Paper Tigers: DPRK POE Report Shows Deep Problems with Enforcement

The February 27, 2017 report by the Panel of Experts (POE) responsible for monitoring the implementation of UN Security Council (UNSC) resolutions against the DPRK paints a complex picture of how this sanctions regime is working.

Orange Chinese paper is cut into a tiger, symbolizing the year of the tiger, on a white background. The tiger's head is to the left, and the front-right paw is lifted to show movement.On the one hand, the report is actually reassuring. It is only made possible by a truly global effort to monitor and enforce UNSC sanctions on North Korea. Countries around the world cooperated both with the POE and operated independently to identify sanctions violations by the DPRK and to respond, in many cases, with interdictions, seizure or enforcement actions. On the other hand, the comprehensive nature of the report and its extensive documentation of DPRK sanctions evasion are deeply troubling. Taken together, the report suggests that UNSC sanctions are—at best—being subjected to a tremendous evasion effort and that, for every transaction identified and blocked, many others could be—and likely are—going through. At worst, the DPRK sanctions regime is presently serving only as a speed bump for the DPRK’s development of its missile capabilities and not even that with respect to the nuclear program, all while Pyongyang profits from trade that, in many cases, has been prohibited for a decade.

Beyond the specific recommendations by the POE, all of which can and should be pursued by the DPRK Sanctions Committee at the UNSC and individual member states, the report suggests three additional challenges limiting the effectiveness of sanctions: 1) the importance of states taking an active approach to investigation and enforcement; 2) the imperative of “flipping the script” on DPRK trade; and 3) the degree to which even modest evasion is of value to DPRK. In doing so, the report underscores that the UNSC must to take steps to improve international enforcement, including by threatening and even imposing sanctions on non-North Koreans involved in evasion, coincident with any consideration of new sanctions.

Active Approach to Investigation and Enforcement

A conclusion that leaps from the pages of the POE report is the degree to which many member states are lackadaisical in their enforcement of UNSC sanctions. This is not necessarily a surprise, but taking into consideration my experience as a sanctions policy official in the US government, I was taken aback by the myriad examples of states simply failing to take an active approach to investigation and enforcement, let alone pushing their companies to do so.

To be fair, there were several examples cited in the POE report that suggested the opposite, such as Egypt’s seizure of DPRK arms, arrests of various smugglers in a number of countries, and cooperation with POE investigators. But, even with these successes, the report is riddled with indications that states are simply not performing the necessary due diligence to avoid their jurisdictions from being abused by North Korean smugglers and sanctions evaders. The most egregious example of this was the DPRK entity Kumsan, which, according to the report, marketed itself using the address of the DPRK embassy in Moscow and claimed it was involved in “dealings in metal minerals and mineral ore, including vanadium ore,” contrary to UNSC resolutions. The Russian government informed the POE that Kumsan was not officially registered and claimed that no trade took place after vanadium was explicitly sanctioned in March 2016, though the timing is convenient and the argument suspect. If the company was not registered, what confidence does Moscow have that no UNSC-sanctioned trade took place? Other examples also abound, from African countries engaged in extensive arms-related transactions with DPRK to the involvement of Chinese companies and intermediaries in a number of identified transactions.

Even taking on faith the idea that most UN member states would adhere to UNSC sanctions if aware of illicit acts being undertaken in their territory (a stretch, to say the least), the fact that so many transactions took place suggests that the problem is not just one of crafty DPRK sanctions evasion but also one of extreme negligence on the part of member states. This is particularly concerning when the states involved include two UNSC permanent members, China and Russia, who—more than most countries—have the technical competence and bureaucratic systems to prioritize DPRK investigations and enforcement if they chose to do so. For these sanctions to achieve their modest aim of preventing North Korea from acquiring sensitive goods that could advance its nuclear, missile and military programs—let alone the more ambitious goal of changing Pyongyang’s calculus with regard to its nuclear and missile programs—a qualitatively different level of effort is needed from member states.

Flip the Script on DPRK Trade

The POE report is also striking in the wide range and seeming normalcy of transactions involving North Korea. In the section outlining luxury goods trade with DPRK, the report underscores the degree to which definitional issues and interpretation can undermine implementation of this provision which was first included in a resolution adopted over 11 years ago. To a certain extent, this is unavoidable and from a UNSC resolution (UNSCR) perspective, simply part of doing business.

Leaving aside, however, the specific issue of implementation of this UNSCR, this section of the report demonstrates that the overall mentality of doing business with North Korea is far from treating the country as a pariah. Instead, some countries take a narrowly legalistic approach to interpreting what is acceptable and unacceptable business. For example, the fact that ski lifts were considered something legally permissible to trade with DPRK when the North was building its luxury ski resort is not surprising, as there was no provision to prevent such transfers in UNSCRs adopted prior to 2016. However, if the normative mindset of the international business community had been as universally poisonous toward the DPRK as many might assume, then the legalities would have been beside the point, as traders and exporters would have refused to do business with the North Koreans on principle.

