To impose sanctions on North Korea, punish those who do not – Russia and China

North Korean leader Kim Jong Un met with Chinese President Xi Jinping in Dalian, China in May 2018 (photo from KCNA)

To intensify the pressure on North Korea, it is time to hold Russia and China responsible for their failure to implement their international sanctions obligations.

According to recent US and South Korean intelligence estimates, North Korea is making preparations for its seventh nuclear test, which will be its first since September 2017. And while tougher international sanctions have followed such provocations in the past, it is unlikely that the UN Security Council will reach To unanimously adopt new sanctions this time. Not only have China and Russia failed to implement their own sanctions obligations, but they have also actively worked to undermine the UN sanctions regimes.

The sabotage of China and Russia. In the nearly five years since the Security Council last imposed new sanctions, Russia and China have thwarted even the most modest efforts to modernize and revise international sanctions against North Korea. Last month, the two countries vetoed a US-sponsored resolution that would have tightened sanctions on North Korea in response to the country’s continued provocations and ballistic missile tests. Chinese Foreign Ministry spokesman, Zhao Lijian, hinted at China’s unwillingness to demand new sanctions if North Korea conducts another nuclear test, noting that “sanctions will not help solve the problem” and that “[t]The United States should adopt some visual action rather than just lip service so that the two sides can meet halfway.”

Since 2006, the United Nations Security Council has adopted a suite of targeted, trade-based sanctions targeting North Korea’s ballistic missile and nuclear weapons programs. Initially, the sanctions targeted the country’s political elites and organizations within the country’s military-industrial complex that played a direct role in developing its ballistic missiles and nuclear weapons. Over the past 15 years, the Security Council has gradually restricted North Korea’s access to international banking, commerce, and commerce — even limiting the number of refined petroleum products North Korea could import to 500,000 barrels a year.

With a few exceptions, such as humanitarian aid, North Korea is virtually cut off from global financial markets, commerce, and trade. Countries are prohibited from maintaining representative offices of North Korean banks, must repatriate North Koreans living abroad, and are prohibited from forming joint ventures. However, despite these and other restrictions, North Korea continues to evade sanctions and generate revenue from its ballistic missile and nuclear weapons programs. This is all happening while more than 40 per cent of the country’s population is chronically malnourished and in need of humanitarian assistance – a situation that has been getting worse since the outbreak of the coronavirus.

The latest round of sanctions adopted by the Security Council came in September 2017, after North Korea conducted its sixth nuclear test, which US intelligence estimated to produce at 140 kilotons — enough power to vaporize a city the size of Boston.

This year alone, North Korea has conducted 18 missile launches. Among these missiles, two were intercontinental ballistic missiles (ICBMs) – missiles capable of reaching parts of the United States. In January, North Korean leader Kim Jong Un tested a “hypersonic missile,” which analysts described as a “potential major upgrade in North Korea’s strike force against its close adversaries.” Moreover, the latest report of the UN Panel of Experts described the country’s progress as “a marked acceleration in the testing and presentation of new short- and possibly medium-range missiles”.

Russia and China veto tougher sanctions. In response to North Korea’s ICBM tests and continued provocations, the United States has proposed toughening international sanctions, including further cuts to North Korea’s maximum imports of refined petroleum, targeted sanctions against the country’s elite piracy units, and more restrictions on importing / Export of certain goods. . Both Russia and China vetoed the proposal – for the first time since 2006.

China’s ambassador to the United Nations, Zhang Jun, claimed that sanctions did not bring North Korea to the negotiating table and blamed the United States for the stalled talks. Chang also called for the lifting of international sanctions on North Korea due to the unfolding humanitarian crisis in the country. But he did not mention the North Korean regime’s diversion of its scarce resources to its nuclear weapons and ballistic missile programs.

After the vote, the US ambassador to the United Nations, Linda Thomas Greenfield, called China’s veto an “unthinkable concession to the [China’s] and responsibilities towards the Council and the protection of international peace and security.”

Ineffective penal system. Some argue that international sanctions against North Korea are ineffective because the country has not yet denuclearized. But this assumes that UN member states are effectively implementing sanctions, which is far from reality.

One of the reasons countries struggle to implement sanctions on North Korea involves technical guidance from the United Nations Security Council’s 1718 Committee (the committee responsible for the sanctions regime against North Korea) — guidance that is often absent or nonexistent. In recent years, political disagreements among the permanent members of the Security Council have often led to such a lack of direction. It was only recently, for example, that the commission was able to find a preliminary agreement on the conversion rate between barrels of oil and metric tons of oil. This appears to be an esoteric problem, but it often prevented the team of experts from making definitive statements about North Korea’s breach of the oil cap. (Under the current international sanctions regime, North Korea is allowed to import only 500,000 barrels of refined oil annually.)

