as to ensure such transfers of bulk cash do not contribute to” prohibited activities, or “to the evasion of” U.N. sanctions.

Finally, Paragraph 15 “decides” that member states “shall not provide public financial support for trade with the DPRK (including the granting of export credits, guarantees or insurance to their nationals or entities involved in such trade) where such financial support could contribute to” prohibited activities, or “to the evasion of” U.N. sanctions.

So KDI’s scheme would be in clear violation of the sanctions. I’ll leave it to others to decide whether KDI didn’t read them or doesn’t care. Many South Koreans have long subscribed to Korean Exceptionalism, which is not so much an argument as an emotional impulse that subordinates the enforcement of law and principle to ethnic solidarity. To Americans, of course, this is another case of South Koreans violating the very rules that were largely written and approved for their own protection.

The onus now shifts to the South Korean government, which is legally obligated to block this. After all, KDI isn’t just an “entity organized under” South Korean law, it’s also under the government’s obvious and substantial influence. The South Korean government can’t allow this plan to move forward without itself violating the resolutions.

One last point–KDI also claims that “[p]roducts made at such factories should enjoy price competitiveness and could be shipped to other parts of China and the world without restrictions,” but this isn’t quite so, either. Executive Order 13570 prohibits the “importation into the United States, directly or indirectly, of any goods, services, or technology from North Korea.” (Emphasis mine, but you knew that.) Willful violations carry severe penalties, including 20 years in prison, a fine of up to $1 million, and a $250,000 civil penalty.

Which isn’t to deny that there are willful violations going on anyway, either for lack of intelligence, lack of interest by the Obama Administration, or both. (Eventually, the North Korea Sanctions Enforcement Act will also make this commerce sanctionable as a product of forced labor or human trafficking.) But like a heat rash, the Obama Administration won’t last forever, and one day, a new administration will come along.

And it will screw this up in a completely different (but almost certainly, less tolerant) way.

Functionally, what KDI wants to do here isn’t that different from Kaesong or any number of similar “engagement” projects run by China, Russia, or other countries. What makes it different is the brazenness with which the proponents admit (in an unguarded moment) what their game is. In doing so, they unwittingly validate my darkest suspicions, not just of KDI’s true motives, but of the true motives behind other engagement projects, too.

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Senators Graham, Menendez introduce companion to N. Korea Sanctions Enforcement Act

Senators Lindsey Graham (R, SC) and Robert Menendez (D, NJ) introduced the bill, numbered S. 1747, last night. I haven’t had a chance to read the full text yet, but from my initial read, it looks similar to S. 3012, which Senator Menendez introduced in the 113th Congress.

Like S. 3012, S. 1747 makes the designations in Section 104(a) discretionary, rather than mandatory. The problem with that approach is that so far, President Obama has exercised his discretion to sanction North Korea as little as possible. The State Department has been patently dishonest in its refusal to hold North Korea accountable for its terrorist threats against Americans, to say nothing of its terrorist attacks against human rights activists and dissidents in exile.

Also like S. 3012, S. 1747 retains key provisions to fund the enforcement of the legislation in a time of shrinking budgets, and to fund humanitarian and human rights promotion programs, using assets forfeited from those who violate the prohibitions in section 104. That language was stripped out of the current House version, probably due to inter-committee jurisdictional drag. If only for keeping that important language in the conversation, S. 1747 is a welcome opening bid from the Senate.

Overall, S. 1747 is an imperfect but a good bill, and an important, bipartisan step toward putting a sanctions enforcement bill on the President’s desk this year. Like Senator Gardner’s S. Res. 180, S. 1747 sends a clear message to the President, urging him to abandon the old, failed approach of North Korean exceptionalism–of refusing to hold North Korea accountable for its threats, attacks, crimes, and atrocities lest we spoil a mood that exists only in the collective imagination of Foggy Bottom.

I wouldn’t assume that S. 1747 is the last bill we’ll see in the Senate before the August recess, either, despite Congress’s present preoccupation with Iran. Senator Corker (R, TN), the Chairman of the Foreign Relations Committee, hasn’t spoken yet.

