Picture hat tip to Kushibo

Aijalon Gomes may be made of sterner stuff. After seven months in a North Korean prison — try to imagine how interminable each of those months must have been — we’ve heard no confession, only the troubling report that he tried to take his own life. That still doesn’t mean he’ll make North Korea a less cruel place for having gone there. If he becomes “Kim Jong Bill” Richardson’s justification for another self-serving ransom mission to Pyongyang, he’ll only have helped to advance the Kim Dynasty’s diplomatic, political, and financial goals. Park and Gomes would have done more good and spread their message more effectively by joining in the leaflet balloon campaign. And although Gomes did not publish a manifesto when he crossed, it seems that he took his inspiration from Robert Park, who said he didn’t want anyone in our government to do anything to secure his release. Of course, that’s not a wish that any citizen can reasonably expect his government to honor, but I would certainly oppose giving any concession of any kind for his release.

But what other plausible justification is there for holding Aijalon Gomes in a jail cell for seven months? Nothing Aijalon Gomes did was vaguely violent, surreptitious, or criminal.

I may value my discretion more than Gomes’s valor, but I can’t deny that I envy the courage of this 31-year-old English teacher from Boston. Having just spent the better part of last weekend absorbed in this remarkable archive of historic newspapers from Georgia — including contemporary accounts of slavery by its defenders — I am tempted to think that Aijalon Gomes’s greatest error was an excess of sincerity in taking up the abolitionist cause of his African ancestors so that Asians will not be enslaved today. There is something exceptional about this in our age of individual and ethnic selfishness. If so, this certainly mitigates Mr. Gomes’s fault. Indeed, it honors him.

Enough is enough. Aijalon Gomes has committed no crime but to demand justice from the unjust. The time has long passed for him to be set free. The men who represent Aijalon Gomes in Congress must see his captivity for what it is — a thinly veiled demand for ransom. Scott Brown must inform himself of the plight of his constituent, and John Kerry, who has misbegotten the notion that he represents Kim Jong Il on the Foreign Relations Committee, must remember that he really represents the Gomes family in the Senate. It is time for Aijalon Gomes to come home, something that is most likely to happen soon if we attach legal and financial consequences to his captivity. Specifically, members of Congress ought to remember that the Foreign Sovereign Immunities Act would allow the Gomes family to file suit against North Korea — imagine that, someone actually suing the responsible party! — for any act that causes it to be listed as a state sponsor of terrorism. If there will be renewed moves to list North Korea as a state sponsor of terrorism anyway, and I think there will be, then I hope the staffers who write the bills and their findings of fact will think of Aijalon Gomes and his family.

Around 150 people gathered at a park at Imjingak near the border to release ten giant balloons carrying some 100,000 leaflets, 300 DVDs and 1,000 one-US-dollar notes. An activist shouting ‘Down with Kim Jong Il’ ripped up a North Korean flag with a knife. Another wore a traditional Korean funeral hat with the message ‘Congratulations, Kim Jong Il’s death’. The leaflets and DVDs criticised Pyongyang’s human rights record and carried detailed claims that it sank a South Korean warship in March, with the death of 46 sailors.

Unfortunately, the winds didn’t cooperate and blew the balloons back into South Korea, but no matter. They might do just as much good if they land on any college campus in Seoul.

One day, they must be held accountable for crimes against the English language: “They, at the same time, powerfully demonstrated the will of the strong revolutionary army of Mt. Paektu to mercilessly wipe out the U.S. imperialists and their stooges hell-bent on the moves to ignite a new war by the force of arms of Songun bolstered up and defend the socialist country as firm as an iron wall if they dare intrude into even an inch of the inviolable sky, land and seas of the DPRK.” That’s one sentence. And there’s more where that came from.

I’m glad to see that Angela Jolie is “very concerned about the North Korean people,” as generic a statement as that may be, but I wish she was more concerned about how little the UNHCR seems to share that concern. If she knew more about how badly the UNHCR has failed to fight for the rights of North Korean refugees in China, a few well-chosen words could really do some good.

Burma, North Korea, and Nukes: The evidence just keeps piling up.

Those joint naval exercises in the waters off Korea have ended without incident, and probably without much useful deterrent effect, either.

Like Kushibo says, China’s biggest problem is China: “A Japanese government panel will recommend deploying more armed forces in coastal areas where Chinese naval traffic has increased and relaxing rules on nuclear arms transfers.”

The team and coach Kim Jong Hun were summoned to a meeting at the People’s Palace of Culture in Pyongyang on July 2, the U.S.-financed Radio Free Asia reported Monday. Sports Minister Pak Myong Chol was among some 400 government officials, athletes and others at the six-hour-long closed-door session, the report said. Team members were forced to reprimand their coach at the end of the gathering, the report said. [….]

The report cited two unidentified sources in North Korea and a Chinese businessman named Yu, described as knowledgeable about North Korea affairs. [AP]

Of course, these “criticism” sessions are a part of everyday life for all North Koreans, and hopefully, this doesn’t necessarily mean the players or the coach will suffer a darker fate. It just raises an obligation for FIFA not to look the other way.

A diplomatic source here said the U.S. will blacklist more North Korean entities and individuals in the coming weeks so that international financial institutions would cut off ties with them.

Any foreign banks refusing to sever business ties with the North Korean entities and individuals in question will have U.S. financial institutions suspend ties with them, the source said. “Think of Citibank or Bank of America suspending business ties with Bank of China or Bank of Shanghai. That will be a great burden to China.”

