China Once Again Caught Violating North Korean Sanctions on Coal Imports

Over at One Free Korea has a good posting up showing how yet again the Chinese are cheating on the North Korean coal import ban:

The lesson I’ve learned from this and other, similar episodes is that one should be cautious before believing any highly publicized case of China enforcing sanctions against Pyongyang or applying economic pressure to it. I’ve seen this show enough times to suspect that China has a deliberate media manipulation strategy of making a big deal of enforcing sanctions until reporters lose interest. (……)

Take the coal export cap under UNSCR 2321, which later became a coal ban in UNSCR 2371. Remember August, when China announced that it was halting coal imports from North Korea? We’ve since learned that this is yet another case of China initially complying with an obligation, only to resume its cheating as soon as reporters looked the other way. The flaw in this strategy is that nowadays, too many reporters don’t look the other way for long. The sharp-eyed crew at NK News has been especially diligent about spotting North Korean bulk carriers at Chinese coal terminals, but this time, I’ll credit VOA.  [One Free Korea]

You can read the rest at the link, but the Chinese are not even trying to hide their cheating considering they imported 509,000 tons of coal last month. It is pretty clear the Chinese government feels they will not be held accountable for cheating on the coal ban and they are probably right.

UAE Announces Plan to Cut Ties with North Korea

Here is the latest development in regards to drying up foreign currency to the Kim regime:

Korean waitresses play music at the Pyongyang Okryu-Gwan North Korean Restaurant in Dubai, United Arab Emirates, on July 25, 2017. The UAE said Thursday, Oct. 12, it will stop issuing new visas to North Korean laborers, becoming the latest Gulf country to cut back on ties to Pyongyang.

The United Arab Emirates said Thursday it would stop issuing new visas to North Korean workers, becoming the latest Gulf country to limit Pyongyang’s ability to evade sanctions and raise money abroad amid tensions with the U.S.

A statement by the UAE Foreign Ministry did not address the hundreds of North Korean laborers already working in the Emirates. A call to the UAE’s Embassy in Washington was not immediately returned.

The statement said the UAE would pull its non-resident ambassador to North Korea as well as stop North Koreans from opening new businesses in the Emirates, a federation of seven sheikhdoms on the Arabian Peninsula that is a staunch U.S. ally.  [Associated Press]

You can read more at the link, but it just makes you wonder why the US government did not put this type of pressure on these governments before to cut ties?

How Chinese Front Companies Help North Korea Evade International Sanctions

Here is why UN sanctions do little to stop North Korea from receiving foreign currency to sustain the regime and their weapons programs:

The North’s ability to finance itself, despite growing international sanctions, can be credited to a broad range of illicit activity that spans the world, according to experts. For example, schemes employed by the regime to garner profits include currency and cigarette counterfeiting, insurance fraud, illicit drug production and trafficking, weapon sales and even wildlife and human trafficking, according to U.N. and Congressional reports.

A 2008 Congressional Research Service report estimated that North Korean criminal activity could rake in anywhere from $500 million to $1 billion per year.

But these activities represent just a fraction of the North’s profits, according to experts. Its most lucrative gains, they say, come from a complex web of illicit networks set up largely within China that allow it to maintain access to international markets.

“When you’re talking about these Chinese networks, you’re talking in the hundreds of millions or billions of dollars,” said David Thompson, a senior analyst at the Center for Advanced Defense Studies, a nonprofit research firm based in Washington. “The more small-scale illicit activity is definitely going to help fund their overseas presence, but I don’t think it’s anywhere close to the scale of these China-based networks.”

The proceeds from these networks are far-reaching: some help Pyongyang procure goods from abroad, while others help it maintain a stable economy.

Much of the rest is believed to finance weapons and missiles. As the Obama administration concluded in 2016, North Korea’s “state-controlled financial institutions and front companies” are used “to conduct international financial transactions that support the proliferation and development of WMD and ballistic missiles.”

