Must read: Jieun Baek on how North Koreans beat the border blockade

Admittedly, Baek’s explanation of the North Korea’s guerrilla banking system isn’t the first I’ve read, it’s only the best:

The next time Kevin talks to his mother, she asks him for $1,000. She gives Kevin a phone number. When he hangs up after about a minute, Kevin then calls that number and tells the stranger on the line that he got a call from someone (he uses a pseudonym to protect his mother’s identity). Every time, the phone number is different.

The stranger on the other line is usually a girl, a Joseonjok girl. The woman gives Kevin a South Korean bank account number, to which Joseph wires $1,000. He then sends the woman a text message using Kakao Talk (a Korean smartphone application that’s similar to Whatsapp), texting that he sent the $1,000. After receiving the message, the Joseonjok lady sends a message to another Joseonjok living in North Korea. This person will then notify Kevin’s family via their legal domestic cell phones that the money has arrived so that Kevin’s mother can go to that individual’s location, or the underground financial house, to pick up her $700 in Chinese RMB. The two middlemen take 30 percent of the requested money and split the commission. The whole transaction, part of the small underground financing system inside the country, can take place in as little as 20 minutes. [Jieun Baek, Politico]

It sounds very much like the hawala systems that initially caused the Treasury Department so much trouble after 9/11, until Congress tightened requirements that they be licensed and regulated. With a few upgrades, this could be the guerrilla financial system I’d advocated for here.

Baek also writes that refugees in the South can send medicine to their sick relatives in the North via smugglers. That has helped to ease the suffering caused by the collapse of North Korea’s state-run health care system, but there are risks that come with this, too. As Rimjin-gang recently informed us, some North Koreans who take smuggled medicines — often, medicines stolen from U.N. aid supplies — without a doctor’s advice are getting sick. If some way could be found to open the lines of communication wider, doctors in South Korea could volunteer to treat North Korean patients remotely, practicing what’s now called telemedicine.

Jieun Baek is writing some of the most thought-provoking work on how to “engage” with the North Korean people I’ve yet read. I’ve added her to my blogroll, and must keep a closer eye on what she writes.

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House, Senate will both hold hearings on North Korea policy this week* (updated)

If you ask senior Obama Administration officials about the policy of “strategic patience” with North Korea today, they will bristle and recast it as something else, but this wasn’t the case in 2010, when former Secretary of State Hillary Clinton explained her policy in a visit to Seoul:

“What we’re focused on is changing North Korean behavior,” one senior U.S. official said. “We are not focused on getting back to the table.” “We recognize that diplomacy, some form of diplomacy with North Korea, is inevitable at some point,” another official said. “We’re really not there.” [Glenn Kessler, Washington Post]

That visit followed North Korea’s second nuclear test by a year, and North Korea’s attack on the ROKS Cheonan by a month. It clearly wasn’t working then, and it certainly isn’t working now. Expect “strategic patience” to come under attack in both houses of Congress this week.

Wednesday’s event, at the Senate Foreign Relations Committee’s Asia Subcommittee,** is entitled, “Assessing the North Korea Threat and U.S. Policy: Strategic Patience or Effective Deterrence.” Senator Cory Gardner, the Subcommittee Chair, will preside. If this speech and this resolution are any indication, the junior senator from Colorado will have some difficult questions for the Panel One witnesses, including Ambassador Sung Kim and Ambassador Robert King.

[Update: the hearing notice now says that the hearing has been postponed. I’ll update this post when the hearing is rescheduled.]

Panel Two witnesses will include Ambassador Mark Minton, President of the Korea Society, and Jay Lefkowitz, King’s predecessor as former Special Envoy for North Korean Human Rights. I confess that King’s message discipline has made me miss Lefkowitz, who was willing to stray from the party line to prevent his portfolio from being steamrolled by the State Department bureaucracy.

The hearing follows the introduction of a sanctions bill by Senator Bob Menendez (D, NJ) and Senator Lindsay Graham (R, SC), even before we’ve heard from the Chairman and Ranking Member of the full committee, Senators Bob Corker (R, TN) and Ben Cardin (D, MD). For the Senate, it will be the first major hearing on North Korea policy since March 2013, shortly after North Korea’s third nuclear test.

On Tuesday afternoon,* two subcommittees of the House Foreign Affairs Committee, the subcommittees dealing with Asia policy and nonproliferation, will hold their own hearing, “The Iran-North Korea Strategic Alliance,” a topic I addressed to a limited extent in “Arsenal of Terror.” The hearing announcement does not include any witnesses from the administration, but will include (among others) investigative journalist Claudia Rosett and Larry Niksch, formerly with the Congressional Research Service.

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In retrospect, it was North Korea’s third nuclear test in February 2013 that collapsed congressional support for “strategic patience.” Congress never showed much enthusiasm for it, but until 2013, its skepticism was mostly expressed by Republicans. Even the comically short-lived Leap Day Agreement failed to raise much organized opposition in 2012. Still, it was obvious to anyone who paid attention that the administration was paralyzed and out of ideas. Even prominent former administration officials admitted as much.

Congress’s 2013 revolt, led by the new Chairman of the Foreign Affairs Committee, Ed Royce, was bipartisan, organized, and expressed in the form of comprehensive sanctions legislation.*** Royce was joined by Ranking Member Elliot Engel, many other prominent Democrats, 147 co-sponsors in all, and eventually, the full House.

This year, the Senate has joined the House in questioning the State Department’s lack of a credible response to North Korea’s continued proliferation, to the Commission of Inquiry report, and to the Sony cyberattack and threats — in short, its apparent lack of any coherent North Korea policy whatsoever. Contrary to the concern I’d expressed last week, the controversy over Iran will not monopolize Congress’s energy for the foreseeable future after all.

This week’s hearings will likely cement congressional frustration with the administration’s policy (or lack of one). Only time will tell if that frustration, in turn, will be enough to frustrate any grasp at Agreed Framework 3.0, but it certainly won’t make it any easier.

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* If you’re reading this on Wednesday, please don’t go to the Rayburn Building this afternoon to see this hearing. It was actually held on Tuesday — sorry! I’ll link the video when it’s published on line.

**  I clarified the original post to indicate that this is a subcommittee hearing, not a full committee hearing.

*** Full disclosure.

 

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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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That time in 2013 when 100 N. Korean women staged a walkout at a prison uniform factory

Fittingly, our story begins with a Chinese textile company that made prison uniforms. We don’t ordinarily think of Chinese prison-garment workers as overpaid, but then, some North Korean officials paid them a visit. The officials knew of a derelict factory in the extreme northeast of the workers’ paradise, where women would work 12 hours a day for 30 kilograms of rice a month.

For the women, this was still a good wage, especially compared to any wage that might be paid in North Korea’s inflated currency, and at a time when rice had a high market value. There was no shortage of applicants, and by September 2013, the factory had hired 125 women and 10 men, and started up. Then, a month later, payday rolled around:

However, just one month after start of operations a major problem arose. The payment of white rice was not made as promised. Most of the angry female workers refused to come to work.

The white rice for the “monthly wage payments” was to be brought in by the Chinese company, then handed over to the workers via the county officials. That was the agreement. However, the officials first withheld about half of the rice as “army rice” before paying the workers. That’s what made the workers so angry.

The officers, in a panic, visited the homes of the workers to encourage them to come to work.

“The female workers sent the officers packing, saying, ‘How can you expect us to come to work when you will not pay us properly? We will starve!’ In North Korea today, if promises are not kept, any one will leave the workplace at the factory in the same way” says Mr P. [Rimjin-gang]

The incident happened nearly two years ago, but Rimjin-gang held the story until recently “to ensure the safety of the reporter,” known as “Mr. P.” Shortly after the work stoppage, the Chinese investors withdrew from the project, and North Korea’s opening to the world slipped from our grasp once again.

Jiro Ishimaru, the founder of Rimjin-gang, who has been reporting on North Korea for over 20 years, says “this is the first time he has ever heard of something like this that might be called a group labour dispute.” In 2011, however, the Daily NK reported a work stoppage by a brigade of underfed soldiers at a uranium mine.

In my recent essay on “guerrilla engagement,” I wrote of using clandestine communications to empower and organize North Korean workers with clandestine labor unions. If labor organizations proliferated throughout North Korea, they could eventually organize nationwide work stoppages and strikes. Here is an incident where a clandestine labor organization formed locally and spontaneously. It isn’t hard to believe that with a little support, more North Koreans at other factories and mines would organize, too.