What I wouldn’t give to see the case of the vapors Peter Lee must be having at this moment. Of course, I care little and know less about Lee’s background, but I wonder if the manic oscillation between contemptuous arrogance and resentful victimhood is a function of life in a society where destiny is so often imposed on the resentful by the arrogant. If it’s futile or worse for a Chinese citizen to curse the policies of his own government, there’s no less futility in cursing the policies of the American government.

Crowley said last week that the U.S. will not only use existing measures like the Patriot Act, but will also establish “new executive authorities” to blacklist more “entities and individuals supporting proliferation, subjecting them to an asset freeze; new efforts with key governments to stop DPRK trading companies engaged in illicit activities from operating in those countries and prevent their banks from facilitating these companies’ illicit transactions.” [Yonhap]

They certainly do sound very serious about this. And thorough:

Robert Einhorn told the Voice of America that the U.S. has tracked down every trading company and individual in North Korea doing illegal business activities overseas and will freeze their assets. It was the first interview Einhorn has given since being made the U.S. government’s special adviser for nonproliferation and arms control.

Einhorn said the legal basis for past sanctions, which he called “existing authorities,” will be more actively applied and used to freeze assets of North Korean organizations, trading companies and individuals involved in terror or nuclear proliferation activities.

The new sanctions, on the other hand, will be focused on restraining other illegal activities such as trade in conventional weapons, luxury goods, tobacco, counterfeit bills and drugs, he said. He said the U.S. is drafting “authorities” to control those non-terror or nuclear proliferation areas. He said once the new authorities are arranged, the ability of the U.S. to freeze those illegal activities by the North will be strengthened. The details of the new sanctions will be announced by next week, he said. [Joongang Ilbo]

All of this has the potential for some very interesting money laundering prosecutions in the courts. The measure to watch for, however, is whether Treasury will simply declare the entire country of North Korea to be a primary money laundering concern and deny its entities access to the U.S. financial system, something that my spies tell me key people in Treasury have seriously considered. This so-called Fifth Special Measure is to Plan B what the Public Option is to Obamacare. And it wouldn’t be unprecedented. We’ve done this to Nauru and the Ukraine, among other places.

It’s encouraging that the old partisan reflexes really aren’t very probative of how people in Washington see the issue of financial pressure. Most hard-liners agree that all kinds of pressure have to be applied in tandem with at least an offer to negotiate, in the unlikely event that North Korea is prepared to accept the kind of fundamental transparency that even most soft-liners now know it never will.

China has repatriated an 81-year-old former South Korean prisoner of war who had fled North Korea decades after being captured, a newspaper report and an activist said Tuesday. Dong-A Ilbo quoted an unidentified government official as saying the man surnamed Jung was sent back despite intensive diplomatic efforts by Seoul to bring him to the South. [….]

“The government made tremendous diplomatic efforts but he was eventually sent back to the North,” the source was quoted as saying. South Korea had contacted Chinese diplomatic authorities more than 50 times since Jung’s arrest, the daily said. Choi Sung-Yong, an activist who campaigns for the return of South Korean abductees, said Jung was forcibly returned to the North in September last year, about a month after being arrested in China where he was hiding. He said Jung was arrested eight days after he fled the North with the help of South Korean activists. [AFP]

In the end, all of our differences with China over Taiwan, Tibet, Xinjiang, Korea, and everything else come down to its contempt for the rights of individual human beings. If China recognized that the condition of humanity carries with it certain basic rights and liberties, it would be a threat to no one, it would have peacefully reunified with Taiwan decades ago, it wouldn’t be plagued with ethnic and labor unrest today, and wary Asian nations wouldn’t be looking for alternative structures to check its thuggish conduct, its hegemonic predations, and most recently, its aggression through its North Korean proxy. That is why Pacific nations need a military alliance, patterned after NATO during the Cold War, to contain China for next 20 years until demographics, economics, religion, and politics catch up with its anachronistic statism. There already is a new Cold War in Asia — it’s just that some would rather not admit it. But I suspect that historians will record that it was presaged by the ugly nationalism of the 2008 Olympics, and “officially” began with the Cheonan Incident.

The Chinese reaction to such an expansive argument will certainly be that I am making too much of one man’s life, which is just my point. Societies and nations are composed of individuals who want the state to serve them, and not the other way around. Gradually, those who can see the significance of an individual’s life are learning to loathe China’s oligarchy, one small injustice at a time. Because this includes growing numbers of the Chinese people, this will be the downfall of the fascist experiment that has functionally replaced the failed Maoist one. In the case of China, that downfall is likely to be more episodic than cataclysmic, but a system can only brutalize so many people before their rage eventually consumes it.

A powerful Afghan insurgent leader and a man identified as Osama Bin Laden’s financial adviser purchased ground-to-air missiles from North Korea in 2005, according to an uncorroborated U.S. intelligence report released by Wikileaks on Sunday.

“On 19 November 2005, Hezb-Islami party leader Gulbuddin Hekmatyar [sic] and Dr. Amin [no last name], Osama Bin Ladin’s financial advisor, both flew to North Korea departing from Iran,” the undated report said.

“While in North Korea, the two confirmed a deal with the North Korean government for remote controlled rockets for use against American and coalition aircraft,” said the report, whose origin could not be determined from the version published on the Wikileaks site. [WaPo]

And here is the suspected consequence of that:

about 18 months later, according a previously undisclosed after-action military report obtained by Wikileaks, a CH-47 Chinook helicopter was downed by a missile “shortly after crossing over the Helmand River.”

“The impact of the missile projected the aft end of the aircraft up as it burst into flames followed immediately by a nose dive into the crash site with no survivors,” the May 30, 2007 report added.

Reached for comment, a State Department spokesman repeated that State Department lawyers do not consider the sinking of the Cheonan to be the state sponsorship of terrorism.

