North Korean Economy Watch

Pictured above in Wonsan: Possibly a new yacht (see more here)

According to the Choson Ilbo:

The North Korean regime has spent US$1.04 billion since 2008 importing luxury goods in contravention of UN Security Council resolutions.

According to data Grand National Party lawmaker Yoon Sang-hyun obtained from the Foreign Ministry and other government agencies, the regime imported luxury goods worth $272.14 million in 2008, $322.53 million in 2009, and $446.17 million in 2010.

TVs, digital cameras, and video recorders made up the largest proportion, jumping from $115.47 million in 2008 to $215.95 million in 2010.

Luxury cars and parts came second and movie equipment such as film cameras and projectors third.

UN Security Council resolutions 1718 and 1874 ban exports of luxury goods and weapons of mass destruction to the North.

The amount the regime spent buying luxury goods was about 10 times the total humanitarian aid of $107.29 million it received from South Korea and the international community over the same period.

Read the full story here.

Additional information:
1. Back in July, there were several estimates of DPRK luxury goods imports based on Chinese data.

2. The DPRK maintains appx 200-300 foreign trade companies.

3. Office 38 is reportedly responsible for engaging in trade deals.

4. On the life of an overseas North Korean trade agent.

5. Here is an American Hummer parked at the Yangakdo Hotel.

UPDATE 2 (2011-7-20): The Daily NK offers some more statistics:

It has been confirmed the North Korean authorities were concentrating on importing luxury items for privileged people, while international humanitarian organizations were worrying about North Korea’s chronic food shortage and the damage to the vulnerable classes.

According to statistics from the South Korean government and Chinese customs, from January to May this year, the cost of food import is only about 4% out of the total amount of imports, which translates to about 46 million dollars out of 1.148 billion dollars.

The total amount of trade with China was doubled as compared with the corresponding period from last year: exports were increased by 217% and imports by 58%. The export amount is 812 million dollars while the import is 1.148 billion dollars.

In comparison, around 10 million dollars were used to purchase high quality liquor, cigarettes and others for privileged classes. The amount of cigarette imports, such as Marlboro, Mild Seven and others, is 7.5 million dollars. 2.4 million dollars were used to buy Cognac or whisky like Chivas Regal, Hennessy X.O. and other kinds of alcohol.

The amount of alcohol imported was increased by 94 % compared to the same period of last year.

It was reported that other items, such as international designer brands clothes, watches, and other items and electronic goods from SONY and Samsung were also imported.

It also showed that North Korean authorities sold wheat it had received from the international community to other countries. 200,000 tons of phosphate rock, which is materials for fertilizer, provided by Middle Eastern countries for free in 2010, were sold to some countries in Europe.

In addition, since South Korean markets have been blocked due to May 24 Measures, North Korea tried to download agricultural products, which are disguised as Chinese products, onto South Korean vessels in international waters by secretly working with Chinese traders. The South Korean government reported that there were four cases last year and 11 cases so far this year.

So apparently everyone has seen the data source but me.

UPDATE 1 (2011-7-22): The Los Angeles Times picked up on the report and offered a few more details:

North Korea’s importing of luxury goods from China nearly doubled in the first five months of this year, compared with the same time period for 2010, according to a report by Beijing customs officials obtained by the South Korean Unification Ministry.

…

The communist regime spent $46 million on imported corn, rice and other food staples, but it also spent $10 million on luxury items from January through May of this year. Imported through China, the items reportedly include Marlboro cigarettes, Hennessy cognac, whiskey and Japanese beer, South Korean officials said this week, quoting the Chinese customs report.

The imports included about $500,000 worth of high-grade beef, apparently for luxury meals, which North Korean leader Kim Jong Il uses to maintain the support of the power elite, Seoul officials said.

…

This year, the regime again requested food aid, citing reduced crop yields. Though the European Union plans to send $14.5 million in food aid, the United States and South Korea have been reticent to supply such aid.

Some scholars believe that North Korea has exaggerated its need for food, alleging that the aid is turned over to the military or stored for future use, such as a planned celebration next year to mark the anniversary of the regime.