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U.N. must confront the political causes of North Korea’s food crisis

In North Korea, the land of suspended disbelief, an almost unbroken twenty-year series of meteorological miracles has bounded droughts and floods within the blighted land between the DMZ and the Yalu River each year, without having once caused a famine or food crisis in South Korea. For a few months this year, a serious drought threatened to be the worst-ever again, until rains came and eased conditions in most parts of the country.

North Koreans can still look forward to a hard year (see here and here), but not a disastrous one. For this, many North Koreans may owe their lives to the sotoji farmers, who spent the drought tending their crops and covering them with plastic sheeting to hold the soil’s moisture. Although sotoji farmers grow their crops in backyards, cleared plots in the hills, and marginal land the state did not bother to collectivize, they provide “as much as 60 percent of all food sold on the local market” in some areas. The state has fought them every step of the way, by confiscating plots, limiting their size, hiking land use fees, or planting trees on them.

Clearly, then, the causes of North Korea’s food crisis are not primarily meteorological. The same must be said of the solutions.

If anything good came of the drought, it is that it briefly revived the debate about aid policy, to which Benjamin Katzeff Silberstein makes an important contribution at The Diplomat. Silberstein takes aid agencies to task for enabling the regime’s avoidance of fundamental reforms that are essential to address the root causes of North Korea’s long-term nutritional crisis.

Sadly, in trying to counter North Korea’s suffering, the international community may ironically be contributing to its prolonging. The United Nations and other donors are enabling the North Korean regime to continue its disastrous policies when they act as cushions whenever the country runs out of food.

Foreign aid has been an integral part of North Korea’s food supply planning since the mid-1990s. This year is no exception, and the international community may have to allocate additional funds to North Korean food aid in order to prevent widespread malnutrition. But aid won’t change anything in the long run. North Korea will continue to be highly vulnerable to simple weather changes, unless its most basic economic policies are completely overhauled. [Benjamin Katzeff Silberstein, The Diplomat]

He also raises an obvious question that aid agencies consistently avoid — that North Korea could import enough food to close its food gap, yet chooses not to.

The North Korean regime often emphasizes that the country consists mostly of mountainous regions not suitable for farming. That is clearly true, but the logical response to such a challenge would be to seek to import agricultural goods and export those that the country can produce in greater abundance to a cheaper price than others. Instead, the regime continues to uphold economic and political self-reliance as its overarching goal.

The first duty of a government is to either provide for its people or let them provide for themselves. States that fail this most basic obligation forfeit their sovereign right to spend hundreds of millions of dollars on flat screen TVs, jewelry, and expensive liquor; to spend hundreds of millions of dollars building ski resorts and water parks; and to spend a billion-and-change on missiles each year. All of these expenditures ($644M, $300M, $1.3B, respectively) dwarf what aid agencies are asking foreign donors to give to food aid programs ($111M). Even without subtracting out the aid agencies’ substantial overhead costs, this means that North Korea has more than enough cash on hand to feed its own people.

Silberstein concludes:

Like most disasters often termed as “natural,” the consequences of North Korea’s drought are first and foremost failures of policy, not of nature. By agreeing to supply North Korea’s shortfall in food production, year after year, even as the regime refuses to make any fundamental changes to the system that keeps on failing, the international community acts as an enabler for the regime’s continuing mismanagement. Humanitarian aid is given with the best of intentions, but in the long run, by helping the North Korean regime avoid necessary policy choices, it may be harming rather than helping the North Korean population.

When two decades* of international aid fail to pull an industrialized society in a temperate zone out of a state of widespread, multi-generational, chronic malnutrition, aid agencies incur an obligation to identify and confront the real causes of hunger in North Korea. In North Korea, that begins with talking about an undeniable and criminally culpable misallocation of resources, but does not end there. The fact that North Korean spies have infiltrated the World Food Program (and UNESCO, for good measure) may not be the only reason why aid agencies haven’t met this duty, but until they do, donors will continue to stay away in droves.

Silberstein devotes much of his article to the state of agricultural reform in North Korea, which he views as “nothing more than tweaking the edges of a failed system.” Even this may give Pyongyang too much credit, as the regime’s unsteady policies make every gain uncertain. Last month, for example, I wrote that the regime’s tolerance of markets was one clear bright spot in the economic picture. Since then, it has banned men under 60 from trading. To angry North Korean traders who are protesting to security forces, brawling with them, or jumping off buildings in angry desperation, the state’s liberalization hasn’t gone far enough. To them, when the state fails to provide, it is their right to provide for themselves:

Not only that, on the same day, an additional source in the same province reported a recent riot targeting MPS agents at Chongjin’s Sunam Market. The skirmish ignited when an agent arbitrarily targeted a male merchant in his 60s for the old middle-school textbooks mixed in with the secondhand books he was hawking at his stall.

When the books were confiscated he shouted, “What does the state give us? We don’t get rations or wages. If I got even one of those two things I wouldn’t be here doing this!” according to the source.

Moreover, “Passersby and merchants alike near the scene quickly stepped up to take the old man’s side, wasting no time in berating the MPS officials by shouting, ‘What’s wrong with what he said? Of course we’ve taken to market life–we’re hungry! We have to make ends meet! Why would be put ourselves through arduous work like this if we could be full and rich like you. Those who are full can’t grasp the hunger of others,” he explained.

Others at the scene chimed in, shouting, “Not even being able sell things without worrying–that’s too suffocating a reality,” according to the source, who added that this micro incident is directly reflective of a macro issue of citizens’ frustration regarding the authorities.

The agent, visibly overwhelmed by the outcries, tried to defend himself, shouting, “It’s not my fault that the state is not giving you rations. Go take your complaints to the district office,” according to the source, who said that he fled directly thereafter, during which citizens yelled after him, “ You’re all the same–living off the money of those struggling to get by!”

He added, “The MPS agent took off in a flash before the altercation could escalate further. Still, the tension hung heavy in the air long after his departure and a lot of the residents on the scene said that it helped them get [suppressed feelings] off their chests.” [Daily NK]

Today, street stalls are springing up everywhere, but what about tomorrow? Further complicating this picture is the fact that it can be difficult to determine, based on unconfirmed and isolated reports, whether reported incidents suggest a top-down policy change or bottom-up corruption. What matters in the end is what’s inflicted on the traders in the markets, and on the consumers who rely on them.

On the contrary, North Korea is not only refusing to change its economic structures to make them more resilient to events like the current drought. The state also continues to suppress those economic mechanisms that could help counter the effects of natural disasters. Even though private legal markets are now part of the formal economy to a large extent, imports and exports are still heavily restricted and largely rely on the willingness of border guards to accept bribes.

While Kim Jong-un has implemented measures that carry the shape of economic liberalization with one hand, his other hand has been used to tighten controls on border trade and smuggling. The government would only need to cease some of its control of the markets to alleviate the food shortages that will likely follow the current drought, a virtually costless measure. So far, it has done nothing of this sort. [Silberstein]

The regime now confronts a political paradox — small relaxations of control only beget demands for greater relaxations of control. As more people enter the market system and deepen their investments in it, their demands also become more aggressive. For North Korea’s poor, the market system is the new normal, even a new right. Year by year, that right becomes more unalienable. Unlike the generation that preceded them, most of North Korea’s untermenschen do not sit listlessly at the verge of starvation; they are merely poor, on the wrong side of a widening gap between rich and poor, and increasingly angry about it. Far better for the regime, then, to simply accept the inevitable change that it seems less able to resist each year.

North Korea needs fundamental, structural policy reforms at every stage of its nutritional cycle. First, it must prioritize providing food and medical care for its people, instead of luxury items and weapons. Second, it must fundamentally liberalize its markets and let its people provide for themselves. Third, North Korea needs real land reform — not sharecropping, or any other marginal reforms that people in Washington love to predict, and people in Chongjin never see and no longer believe in. To end North Korea’s food crisis, Pyongyang must give the land back to the tillers, let the market provide food to those who can provide for themselves, and build a functioning social welfare system for those who cannot.

Donor nations must recognize that the change North Korea needs is a fundamental transition to a market-based system, including land redistribution, and make clear that the world is ready to help the North Korean government implement that change by providing seed, fertilizer, environmentally safe pesticides, and training to farmers. Until then, they should unite to block the offshore funds that Pyongyang is wasting, and make those funds available for humanitarian purposes only.

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* Originally said “a decade.”