The report is dated May 30, 2007, which would be about a month after North Korea was to have met its first deadlines under Agreed Framework II, and just three months after the agreement itself. Readers will recall former Bush Administration official Danielle Pletka’s accusation in the Washington Post that Hill “demand[ed] that intelligence regarding North Korean noncompliance with its denuclearization commitments be vetted through him and cut[ ] off the flow of information to diplomats with contrarian views on the wisdom of his approach to Pyongyang.”

Knowing that there are congressional staffers who are reading this, it would be my respectful suggestion that they take a very close look at just what State told the intelligence oversight committees about North Korea’s suspected sponsorship of terrorism in the months leading up to October 11, 2008, when President Bush removed North Korea from the list of state sponsors of terrorism.

The Taliban leader mentioned, Gulbuddin Hekmatyar, is an individual with a long and repulsive history. Hekmatyar muscled his way to the leadership of a mujaheddin faction after the Soviet invasion. His medieval radicalism made him a favored beneficiary of the Pakistani ISI and the Saudis, which largely controlled the distribution of U.S. aid to the mujaheddin and helped Gulbeddin build a power base at the expense of more moderate groups. Our deference to the Pakistanis was one of the two grave errors of our otherwise commendable support for the mujaheddin. The other was our post-Soviet withdrawal from Afghan affairs, a decision that abdicated Afghanistan to thugs like Gulbuddin, and ultimately gave rise to a sanctuary for Osama bin Laden.

It’s strange how ten years of unrestricted, unconditional Sunshine Policy and two agreed frameworks don’t count as “previously ineffective,” yet two brief experiments with freezing the proceeds of illicit activity somehow do. So let’s just be clear about this: when the proponents of unrestricted appeasement of Kim Jong Il’s regime talk about North Korea already being the most sanctioned country on earth, they’re either ignorant or just being disingenuous. In Munneke’s case, I’ll charitably assume the former.

My first suggestion to those who repeat this cliche is that they should at least bother to read the Treasury Department’s summary of the U.S. government’s North Korea sanctions program. With the exception of counter-proliferation sanctions that keep North Korea from buying weapons and dual-use technology, and the Treasury Department licensing program needed to enforce these focused sanctions, most trade sanctions with North Korea were lifted back during the Clinton Administration as a reward for North Korea’s long-since-broken promise not to test any more ballistic missiles. That was three U.N. Security Council resolutions and at least two presidential statements ago. President Bush lifted most remaining trade sanctions under the Trading With the Enemy Act in 2008. It would not be so if it were my decision, but Americans are free to take overpriced potemkim ad ridiculum tours of Pyongyang and see its creepy ghost dance spectacles. Aside from these sanctions and some vague Treasury Department warnings about potential money laundering risk, the U.S. government has been permissive of trade with North Korea, and with the exception of suspected financing of illicit activity, still is. And I’m saying this like it’s a bad thing, because it is. All of this trade is perpetuating a system that enslaves 23 million people, refuses to provide for their basic needs, resists reform, and richly deserves ignominious extinction — something that will certainly be expensive, but probably less so than the U.S. city we might yet lose to a North Korean-supplied nuke.

Beyond this, the United States has been trying for years, through generous offers of monitored humanitarian aid, to meet a need that ought to trump any commercial interest: keeping the people of North Korea from starving.

Surely Munneke doesn’t expect the Obama Administration to be equally solicitous of illicit trade and money laundering, but he criticizes Treasury’s enforcement action against one crooked bank in Macau, an effort that lasted just 17 months from its inception to its premature abandonment by failed diplomat Christopher Hill. Contrary to the overwhelming weight of the evidence, Munneke claims that the North Korean regime thus proved itself “immune to sanctions.” The evidence actually suggests that the sanctions panicked Kim Jong Il and forced him to make concessions, at least until we lifted the sanctions and he reneged again. It seems more likely, in retrospect, that North Korea, South Korea’s then-leftist government, China, and our own State Department all wanted the BDA sanctions lifted not because they weren’t working, but for the precise reason that they were so much more effective than expected that they’d become a threat to the stability of the regime.

The Obama Administration has since concluded — and commendably so — that the sanctions worked, and should not have been lifted without more concrete progress toward disarmament. Since then, to my disappointment and Munneke’s apparent ignorance, trade with North Korea has been reasonably free, at least until several months after Kim Jong Il ordered the sinking of a South Korean warship. Munneke summarily dismisses this murder of 46 South Korean sailors as something we must “move beyond” in the interest of being “pragmatic.” Yet Treasury has now been loosed, not to halt all North Korean trade, but to hunt down the proceeds of North Korea’s illicit activity. Does Munneke really suggest that we are required, in the interests of endlessly pointless talks, to absorb unilateral warfare, tolerate crime and proliferation, and grant Kim Jong Il a franking privilege over our currency? Apparently so! Some of the assets various foreign governments and banks are now said to be blocking at Treasury’s urging may be co-mingled with assets derived from legal activity, but so what? The essential act of money laundering is co-mingling it to disguise its origins, confuse its legitimacy, and facilitate the superficial arguments of the ill-informed.

It’s not North Korea’s inability to buy helicopter gunships and Escalades from us that’s throttling its trade relations with the world, it’s North Korea awful credit rating, which is a function of the fact that it doesn’t keep its obligations and never allows foreign investment to penetrate so far into its society that ordinary people are exposed to its influence. But then, trade isn’t the only place where the North Korean regime has this same fundamental problem. If ten years of Sunshine Policy didn’t change that, nothing Munneke proposes will, either.

