Slave to the Blog: Sanctions Roundup I



In the last couple of weeks, a number of pieces have come across our desk on sanctions, and we summarize them here. We begin today with more standard sanctions issues, and then turn tomorrow to an interesting collection of documents secured through Freedom of Information Act requests about US requests for licenses.

First, up, the National Committee on North Korea has a very useful guide to the slew of sanctions bills that are winding their way through Congress. These include:

  • R. 757 (the “North Korea Sanctions Enforcement Act of 2015”) known as the Royce Bill; this was introduced earlier in the year, a version passed the House but the Senate did not pick it up.
  • In the Senate, S. 1747 (also the “North Korea Sanctions Enforcement Act of 2015”) was introduced by Senators Robert Menendez and Lindsay Graham in July of this year.
  • Senators Cory Gardner, Marco Rubio, and James Risch are co-sponsors of the recently-introduced bill S. 2144, the “North Korea Sanctions and Policy Enhancement Act of 2015.”
  • Finally, Rep. Ileana Ros-Lehtinen has also introduced a North Korea sanctions bill in the House, but it differs substantially from these bills in relisting North Korea as a state sponsor of terrorism.

The main provisions of all of the bills are lined up in a useful table, but four issues seem to be most important in distinguishing them:

  • Despite humanitarian exemptions, language in the Royce bill appears to make it difficult if not impossible for humanitarian organizations to operate in the country because of a complete ban on any transactions with the government of North Korea.
  • Under existing executive orders, most recently EO 13687, the president has very wide discretion to sanction virtually any North Korean official or entity. The bills differ in the extent to which the bills leave the president this discretion or tie his hands: Royce and Gardner bills provide less discretion than the Menendez bill.
  • Secondary sanctions are one of the most complex issues in the sanctions business: should the US sanction firms that do business with North Korea? The main restraint in this regard would be to “urge” the president to tighten financial sanctions through more aggressive use of money-laundering rules. While not technically secondary sanctions, these have the effect of limiting North Korea’s international financial space by discouraging transactions with banks outside the United States. But the Gardner bill includes one very surprising secondary sanction against those involved with commercial trade in raw materials, including coal; this could set up a show-down with China on the issue.

This last issue is taken up in more detail at a useful post at 38North by Andrea Berger. She notes that the range of firms that have been sanctioned at the multilateral level is surprisingly small, focusing more on individuals. But her main point is that much more could be done against the “facilitators” of this trade: the firms that are counterparties to North Korean firms. She cites the 2014 designation of the North Korean shipping firm Ocean Maritime Management (OMM) which provided grounds for Singapore to charge and try Chinpo Shipping and its owner Tan Cheng Hoe for violation of export controls. The Panel of Experts has good intelligence on where these firms are and has named names with respect to entities in Egypt and Hong Kong as well as Singapore. But there has been reticence to tighten these loopholes. Berger also argues that the small arms exception should be tightened up, since it is a moneymaker for the military, and more should be done to identify transactions in which North Korea is acting as a broker for other parties.

What will force action on the competing US bills is unclear, but they will clearly need to be resolved in conference; to date, the Senate seems more cautious than the House. At the multilateral level, Berger rightly notes that new sanctions are not likely to be added unless there is a forcing action, such as a missile test. And even then it is not clear that China would acquiesce to layering on more sanctions; it will very much depend on the context and what is happening in the dark space between the two countries.

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