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On Monday, I talked about the new US Treasury designation. Last week, another shoe also dropped in the form of new European sanctions.
The European Council takes a very deliberative process to the imposition of such measures, typically starting with the “transposition” of UNSC resolutions into Community law, and then adding so-called “autonomous” additional measures as deemed appropriate; these measures are binding on EU members but also require consensus. In addition, individual countries may pursue their own independent sanctions measures (for example, the UK sanctions page can be found here). Prior to the current cycle, the last major action occurred in April 2013, transposing UNSC resolution 2094 passed in the wake of the third nuclear test.
If North Korea was hoping for daylight between Europe, the UN and the five parties, it will have to come in the form of weak implementation. In March, the Council took the first and easiest step: simply adding 16 people and 12 entities to the list of designated individuals and entities. Later in the month, the Council took the second step of inscribing the rest of UNSC 2270 into law, including the export bans, measures related to shipping—including inspections—and the financial measures in the resolution.
The most recent measures, however, fall in the category of “autonomous” measures. On plain reading, they appear quite sweeping with the potential to complicate if not altogether disrupt a variety of small ventures that have operated through Europe and to deter foreign investment. The EU’s summary notes the following: (the full directive can be found in the EU Journal of May 28 here)
- In the trade sector an odd prohibition of the import of petroleum products and luxury goods from the DPRK; this could affect possible investments in the oil sector and any transshipment activities, because it includes oil originating from elsewhere. It might also affect some small businesses dealing in curiosities. The underlying directive adds some dual-use goods and technology and bans any public financial support for trade with the DPRK (if any were in place).
- In the financial sector, a plain reading suggests a wide-ranging prohibition of transfers of funds to and from the DPRK, unless for “certain predefined purposes and authorized in advance.” On closer reading, however, it appears that this ban is limited to transfers associated with the trade ban, but businesses such as the tourism industry will no doubt seek clarification.
- In terms of investment, the measure includes a complete prohibition of all investment by the DPRK in the EU and a prohibition of investment by EU nationals or entities in the mining, refining and chemical industries sectors as well as in any entities engaged in the DPRK's illegal programs.
- In the transport sector, the directive prohibits any aircraft operated by DPRK carriers or originating from the DPRK from landing in, taking off or overflying EU territory and prohibits any vessel owned, operated or crewed by the DPRK from entering EU ports.
As with UNSC 2270 itself, it will take some time for us to see how binding these measures are, and for three reasons. First we simply do not know what activities exist that might fall under these prohibitions. Second, there will almost certainly be questions about how the directive is interpreted. For example, the intrepid Vice New has done an incredible piece of journalism on North Korean workers in Polish shipyards. Are transfers to such entities exempt? And if they need to be pre-approved, are there grounds for denying such approval under the new statute? Finally, of course, Europe is not exempt from the global underground, and no doubt North Korean operatives will be trying to figure out how they can circumvent these measures.
In this regard, NGO and media like Vice play a crucial role in maintaining the integrity of these measures. The prohibitions in this new directive do not constitute a total embargo on the country, but it is pretty clear that Europe is gradually moving in that direction. Those seeking to build business ties with Europe will no doubt face increasing skepticism about whether additional measures may be on the way, particularly in the wake of revelations about North Korea’s hacking of Asian banks.
(For a quick overview from a non-official European source, Maya Lester and Michael O’Kane run a blog on European sanctions and its North Korea archive can be found here).