Admittedly, I don’t know much about the history of Cambodia, including the nightmare under the Khmer Rouge, but this is a reminder that someday (may it be very soon), decisions made today will determine the fate of many now running the regime in North Korea.

The details and issues addressed in South Korea’s pending North Korean Human Rights Act* will help shape how the process attempting to achieve some sort of justice plays out and which SK government agencies will be responsible for what between now and then (eg, properly interviewing, recording, and storing witness testimony for later prosecution). For a discussion of some of the “details and issues”, see this post from last year.

Obviously, other factors (how the regime falls and neighboring countries’ roles in that and the aftermath) will be involved in what happens to the perpetrators of mass human rights violations in the North, but to the extent it has a say, South Korea, needs to awaken from its apathy now to be ready later.

If there ever is an attempted reunification, as Vitit Muntarbhorn said on this very topic at the PSCORE seminar this spring, “If you don’t know the truth, you cannot heal properly.” (this quote came at 4:42, but he starts talking about the NKHR bill around 1:36)

Let us hope the North Korean people won’t have to wait 30 years after liberation for their shot in court!

*For those of you in Seoul, there will be a seminar Wednesday on the pending NKHR bill:

A Second Discussion on North Korean Issues and Policy

Subject: How Shall We Proceed with the NK Human Rights Bill?
When: Wed., July 28th, 2-4pm
Where: National Assembly — Constitutional Memorial Hall, 2nd Floor, Large Lecture Hall (헌정기념관 2층대강당)
Sponsored by: National Assemly Human Rights Forum and the Association of NK Human Rights Organizations (ANKHRO)
북한인권문제정책협의회 제2차 북한인권토론회

주제: 북한인권법 어떻게 할 것인가?
주최: 국회인권포럼 ,북한인권단체연합회
일시: 7월 28일(수) 오후2시~4시
장소: 국회의사당 헌정기념관 2층대강당

☞ 오시는 길
[9호선 국회의사당역 하차] 1번, 5번 출구로 나와 도보 이용
[5호선 여의도역 하차] 5번 출구, 버스 162, 261, 262, 461번
[1호선 대방역] 360, 363번 버스 이용
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Treasury focused on 100 accounts where its evidence was strongest and quietly persuaded the banks holding those accounts to freeze them. In contrast to the approach applied in the case of Banco Delta Asia, Treasury approached these banks quietly and got their more-or-less voluntary cooperation — and given the conspicuous example of BDA, who wouldn’t cooperate? (FYI to the Hankyoreh: the amount frozen in North Korea’s BDA accounts was $25 million, not $250 million. Not that the Hanky’s reporting on North Korea reveals much accuracy, insight, objectivity, or any of the other qualities one looks for in journalism.)

Reading between the lines of the stories, Treasury appears to be going after patterns of large cash deposits and withdrawals, of the sort that would require the filing of a Suspicious Activity Report if conducted in an American financial institution. A common example of a suspicious activity would be a low-level employee of a North Korean diplomatic mission making a large cash deposit, or purchasing, say, a quantity of Omega watches out of all proportion to his likely salary.

The banks in question are variously reported to be in Africa, Asia, the Middle East, Europe, and Russia, whose organized crime industry is said to be helping Kim Jong Il launder his money. One account in Liechtenstein was apparently exposed by an employee and whistleblower. The Chosun Ilbo also reports (below) that the South Korean government has identified 10 to 20 suspicious North Korean accounts in its banks. (And I can only hope that the Calderon and Massie plaintiffs are reading this.) At least one entity in China, a Hong Kong-based trading company, is also a reported target.

The stories are too full of interesting detail, some of them slightly varying with each other, not to blockquote at great length. Overall, however, the stories are detailed and consistent enough to suggest that someone in the administration has been directed to speak to the Korean press on background. While the South Korean newspapers are reporting on the asset-freezing campaign extensively, there is surprisingly little coverage of this level of detail in American newspapers. The Washington Times speaks generally about the need for tightening sanctions against North Korea, with quotes from Nick Eberstadt, Bruce Klingner, Kim Kwang Jin, and Chuck Downs.

You can read the longer quotes below the fold. Collectively, they suggest that the administration is making the kind of comprehensive effort that is needed here, and which should have the desired (to me) effect of starving the “palace economy” of cash. And while the cessation of illicit activity and proliferation isn’t a bad thing in itself, the reports say little more about the greater purpose of this. Which, I suppose, is fine for the time being.

From the Joongang Ilbo:

The United States has already begun quietly freezing assets in North Korean accounts at about 10 banks around the world, diplomatic sources familiar with the situation told the JoongAng Ilbo yesterday.

On Tuesday in Seoul, U.S. Secretary of State Hillary Clinton said the U.S. would levy additional sanctions on North Korea for the March sinking of the Cheonan.

“The U.S. Treasury Department and intelligence authorities began looking into about 200 bank accounts that showed suspicious activities involving North Korea,” an informed diplomatic source said. “Bank accounts used to deposit money earned from the North’s exports of arms, in violation of UN Security Council resolutions 1718 and 1874, were studied, along with accounts used to purchase luxury goods believed to be supplied to the North’s leadership.”

Of the 200 suspicious accounts, U.S. authorities narrowed their attention to about 100 and began freezing their assets, the source said. The accounts belong to about 10 banks in Southeast Asia, southern Europe and the Middle East, the sources said. All the accounts were opened and operated under aliases, the source said. [….]

“When the U.S. authorities informed the banks that there were problems associated with certain accounts, the banks quietly froze the assets, making it hard for the media to detect,” the source said. “The assets in those accounts are likely to be money Kim Jong-il needs to operate his regime, so this will deal a serious blow to the North.”

