Open Sources, December 6, 2013

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NOT THAT “AXIS OF EVIL” NONSENSE AGAIN: New reports claim that “the U.S. intelligence community has determined that Iran and North Korea continue to develop” an ICBM together. Plaintive cries about starving babies in Iran notwithstanding, the mullahs are “financing much of the North Korean missile program in exchange for the transfer of technology, expertise and components.” More here, and much more here, in Bruce Bechtol’s new book.

I’ll leave the commentary on the Iran deal to others, like Claudia Rosett, who thinks that Iran is following the North Korean playbook to its first nuke test. What concerns me is that soft enforcement of Iran sanctions could have a spillover effect on the enforcement of U.N. sanctions against North Korea. Exchanges of missile technology between Iran and North Korea would violate multiple U.N. Security Council resolutions (see sidebar). Unfortunately, our State Department has a history of overlooking small details like that when it wants a deal badly enough.

Barack Obama, Hillary Clinton, and John Kerry want to take credit for the tough sanctions that drove Iran back to the bargaining table, despite the fact that it was the Congress that passed them and made Treasury enforce them (don’t try to tell me otherwise, I was there to see it). The administration’s collective failure to reimpose sanctions on North Korea after it reneged — and despite its repeated statements that it will never give up its nuclear weapons programs — makes its Iran argument look disingenuous.

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PLAN B WATCH: The Financial Crimes Enforcement Network, a division of the Treasury Department, has issued its umpteenth call for banks to take “countermeasures” against North Korea for “deficiencies” its anti-money laundering and combatting terrorist financing regimes. (Contrary to this Yonhap’s report, FinCen did not warn American financial institutions “to refrain from doing business with North Korea,” as much as I wish it had.) The warning is mostly a retread of multiple and similar warnings by the Financial Action Task Force.

To say that North Korea isn’t doing enough to combat money laundering is no less absurd than saying Rob Ford isn’t doing enough to teach kids to say no to crack. North Korea and Iran alone are placed in the worst category for AML and CTF compliance, but while Iran is designated as a jurisdiction of primary money laundering concern, North Korea merely cries out to be designated as one. Meanwhile, the administration does its best to pretend that North Korea doesn’t exist.

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NORTH KOREA CULTIVATES TIES with Egypt, Angola, and ASEAN states, probably to exploit weaknesses in sanctions enforcement. Nothing good will come of that, because nothing good comes from North Korea. Does North Korea sell anything legal?

This ought to cause State and Treasury to redouble their diplomatic efforts to get all of these states to tighten their enforcement. On the other hand, if Russia really does enforce a ban on trade with North Korea — something I’m unprepared to believe based on Putin’s assurances alone — that would count as a major accomplishment for any U.S. officials who’d lobbied for it.

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KAESONG FAILWATCH: A South Korean man has been found dead in his dorm room at Kaesong. Police are saying they think it was a heart attack, but the authorities will perform an autopsy. Separately, Yonhap reports that 63% of Kaesong companies have paid back their insurance money, which presumably means that 37% haven’t. Finally, the two Koreas have failed to reach agreement on improving internet connectivity to Kaesong.

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INFLATION ALERT. I’d written previously that wage hikes in North Korea were an acknowledgement that the new North Korean won has effectively lost most of its buying power to the yuan and the dollar. Here’s another report along those lines, that wages for textile workers have just been increased ten-fold. As we learned in 2009, and on other occasions, economic issues have a history of causing dissent to break out into the open in North Korea.

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IMPOSSIBLE. North Korea can’t possibly have trained IRA terrorists in assassination and bomb-making in 1988. The State Department says North Korea hasn’t sponsored any acts of terrorism since 1987.

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WHY ASIA NEEDS ITS OWN NATO: Judging by the predictable backlash against China’s unilateral declaration of an air defense zone, China’s brightest minds are not running its government. In addition to pushing Japan to the right, they’ve now managed to rile South Korea, which had been subtly tacking their way, into almost Tokdo-like demonstrations.

Didn’t anyone dare to speak up and say how predictable this reaction would be? Now, people are writing serious-sounding proposals to respond to Chinese aggression by “tak[ing] advantage of geography to block China’s exports and thus severely weaken its economy.” I’m sure that China’s paranoia about exactly such a strategy is the real incentive for its land grab in the Pacific today. The problem with paranoia is that it can be self-fulfilling.

And speaking of China and paranoia, seriously — is China really about to go to war against Bloomberg and The New York Times over their investigations into official corruption? They certainly haven’t won many friends at The Washington Post. Silly ChiComs. They should know by now that the only people who can take on the media and win are bloggers (we’re like the spies in Stratego that way).