“I do not believe these claims about mass starvation,” said Andrei N. Lankov, a professor at Kookmin University in Seoul and the author of several books on North Korean history and politics.

He called the move by Pyongyang “a deliberate campaign to get free food, which will then be distributed to the privileged groups as government gifts. This will allow them to increase their legitimacy and win some popular support at the expense of the Western and South Korean taxpayers.”

I still have not seen the original Chinese source.  If anyone has it, please send it my way.

ORIGINAL POST (2011-7-20): Yonhap cites an unnamed South Korean government official (anyone want to take credit for these statistics?) who claims that the DPRK is skirting UN sanctions and obtaining luxury goods.  According to the article:

Despite years of food shortages, North Korean leader Kim Jong-il has engaged in the gift politics of showering his top aides and other elites with luxury goods to win their loyalty.

Some ruling elites also enjoyed McDonald’s hamburgers delivered from China via Air Koryo, North Korea’s flagship airline, the official said, without elaborating.

The North also spent about US$7.5 million in buying cigarettes such as Marlboro and Mild Seven in the first five months, a rise of 117 percent compared to the same period last year, according to figures by South Korea and China. It also showed that the North imported $2.4 million worth of Hennessy Cognac, whiskey and Japanese beer, up 94 percent compared to the same period last year.

The trade volume between North Korea and China stood at US$1.96 billion in the first five months, twice as much as in the same period last year, according to Lee.

Since the article does not name a source or provide any way to track down the numbers, take them with a grain of salt.

Read the full story here:
N. Korea imports luxury goods for ruling elites despite food shortages
Yonhap
2011-7-20

UPDATE 6 (2011-7-11): It looks like none of the DPRK power stations have been approved by the UNFCC for the CDM program.  A reader notes:

[I] just searched through the entire CDM database with the category numbers for these projects, and as far as I can see none of these has got beyond validation phase['s] comments phase, and judging by some of the comments – “It is evident from the PDD [Project Design Document] that the values are consistent and it is definitely forged and cooked up values to show a non CDM project as a CDM project” – being one of the more polite, that I’d be amazed if they make it beyond that. [It] looks like the DPRK hasn’t got its environmental and managerial audit systems quite up to date yet.

UPDATE 5 (2011-7-11): I just checked the UNFCC web page, and it appears that in addition to the hydro power plants mentioned below, the North Koreans also submitted the “Energy Efficiency Improvement Project in Pyongyang Textile Factory” [sic] for carbon offsets on May 23, 2011. According to the UNFCC web page, the project is in the portfolio of the Carbon-Trade Division, GBCIO, Ministry of Foreign Trade.

UPDATE 4 (2011-7-11): DPRK begins construction of Ryesonggang Power Stations 3 and 4

Pictured above (Google Earth): Ryesonggang Youth Power Stations 1, 2, and 6 (례성강청년발전소).

Back in March of this year, the DPRK registered eight potential power plants with the UNFCC which it intended to construct to obtain carbon offset credits.  These eight hydro-power plants are:

Hamhung Hydropower Plant No.1
Hamhung 20MW Hydropower Plant No. 2
Kumya Hydropower Plant
Paekdusan Songun Youth 14MW Hydropower Project No.2
Ryesonggang Hydropower Project No. 3
Ryesonggang Hydropower Project No. 4
Ryesonggang Hydropower Project No. 5
Wonsangunmin 20MW Hydropower Project No. 1

On June 25th the DPRK evening news featured footage of the construction of the Ryesonggang Youth Power Station No. 3 (례성강청년3호발전소).  I have uploaded the footage to YouTube and you can see it here.

On June 28th the DPRK evening news featured footage of the construction of the Ryesonggang Youth Power Station No. 4 (례성강청년4호발전소).  I have uploaded the footage to YouTube and you can see it here.

I have not had the time to pinpoint the exact locations of these power stations using Google Earth.  Since the imagery is older, it will take some time to match up the mountain contours.  However, we have a general idea where they are located: between the Ryesonggang Power Stations 2 and 6.  These are mapped out in the image at the top of this post.  The satellite imagery is of Thosan (토산군) and Kumchon (금천군) counties.

