Sanctions News Galore Part II



Earlier this week, I went through the excellent Panel of Experts report, culling it for findings with respect to China. Today, I simply cycle through more of the accumulating evidence that sanctions and their effectiveness are going to be front-and-center under the new Administration.

First up, it should come as no surprise that the administration is considering broader use of secondary sanctions. Reuters has an “exclusive” on the issue that talks about “sweeping” sanctions, when in fact secondary sanctions are exactly the opposite: highly targeted at particular companies. Congress will be playing its role, and as is typical these days that role will be symbolic as much as substantive. Ted Cruz and others have introduced a bill to the US Senate to re-list North Korea as a state sponsor of terrorism. Josh Stanton has endless patience in parsing the details of such legislation. But I honestly can’t see it having much material effect beyond what would be achieved by exploiting existing authorities under legislation passed last year. For example, it is hard to imagine that North Korea is worried about being stripped of its immunity from lawsuits resulting from its sporadic acts of terrorism. Kim Jong-nam’s son is going to sue? Financial sanctions would be tightened, but they could be upped under existing authorities. Unlike Joseph deThomas, I don’t see the designation doing any active harm, but neither is it likely to be materially significant.

As I argued earlier in the week, the Tillerson visit was all about setting the stage for the Mar-a-Lago summit, at which North Korea will be front and center. If any further evidence is needed on China’s enabling behavior with respect to North Korea, here are a few very good sources that—unfortunately—are reduced to restating the obvious. At the Korea Economic Institute, the Joint Academic Studies report for 2016 is now out. In it, I introduce a great collection of papers on North Korea’s relations with Japan, Russia, and South Korea. But Li Tingting has a stand-out paper on China that talks about some of the subtle changes in the relationship, such as the growth of the processing-on-commission trade.  SIPRI has a report that outlines the basics, including the way in which North Korea-China trade has regional effects in the Northeast of China. But in the “where are the leakers when you need them” category, Jane Perlez makes intriguing reference to a report by Sayari Analytics that purports to name a number of the companies—as many as 600—that are linked to the massive Hongxiang network uncovered by the financial forensics work of C4ADS. Identifying such companies is key to undertaking the secondary sanctions that could ultimately have material effect on North Korea. The report is not publicly available, but hopefully Treasury was the client or on the distribution list.

These discussions center largely on commercial trade or plugging leaks in proscribed trade. This week, David Albright and his team at “the good ISIS”—the Institute for Science and International Security—posted a disturbing report on North Korea's Lithium 6 Production for Nuclear Weapons. Albright et. al. are primarily focused on the implications of the finding for the ability of the North Koreans to boost the power of fission-based nuclear weapons. But there is a procurement story, and in fact the evidence for production is based on procurement records showing industrial-scale equipment, a metric tonne quantity of mercury and tens of kilograms of lithium hydroxide, inputs to the mercury-based lithium exchange production process. The evidence is partly circumstantial, but the fact that North Korea could procure such inputs from China as recently as 2012—well-after WMD-related sanctions were firmly in place—is a further indicator that the export control regime is leaky.

On sanctions enforcement elsewhere, Josh Kurlantzik at the Council on Foreign Relations asks the question of whether Southeast Asia will tighten up its act on providing a platform for North Korean activities. His answer is probably right: that countries such as Thailand and Singapore care about their reputations, while Laos and Cambodia are less affected and may even benefit. As we noted yesterday on passports, those two countries continue to ease entry for North Koreans. Farther afield, though, the ripples of the Kim Jong-nam assassination are starting to spread. The Panel of Experts report noted that country submissions required by UNSC 2321 have gone up. Bulgaria issued a statement that was interesting: that Sofia has reduced the number of North Korean embassy personnel. It is well-known that North Korean embassy staff double not simply as promoters of bilateral ties but as the regime’s direct agents.

On alternative means of enforcement, the National Bureau of Asian Research’s annual Asia Policy is out from behind a paywall for another week (but is worth buying in any case). In it, Robert Huish has a depressing piece about the failure to implement shipping sanctions. His executive summary is worth quoting at length because it shows clearly how controlling proliferation networks requires multiple steps: export controls, surveillance of transport, and scrutiny of financing channels:

“Based on a review of automatic identification system data tracking approximately 70 vessels that entered DPRK ports between April 2016 and October 2016, current sanctions on North Korea do not appear to be impeding marine traffic into the country. The majority of marine traffic into the DPRK during this period was from Chinese ports by vessels flagged by several countries in Africa, the Caribbean, and the DPRK. The registration and flagging of vessels trading with North Korea occurs via offshore firms that are based outside sanctions enforcement zones in places such as Hong Kong, the British Virgin Islands, and the Seychelles…For sanctions to influence the regime’s behavior, it would be necessary to pursue restrictions on the capital flows that allow marine traffic to enter the country rather than sanctioning the regime itself.”

Finally, I close with a piece at NKNews that is a perfect candidate for the “not satire” category. While shooting off missiles, North Korea is simultaneously seeking foreign direct investment in cruise ships to visit the shuttered Mt. Kumgang facility. According to the story, a government website “released investment guidelines on March 15 to promote the operation of a 20,000 – 30,000-ton ferry docking at Kosong Port in Kangwon Province located near Mount Kumgang.” Chinese are not likely to bite because they lack access to the West Sea, so the target appears to be Russia. Good luck with that.

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