Of course, politics hurt the implementation of sanctions, too. Many, if not most, of North Korea’s sanctions evasion activities—including its efforts to generate revenue that support its ballistic missile and nuclear weapons programs—involve China and Russia. While geographic proximity and historical political and economic ties can explain part of the sanctions evasion activity, it is undeniable that both Russia and China have systematically sought to undermine the sanctions regime.

Since North Korea’s last nuclear test in 2017, Russia and China have been the only dissenting voices on the Security Council and the 1718 Committee — blocking even the most modest proposals. Furthermore, both countries have actively worked against the UN Panel of Experts to undermine ongoing investigations into sanctions evasion.

The UN panel has repeatedly investigated Chinese authorities for alleged evasion of North Korean sanctions. In several cases, the commission has provided satellite images of North Korean ships unloading coal to Chinese-flagged vessels — sometimes inside the yards of Chinese law enforcement ships. China denied those reports, saying it was “faithfully implementing” its international obligations.

While Russia and China are the most egregious violators of sanctions, other countries have also failed to live up to their international obligations. In some cases, jurisdictions simply lack the resources and capacity to coordinate the extensive sanctions regimes imposed on North Korea.

The illegal activities of North Korea. In June, the Financial Action Task Force – the international organization set up by the Group of Seven (often known as the G7) and responsible for setting anti-money laundering standards – released a report on the state of global efforts to tackle money laundering, terrorist financing, and nuclear proliferation. The report, the first of its kind by the organization, found that most member states still suffer from significant shortcomings when it comes to implementing the asset freeze provisions found in international sanctions. While 66 percent of high-income countries are rated as “compliant” or “largely compliant” with the sanctions provisions, that figure drops to 11 percent for low-income countries—particularly those in West and Sub-Saharan Africa. major, plus parts of East and Southeast Asia. These are “hot spots” for North Korea’s sanctions-evading activities.

Other countries have taken a page from China’s playbook by ignoring (or denying) North Korea’s activities in their jurisdictions. Senegal, for example, continues to allow North Korean workers into its borders, despite articles and media mentions in the UN Panel of Experts report on activities.

Compounding this problem: many of North Korea’s income-generating activities are increasingly taking place in the virtual world. The US Federal Bureau of Investigation attributed the largest-ever cryptocurrency hack to North Korea – a March 2022 heist that harvested the country nearly $600 million in digital assets. The US State Department has released an advisory detailing how North Korea is sending workers abroad to generate revenue for the Kim regime by providing mobile apps and web development services. The revenue generated, amounting to $300,000 annually per worker, directly fuels North Korea’s ballistic missile and nuclear weapons programs.

Regardless, Russia and China remain the financial hubs for North Korea’s sanctions evasion activities. In its 2021 report, the Panel of Experts detailed several cases of North Korean banks operating inside China and Russia, in apparent violation of international sanctions. In one particularly egregious case, Beijing informed the Panel, in response to an official inquiry, that its “competent authorities had listed the individuals identified as being prohibited from entering or transiting China, and had requested Chinese banks and financial institutions to freeze their assets.” This denial came despite the submission of Evidence from Beijing officials that the individuals involved continued to operate in the city. In another case, the team provided evidence to Moscow, including transaction details and account numbers, for a North Korean front company operating at the behest of its national bank. Since the person in question was an accredited diplomat, Russia refused to take any action.

What should be done? In the absence of final action by the Security Council, at the very least, the United States, the European Union and the United Kingdom should coordinate sanctions against naval vessels, individuals and companies that the UN Panel of Experts recommends identifying. For the most part, the US already does. But in order to cement the gaps, closer cooperation with the UK and the EU will be necessary. Doing so will also raise awareness of the scale and scope of North Korea’s sanctions evasion activities.

And if Western countries are serious about their international non-proliferation commitments, they should hold Russia and China responsible for their failure to honor their commitments. Russia and China’s removal of liability should be met with secondary sanctions against their domestic institutions if they turn a blind eye to North Korea’s sanctions-evading and income-generating activities.

For a start, the United States should impose secondary sanctions against Chinese and Russian regional banks and state-owned companies that continue to support North Korea. There is precedent for such actions. In 2012, for example, the United States imposed secondary sanctions on China’s Bank of Kunlun for its role in providing financial services to Iran. The bank was eventually cut off from the international financial system.

The stark fact is that the lifeline that China and Russia provide to North Korea maintains the country’s nuclear ambitions and prevents any peaceful solution to the ongoing crisis sparked by its nuclear program.

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