“The U.S. began the freezings before June,” the source said. “The moves should be interpreted as a part of new sanctions on the North to hold it responsible for the sinking of the Cheonan.”

The assets in those accounts were presumably raised through illicit trade of arms, counterfeiting money, money laundering and drug trafficking, the source said. “In the past, the North deposited money in African bank accounts created under aliases and raised through trafficking in elephant ivory, selling of counterfeit Viagra and exporting arms in Africa,” the source said.

The source said the new financial sanctions will be different from what happened in the Banco Delta Asia crisis that stalled the six-party nuclear talks for years due to the North’s protest. Instead of naming and shaming a specific bank as a money laundering institution and pressuring it to freeze North Korean assets, “quiet” moves are now preferred to avoid blowback from Pyongyang, the source said.

Another source confirmed the additional financial sanctions, noting that, “If the charges are very clear, then the Banco Delta Asia method will be used, while the silent method will be used in more ambiguous cases.”

Meanwhile, a senior U.S. official said a package of sanctions aimed at stopping Pyongyang’s illegal activities will be announced in the next couple of weeks. In a press briefing in Washington on Wednesday, Assistant Secretary of State Philip J. Crowley elaborated on the fresh sanctions announced by Clinton in Seoul.

“Much of what we’ve done up to this point has centered on proliferation activities that stem from specific authorities,” Crowley said. “We’re moving into strengthening our national steps to attack the illicit activities that help to fund the weapons programs that are of specific concern to us - things like the importation of luxury goods into North Korea, concerns that we have long had about trafficking in conventional arms. So there are authorities that we will strengthen nationally, and we’ll have more to say about that in the next couple of weeks.”

North Korea’s counterfeiting of banknotes and cigarettes, diplomats’ smuggling of cigarettes, banking transactions that fund weapons programs and support the government and its policies were named as some of the illegal activities to be tackled under the sanctions.

Crowley also said Robert Einhorn, special adviser for nonproliferation arms control, will soon begin a trip to encourage countries that have been reluctant to implement earlier sanctions, noting that the North has found ways to sidestep the measures.

“They look to see if there are seams and gaps in the international effort,” Crowley said. “That’s what Bob Einhorn is going to be consulting with a range of countries where we think there needs to be more aggressive implementation of Security Council resolutions 1718 and 1874.”

Crowley, however, refused to say what Einhorn’s destinations are and if they include China.

“China obviously has a big role to play in this,” Crowley only said. [Joongang Ilbo]

From the Chosun Ilbo:

The U.S. government is tracking 200 North Korean accounts in foreign banks suspected of being linked to illicit activities such as nuclear weapons development, drug trafficking and counterfeiting. “Even before the Cheonan incident, the U.S. was tracking around 200 North Korean bank accounts in banks in China, Russia and even Eastern Europe and Africa that are believed to be involved in the development of weapons of mass destruction and the export of drugs, counterfeit money, fake cigarettes and weapons,” a diplomatic source said Thursday.

North Korean leader Kim Jong-il is believed to have a US$4 billion slush fund stashed away in secret accounts in Switzerland, Luxembourg and Liechtenstein.

According to sources, North Korean bank accounts in Russia are being tracked after the U.S. government obtained information that the Russian mafia is laundering money for the North. Kim Jong-il and other officials cannot engage in financial transactions using their real names, so they are believed to operate secret bank accounts or rely on the Russian mob.

Philip Goldberg, the former U.S. State Department envoy charged with enforcing UN sanctions, visited Russia in August last year and reportedly asked Deputy Foreign Minister Alexei Borodavkin to crack down on the mob for its involvement in laundering money for North Korea.

North Korean accounts held in African banks are being tracked, because the reclusive regime has been earning a substantial amount of money in the region by smuggling ivory and selling weapons. “Despite the UN sanctions, North Korea has opened up new markets in Africa and Latin America,” said one North Korean source.

The U.S. sanctions against North Korea are expected to differ from pressure applied to Macao-based Banco Delta Asia back in 2005. “Rather than freezing the operations of an entire financial institution like BDA by getting the U.S. Treasury Department to blacklist it on suspicion of money laundering, the measures this time will probably involve the tracking of individual North Korean accounts directly linked to illicit activities and freezing them,” a diplomatic source said.

Sanctioning entire banks could prompt North Korea to complain that its legal financial transactions are also being blocked and this could make the lives of ordinary North Koreans even more difficult. This is probably why U.S. Secretary of State Hillary Clinton said these measures “are not directed at the people of North Korea,” but at the “destabilizing, illicit and provocative policies pursued by that government.”

Others say the latest sanctions could be more comprehensive than previous ones by automatically limiting U.S. transactions with all banks found to deal in a certain amount of money with North Korea, rather than singling out particular banks. Under such pressure, banks could voluntarily sever relations with North Korean businesses or individuals to avoid being blacklisted.

The South Korean government has apparently notified the U.S. of between 10 to 20 North Korean bank accounts under suspicion of being involved in illicit deals. There are fears that massive Chinese aid to the North could render the U.S. sanctions useless, but judging from the vehement protests lodged by North Korea when its accounts at BDA were frozen, experts say financial sanctions are an effective means of pressure. [Chosun Ilbo]

Also from the Chosun Ilbo:

The U.S. will freeze North Korean leader Kim Jong-il’s overseas secret bank accounts based on a tip-off from a whistleblower at a state-run bank in Liechtenstein in 2006-2007.

The August issue of the Monthly Chosun said since the North’s attack on the South Korean Navy corvette Cheonan in March, speculation has been rife among North Korea experts in Washington that the Obama administration will freeze Kim Jong-il’s secret accounts in Liechtenstein and Switzerland.