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“The first words she said were, ‘let’s die together.’ But I was still happy.”

Screen Shot 2015-07-21 at 8.02.27 AMNational Geographic recounts the story of Eunsun Kim, who survived the Great Famine and a dangerous journey from North Korea to the South:

Many people died because of malnutrition, including my grandparents. In 1997, my father passed away too. My mom sold or bartered everything from our apartment until we had nothing left. So she decided to go to the city to search for food. She left me at home, but took my older sister who’s two-years-older than me. She said she would be back in three days, but if she got food earlier she would be back sooner. She gave me 15 North Korean chon—enough to buy just one piece of tofu—and left.

Three days passed, then four, then five. I was waiting for her to come home but on the sixth day I had no energy left and thought maybe today is my last day. I wasn’t afraid of death. I had seen so many people dying during that time. What made me sad was that I felt my mom didn’t want me. She took my other sister but didn’t come back for me. So I decided to write a will, at 11 years old.

I wanted to say I would miss my mom, that even if she came home after I died, I wanted her to know what I had felt while waiting for her. But on the sixth day she came back. I was happy even though she arrived empty-handed. But she didn’t give up. She didn’t leave me alone. The first words she said were, ‘let’s die together.’ But I was still happy.

As I’ve argued before, every one of those deaths was needless — the result of deliberate decisions by the regime, and disproportionately inflicted on those at the bottom of North Korea’s political caste system.

Kim’s book is “A Thousand Miles to Freedom.”

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The courage of Hyeonseo Lee: “I am human also. I am scared.”

Last Wednesday, Bruce Klingner of the Heritage Foundation hosted and moderated an event called “Confronting the Human Rights Challenge in North Korea.” Hyeonseo Lee, author of “The Girl With Seven Names,” was the keynote speaker.

Screen Shot 2015-07-20 at 6.39.54 AMLee spoke in accented, but clear English of the indoctrination she received as a child, of the revelations that broke the hold of the state’s propaganda over her, of her flight from North Korea, and of her resettlement in South Korea. (Later, we learn that Lee also speaks fluent Chinese; from this, and from her answers to questions from the audience, it’s clear that she’s a highly intelligent young woman.)

Perhaps because I’d already seen Lee’s powerful TED talk about her flight from North Korea, the part of her Heritage speech that moved me the most concerned more recent events. At 30:19, Korean-American activist Henry Song asked Lee about her fear that the regime will attack her. Those attacks might well be much more than verbal and rhetorical assaults from Kim Jong-Un’s propagandists, or addlebrained harangues from his noisy little chorus of sympathizers abroad. As I’ve documented in detail, Ms. Lee must also worry about physical violence, including assassination attempts like those directed against Park Sang-Hak, Hwang Jang-Yop, and other dissidents in exile.

Lee spoke of the report — still not carried in any English-language media — that the regime ordered its agents to “punish” 24 dissidents who had spoken at the U.N., and that she understood “punish” to mean “assassinate.” She told of learning that her best friend was arrested for spying for the regime, and of her inability to trust even fellow North Korean refugees, with whom she might make common cause. She told of having moved her residence so that fewer people would know where she lives. She still fears retribution against her family inside North Korea itself. And yet, she speaks out anyway:

Klingner was kind enough to invite me to be a panelist, alongside Param-Preet Singh of Human Rights Watch and T. Kumar of Amnesty International USA. At 1 hour and 25 minutes, I speak about the policy paralysis of the administration and within certain academic circles, the weakness of U.S. sanctions against North Korea, recent moves in Congress to address this, and how sanctions fit into a broader, people-focused engagement policy that would aim to shift the balance of power inside North Korea.

On my way home that day, and in the days since, I’ve reflected with shame and sadness on how low we’ve fallen — or perhaps “shrunken” is the word I’m grasping for — from our historical role as the haven for, and champion of, the liberal values of dissent, of heresy, of free thought. You don’t need to see this in strictly moral terms to see what we’re losing. America became a great nation — greater than nations with more land, more people, with far more advanced cultures, and even more resources — because earlier generations of heretics, dissidents, and refugees made America the world’s center of free thought, of innovation of every kind, and of global culture in the modern age. Freedom of expression hasn’t only enriched our lives incalculably, it has enriched our economy and our global power incalculably, too.

Today, the same men who threaten Hyeonseo Lee and her brave compatriots also threaten our own freedom of expression, here in our own country. The Obama Administration has answered with cowardly mendacity, refusing to even acknowledge Pyongyang’s threats against Lee and other dissidents in exile, even lying to the entire world to avoid confronting them. What was so recently the world’s greatest nation cowers. A lucky few of us look to a small woman from North Korea to show us what courage still means.

If you were in Hyeonseo Lee’s place, what message would you derive from the American government’s refusal to acknowledge Pyongyang’s threats against your life, your freedom, and your family? It isn’t so difficult to imagine her sentiments if you begin by asking yourself how you feel, as an American, that your government offers nothing resembling a credible answer to a foreign despot’s threats against your own freedom, in your own town. In doing so, our government ceases to be a champion of the oppressed; it is the oppressed — and by proxy, so are we. It chooses silence over courage and principle, in the false hope that it can trade our liberty for its security, or — to be even more brutally honest — for its own temporary political advantage. But when our government submits to terror, it submits for all of us, and the consequences of this will extend long beyond January 2017. That is the antithesis of statesmanship.

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U.N. asks China why it sent 29 refugees, including a 1 year-old baby, to North Korea

The U.N. has requested Beijing for an explanation of its decision to repatriate 29 North Korean defectors last August, and of their current status in North Korea. [….]

The U.N. Commission of Inquiry is particularly concerned about the status of human-trafficking victims and illegal immigrants in China, and the persecution or torture, as well as the long detentions that await returnees in North Korea, South Korean outlet No Cut News reported.

North Korean women also are vulnerable to forced abortions and sexual assault after repatriation, according to the U.N.

The forced abortions on repatriated women have been performed because Chinese men have impregnated the women, according to the Brookings Institution.

In a follow-up to China’s report, the U.N. said it had received information a 1-year-old child was one of the 29 North Koreans repatriated in August 2014.

The U.N. asked Beijing to confirm this notice and where possible provide any information on the status of the returnees in North Korea.

Greg Scarlatoiu of the Committee for Human Rights in North Korea in Washington told Radio Free Asia the defectors should be classified as political refugees, considering the possibility of torture that await returnees forcibly sent back to North Korea. [UPI, Elizabeth Shim]

UPI’s report doesn’t specify which U.N. agency asked the impertinent question, but one U.N. agency that’s been outstanding for its cowardice and uselessness is the U.N. High Commission for Refugees, which sits passively in Beijing doing nothing of consequence for North Korean refugees. It’s long past time for the UNHCR to demand that China grant it free access to the border regions. The results of quiet acquiescence speak for themselves.

The repatriations are in flagrant violation of the U.N. Refugee Convention and its 1967 Protocol, which China signed. Background here, here, and here.

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Does the Iran deal make a North Korea deal more likely? Here are six reasons why it doesn’t.

The Korean press today is filled with analysis of how the Iran deal could affect North Korea policy. China, which has long sought what would amount to de facto recognition of North Korea as a nuclear state, thinks the Iran deal is a swell model for a deal with North Korea, which almost certainly means that China sees the Iran deal as a capitulation. State itself is saying it’s ready for “authentic, credible” negotiations with Pyongyang, although State’s operational definitions of “authentic” and “credible” leave much to the imagination. The Chosun Ilbo thinks the deal increases pressure on North Korea to make a deal. Some of the Daily NK’s experts see the Iran deal as a potential model, while others see it as a potential incentive to press on with its nuclear programs. Yonhap publishes a balanced and diverse selection of views from safe pro-engagement establishment scholars, who conclude that the Iran deal won’t have much effect at all.

My view is actually closer to the last of these views, and here’s why.

1. The President is running out of time and influence. Even in the diplomatic arena, presidents’ power and time are limited as their terms end. The Cuba opening cost President Obama much support within both parties, particularly among the powerful Cuban-American delegation and its allies. The Iran deal now pits the President against Israel’s many powerful friends on the Hill. At a time when the Republicans have strong majorities in both houses of Congress, and when the President is already leading his party into a presidential election while saddling it with an image of weakness and unilateral conciliation, a deal with an unrepentant and aggressive North Korea, just months after Kim Jong-Un’s cyberattacks and terrorist threats against The Interview, strains political plausibility.