In the end, I’m confident that Congress will merge what’s best about both bills in the Conference Committee, hopefully this fall. Unless the President vetoes the bill, at great political cost to himself, that bill would re-shape North Korea policy around a two-track policy of sanctioning the regime in Pyongyang, and engaging the North Korean people. If diplomacy has any prospect of success–a prospect that now rests on the fragile reed of Kim Jong Un’s temperament–it lies in an approach that gives our diplomats enough leverage to win concessions to improve human security for the North Korean people, for the region, and for us.


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South Korea’s new unilateral sanctions point to a multilateral sanctions strategy

South Korea has imposed unilateral financial sanctions “on six Taiwanese individuals and entities for their alleged arms trade with North Korea,” and on the Syrian Scientific Studies and Research Center. The Taiwanese entities include Global Interface Company, Trans Merits, Trans Multi Mechanics, Tsai Hsein Tai, Su Lu-Chi and Chang Wen-Fu. None of the entities are currently designated by the U.N. Security Council, whose designation process has historically been slow and subject to Chinese and Russian obfuscation.

It is the first time that the government has taken such a punitive step against foreigners and groups who are not from North Korea, in a bid to put pressure on the nuclear-armed communist neighbor.

Officials said there is “evidence of illegal ties” between those blacklisted and the North.

“It’s evident that they are involved in weapons trade with North Korea. They have already faced U.S. sanctions,” a ministry official said, requesting anonymity. “We have shared related information sufficiently with the ally and international organizations.” [Yonhap]

The measure requires South Koreans doing business with the blacklisted companies to request permission from the Bank of Korea. Engaging in any such transactions without BOK permission carries criminal penalties, including fines and prison time. The process sounds roughly similar to the process requiring a license from the U.S. Treasury Department’s Office of Foreign Assets Control.

The South Korean action suggest a model for an effective ad hoc global alliance to make sanctions enforcement more effective, and that China cannot effectively hobble with a veto threat. By itself, South Korea is not a hub of international finance and does not have a convertible currency, but if enough states–and the EU in particular–were to agree on a coordinated blacklist of companies trading with North Korea, that list could become a powerful tool to make the U.N. Security Council resolutions work as intended. The existing institution that’s best equipped to coordinate these efforts is the Financial Action Task Force, which has already published guidelines to prevent the financing of proliferation. The FATF has broad international acceptance and recognition, including from the UNSC.

Governments may be reluctant to use an instrument as blunt as a blacklist against some of North Korea’s larger bankers and trading partners. For those banks and companies, there should be a second, separate Watch List requiring higher levels of compliance and due diligence before transactions can be approved. This would increase the pressure on generally reputable banks to scrutinize (or avoid) transactions with North Korea to protect their reputations.

A challenge for South Korea will be to create a list of sanctioned companies, similar to the Treasury Department’s list of specially designated nationals, commonly known as the SDN List, and getting South Korean banks and businesses to check that list before conducting transactions. In the United States, building a culture of compliance with sanctions regimes took years, and required a willingness to prosecute offenders and set examples. South Korea will also have to create a culture of compliance to make this action effective. If the next South Korean President comes from the left-of-center New Politics Alliance for Democracy, that will present a challenge to the creation of that culture. Historically, the NPAD has been unwilling to impose adverse consequences on North Korea for its conduct.

Japan, which is seeking new ways to pressure North Korea, could also increase its regional influence by adding its economic weight to this informal alliance.

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U.S., allies talk sanctions and human rights (emphasis on talk)

We’d hardly had time to digest all those rumors of “exploratory talks” with North Korea just two weeks ago, before John Kerry was in Seoul, sounding like his speechwriters had slipped him some cut-and-pasted OFK text. There, Kerry denounced Pyongyang’s “recent provocations,” said it wasn’t “even close to” ready for serious about talks, and accused it of “flagrant disregard for international law while denying its people fundamental freedom and rights.”