Since I have a job, am in graduate school, am a landlord, and running this web page, I have not had time to follow up with the UNFCC to see if they have approved these projects for the Clean Development Mechanism (CDM). If there is an enterprising journalist or reader who cares to find out the answer, please let me know.

UPDATE 3 (3/23/2011): According to the UNFCC web page (select Democratic People’s Republic of Korea in the “Host Party” box), these are the eight power stations that have been submitted for consideration:

Hamhung Hydropower Plant No.1
Hamhung 20MW Hydropower Plant No. 2
Kumya Hydropower Plant
Paekdusan Songun Youth 14MW Hydropower Project No.2
Ryesonggang Hydropower Project No. 3
Ryesonggang Hydropower Project No. 4
Ryesonggang Hydropower Project No. 5
Wonsangunmin 20MW Hydropower Project No. 1

The UNFCC web page does not mention the locations, size, or power generation capacity for most of the dams, but I am sure that information will trickle out over time. With the exception of the Kumya Power Station (See satellite image below), none of these facilities are visible on Google Earth–but related facilities are: the Paektusan Power Station 1 (See satellite image below) and Ryesonggang Power Station 1, 2, 6 (See satellite image below).  The Hamhung Power Stations are probably in or near Hamhung, and the Wonsangumin project is probably near Wonsan.

And according to an email from the UNFCC:

This list contains all the projects which have already started and for which a notification of CDM prior consideration has been submitted. This notification is necessary to prove that the incentive of the CDM was a decisive factor for taking up the project when a project has started before a project design document (PDD) has been published for global stakeholder consultation or a new methodology in connection with the project has been submitted. However, kindly note that these projects have not yet entered the CDM project cycle as lined out in the CDM rules, requirements and procedures, and to submission for registration has yet been made.

Further details on the CDM project cycle are available here: http://cdm.unfccc.int/Projects/diagram.html

More information will be added here as time passes.

UPDATE 2 (3/11/2011): The DPRK has apparently registered eight power plants with the UNFCC.  According to Reuters:

North Korea has registered eight hydroelectric plants with the United Nations, and if approved, could allow the world’s most reclusive state to sell carbon offsets to earn precious hard currency.

These hydropower projects were registered with the United Nations Framework Convention on Climate Change (UNFCCC) for prior consideration in getting carbon credits, some of which have a capacity of 20 megawatts, the UNFCCC website showed.

Prior consideration is the first step for accreditation toward the U.N.’s Clean Development Mechanism that allows developing countries to earn tradeable carbon credits for emissions from clean-energy projects.

Bernhard Seliger, a messenger for North Korean officials on these projects, said the United Nations uploaded the information on Thursday after he submitted related forms on behalf of the North Korean government’s carbon trade division in late February.

“I have no idea when the U.N. makes a decision… North Korea has to finish the power plants, which up to now are only half-finished dams,” Seliger, Hanns Seidel Foundation’s representative in South Korea, told Reuters via email.

Analysts questioned the demand for carbon credits from North Korea, concerned the money might be siphoned off to nuclear arms or other military projects.

The UNFCC web page is not stranger friendly.

UPDATE 1 (3/8/2011): According to the Guardian:

North Korea hopes to earn much-needed hard currency by selling UN-backed carbon offsets from a series of hydro-power projects, as the country faces sanctions over its nuclear weapons programme.

If approved and registered by the UN, these would be the first projects for North Korea under a scheme called the Clean Development Mechanism (CDM). This allows developing countries to earn tradeable carbon credits for emissions reductions from clean-energy projects.

Some analysts questioned the demand for carbon credits from North Korea, with fears the money might be siphoned off to nuclear arms or other military projects.

The government has asked the Hanns Seidel Foundation of Germany, which focuses on humanitarian issues, to act as a go-between by working with UN-approved verification agency TUV Nord.

According to Bernhard Seliger, the foundation’s representative in South Korea, North Korea is initially looking at trying to get approval for three hydro power plants of 7-8 megawatts (MW).

Seliger visited the three hydro-plant construction sites in the north-east corner of the country in January.