2. The Iran deal will exhaust most of that time and influence. One immediate effect of the Iran deal will be that Congress will now be absorbed with Iran for the next three months, both before and after the August recess. For two months after that, it will be absorbed with whatever it didn’t deal with when it was dealing with Iran. After that, it may have a chance to turn to North Korea, if North Korea is still a high enough priority. In the short term, then, the Iran deal is probably a temporary setback for any North Korea legislation, but in the long term, it dims the prospects for a deal with North Korea. The Iran debate will consume the administration’s energy and credibility in Congress, and will restrain the President from fighting Congress on North Korea while conserving his energy to hold an Iran deal together. Even congressional supporters of the Iran deal will want to portray themselves as tough-minded. North Korea is an excellent vehicle for that, and the number of Democratic co-sponsors for H.R. 1771 is the best empirical measure of this incentive. That tendency will help help cement a centrist, bi-partisan majority around a tougher policy going into the next administration.

3. North Korea wants money, but Congress won’t pay. Congress has less power to obstruct diplomatic agreements than domestic policy initiatives, which invariably require Congress to pass legislation and appropriate funds. Yes, the Senate must ratify a treaty, but one-off deals with dictators are almost never written as treaties. Congress can refuse to appropriate funds for a deal, and has repeatedly passed amendments restricting the delivery of funds to North Korea, but that doesn’t stop State from asking allies to pay instead. Thus, Congress can seldom block a deal outright without a Senate supermajority. In the case of Iran, there is an important difference — Congress has already passed a series of sanctions statutes that the President can’t lift unilaterally without some kind of built-in authority for that (as with sanctions under the International Emergency Economic Powers Act).

4. The Optics of the Iran-North Korea Analogy. Opponents of the Iran deal frequently cite the 1994 Agreed Framework with Pyongyang as an example of a bad agreement that doesn’t prevent proliferation, but facilitates it. The administration denies the comparison. (If Republicans were completely honest here, they’d admit that George W. Bush’s 2007 deal was worse than either the Iran deal or the 1994 deal, in that it lifted sanctions before North Korea even began to perform.) The last thing the President needs now is another Agreed Framework with North Korea to validate that analogy and remind us that the same person — Wendy Sherman — was a key player in negotiating both deals.

5. North Korea isn’t buying what we’re selling. All of the above assumes North Korea would take a disarmament deal, or even a freeze deal. Based on what North Korea has been saying recently, however, that probably assumes too much:

Rodong Sinmun Slams U.S. Mandarins’ Reckless Remarks on DPRK’s Nukes

Pyongyang, May 20 (KCNA) — The U.S. ambassador to south Korea was recently reported to have said as regards the denuclearization that if north Korea takes landmark measures, it can improve its relations with the U.S. and head for “peace and prosperity”. [….]

     The U.S. is foolishly seeking to denuclearize and stifle the DPRK. However, the U.S. would be well advised to clearly know that the DPRK is neither Iraq nor Libya.

     The DPRK would like to declare once again that its nuclear force serves as the nation’s treasure which can never be abandoned nor be bartered for anything as long as there are imperialists on the globe and nuclear threat to the DPRK persists.

     Peace and prosperity depends on bolstering up the nuclear force. Neither pressure nor blackmail nor appeasement can ever stop the DPRK from dynamically advancing, pursuant to the line of simultaneously developing the two fronts. -0-

DPRK Will Continue Developing Powerful Deterrence for Self-Defence: Minju Joson (2015.05.17)

Pyongyang, May 17 (KCNA) — The south Korean puppet groups is pulling up the DPRK over its recent underwater test-fire of ballistic missile from a strategic submarine, terming it a “violation of UNSC resolution” and “serious challenge”. [….]

    Explicitly speaking, the DPRK’s nuclear deterrence for self-defence serves as the almighty treasured sword greatly contributing to peace and security not only on the Korean peninsula but in Northeast Asia.

    A particular mention should be made of the fact that it is irrefutable that if the ballistic missiles from strategic submarines are to go on a serial production and be deployed in a near future, peace and security on the Korean peninsula and in Northeast Asia will be consolidated so much. [….]

6. A deal with North Korea isn’t a legacy-maker. It’s a well-established pattern that lame-duck Presidents grasp for “accomplishments” abroad as their power wanes at home. There’s no better president to negotiate with than one who knows he’ll be safely ensconced in his presidential library by the time the deal falls apart. North Korea’s track record tells us it will cheat, and when it does, the next president will come under strong pressure to walk away. I suspect that the administration has been involved in secret talks with North Korea periodically, but there’s usually at least some warning before a deal is announced. I first got wind of Chris Hill closing a deal with the North Koreans in Berlin in late 2006, and the deal was announced the following February. But then, how often do you hear George W. Bush boast about Agreed Framework 2? And even assuming this were possible, how long would it last under a future president? Probably not much longer than the Leap Day Deal itself. That’s a pretty dubious foundation for a legacy.

~   ~   ~

Update: So on the one hand, Wendy Sherman, who wrote the North Korea deal that Iran learned from, now wants North Korea to learn from the Iran deal. As Kevin Kim says:

On the other hand, Ambassador Lippert confirms that the North Koreans don’t sound interested in any deal we’d offer:

“But I think the key difference between those three cases and North Korea is the lack of interest in coming to the table and talking seriously about denuclearization and rolling back its missile programs,” the U.S. envoy said in a speech given to a meeting of Seoul National University alumni in Seoul.

The communist country has so far only rejected the U.S.’ signal for dialogue, refusing to return to the six-party denuclearization talks or inter-Korean talks, canceling leader Kim Jong-un’s trip to Moscow and aggravating its relations with China, he said.

“We were met with more silence and unwillingness to come back to the table (from North Korea),” Lippert noted.

The U.S. policy is built on principled diplomacy, “not appeasement,” and the U.S. will continue to effectuate the harder-line approach until the North has seriousness of purpose, he said. [….]

“Our principal hope is that North Koreans will agree to come back to the table … we are less concerned about the platform or less concerned about the process,” according to Lippert. “We are interested in coming back to the table and exercising the principled diplomacy to roll back and get back to serious, incredible and authentic negotiations toward the denuclearization of the Korean Peninsula.” [Yonhap]

Maybe one reason why Iran and North Korea are behaving differently today is that our Iran sanctions were tough and effective, while our North Korea sanctions are a joke.

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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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The summer of their discontent: Is Kim Jong Un losing the elite classes?

Over the last few weeks, we’ve seen a spate of reports about defections from North Korea. Broadly, this is nothing new. The defection, for example, of three crew members of a fishing vessel is life-changing for three men, but is no more likely to rend the fabric of Kim Jong-Un’s regime than 27,000 other defections, almost all of them of people the regime had written off as expendable. 

Recently, however, we’ve seen multiple reports suggesting something very different, and vastly more consequential for Kim Jong-Un: a surge of defections from the Inner Party. The defection of the biochemical researcher I wrote about in last Thursday’s post is just one of a series of reports that causes me to wonder whether Kim Jong-Un’s purges—“on a scale not seen since at least the late 1960s,” according to Andrei Lankov—are alienating the ruling class that keeps him in power. I’m not alone in asking this question. No less an authority than Ken Gause opines that, assuming the reports are accurate, “they could reflect … that leaders within North Korea are becoming increasingly anxious about politics around Kim Jong Un.”  I’ve held and added to this post for more than a week as enough evidence emerged to suggest the start of a trend.

Recall that in June, shortly after the purge of North Korean Defense Minister Hyon Yong-Chol, South Korean President Park Geun-Hye sat for an interview with The Washington Post and claimed that a growing number of North Korean officials are discontented enough to risk their lives to escape it:

Since [he] took power 3 1/2 years ago, he has executed some 90 officials. Indeed, the reign of terror continues to this day. Although one can say that the reign of terror might work in the short term, in the mid- to long term, it is actually sowing and amplifying the seeds of instability for the regime …. Recently, a senior North Korean defected and confessed to us that because of the ongoing and widespread executions that include even his inner circle, they are afraid for their lives. That is what prompted him to flee. [WaPo]

Last week, Yonhap reported that “[a] number of North Korea’s working-level officials based in foreign nations have sought asylum” abroad, because “[m]any of them feel agitated” by Kim Jong Un’s rule. Some of them “have already defected to the South.” Yonhap also cited a report in the Chosun Ilbo, that “about a dozen senior North Korean officials” have defected for fear of being purged.