Russia’s willingness to permit DPRK representation at a military technical forum is further evidence of this relatively permissive and positive mindset toward the North, and of an overly restrictive definition of sanctions enforcement that begs common sense. That DPRK representatives were invited to a military-related event in Moscow in 2016 is certainly disturbing, but not unprecedented: Iranian and North Korean armament manufacturers and importer representatives have been invited to trade shows and the like before, prompting debate at the UNSC over whether such activities are permitted or not. As it did with this case, Russia has maintained a different stance about the permissibility of such interactions, arguing that unless explicitly prohibited, such activities ought to continue. But Russia’s explanation and defense of this invitation in 2016 underscores the blatant degree to which the Russians simply disregard the natural concerns that such participation raise: Russia simply stated that the activities in question were not covered by UNSC sanctions. Even if true, this stance encourages other states to take a similarly legalistic approach to UNSC sanctions that, even if defensible, does not help to create the kind of environment in which a normal approach toward North Korea is being discouraged. Moreover, considering Russia is a permanent member of the Security Council and could certainly work with the rest of the UNSC to prohibit such interactions, Russia’s explanation is disingenuous as well.

North Korea will not change its stance toward UNSC resolutions so long as it believes that the consequences of UN sanctions are manageable and that other countries will take deferential—and even permissive—interpretations toward the text of resolutions and their obligations.

Most Evasion Is of Value

If North Korea truly believes UNSCRs are manageable, this is particularly significant in light of the modest needs of DPRK sanctions evasion. The POE report underscores the degree to which the North can get by with restrained access to the international economy. This has two components: Pyongyang’s need to obtain goods to push forward with its missile program and its need for hard currency to sustain popular support and cohesion for the regime.

With respect to the DPRK’s missile program, the report demonstrates that the country still relies on the provision of some goods and materials from the outside world. The report’s extensive review of missile components retrieved from North Korean test launches suggests that there are some parts that the North seeks from abroad to make progress in developing its missile systems, suggesting that more robust sanctions enforcement could slow its missile development. At the same time, the report’s silence on nuclear-related goods could suggest that the DPRK is less dependent on international supply for making advances in this area; in fact, it notes that North Korea has marketed the sale of lithium-6, which is used in the production of tritium for nuclear weapons, suggesting that Pyongyang has all that it needs. That would not be surprising, considering how long the North has been developing its nuclear capabilities and the degree to which critical commodities may exist or have already been imported into the country. But this does not lessen the imperative of effective enforcement of nuclear-related commerce, if only because DPRK interest in a specific item might mean that its unavailability is a chokepoint for its continued nuclear development.

With respect to broader issues of sanctions pressure, the degree to which the North engaged in fairly small sales of military goods is suggestive of a need to trade with whomever and at whatever level is attainable, a good sign in terms of North Korean vulnerability to sanctions pressure. At the same time, its efforts to engage in small transactions, notwithstanding the complexity and high cost of operating vast procurement and trade networks, suggests that the DPRK’s cost/benefit equations are informed by a minimal expectation for what is really needed to keep the country in business.

It is generally believed that North Korea is willing to forego the needs and desires of its population in deference to the interests of the ruling clique. In this context, North Korea doesn’t need to obtain large amounts of hard currency in order to keep consumer electronics coming into the country (as Iran did in the most intensive period of sanctions implementation), nor does it need to ensure its people can travel extensively around the world. With such modest needs, individual exports can have a powerful impact for DPRK, increasing the importance of rigorous enforcement for those transactions that are contrary to sanctions.

UNSC Should Get Tough With Member States

DPRK evasion of sanctions is a given. Member State enforcement of UNSC sanctions ought to have the same expectation from the international community, but the POE report underscores from the very beginning that most Member States cannot even bother to submit the requisite documents to the UNSC describing their implementation of the measures. Worse yet, the many descriptions of flagrant violations of even some of the oldest sanctions measures imposed against North Korea demonstrate that enforcement officials are not even trying.

Member States must be held accountable for their implementation of UNSC sanctions. The UNSC Sanctions Committee and UNSC more generally should consider imposing sanctions, even if just targeted designations, on officials and entities involved in the willful refusal to implement UNSC sanctions. Pertinent examples could include the African nations who have continued to purchase arms from North Korea as well as some of the traffickers described in the report. It is too much to expect that China or Russia would agree to impose sanctions on entities or individuals operating in their own territory (and there is more than a touch of hypocrisy involved in supporting designations of citizens of other countries engaged in evasion), but they may be willing to support certain other non-DPRK designations at this stage. This would help send a message around the world that the UNSC is serious about enforcement and that Member States and their citizens are expected to play their part. In the case of Iran sanctions, multiple front companies and entities operating outside of Iran were subject to UNSC sanctions and their governments were responsive (if upset) to the charges levied.

The DPRK POE report is a good reminder of how valuable UN POEs are in providing information and transparency into the activities of states, entities and individuals subject to UNSC sanctions. But, unless the UNSC and Member States do their part, their reports are destined to simply a historical record outlining how the DPRK flouted international rules rather than a marker of a positive resolution to the North Korean crisis.

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