In a statement, TUV Nord confirmed the foundation had engaged their services.

“In this respect, TUV Nord intends to verify hydropower dams in North Korea once pre-registered with United Nations framework conventions on climate change [UNFCCC] via the Beijing branch of its Chinese subsidiary TUV Nord Guangzhou,” it said.

If registered, the plants could yield millions of euros over several years.

Beijing-based lawyer Tom Luckock, who specialises in projects that curb greenhouse gas emissions, estimated that an 8 MW hydro plant could yield about 23,000 UN offsets a year.

The offsets, called Certified Emissions Reductions (CERs), are generated from registered CDM projects, such as wind farms, that are rewarded for reducing greenhouse gas emissions.

The offsets currently trade at nearly €12 (£10) each and are bought by governments in rich nations that need to meet UN emissions reduction targets.

Europe is the biggest buyer, with large polluting firms allowed to buy the offsets to meet a portion of their emissions reduction targets under the EU’s emissions trading scheme.

“Finding ways to secure foreign currency is the priority for North Korea, which is linked to everything from food to raw material imports to boost reduced productivity,” said Cho Myung-chul, a senior researcher at the Korea Institute for International Economic Policy.

…

Seliger said North Korea, which signed the UN’s Kyoto Protocol climate pact in 2005, was also interested in biomass power generation projects under the CDM.

The UN-approved national agency that assesses and approves CDM projects in North Korea was not available for comment.

Questions remained on demand for North Korean CERs.

“Even if they open up, who in the world wants to pay for North Korea that is blamed for its nuclear weapons programme?” said Choi Soo-young, a senior researcher at the Korea Institute for National Unification.

Cho said the UN needed to prevent outside cash going into its nuclear development activities, while Luckock, of global law firm Norton Rose, said: “Their limited access to hard currency has to be a concern for buyers – the damages clauses will carry limited weight without some security there.”

Another challenge is that North Korea would have to make public its energy consumption and generation data and disclose information on the amount of energy linked to the hydro project.

“Annual inspection, constant measurement and energy flow posting on the [UNFCC] website – all these things are new for North Korea,” Seliger said.

According to the AFP:

“We are talking about eight power plants, with the smallest size about 7.5 megawatts. These are not big projects but small or medium-sized projects,” Bernhard Seliger told AFP.

None has yet been completed, he said.

“I saw some (construction) sites in South Hamkyong province but that’s not all. There are other plants in other regions,” Seliger said, adding that some of the projects are led by the UN Development Programme.

The Hanns Seidel Foundation has been working since 2003 to build the North’s development capacity, and in 2008 organised a seminar on carbon trading for Pyongyang officials at their request.

The tradeable credits, called Certified Emissions Reductions, are awarded for approved clean-energy projects such as hydropower plants or wind farms.

Big polluters elsewhere in the world can buy them as part of their efforts to cut emissions.

Seliger said his foundation is helping the North to prepare for the auditing process required to join the UN carbon credit trading system known as the Clean Development Mechanism.

“One good thing about this project is that it is very transparent, involving monitoring and auditing on an annual basis… I think it is very good for North Korea to participate in such an international regime,” said Seliger.

An official at a South Korean state agency, the Korea Energy Management Corp, said registration would take at least a year or two and it was unclear how much the North would be able to earn if approved.

The official, who declined to be identified, said a typical eight-megawatt hydropower plant could yield about 19,500 carbon credits each year, each of which was currently traded at 12 euros in global markets.

This would amount to around $327,000 a year.

But some buyers may shun the communist state, given its history of nuclear and missile development which has led to international sanctions.

“Government buyers will certainly shy away from dealing with the North,” said Koo Jung-Han, a researcher at the Korea Institute of Finance.

“But private companies have few reasons not to buy credits from the North as long as it can offer a competitively low price. However, the big question is whether the North will be able to build the plants without outside financiers.”

Koo said that countries hoping to buy carbon credits from upcoming overseas projects often encourage investment in the ventures by their own finance companies.

“But what kind of financial companies will take a plunge in projects in such a volatile, politically risky country like North Korea?”