The defectors were working in China and Southeast Asia, some charged with earning hard currency for the regime. Several have already arrived in South Korea while others are staying in a third country.

Early this year, a mid-ranking official who had been dispatched to Hong Kong from Room 39, a Workers Party office that handles Kim’s slush funds, sought asylum in South Korea with his family.He reportedly told investigators here he was terrified of Kim’s draconian purges, which saw senior officials executed by anti-aircraft gun, and that officials left in North Korea find it almost impossible to flee because of tight controls but those working overseas can find some opportunities to defect. Last year, a senior official of Taesong Bank, who had handled Kim’s slush funds in Siberia, fled to South Korea with millions of dollars. Even a senior official of the State Security Department fled the North and arrived here. According to the National Security Service here, the defection particularly upset Kim. [Chosun Ilbo]

I wrote about that defection in this post at the time (see also this L.A. Times report). An especially tantalizing aspect of the Chosun Ilbo‘s report is that some of these defections could represent invaluable windfalls of financial intelligence about Pyongyang’s offshore assets, income streams, and money laundering methods. That intelligence could boost the Obama Administration’s ability to enforce sanctions against North Korea, should it develop the will to do so at a vulnerable moment for Kim Jong-Un.

(The Chosun Ilbo report also claims that “[a]n army general” who “was involved in the two inter-Korean summits in 2000 and 2007”—so presumably, once a highly trusted cadre—“has been staying in a third country since he fled the North recently.” If the general in question is Park Seung-Won, who was also involved in building the Masikryong Ski Resort, South Korea denies this report.)

Yonhap has since reported that North Koreans laboring abroad are terrified of the purges and “examinations” by security forces cadres posted in China, and that some of them are choosing to defect. The Daily NK reports increased surveillance of well-connected merchants (donju) and officials of state-owned enterprises. Radio Free Asia reports that at Pyongyang’s request, China has forcibly summoned ten of its officials home, as part of its own investigation into the defections:

North Korea’s National Security Agency (NSA) summoned the workers as part of an investigation into a recent flood of high-ranking officials seeking asylum, the source from inside North Korea with knowledge of the country’s affairs in China told RFA’s Korean Service.“Resident employees who work in Shenyang (in northeastern China’s Liaoning province) earning foreign currency were recalled in the last ten days of June by the North Korean government,” the source said, speaking on condition of anonymity.“

It was not their will to go back. They were forcibly returned to their own country.” [RFA]

Invariably, most of these reports cite anonymous sources, but they’re consistent with other reports, and a report that, after the December 2013 purge of Jang Song-Thaek, Jang’s minions in hard currency-earning enterprises in China were called home, but ran the other way. Reports that some North Koreans choose defection over obedience suggests more than simple insubordination. They suggest that Kim Jong-Un is losing his psychological hold over his elites.

The purges are also sowing mutual distrust between Kim Jong-Un and the elites. Some of them now accuse the State Security Department of bugging their homes.

An official in Pyongyang recently told RFA’s Korean Service that “in December 2013, several complaints were lodged by the North Korean Workers’ Party leadership that the State Security Department had even wiretapped departments under the Central Party,” and Kim Jong Un had responded by saying that “if they are clean, why do they fear being wiretapped?”

Soon after, wiretapping and surveillance by the State Security Department became “ubiquitous,” targeting high-ranking officials in their homes and forcing them to rein in conversation with their families, the source said, speaking on condition of anonymity.

Several officials had gone so far as to send their children to stay with relatives or to live in areas outside of Pyongyang, he said. [RFA]

According to the Daily NK, there have been so many defections from elite families in Pyongyang that the regime has concluded that exiling their entire families, or sending them to prison camps, is no longer a practical deterrent. Instead, some elite families are merely put under enhanced surveillance.

“The number of various cadres defecting is on the rise, but I think it was determined that indiscriminate penalization of family members could worsen public sentiment and hurt the ‘Republic,’” he said.

Empirically, families of defectors in North Korea appear to lead stable lives in Pyongyang, but bubbling under the surface is the stress of constant surveillance and phone taps by the State Security Department (SSD).“

Families of traitors (defectors) are merely used as propaganda for the state, which claims they are able to lead stable lives thanks to the benevolence of the leader, but they never know when they’re going to be executed,” the source explained.

As of late, more officials at North Korea’s missions overseas or trade workers plan group defections with their families due to the cycle of purges, executions, and ensuing anxiety rife within the upper echelons of power in the North. Others feel threatened while carrying out overseas posts and defect rather than return to their homeland, according to the source.

When those with families in Pyongyang or relatives stationed at overseas missions hear of officials’ returns being delayed or that they’ve gone missing, an increasingly common response is, “another one fled,” according to the source. [Daily NK]

It is also possible that corruption plays a role in the state’s leniency, and that the security forces are taking bribes to spare these families.

~  ~   ~

North Korea has survived other high-level defections, of course, most notably that of Hwang Jang-Yop in 1997. Predictions of North Korea’s collapse—and the refutation of them—are necessarily so based on unknowables that they become Rorschach tests of the writer’s broader policy views. For example, Yonhap quotes four scholars, two of whom argue that the recent defections will not cause the collapse of the regime (although the headline attributes that conclusion to “experts”). The article tells us nothing about these academics or their orientations,* and offers little explanation for their conclusions, but strictly speaking, defections will not cause the regime to collapse, any more than hair loss will kill a cancer patient, or any more than a wave of defections in 1989 caused the collapse of East Germany. That wave, however, was a coincident symptom of a metastatic social cancer, of a society so riddled with disillusionment at every level that in the end, even the Stasi feared summary justice, border guards couldn’t wait to cross the wall to buy bananas, and hardened killers like Erich Mielke did not dare to crack down violently.

The more data points there are, the more one can argue that those points represent a trend. There are more of these data points today than at any time during the reign of Kim Jong-Il, a man who couldn’t govern but who could, unquestionably, rule. Kim Jong-Un shows little aptitude for either skill. I’ve never believed that Kim Jong-Un had the temperament, credentials, or gravitas to survive long in power, and nothing I’ve observed since December 2011 disturbs this belief. The short, unhappy history of his rule has mostly been remarkable for its repressionbrutality, and purges; the widening of destabilizing social and class divisions; Kim’s flaunting of his bacchanalian, un-socialist lifestyle; and a disregard for the deiocratic cult of a selfless, enlightened, superhuman protector of the people.

If Kim is no master of statecraft, which members of the inner junta does Kim Jong-Un still trust enough to guide him as he shifts the levers of power, or to restrain him from grinding the gears? Which of them trusts him? Kim Yong Nam, an 87 year-old best known for leading delegations to Africa in his autumn years? Chae Ryong-Hae, who is rumored to have “barely escaped” his own one-way trip to the ZPU-4 range—a rumor that finds some support in official North Korean media—just before he suddenly appeared in Seoul, leading an official delegation? Chae was promoted as a contemporary of Hyon Yong-Chol, Ri Pyong-Chol, and Ri Yong-Ho; he’s now the lone survivor of the four. In such a place, not even Hwang Pyong-So can feel confident that he’ll survive long enough to serve on Kim Yong-Nam’s funeral committee.

If it’s true that Pyongyang survived the last two decades without a sudden collapse, it’s equally true that Pyongyang’s control over food, information, and consumer goods has undergone a gradual collapse. The regime is riddled with corruption and inequality; and (as I argue here) falling morale within the party and the security forces. You’d be right to scoff at the empirical pretensions of a Foreign Policy survey that recently ranked North Korea as the world’s 29th most unstable state—up from 26th last year—but the broader conclusion finds support in the historical trends.

Historically, totalitarian regimes either bend under the weight of popular disillusionment or break under it. Despite the mostly unsupported hopes of scholars in Washington and Seoul, Kim Jong-Un has not implemented significant economic reforms, and no one speaks of political reforms. Instead, he has tried to re-impose North Korea’s information blockade and win over the elites with material amenities, even as he terrorizes them. I doubt this will be a winning strategy. If I were to offer a guess as to how the gears of this charnel house will eventually coagulate and clog, it would start with a local disturbance and a bloody crackdown that splits the security forces, then a fatal delay as critical units wait in their barracks to see which will be the winning side.

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Four federal court opinions* say N. Korea sponsors terrorism, yet the State Dep’t still denies it.