The tip-off from Heinrich Kieber, a former employee of LGT Bank, which is owned by the Liechtenstein royal family, contributed decisively to the U.S. obtaining information about Kim’s secret accounts. According to the U.S. Senate, Kieber said the “head of department in a socialist government” wanted to deposit more than US$5 million “with no explanation in the files whatever in regard to the source of the vast amount.”

The U.S. recently signed a tax information exchange agreement with Liechtenstein which could allow it to freeze bank accounts suspected of belonging to Kim. [Chosun Ilbo]

From the Korea Times:

The U.S. plan to impose new financial sanctions on North Korea will focus on cracking down on its overseas arms sales and the supply of luxury goods to its leadership, according to South Korean intelligence sources, Friday.

Washington is reportedly taking steps to freeze Pyongyang’s secret overseas bank accounts used to deposit money from arms transactions, counterfeiting, money laundering and drug trafficking.

“American investigators have discovered about 200 overseas accounts linked to Pyongyang. It is closely monitoring about 100 of them,” an official from the National Intelligence Service told reporters Thursday, asking not to be named.

“The accounts are in about 10 banks in Southeast Asia, southern Europe and the Middle East and were opened under false names.”

Regarding this, Hong Kong’s financial authorities are considering an audit of North Korea’s state-run firms operating in Southeast Asia, including Taepung International Investment Group, whose main mission is to attract foreign investment for the North’s economic projects, another source said.

The probe will focus on revealing whether the firms engaged in illegal deals and stashed slush funds are in violation of U.N. Security Council resolutions 1718 and 1874, which were adopted after the North’s missile and nuclear tests in 2005 and 2009 to ban its arms exports, transactions linked to its nuclear and atomic activities.

“The U.S. sanctions against North Korea will address its illegal and suspicious overseas activities on a wide range of areas,” the Ministry of Foreign Affairs and Trade said in a press release.

“We expect the measures to include stopping the supply of cash earned from arms sales and illegal deals to Pyongyang, banning suspicious figures from travelling overseas and looking into involvement of diplomats in illicit activities.”

The U.S. State Department said Robert Einhorn, the envoy on nonproliferation, would travel to Asia in early August to encourage enforcement of the sanctions.

“We would like to see other countries also take the same kinds of national steps that we’ve announced,” spokesman Philip Crowley said Wednesday. [Korea Times]

It looks like at least one economically significant part of China is promising its cooperation:

“Hong Kong will continue to exercise vigilance in enforcing our regulation to effectively implement the United Nations Security Coucil sanctions against DPRK,” Josephine Lo, an official at the Commerce and Economic Development Bureau of the Hong Kong government, told Yonhap News, using the North’s official name, the Democratic People’s Republic of Korea.

“Our law enforcement agencies will take appropriate actions on those found in violation of the laws,” she said. [Yonhap]

And in related news, isn’t it just precious when the North Koreans try to cite a non-binding U.N. presidential statement as authority?

“The new sanctions are in violation of the statement, which encourages the settlement of issues on the Korean Peninsula by peaceful means to resume direct dialogue and negotiation,” said Ri, who is in charge of the disarmament bureau at the North’s Foreign Ministry.

Funnier still, this quote from a member of the North Korean delegation to something called the Asian Regional Forum.

“It will not only pose a grave threat to the peace and stability of the Korean Peninsula, but also of the region,” said Ri.

Hillary Clinton was ready with an answer to that:

US Secretary of State Hillary Clinton on Friday accused North Korea of a “campaign” of provocation as an Asia-Pacific security forum descended into recriminations over tensions on the Korean peninsula.

A North Korean spokesman reacted by warning of a “physical response” to new US sanctions and massive US-South Korean naval exercises due to begin Sunday in the Sea of Japan, accusing Washington of “gunboat diplomacy”. [….]

“Here in Asia, an isolated and belligerent North Korea has embarked on a campaign of provocative, dangerous behaviour,” Clinton said in prepared remarks to foreign ministers gathered at the region’s biggest security dialogue.

“Peaceful resolution of the issues on the Korean peninsula will be possible only if North Korea fundamentally changes its behaviour.” [AFP]

KCNA has since raised the rhetorical ante with calls for a “Korean-style sacred war for retaliation.” Nice of KCNA to supply its own translation, thus removing any question of interpretation and adding extra comical effect.

You know, this may not be the most opportune moment for NoKo Jeans to launch that big market-expansion campaign for its $210 pants. I’d be perfectly content to see them go bankrupt, along with their fellow enablers in Orascom and Koryo Tours.

The bigger question mark is how South Korea can still justify pouring money into North Korea through subsidies to businesses in the Kaesong Industrial Park when other countries’ banks and businesses are being discouraged from dealing with North Korea for the sake of protecting South Korea’s own security. Admittedly, Treasury has identified those other third-country accounts on the basis of the appearance of illegality, but then, no one in the South Korean government can really provide the assurances required in either UNSCR 1718 or 1874 that North Korea isn’t spending its taxpayer-funded Kaesong revenue for its WMD programs. I understand the political reasons why South Korea doesn’t close Kaesong down, but I haven’t understood since October 2006 how it could justify continuing its subsidies to that great failed experiment.

The Obama administration announced Wednesday that it would impose further economic sanctions against North Korea, throwing legal weight behind a choreographed show of pressure on the North that included an unusual joint visit to the demilitarized zone by Secretary of State Hillary Rodham Clinton and Defense Secretary Robert M. Gates.

