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.