In case you missed it on my Twitter feed yesterday:

Americans are rightfully concerned about ISIS’s rampage across the Middle East. But one thing that even ISIS has not yet accomplished is what the president, the director of the FBI, and the director of the NSA all insist Kim Jong-un’s hackers did last year — suppress the release of a major motion picture by threatening terrorist attacks on movie theaters across America.

And yet, incomprehensibly—and two months overdue—the State Department’s recent Friday news dump of its annual “Country Reports on Terrorism” still clings to the tendentious, perennial boilerplate that North Korea “is not known to have sponsored any terrorist acts since the bombing of a Korean Air Lines flight in 1987.” Coming so soon after North Korean threats drove The Interview from theaters, this statement puts the world on notice that the Obama Administration is unserious about protecting Americans’ most fundamental liberties from terrorism by the world’s worst despots.

Read the rest here, at The Weekly Standard.

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* Previously said “courts,” but technically, two of the opinions are from the D.C. District.

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Can the UNHCR address North Korea’s human rights crisis, despite Ban Ki-Moon?

At long last, the U.N. High Commission for Human Rights has opened its new field office in Seoul. Its mandates will be as follows:

  • Strengthen monitoring and documentation of the situation of human rights as steps towards establishing accountability in the Democratic People’s Republic of Korea
  • Enhance engagement and capacity-building with the Governments of all States concerned, civil society and other stakeholders
  • Maintain visibility of the situation of human rights in the Democratic People’s Republic of Korea including through sustained communications, advocacy and outreach initiatives

The U.N. picks up this work after a lost year, in which China and Russia prevented the Security Council from acting on the February 2014 report of a U.N. Commission of Inquiry, finding the North Korean government responsible for “crimes against humanity, arising from ‘policies established at the highest level of State.’” Those crimes include “extermination, murder, enslavement, torture, imprisonment, rape, forced abortions and other sexual violence, persecution on political, religious, racial and gender grounds, the forcible transfer of populations, the enforced disappearance of persons and the inhumane act of knowingly causing prolonged starvation.” All of these crimes went unanswered because no one made China and Russia pay a political price for shielding their perpetuation, least of all the nominal of leader of the U.N. itself.

If the UNHCR takes its mandates seriously, it still could do much to attach political, diplomatic, and eventually, financial costs to Pyongyang’s crimes against humanity. UNHCR investigations could help to separate established fact from rumor and disinformation, test the credibility of claims and counterclaims, report on and publicize the facts it establishes, humanize the victims, and keep the rights of the North Korean people in the public eye and on the diplomatic agenda. Ultimately, its findings could build support for an international movement, along the lines of the movements that isolated South Africa and Sudan.

Judging by its reaction, Pyongyang also recognizes this potential. It has called the opening of the field office an “unpardonable hideous politically-motivated provocation and an open declaration of a war,” threatening “revenge” and “harsh punishment,” and written that the field office “will be the first target of its merciless punishment and strike immediately the office is set up in south Korea.”

Pyongyang’s Foreign Ministry also threatened Seoul for hosting the field office, calling it a “hideous politically motivated provocation challenging [the North’s] the dignity and social system.” Its counterpart to South Korea’s Unification Ministry, the Committee for the Peaceful Reunification of the Fatherland, has threatened to “mercilessly punish” South Korea, and threatened “‘catastrophic’ consequences” in relations between the Koreas. But then, Pyongyang says that the human rights issue in the North is “non-existent,” which unwittingly validates the need for the office.

High Commissioner Zeid Ra’ad Al-Hussein hasn’t escaped Pyongyang’s charm offensive, either. Uriminzokkiri recently called him “a mediocre peddler of cheap goods.”

Hussein responded to at least some of this, calling the “threats from a member state” of the U.N. “deeply regrettable and unbecoming of that member state.” (What’s really unbecoming of the U.N. is that North Korea is still a member at all.) Threats notwithstanding, Hussein promised that “the U.N. will continue to work to highlight the dire human rights situation in North Korea and pressure the Kim Jong Un regime to change.” He added, “The fact that this U.N. human rights office in Seoul is now a reality and will start fully operating in a month or so is a sign that the commission’s work is starting to bear fruit.”

(Similarly, Pyongyang has also threatened the United States last month with “tougher countermeasures” over a new State Department report criticizing its human rights conditions as “among the worst in the world.” The North Korean threat came just a week after another State Department report concluded that North Korea is not known to have supported an act of terrorism since 1987, which is a lie. Also last week, South Korean police stated that a pro-North Korean attacker who slashed the face of U.S. Ambassador Mark Lippert—for which North Korea almost immediately expressed its approval—was inspired by North Korean propaganda. Discuss among yourselves.)

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U.N. General Secretary Ban Ki Moon was a no-show for the office’s opening, although just three weeks earlier, he tried to visit Kaesong, North Korea, only to be turned away by the North Koreans. But despite Ban’s absence, the field office has had a modestly good beginning. The office’s publicity, and its bilingual posts and tweets, are finding their way into the newspapers. As such, they will force a younger generation of South Koreans to pay some attention to issues their elders spent the last two decades ignoring.

“Less than 50 miles from here lies another world marked by the utmost deprivation,” Hussein said in a statement to mark the opening, referring to the North.

“The Seoul office will monitor and document human rights issues in (North Korea), building on the landmark work of the commission of inquiry and special rapporteur. We firmly believe this will help the basis for future accountability,” he said.

Many North Koreans have escaped to find a new life in the South, but millions remain “trapped in the grip of a totalitarian system which not only denies their freedom but increasingly their basic survival needs”, he added.

Human Rights Watch’s deputy Asia director Phil Robertson described the new UN office as a “critical step forward” in the campaign to end North Korea’s “systematic and pervasive human rights abuses”. [AFP]

There is much work for the UNHCR to do. A new report from the Korean Institute for National Unification alleges that North Korea carried out 1,382 known public executions since 2000, the year Kim Jong Il met Kim Dae Jung, although the “actual number of public executions is presumed to be higher.” This figure certainly excludes many more hidden executions, deaths in labor camps, and culpably preventable deaths due to starvation and disease.

Shortly after the field office opened, some of the 27,000 North Korean refugees living in the South presented it with a list of 180 of their countrymen whom they believed were held at Camp 15, one large camp within North Korea’s gulag, as of 2000. Some estimates hold that 20% of the prisoners die from starvation, disease, torture, and arbitrary execution each year. And soon, a defector’s evidence may confirm whether there is a modern-day Mengele at work inside North Korea.

~   ~   ~

It’s also worth noting that 20 “activists” of another kind protested against the opening of the office, “saying it would be used to ‘bring down’ the North Korean government”—as if that would be a bad thing—and “aggravate strained inter-Korean relations.”

To be sure, there is a hard core of North Korean sympathizers in South Korea, but many other South Koreans will be ambivalent about the UNHCR’s work, and will eventually be tempted to throttle it. If North Korea’s most successful political strategy has been its appeal to ethnic nationalism, its most successful diplomatic strategy has been to lure governments into commercial ventures that never quite transform the North, and talks that never quite disarm it, but which keep them too conflicted to choose between their principles and their own short-term interests. Consequently, many South Koreans in the squishy center share Pyongyang’s view that any inter-Korean contact is a privilege—for the South, that is.

Pyongyang is already linking the establishment of the field office to inter-Korean contacts, such as a sporting event in Gwangju, to pressure Seoul. Pyongyang’s strategy appears to be to force the South Korean government to choose between abolishing (or more plausibly, muzzling) the field office, or going without the pleasure of its company.

North Korea reiterated its strong opposition against the opening of a U.N. human rights office in Seoul via its state-controlled media, warning that the move has made the possibility of improved bilateral ties “hardly imaginable.”

[….]

The Rodong Sinmun, an official newspaper of the North’s ruling Communist Party of Korea, slammed the South for establishing the office.

“The puppet forces’ hosting of such ‘office’ for confrontation in Seoul which no country in the world dared do is as a foolish an act as planting a time bomb in their house,” the paper was quoted as saying in the English dispatch of the North’s state-run Korean Central News Agency.

“Dialogue and improved relations between the north and the south can hardly be imaginable,” it said, adding, “It is the steadfast will and determination of the DPRK to mercilessly punish those who are keen to hurt its dignity and social system.” [Yonhap]

That strategy is likely to have some success during Park Geun-Hye’s administration, which has always seemed ambivalent about pressing the human rights issue. It would almost certainly be even more successful under a left-leaning South Korean government, and the law of pendulums suggests we’ll soon see one of those.