The measures, announced here by Mrs. Clinton after talks with South Korean officials, focus on counterfeiting, money laundering and other dealings that she said the North Korean government used to generate hard currency to pay off cronies and cling to power. [N.Y. Times]

Clinton announced the sanctions as she visited the DMZ, while accompanied by SecDef Gates, and while displaying her supernatural frost-projection powers against a hapless North Korean border guard. I count at least three priceless expressions in this photo.

The Treasury Department announcement I linked here yesterday now looks to be just the first part of the Obama Administration’s dangerously overdue and initially weak response to the sinking of the Cheonan, using at least some of the legal and financial tools I’ve advocated using for the last several years.

“Today, I’m announcing a series of measures to increase our ability to prevent North Korea’s proliferation, to halt their illicit activities that helped fund their weapons programs and to discourage further provocative actions,” Clinton told a news conference in Seoul after high-level security talks with South Korean officials.

Clinton said Washington’s “new country-specific sanctions” will target the North’s “sale and procurement of arms and related material and the procurement of luxury goods and other illicit activities.”

“Let me stress that these measures are not directed at the people of North Korea who have suffered too long due to the misguided and malign priorities of their government,” she said. “They are directed at the destabilizing illicit and provocative policies pursued by that government.” [Yonhap]

With apologies to KCJ, this is encouraging — a strong opening message that will get the attention of the investors on whose cash North Korea depends. Unfortunately, Clinton offered few details about the sanctions, and via some inside sources, I’ve learned that the administration is still debating just what specific measures it’s going to announce. Until I see what those specific measures are, and how strong and comprehensive they are, I will reserve judgment. Or, as one observer put it:

Nicholas Szechenyi, a northeast Asia policy analyst at the Center for Strategic and International Studies in Washington, said the key to effective U.S. sanctions is how they are implemented.

“If the U.S. is doing this in isolation, doing this piecemeal, then I don’t think they’ll have much effect,” he said. “But if there’s a unified effort to not only announce these sanctions as an act of solidarity with our South Korean allies but also to apply some pressure on North Korea, then I think over time it might work.”

That sounds exactly right to me. Nick Eberstadt is more skeptical, and maybe he knows something I don’t:

The moves resemble piecemeal steps of the past, they add, and are unlikely to strike where it hurts: the regime’s access to under-the-table international funds.

“If I were in Pyongyang, I would not be trembling in my boots about this,” says Nick Eberstadt, a North Korea specialist at the American Enterprise Institute in Washington. [Christian Science Monitor]

The real question here is what the sanctions will be designed to achieve:

“The real question, if the talks resume, is so what?” says Mr. Lieberthal. Neither Republican nor Democratic administrations have been successful over two decades at curtailing the North’s nuclear ambitions, he says, adding that the Obama administration “shows no signs of being in the mood to reward North Korea” to prompt its cooperation, a pattern he says the North has become accustomed to.

“So even if the talks resume at some point, would they produce any serious results?” he asks. “I remain very skeptical about that.” [Christian Science Monitor]

If the administration is looking for sanctions that are undone as easily as they’re done, this won’t work. Our financial power over North Korea is our power to scare away investors and sever its financial lifelines, including those that originate in China. If we try to spare Chinese entities and only target isolated investors like Orascom and various shady bankers here and there, this won’t work. If the administration nips at North Korea’s illicit financing at its fringes, a U.S.-led sanctions program will fail just as U.N. sanctions always have, because North Korea is very nimble at setting up new banks and companies to evade sanctions, and because Chinese entities will adopt a see-no-evil approach to transactions with North Korea unless it’s made clear to them that their own comingled assets are also at risk.

For what it’s worth, Hillary Clinton and Robert Einhorn will both be traveling to China to seek its cooperation. Wish them luck.

But if the administration goes all-in to hit North Korea’s finances hard before its big succession-focused party conference in September, this could be extremely effective, and might even disrupt Kim Jong Il’s plans to purge his and promote the next generation of apparatchiks to preserve his dynasty for another generation.

It now appears that China’s obnoxious protestations will get at least part of a joint U.S.-South Korean naval exercise moved to North Korea’s East Coast. Given China’s indefensible behavior, that would be a very bad concession for President Obama to make. Despite the U.S. Navy’s insistence, it’s clear that there’s a message for China in these exercises, too, as there should be. But instead of China suffering some vicarious liability for North Korea’s attack, it could stand to benefit from what amounts to thuggery by proxy. If the Navy moves its exercise out of the Yellow Sea, China will have achieved a great leap forward for its regional hegemony. And while a naval exercise in the Yellow Sea is useful for showing America’s commitment to its allies in the region, it still falls far short of the sort of economic and security consequences needed to deter North Korea and China from letting something like the Cheonan Incident happen again.

One deferential commenter asks, “Will the anti-submarine warfare exercises signal an expansion of the coverage area of the U.S.-(South Korea) alliance?” I hope the answer to that is “yes.” Whereas I’ve long believed that U.S. ground forces should be withdrawn from Korea, I believe having a U.S. air component in Korea is good for both countries’ security, and that if any part of the alliance has the potential to grow, it’s the naval component. Having U.S. infantry in South Korea is an anachronism and an inviting target, but creating a multinational naval alliance between the United States and the Pacific democracies will better protect those democracies against Chinese intimidation and proxy attacks.

Rather than showing contrition and doing its share to restore regional stability by dialing back its support for Kim Jong Il, China’s behavior is bombastic (but very helpful to my side of the argument about China’s intentions). I certainly do not suggest that Peter Lee speaks for Beijing, but I do suppose his writing probably reflects the way Beijing hopes to use this incident to advance its hegemonic ambitions and divert its suppressed domestic rage toward foreign demons.