To access the global financial system, North Korea has been known to establish business relationships with Chinese companies, which effectively act as middlemen for the regime and allow Pyongyang to mask illicit dealing under the cover of more legitimate trade activity. These companies sell North Korean exports, but rather than send that money back to North Korea — which is almost entirely cut off from international markets — the money is transferred to overseas bank accounts set up within established front companies.

When North Korea needs certain products — from raw materials for its nuclear weapons program to goods ranging from sugar to cell phones — these China-based companies can then buy the goods via the front companies.

“Almost all trade and finance, legitimate or illegitimate out of North Korea, flows through China on its way into or out of North Korea,” said Andrea Berger, a senior research associate at the Middlebury Institute of International Studies. “And that’s not just for the nuclear program — that’s for legitimate goods, that’s for sanctioned commodities, that’s for dual use goods, that’s for finance. And that pattern applies quite widely.”  [PBS Frontline]

You can read more at the link, but it seems the Trump administration is going to have to sanction individual Chinese banks that get caught doing business with these Chinese front companies linked to North Korea.  If the Chinese banks fear being cut off from the international banking system they will be more vigilant to ensure no transactions involving North Korea are flowing through their banks.

Right now it seems like there is very little incentive for these banks to crackdown on these front companies.  Of course sanctioning these Chinese banks will lead to likely retaliation of some kind from the Chinese government.  However in the past sanctioning a Chinese bank has actually changed regime behavior.  Long time readers may remember the reaction from North Korea during the Banco Delta Asia lockdown of their funds by the Bush administration.  There was a noticeable change in North Korean behavior over the short-term before the found other businesses and banks to move their money.

Google Takes Down North Korea’s Youtube Channels Due to Sanctions

It looks like no more Youtube for the Kim regime:

Experts who study North Korea say that Google dealt them a “crippling blow” recently by shutting down two YouTube channels that broadcast the Hermit Kingdom’s propaganda, but a source inside the tech giant says the company’s “hands were tied” by U.S. sanctions.

The first channel to disappear on September 8 was Uriminzokkiri, which many analysts believe is a state-run operation out of China. A short message on YouTube says it was “terminated due to a legal complaint.” The second channel, Tonpomail, believed to be controlled by ethnic Koreans based in Japan, was finally taken down on September 12 “for violating YouTube’s Community Guidelines.”

Publicly, Google has cited violations of its community guidelines and terms of service. Privately, sources at Google and YouTube who were briefed on the takedowns told VICE News the move was related to sanctions imposed by the U.S. government.  [VICE News]

You can read more at the link, but according to the article open source analysts are not happy with the shutdown because it removes a window into North Korea for them to look at.  North Korea has found ways to get around many other sanctions, I am sure they will find a way to get around Youtube.

After Latest North Korean Missile Launch Congress Wants Tougher Action

It appears that some in Congress want to force China to make a tough decision of either supporting the Kim regime or remain part of the international banking system:

Frustrated U.S. lawmakers called on Tuesday for a high-powered response to North Korea’s nuclear tests, saying Washington should act alone if necessary to stiffen sanctions on companies from China, Russia and any country doing business with Pyongyang.

“I believe the response from the United States and our allies should be supercharged,” said Representative Ed Royce, chairman of the House of Representatives Foreign Affairs Committee.

“We need to use every ounce of leverage … to put maximum pressure on this rogue regime,” the Republican congressman told a hearing on North Korea. “Time is running out.” (……)

“We can designate Chinese banks and companies unilaterally, giving them a choice between doing business with North Korea or the United States,” said Royce, who had breakfast on Tuesday with Secretary of State Rex Tillerson.

“We should go after banks and companies in other countries that do business with North Korea the same way,” he said.  [Reuters]

You can read more at the link.