It is particularly likely to succeed if the next President of South Korea is the current U.N. General Secretary, Ban Ki Moon. It is one of Washington’s worst-kept secrets that Ban intends to run in South Korea’s 2017 presidential election. As Foreign Minister under Roh Moo Hyun, Ban was the executor of Roh’s appeasement policies. For a more detailed criticism of Ban’s record in office in South Korea, I’ll refer you to this 2006 post.

As Foreign Minister, Ban was architect and executor of a no-questions-asked appeasement policy toward North Korea. During those years, North Korea’s human rights record was the worst on earth, and probably the worst since the fall of the Khmer Rouge. Kim Jong Il’s absolutist regime, supported by $7 billion in South Korean aid since 1994, stands accused of racial infanticide, the use of gas chambers for horrific chemical weapons on entire families, and a politically selective famine that “cleansed” North Korea of millions while the regime went on an arms-buying spree. North Korea’s forced labor camps are estimated to hold as many as 250,000 people,* including thousands of children.

Ban and his government had little to say and nothing to ask as these atrocities went on, and go on to this very day. When resolutions condemning these crimes came before the U.N. Human Rights Commission, and later, the General assembly, South Korea’s ambassadors were instructed to either refuse to vote or abstain. Publicly, Ban’s government failed to raise more than one mild, belated, token call to improve human rights in the North, and then, only in the most vague and general sense and in response to withering criticism from abroad.

As General Secretary, Ban validated my worst suspicions by devoting token attention, at best, to the North Korean human rights issue. He continues to prioritize appeasement over human rights.

Consider, for example, Ban’s recent comments about the Kaesong Industrial Park, despite long-standing criticism from human rights groups that it violates the labor rights of the workers, and despite the Treasury Department’s long-standing concerns about how North Korea spends the money it earns from Kaesong. Ban, however, sees no down-side to Kaesong, nor any need to bound it with any principled conditions:

“All parties would benefit from renewed engagement and commitment to genuine dialogue. It is essential for building trust and promoting inter-Korean relations,” Ban said at an education forum in the South Korean city of Incheon, adding he aimed to make the visit on Thursday.

“The Kaesong project is a win-win model for both Koreas,” he said.

“I hope my visit will provide a positive impetus to further develop it and expand to other areas,” he said. [Reuters]

But as I argued here, engagement programs like Kaesong haven’t raised North Korea’s standards; they’ve lowered South Korea’s standards, and diluted the pressure needed to force North Korea to disarm–pressure that is the logical basis of five U.N. Security Council resolutions.

Perhaps I fret too much over the electoral hopes of Narcolepsy Patient Zero. But Ban–and the many other Koreans who share his world view–can still do plenty of damage to the UNHCR’s work. By extension, they can also damage the argument for a world where institutions preempt violence by addressing the humanitarian crises that inevitably lead to war.

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EU blocking of Korea National Insurance Corp. hints at key shift in N. Korea sanctions enforcement

The European Union’s administrative body, the European Commission or EC, has added seven additional designations to its regulation on “restrictive measures” against North Korea. The new designees include the Korea National Insurance Corporation, or KNIC, and six of its officials. There are several good reasons why the EC could have designated KNIC, but didn’t (the reason it did use is more interesting, but we’ll get to that later).

First, KNIC has been linked to Pyongyang’s luxury goods imports, which have been banned since the U.N. Security Council adopted Resolution 1718 in 2006. Historically, most of those goods have been of European origin. The EC notice, however, does not link KNIC to the luxury goods trade.

Second, the EC designation notice says that “KNIC headquarters Pyongyang is linked to Office 39 of the Korean Worker’s Party, a designated entity.” Office 39, a/k/a Bureau 39, the North Korean ruling party’s foreign currency-earning agency, is designated by the U.S. Treasury Department and the EC, but not the U.N., for financing North Korea’s prohibited WMD programs. The EC notice, however, does not say that KNIC is owned or controlled by Bureau 39.

Third, one of the ways KNIC has historically earned money is through insurance fraud. A former KNIC official, Kim Kwang Jin, revealed this in a 2009 Washington Post story, by Blaine Harden, and a 2013 Reuters story. The allegations of fraud arose even before Kim’s revelations, and led to protracted litigation between KNIC (on one side) and Lloyds and Allianz (on the other). The defendants alleged that KNIC had fabricated an accident to collect insurance payments from Lloyds and Allianz, which refused to pay, until the parties settled out of court. If the EC concluded that KNIC engaged in insurance fraud, that would also justify blocking it under UNSCR 2094:

“8. Decides further that measures specified in paragraph 8 (d) of resolution 1718 (2006) shall apply also to the individuals and entities listed in annexes I and II of this resolution and to any individuals or entities acting on their behalf or at their direction, and to entities owned or controlled by them, including through illicit means, and decides further that the measures specified in paragraph 8 (d) of resolution 1718 (2006) shall apply to any individuals or entities acting on the behalf or at the direction of the individuals and entities that have already been designated, to entities owned or controlled by them, including through illicit means;

The notice, however, does not accuse KNIC of fraud or other illicit activity.

Fourth, I‘ve long suspected, but can’t prove, that KNIC is also involved in insuring ships owned or controlled by Ocean Maritime Management, a North Korean entity that was designated by the UN, the EC, and Treasury in 2014 for arms smuggling (specifically, for the Chong Chon Gang incident). OMM controls the ships through individual shell companies for each OMM vessel. According to this 2015 UN POE report, however, a different company, Korea Shipowners’ Protection & Indemnity Association, insured the sanctioned vessels. According to KNIC’s web site, however, KNIC is “a sole insurer of the DPR Korea” and sells maritime insurance. If the EC determined that KSPIA is a front company for KNIC, that would require the EC to block KNIC. There’s almost no information about KSPIA online, and nothing in the UN POE reports links it to KNIC. Anybody?

Unpack the language of the EC’s justification, however, and it doesn’t accuse KNIC of any of these things. It stops short of claiming that KNIC is controlled by Bureau 39. It merely says KNIC is funding the regime, and that those funds “could contribute” to North Korea’s WMD programs.

KNIC GmbH, as a subsidiary controlled by KNIC headquarters in Pyongyang (address Haebangsan-dong, Central District, Pyongyang, DPRK), a government entity, is generating substantial foreign exchange revenue which is used to support the regime in North Korea. Those resources could contribute to the DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes.
Furthermore, the KNIC headquarters Pyongyang is linked to Office 39 of the Korean Worker’s Party, a designated entity.’

I’m not complaining, mind you. The EC’s rationale is fully consistent with the language of UNSCR 2094, which raises the burden of due diligence that applies to transactions with North Korean state entities:

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

The EC’s action has significant potential to crimp Pyongyang’s finances and improve the enforcement of the Security Council’s resolutions. The blocking of Pyongyang’s state insurer will make it much more difficult for it to engage in air and sea commerce with Europe. It could affect Air Koryo, which has long been under suspicion by the U.N. Panel of Experts for being a de facto arm of the North Korean military. It will affect ships in North Korea’s merchant fleet that haven’t yet been blocked by Treasury, and will impede Pyongyang’s ability to access luxury goods from Europe. It will send a strong signal that Pyongyang can’t seek refugee in the Euro system to escape from sanctions in the dollar system. It will require Pyongyang to draw from its hard currency reserves to buy insurance on the commercial market.

But for all the material effects the EC’s action may have, the action may be even more significant for the analytical shift it represents. As far as I’m aware, this is the first designation based on UNSCR 2094–on either side of the Atlantic–that does not make a direct link between the targeted entity and a specific prohibited activity. Instead, on its face, the EC designation applies Paragraph 11’s heightened due diligence requirement to say that KNIC could be funding sanctioned activities. That almost certainly happens to be true, even if the EC doesn’t directly say so.

The EU’s action, along with President Obama’s signature of Executive Order 13,687, represents movement–however glacial–from conduct-based sanctions to status-based sanctions, a shift Treasury officials recently told GAO would make the sanctions much easier to enforce. That is to say, the EU and the U.S. are both moving toward designating Pyongyang’s hard currency earning enterprises simply because they’re Pyongyang’s hard currency earning enterprises. That’s necessary because North Korea’s opaque and deceptive financial practices–as the Financial Action Task Force has alleged for years–make it impossible for the bankers who clear the transactions to meet the resolutions’ heightened due diligence requirements. Two years after UNSCR 2094 passed, governments are finally enforcing it according to its spirit and its letter.

