Sanctions Evasion: The Berlin File

Stephan Haggard (PIIE) and Kent Boydston (PIIE)



One thing we are learning is that sanctions breed innovation and that North Korea—in Justin Hastings’ apt phrase—is “A Most Enterprising Company.” A recent news item though from Deutsche Welle—which follows a scoop by Die Welt—should win some entrepreneurial award: the North Korean embassy in Berlin is contracting out a building on its compound to a hostel. Although information on the contract between the owner of CityHostel Berlin and DPRK authorities has not yet been revealed, this is a no-no, and not only under UNSC 2321, which explicitly reminds North Korea of international conventions (In the language of the resolution, "all Member States shall prohibit the DPRK from using real property that it owns or leases in their territory for any purpose other than diplomatic or consular activities.").

This is not the first time such behavior has been observed. Yonhap broke the story that Bulgaria had to call a halt to similar activity last month and the Deutsche Welle story reports that both Laos and Egypt have ejected diplomatic personnel on related grounds. The Berlin case appears to be another example of the North Korean government taking advantage of vestigial Cold War relationships. According to the Die Welt scoop, North Korea was granted “unlimited rights” to the embassy compound by East Germany and has been in business at least since 2007. Moreover, it appears to be good business, with almost all rooms booked through April and May.

Elsewhere in the EU, Vice released an excellent documentary last year on North Korean forced laborers in Poland that detailed their poor working conditions and uncovered links to illicit weapons networks. Although a violation of EU labor regulations, employing North Korean overseas laborers is not a practice explicitly sanctioned by the UNSC, although Marc Noland has argued it should be. Unsurprisingly, the two largest countries contracting North Korean laborers are China and Russia, which have veto authority at the Security Council. Last year, Malta also came under increased scrutiny as well for employing North Korean overseas laborers in construction and textiles. Malta subsequently announced that it would deny contract extensions nor grant new contracts, effectively forcing North Korean laborers to depart after their contracts time out. Although it did not immediately deport laborers, Poland reported that it did not grant any work visas for North Koreans in 2016.

Although there is no mention of German firms employing North Korean workers, they do indirectly and the Berlin Embassy case is a clear violation of UNSCR 2321. The biggest mystery of the story: the German foreign ministry seems surprisingly tight-lipped on the obvious violation saying only that, "We are closely monitoring potential violations of the sanctions regime imposed by the UN Security Council and, together with our partners, strictly observing the sanctions against North Korea." Sounds like UN speak to us. 

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