Russia and China Successful In Efforts to Water Down UN Sanctions on North Korea

As expected the United Nations sanctions in response to North Korea’s nuclear test have been watered down by the Russians and the Chinese.  The cuts in oil imports and ban on textile exports will inconvenience the Kim regime, but I see nothing in these sanctions that will be a game changer in regards to changing the current status quo on the peninsula which is what the Chinese and Russians want to maintain:

Nikki Haley, left, U.S. ambassador to the United Nations, and Liu Jieyi, right, China’s ambassador to the United Nations, vote in favor of a Security Council resolution to impose fresh sanctions on North Korea over its latest nuclear test at the UN headquarters in New York on Monday. [XINHUA/YONHAP]

The UN Security Council on Monday unanimously adopted new sanctions against North Korea following its sixth nuclear test, imposing a cap on exports of crude oil to the country, though it fell short of a complete ban.

The 15-member council based in New York approved Resolution 2375, which imposes a cap on the supply, sales or transfer of crude oil to North Korea to the level of the past 12 months, some 4 million barrels, and limits exports of refined petroleum products to the country to 2 million barrels a year. It also bans the sale of condensates and natural gas liquids to the North.

However, the latest resolution fell short of the complete oil embargo called for in an earlier U.S.-drafted resolution, which would have needed the support of veto-wielding members China and Russia.

The resolution, though considered a watered-down version of the U.S. draft, will reduce oil provided to North Korea by around 30 percent, according to the U.S. mission to the United Nations, and cut off over 55 percent of refined petroleum products going to the country. China is the largest supplier of crude oil to the North.

It also includes a ban on North Korean textile exports, which was the country’s second largest export category in 2016 after coal and other minerals, and is expected to reduce its revenues by up to $800 million.

The latest resolution does not include North Korean leader Kim Jong-un or his sister on its blacklist, as initially proposed.  [Joong Ang Ilbo]

You can read more at the link.

Andrei Lankov Explains Why Russia Will Water Down or Veto UN Sanctions on North Korea

A ROK Drop favorite Andrei Lankov explains why Russia is going to attempt to water down United Nations sanctions on North Korea or veto them all together and it has nothing to do with Putin taking an anti-US position:

Andrei Lankov

Vladimir Putin was right when he recently said that even if North Koreans have to eat grass, they will not surrender nuclear weapons (of course, in North Korea the people who make decisions on nuclear weapons are far removed from the people who would have no choice but to eat grass).

However, there is the probability that a really harsh sanctions regime will eventually provoke a grave political crisis and revolution in North Korea: instead of eating grass, the people will rebel.

For American observers, who will watch enthusiastic TV reports about a North Korean revolution in safety, this development, as long as it does not trigger a region-wide war, will be welcome. After all, regime collapse will bring about the complete solution of the North Korean nuclear issue, the U.S.’s overwhelming concern.

However, Russia and China, inconveniently located on the border with North Korea, have reasons to be unenthusiastic about prospects of a Syria-like or Libya-like situation, anarchy and civil war in a nuclear-armed country nearby. For Moscow – and, for that matter, for Beijing – a collapsing North Korea is a greater threat than a nuclear one, however bad a nuclear North Korea is.  [NK News]

You can read the rest of the analysis at the link.

Proposed Sanctions Would Allow Inspection of North Korean Ships on the High Seas

I have long advocated for inspection and seizure of North Korean vessels caught smuggling contraband which in the past has led to successful stopping of contraband items:

Image of North Korean ship detained in 2013 in Panama. [CNN]

The proposed U.S. sanctions would also freeze all foreign financial assets of the government and its leader, Kim Jong Un. The U.S. draft also identified nine ships that have carried out activities prohibited by previous U.N. resolutions and would authorize any U.N. member state to stop these vessels on the high seas without their consent and use “all necessary measures” — which in U.N. language includes force — to carry out an inspection and direct the vessel to a port.

Professor Joseph DeThomas of Pennsylvania State University, a former U.S. ambassador and State Department official who dealt with North Korea, said the U.S. demand for quick council action is “an indicator of how the administration thinks time has run out.”

“My sense is they believe that they don’t have time for a delicate diplomatic dance,” he told The Associated Press in a telephone interview Friday. “The other possibility … is they want to see the color of China’s money. They’re putting down the marker here and saying ‘OK, Are you prepared to do what is necessary to put pressure on North Korea at a moment when we’re simply out of time?'”  [Associated Press]