“The world is hearing increasingly more and more stories of grotesque, grisly, horrendous public displays of executions on a whim and a fancy by the leader against people who were close to him and sometimes for the most flimsy of excuses,” he said, referring to a report from South Korea’s spy agency that the North Korean defense minister was publicly executed with an antiaircraft gun after he fell asleep during a meeting led by Kim.

Kerry vowed to speak out against “North Korea’s atrocities against its own people” and warned that Kim’s mercurial behavior is likely to lead other nations to push for charges against him and North Korea at the International Criminal Court in The Hague. [Washington Post, Carol Morello]

This is all good, although if there’s one execution in North Korea that I care less about than any of the rest of them, it’s Hyon Yong-Chol’s. Overall, my reaction to Kerry’s words is the same as Bruce Klingner’s — I’ll believe them when I see him act on them. (Bruce is now on Twitter, by the way, and you really should be following him.)

Still, the Obama Administration has shown encouraging, if belated, signs of having discovered the advantages of progressive diplomacy. This week, Sung Kim was in Seoul meeting with his South Korean and Japanese (!) counterparts, and 70 year-old distractions have cleared away, if ever so briefly, because of a shared panic over the apparent pace of North Korea’s progress toward an effective nuclear arsenal.

For this instant, anyway, they are all saying sensible things, and in splendid harmony. Amb. Kim said the three nations “agreed on the importance of enhancing pressure and sanctions on North Korea even as we keep all diplomatic options on the table and open.” Kim, rumored to be a soft-liner in the administration’s Korea team, said, “In a sense, they (North Korea) have given us no choice but to cooperate on enhancing pressure ….” South Korean negotiator Hwang Joon-Kook offered also agreed on the need for “stronger pressure” on Pyongyang, in tandem with “active efforts for dialogue.”

And Sung Kim even said this:

“We also agreed on the importance of working with the international community to address the grave human rights situation in North Korea,” Mr. Kim told reporters in Seoul as he emerged from a meeting with his South Korean and Japanese counterparts, Hwang Joon-kook and Junichi Ihara. [….]

Officials here said that other options under discussion included tightening inspections of cargo traveling in and out of North Korea and squeezing the source of hard currency North Korea earns through the tens of thousands of workers it sends to factories, building sites, logging camps and other work sites in China, Russia and countries in Southeast Asia, the Middle East and Africa.

The North Korean workers are estimated to earn hundreds of millions of dollars a year but toil in poor, sometimes slavelike, working conditions and have most of their wages confiscated by their government, according to former workers and rights groups.[N.Y. Times]

If only someone had thought of that before.

Next, Kim and Hwang will fly to Beijing to pressure the ChiComs into turning the screws on the North Koreans. Wanna know how to get their attention? I’ll give you a hint, from my visitors’ log today:
Screen Shot 2015-05-28 at 2.04.39 PM

The three governments are talking about ways to “to deter North Korea’s provocations and increase the effectiveness of sanctions,” which is good, because as the U.N. Panel of Experts and GAO have both told us — and as I told you even before they did — the sanctions we already have aren’t being enforced. The three diplomats didn’t announce any new sanctions. The effort instead seems to be about doing a better job of enforcing the sanctions that already exist.

It’s interesting that North Korea’s recent claim to have tested a submarine-launched missile (which might have been fake) seems to have done more to change policy than a direct North Korean terrorist threat against free expression in the United States (which was almost certainly real).

So what exactly do all of these oscillating signals mean? My guess is, they probably all mean about the same thing: a lot of talk, and not much else. But let no one say the Obama Administration dares not confront grave threats as they gather far from our shores. Your government has deployed a brigade of its finest cops and lawyers, armed with the power of the mighty dollar, to fight that existential threat to our liberties, our security, and the sanctity of humanity itself known as … FIFA, which sounds like the name of small, yappy dog, and is probably about as great a threat to our national interests.

Yes, that’s right: the cops, lawyers, and authorities we should be using to bring Kim Jong Un to heel are being kept busy cleaning up a game that Americans don’t even watch.

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