Sanctions Update

The Chosun Ilbo reports that Ambassador Phillip Goldberg has kept himself busy crossing the globe, meeting with government officials and bankers in Russia and China, and shutting down North Korean accounts, even as Stephen Bosworth and others met with the North Koreans to talk nuclear diplomacy.

North Korea invited U.S. North Korea envoy Stephen Bosworth on Aug. 4, when former U.S. president Bill Clinton was in Pyongyang to win the release of two American journalists. The same day, Goldberg was on his way to Moscow, where he met Russian Vice Foreign Minister Alexei Borodavkin and reportedly asked Russia to crack down on a mafia gang based on a tip-off that it had been involved in the laundering slush funds for Kim Jong-il.

South Korean and U.S. intelligence authorities believe that North Korea recently earned a lot of foreign currency by smuggling ivory from Africa and distributing fake Viagra as well as selling drugs and circulating counterfeit dollars.

The North allegedly laundered money or operated secret bank accounts with the help of the Russian gangsters after it became practically impossible for the North to carry out normal transactions using the real names of top officials or agencies. Russia then passed an advisory circular which the U.S. had sent around Russian banks. [Chosun Ilbo]

North Korea has also intensified its arms exports, shockingly, despite a U.N. resolution to the contrary.

According to the source, North Korea expanded arms exports even after UN Security Council Resolution 1874 took effect in the wake of its second nuclear test on May 25. “North Korea has developed new markets in Africa and Latin America, in addition to expanding exports to its existing markets in Southeast Asia and the Middle East,” the source said. “It seems the North is mainly exporting small vessels such as Hovercraft and patrol boats and Air Force equipment including radar and GPS to Africa and Latin America.”

The administration’s policy, for now, is to keep the pressure on, regardless of talks:

We are not going to reward North Korea simply for returning to the six-party talks. We will be looking to see if they’re prepared to take the kinds of affirmative steps that they’ve previously agreed to,” [State Department Spokesman P.J. Crowley] said.

“We have made clear to North Korea and we believe that North Korea understands what the purpose of the meeting is,” Crowley said. [Reuters]

And for what it’s worth, I think that generally, that’s the right approach, although there’s much more we could be doing (see Plan B link in the masthead). Worse, I’m guessing that the North Koreans will eventually promise to honor their previous commitments, we’ll somehow relax sanctions in exchange for bare promises to abide by those, and after a few years of stalling and cheating, North Korea will duly renege. But that’s just my speculation, one that’s backed by observing this traditional ceremony for years.

For now, the administration’s main worry continues to be back-stabbing by China:

Goldberg then visited China in late October to persuade his hosts to implement sanctions against the North. He pledged to concentrate on blocking any money flow related to weapons of mass destruction. There are fears that the sanctions lost their bite when China in early October promised the North a massive aid package, but some experts disagree. [Chosun Ilbo]

It’s strange; in contrast to an abundance of stunningly naive junk analysis from America’s brain trust on the topic of China’s intentions, I think the North Korean intellectuals interviewed by the Daily NK have it about right, assuming that this anecdotal report is accurate and representative:

The North Korean elite’s anti-Chinese sentiment that he described came as a real shock. Nevertheless, he said that although he has a more critical point of view of the Kim Jong Il regime than his colleagues, in general, opinions of China are the same as his own.

China has a so-called blood alliance with North Korea, is a country which fought for the North during the Korea War, and is the current life support system which provides it with the basic resources to maintain its system. After the second nuclear test, as international sanctions were being strengthened, Pyongyang tried to maintain its friendship with China in order to avoid isolation.

However, Choi did not hesitate to say, “China is more vicious than America,” before explaining, “We have been standing against America so far, but now people worry about living as a slave of China.

When The Daily NK’s reporter asked why China is blocking out the pressure from neighboring countries, including the U.S., he noted, “This is only because they need to do it for the sake of their interests, not for our security.

He added, “This is not just my idea, but that of almost every intellectual. He implied that significant concerns about the contradiction between Kim Jong Il’s nuclear plans and the Chinese role exist.

So, he claims, “Since he figured out the Chinese tactics, the Upper (Kim Jong Il) has been doing his best to escape from that situation.

Choi mentioned, “Since the nuclear test, the wariness of university students and intellectuals towards China has risen. Many of them think that we will be spoiled by China.

He emphasized, “The Chinese strategy towards our possession of nuclear weapons is to place itself as a world leader, surpassing the U.S. by using the Kim Jong Il regime. China is using our Republic’s adventurism.

Choi pointed out, “China has manipulated us to increase our stockpiles of nuclear weapons and missiles in practice while pretending to put pressure on us from the outside. On the one hand, they lead North Korea to obtain more nuclear weapons and missile by increasing the sense of crisis on the Korean Peninsula. On the other hand, they let us breathe so that the Kim Jong Il regime doesn’t collapse. [Daily NK]

No strain of xenophobia in North Korea really surprises me, but it does surprise me to see North Korean intellectuals, presumably members of the elite, rooting for the sanctions to work.

Meanwhile, a South Korean expert interviewed by the Daily NK warns us that North Korea’s foreign currency reserves might be greater than what we’re estimating, although it won’t do the regime any good if, as he suggests, much of that currency is in the hands of black marketers and corrupt officials. And on a related note, if this report is accurate, North Korea’s drug economy alone is the elephant in the back room of its larger underground market economy.