The North suffers persistent power shortages even in the showpiece capital Pyongyang.

Many rural areas receive power only during key agricultural seasons, and must rely for the rest of the year on alternative fuels, according to a recent policy paper published by the Nautilus Institute think-tank.

Here are the web pages for the Hanns Seidel Foundation and the UNFCCC Clean Development Mechanism (CDM) Program.

I am not sure which hydro power stations the DPRK is planning to submit to the UN, but many have been been highlighted in North Korean “media” in recent years:

Kumya River Dam
A dam is being constructed in Kumya County, South Hamgyong Province, to provide electrical power. Kim Jong-il last visited in August 4, 2010. It is just one of several dams under currently under construction in the DPRK.

Here is a satellite image of the Kumya dam’s construction (Google Earth: 11/25/2008,  39.574232°, 127.104736°)

This new reservoir will flood the locations of three villages (리): Ryongnam-ri (룡남리), Ryongsang-ri (룡상리), and Ryongchon-ri (룡천리).

Estimates of the reservoir size are made by me, but it is fairly obvious where the North Korean engineers expect the reservoir to flood because they have already relocated the villages from their former locations in the flood zone.

Kumjingang River Power Stations
Beginning in 2000, the DPRK has constructed three power stations on the Kumjin River (금진강) in  South Hamgyong Province.  The first was the Kumjingang Power Station (금진강발전소).  The second was the  Kumjingang Hungbong Youth Power Station (금진강흥봉청년발전소).  The third was the Kumjingang Kuchang Youth Power Station (금진강구창청년발전소).  All three are pictured below on Google Earth:

It does not appear that these projects have resulted in dislocated villages.

Wonsan Youth Power Stations
Below is a satellite image of the Wonsan Youth Power Stations No’s. 1-4 (원산청년발전소).   These projects required the construction of both the Kuryong Reservoir (구룡저수지) and an appx 8.5 mile (13.69km) tunnel to link the hydro power stations with their power source.  The inaugural ceremony for these facilities was on January 10, 2009.

The construction of the Kuryong Reservoir resulted in the dislocation of three villages: Kuryong-ri (구룡리), Konja-ri (건자리), and Haerang-ri (해랑리).

Orangchon Power Station No. 1
Kim Jong-il offered guidance at the Orangchon Power Station (어랑천1호발전소) in February 2007.  This facility will probably not be submitted to the UN for scrutiny because it lies just outside the security perimeter of what human rights groups assert is Kwan-li-so No. 16.

Anbyon Youth Power Stations No’s 1 & 2
The Anbyon Power Stations (안변청년1-2호발전소, 38.954400°, 127.538912°) are powered by waters from the Imnam Reservoir (임남저수지) via an underground tunnel nearly 45km in length.  Much more here.

The Imnam Reservoir flooded Chondo County’s capital city as well as appx 14 villages. The South Korean government was so worried about the Imnam Reservoir being used as a weapon that they built a dam downstream to prevent flooding should the DPRK release a large volume of water (38.209539°, 127.848760°).

Ryesonggang Youth Power Stations 1-6
Some of the Ryesonggang Youth Power Stations (례성강청년1-6호발전소, 38.367696°, 126.781096°) appear to be under construction in North Hwanghae Province.  The North Korean “media” has only broadcast images of the Ryesonggang Power Stations 1, 2, and 6 (all completed), so I presume that power stations 3, 4, and 5 are too new to show up on available Google Earth Satellite imagery. Below I post images of the distance between power stations 1 and 6 as well as close-ups of both facilities.

Power Station No. 1 was completed in 2007 and most recently received media attention in South Korea in September 2009 when the DPRK released a massive amount of water from its dam (Hwanggang Dam), causing floods in South Korea that killed six people. An estimated 40,000,000 short tons (36,000,000 t) of water was dumped during the flood, causing the water level at the border of Gyeonggi-do to leap from 7.5 feet (2.3 m) to 15.1 feet (4.6 m).

Power Station No. 2 (38.324008°, 126.673366°) has been completed, but it is too new to appear on Google Earth satellite imagery.  I have drawn it on Google Earth below:

Construction of Power Station No. 2 resulted in the dislocation of approximately 27 houses, but I have not been able to determine if any other villages were relocated due to construction of the other facilities.