Lee betrays his misunderstanding of South Korea by suggesting that there is “a wave of excitement” there over the possibility of immediate reunification (if only!). He then frets, needlessly, that this could frustrate China’s ability to “win recognition of its national interest in the future of the peninsula, especially since its national interest seems best served by the continued existence of an impoverished, anti-American buffer state.” I hope Koreans are listening carefully. This is the sort of honesty about China’s motives you’ll seldom hear from Washington’s Foreign Policy Industry, or Seoul’s. But in the next breath, Lee nonetheless protests that China’s influence over its North Korean dependent is overstated. China is always trying to play this both ways — claiming hegemony over North Korea while insisting that it has no influence over events there. But with the decline in inter-Korean trade, China is by far North Korea’s largest source of cash, fuel, food, and trade.

Lee acknowledges the wave of anger by the Chinese people against the corruption and lack of accountability of their own government (and also, bad restaurant service). Release the mobs!

Indeed, nationalism and a thirst for vigilante justice targeting anyone from rude waitresses to corrupt officials to countries deemed insufficiently friendly and respectful have emerged as a remarkable source of potential energy, particularly on the Internet. It is easy to imagine China permitting the expression and, through the media, “amplification” of anti-foreign feeling to threaten the economic interests of countries that challenge China’s interests and self-esteem.

The strategy would have the added benefit of using vociferous and intolerant nationalism to crowd out domestic criticism of Communist Party rule and its various shortcomings, which threaten to become a dominant theme on China’s lively, massive, and indignant domestic Internet despite extensive monitoring and censorship operations and the Herculean efforts of paid sock puppets to dilute and redirect unsuitable threads.

Lee then cites the example of a K-pop concert gone bad to support dark threats that Beijing will fall back on the tired tactic of redirecting this anger toward xenophobic nationalism directed against the United States and South Korea, and that Chinese, marching as the state leads them, will riot against the foreign devils (whether digitally or physically isn’t specified). But of course, Beijing has been doing this for years, and while that hasn’t made the people of China any more content, it’s not a tactic whose historical precedents augur favorably for China or anyone else.

By itself, this action is likely to have little effect, because it’s doubtful that any North Korean-licensed banks have U.S. correspondent accounts. The better question, however, is what effect this may have on banks in Europe and Asia, because the Treasury action was ordered in concert with the Financial Action Task Force. The FATF is the rarest of species in this world — an effective international institution. When the FATF speaks, it means that most of the world’s major finance ministries have promulgated guidance similar to Treasury’s, or soon will.

It will be weeks, and probably months, before we know whether this action will encumber the flow of laundered North Korean assets through European and Asian banks, but Treasury’s message should send a clear warning that non-complaint institutions will be targeted for the same treatment that Banco Delta Asia received in 2005 — the dreaded “fifth special measure,” which denies the offending institution access to its correspondent accounts in American banks and effectively cuts it out of the global financial system.

This is a hopeful sign, though by itself, it doesn’t necessary mean this administration has decided to turn Treasury and Justice loose to pursue the flow of illicit cash that sustains North Korea’s palace economy. But to do so now, just as the regime is purging old comrades and preparing for the succession of a new emperor, would be the most opportune timing imaginable.

North Korean behavior has gotten so bad, according to East-West Center Visiting Fellow Victor Cha, that foreign policy experts are really at a loss about what to do.

“You do want to have some sort of diplomacy or engagement, but what do you do if a country just refuses to engage, and in the meantime it continues to build nuclear weapons and ballistic missiles?” Cha said during an interview at the EWC’s recent 50th Anniversary International Conference. “It’s a real dilemma. This is really a case of a country that is operating outside the normal bounds of international relations. And when use of force is really difficult to contemplate as an option, what are you supposed to do?” [East-West Center]

For years, the conventional wisdom has been based on mirror-imaged rationalizations of North Korean motives, rationalizations that failed to understand its irrational (to us) pathology. This was needless, of course. The pathology would have been evident to anyone who confronted is capable of doing to other human human beings, and the profound pathological implications of that capability. Our foreign policy establishment, accustomed to dealing with states that respond to ordinary economic and political incentives, assumed the same of North Korea — that it seeks better trade relations, more commerce with the outside world, the exchange of ambassadors, the reduction of tensions, and a better life for its people. The Foreign Policy Industry clung to them throughout the mutual partisan recriminations (yes, a cliche) that blamed everyone but Kim Jong Il for the collapse of two agreed frameworks.

Perhaps President Obama’s election was just the first necessary element of the destruction of these false assumptions. During the last year, I’ve watched them fall, starting with North Korea’s May 2009 nuclear test, and concluding (for everyone but Mike Chinoy and a few others) after North Korea sank the Cheonan. The new consensus is that talks stand no chance of disarming North Korea, and perhaps not even of preserving the peace. The new consensus is that China isn’t a “responsible partner” that will help us restrain Kim Jong Il within the range of what passes for acceptable provocations. And while sanctions have become more attractive as a policy option, there is no “accepted” view of what plausibly attainable objective they are supposed to serve, because the conventional wisdom still sees them as an accessory to diplomacy. Simply stated, the conventional wisdom is still trying to recover from the destruction of its fundamental assumptions. It has no idea what to do next.

The first step toward a better policy is to acknowledge that the last one didn’t work, and won’t work. The second step is just beginning.

A lot of North Korean officials must be very, very worried right now. I suppose we’ll continue to hear reports like this right up until the big September party conference. Speaking of which, the excellent North Korea Leadership Watch already has some of the graphically beautiful and ideologically repulsive propaganda posters advertising the event.