That’s why this burden shifting represents such a welcome change. In fact, it’s one of the most important shifts the North Korea Sanctions Enforcement Act was intended to drive. It’s also fully consistent with how governments everywhere apply their financial regulations–by sanctioning entities that engage in deceptive financial practices solely for engaging in those practices, even without evidence that the underlying money flows involve illicit activity.

Just ask Dennis Hastert.

Now, a question for your consideration. If the U.S. and the EU are shifting toward status-based sanctions enforcement and enforcing the requirements for “enhanced monitoring,” how will South Korea continue to justify the Kaesong Industrial Park’s opaque financial arrangements? As Treasury Undersecretary (and now, CIA Deputy Director*) David Cohen said:

“Precisely what North Koreans do with earnings from Kaesong, I think, is something that we are concerned about,” said Cohen. “All of the hard currency earnings of North Korea are something I would say that we should be concerned about. [Voice of America]

The EC is acting on those concerns, and the U.S. has at least laid down a legal foundation for doing so. South Korea, a member of the Security Council when UNSCR 2094 passed and the principal beneficiary of the Security Council’s resolutions, simply refuses to acknowledge them, almost certainly for domestic political reasons.

Oddly enough, the EC’s action means it has designated KNIC, but that the U.S. Treasury Department hasn’t. The fact that European insurers were the main victims of KNIC’s insurance fraud may help explain this disparity. Still, as with the push for action on the U.N. Commission of Inquiry’s report on human rights, this is another case of U.S. “leading from behind” in holding North Korea accountable. It’s yet another disparity between U.S. and EC regulations that Section 202 of the NKSEA urges the U.S. governments to harmonize. If the U.S. won’t lead enforcement efforts, the least it can do is be a good follower.

Hat tip to Rob York of NK News. You can read NK News’s report here.

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* A previous version of this post said that David Cohen was the Director of the CIA. He is actually the Deputy Director. Thanks to a reader for bringing the error to my attention.

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N. Korean biowar researcher defects, will testify about human experimentation

[Update, 4 Aug 2015: I inquired with well-connected friends in Europe about when this testimony was likely to take place. Those friends instead questioned the accuracy of Yonhap’s report. Last week, I wrote to a Yonhap correspondent, and asked whether Yonhap stands by the story. Although the correspondent passed my question along to the author of this report, I have not heard back from Yonhap. The lack of a response is further reason to question the accuracy of Yonhap’s story.]

~   original post below   ~

A long-time reader emailed me this afternoon (thank you) to point me to this story in the U.S. edition of the Korea Times, which in turn cites a potentially explosive, game-changing report hiding in Yonhap’s business section. According to the report, a North Korean scientist has defected to Finland with some of his government’s most carefully guarded secrets: a storage device, probably a flash drive, filled with 15 gigabytes of “human experiment results.”

The 47-year-old researcher, identified only by his surname Lee, at a microbiology research center in Ganggye, Chagang Province, bordered by China to the north, fled to the European country on June 6 via the Philippines, said the source from a North Korean human rights group.

“His ostensible reason for defection is that he felt skeptical about his research,” the source told Yonhap News Agency.

Lee held a data storage device with 15 gigabytes of information on human experiments in order to bring North Korea’s inhumane tests to light, according to the source.

The North Korean defector will give testimony before the European parliament later this month. [Yonhap]

Depending on what the researcher’s information is and how credible it is, it could be of incalculable value to our understanding of Pyongyang’s asymmetric warfare capabilities—and also, of other, infinitely more important things about this regime.

For years, newspapers had published defectors’ unconfirmed allegations of chemical and biological experiments in North Korean prison camps (see here, here, here, and here). Of these allegations, the best known are the reports of a gas chamber at the since-closed Camp 22.

The account that Mr. Lee’s disclosure most closely resembles, because it alleges the use of biochemical weapons, is that of Lee Soon-Ok. I’d long harbored doubts about Ms. Lee’s account because of internal inconsistencies I saw in versions of her story I read at long-dead links. The new evidence may call for us to reexamine her story:

North Korea is suspected of having weaponized smallpox and anthrax, which is why your correspondent endured the small discomfort of seven anthrax vaccination injections (it would have been six had I not misplaced my shot record one day) and the low-grade fever that followed each of them.

If this witness presents credible evidence supporting North Korea’s responsibility for additional crimes against humanity, it will strengthen the calls for Kim Jong-Un’s indictment by the International Criminal Court, or failing that—and thanks to China, it will fail—the formation of an ad hoc coalition to raise the financial pressure on Kim Jong-Un and his regime. The revelations will give the UNHCR’s Seoul Field Office an important question to investigate, shortly after its opening. Politically, the EU’s active involvement in publicizing the new evidence would be a welcome departure from the ambivalence European nations have often harbored about holding Pyongyang accountable.

One wonders how much sooner this witness, and others like him, might have emerged from North Korea had Congress enacted the North Korea Freedom Act of 2003, with its informant asylum provisions in Sections 206 and 207. Perhaps that proposal could be revived if, one day, there’s still need for a North Korean Freedom Act of 2016.

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Daily NK: Massive brawl in Musan market after traders resist confiscations

This may be the most significant known incident of anti-regime resistance by North Korean civilians since the Ajumma Rebellion that followed the 2009 currency confiscation:

A massive brawl between Ministry of People’s Security [MPS] agents and vendors at a marketplace in Musan County last Friday has led to an urgent dispatch of county security and safety agents along with the complete shuttering of the market. The clash occurred after angry vendors tried to resist the confiscation of their goods by market surveillance authorities, Daily NK has learned.

“When the agents who manage the market took away manufactured goods from the vendors, they got upset and started arguing with the agents. Soon other merchants and officials nearby joined in and it ended up turning into a free-for-all between the two groups,” a source in North Hamkyung Province told Daily NK on Sunday.

This incident was corroborated by an additional source in the same province.

“An altercation that started with cursing and fistfights turned into mayhem as crowds watching got agitated and joined in with weapons, resulting in many casualties,” he said, noting that armed agents with the State Security Department [SSD] and the MPS from the country were dispatched and after shutting down the market they hauled off everyone everyone involved, including the injured and deceased.

The confrontation occurred unexpectedly and the site was immediately sealed off, making it hard to estimate exactly how many were involved. However, the source said dozens are thought to have been injured on either side.

A witness at the scene described the market as being “jam packed” and thick with an atmosphere of intimidation hanging over what really amounted to a “riot,” he said. [Daily NK]

According to the report, the city has been isolated and the local market is closed, causing much hardship for the people. Discontent was already high because of the drought and the failed potato harvest.

The report follows the regime’s recent decision to ban market activities by men under 60. It will be interesting to watch, over the next few weeks, whether this incident suggests that a wider crackdown against the markets is underway, or whether this merely represents theft by uniformed shake-down artists. As I wrote here recently, there is a long-standing pattern in North Korea of the regime relaxing controls on markets for a few months, or years, only to crack down later.

Over the last few months, the regime had relaxed market controls significantly while focusing its attention on sealing the border and purging the military. But as we also learned in late 2009, the market is the only institution in North Korea that isn’t under Pyongyang’s absolute control. As such, it’s the only institution capable of resisting the state with any measure of success.

Notably, residents have not raised questions as to why such an incident would have occurred, with many suggesting something larger needs to happen. Most agree authorities brought the incident upon themselves by cracking down on people during such difficult times, the source reported.

Although few foreign observers have bothered to compile the history of popular resistance to the North Korean regime—reports that are largely impossible to verify—that reported history turns out to be rather extensive. Recently, most of that resistance has actually come from inside the military, from soldiers who fragged officers and fellow soldiers over hazing and abuse. So why has all of that resistance failed to change the system? It’s likely that the state’s fear of resistance has probably stayed its hand in many ways we can’t know, and has gradually pushed back the state’s economic control.

This incident, however, like others that preceded it (see here, here, here, here, here, here, and here), won’t threaten the state’s control, because North Koreans have such a limited capacity for intra-national communication and organization, and for international information operations to report, photograph, and film incidents like these and attract global media interest. As a result, this protest has probably already been isolated and contained. Like nearly all of the anti-regime incidents linked in this post, it was about personal grievances, mostly economic ones. But as the Arab Spring taught us, isolated, personal, and economic grievances have a way of re-contextualizing into broader movements with broader political objectives.

If the walls within the vast ice cube tray that is North Korean society were to break down, a strong wind could build a ripple on one side of the tray into a great wave on the other. Until those walls break down, that wave will not come.

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