Paektusan Songun Youth Power Stations
The North Korean media has also done a lot of advertising for the Paektusan Songun Youth Power Stations (백두산선군청년발전소) in Paekam County, Ryanggang Province (41.716931°, 128.786163°).

These dams have resulted in the dislocation of  two small communities as well as the severing of the old railway lines that connected Unhung, Kilju and Paekam with Musan.  Maybe the railway lines have been moved to accommodate the new dams, but it is also unclear if these line were in use to begin with.

Pukchang Ryongsan Power Station
Up until recently I believed the Pukchang Ryongsan Power Station (북창룡산발전소, 39.596238°, 126.266478°) was a large-scale river-straightening project, but according to recent KCTV footage (which I posted to Youtube here) it is in fact a hydro power station.  Work on this project began sometime around the spring 2002 (as best I can tell).

Huichon Youth Power Stations
The Huichon Youth Power Stations No. 1 & 2 have received the most attention in the North Korean media.  I recently located them and will post something soon.

Since the DPRK will likely be subjecting several of these (or other) power plants to international scrutiny, I look forward to seeing that data published.  KCNA is short on details and the disclosed information would facilitate more accurate assessments of the DPRK’s domestic hydro-power generating capacities.

A reader writes in with the following comments:

I would like to share some comments on the potential CDM projects in north Korea as i have been working on this field for many years now.

Concerning existing hydropower plants:
To be eligible to a CDM project, one of the first criteria is the additionality of the project. You have to prove (the rules are very stricts) that the project would not have been launched without the consideration of the revenues from the reselling of the CERs.
So the Dams that have already been buit are not eligible.

Concerning hydropower plants that are being implemented:
The first step of a CDM project is to notify to the UNFCCC secretariat and to Designated National Authority (in this case the Secretariat of the National Coordinating Committee of Democratic People’s Republic of Korea for Environment) that you are seeking to establish your project as a CDM project.
Up to now, no such notification has been received by UNFCCC so it would be quiet difficult for projects being implemented to ask for the CDM status (i mean nearly impossible).

Some facts concerning future hydropower projects:
From the day you send the notification that you are seeking the CDM status to the day you are actually given the status, it takes in average 2 to 3 years (they would have to build the plants during this period)
Then it can be at least another year before you receive the CERs.
The price of 12 euro for a CER is for secondary market. The price for primary CER (directly sold by the producer) would be much less than 8 euro.
The figure of 20 000 CERs/year is completely unpredictable for the moment, here is a simplification of the calculation:
One CER is equal to one tonne of CO2 equivalent that would be avoided by producing clean electricity. For example when you produce 1 MW electricity from coal, the process releases X tonnes of CO2 in the atmosphere but when you produce 1 MW from a hydropower plant, you do not release CO2.
In order to calculate what the CDM project would be able to claim, we would have to know the CO2 emission factor of the North Korean grid and then multiply it by the amount of MWh produced by the CDM project.
If most of the electricity produced these days in North Korea already comes from hydropower plants, then the national emission factor will be low and the CDM project will not avoid a lot of CO2 emission (and so not earn a lot of €)
Without the capacity of the future project and the national emission factor, it is impossible to estimate the amount of CERs the project could generate.

The CDM status seems quiet unrealistic to obtain for North Korean projects but other international agreements are discussed these days and their outcome may be more adapted.

ORIGINAL POST (2011-1-31): According to Radio Free Asia:

Nuclear-armed but cash-starved North Korea has expressed interest in joining the world carbon market in an apparent bid to earn precious hard currency and avoid international sanctions, an expert told RFA.

But the secretive Kim Jong Il regime has to disclose critical information, such as energy consumption data as well as methods by which it derives energy, to be eligible for funding under the United Nations’ Clean Development Mechanism (CDM), said the North Korea expert, speaking on condition of anonymity.

The CDM is aimed at encouraging companies or organizations in the developed world to invest in carbon dioxide emissions-saving projects in developing countries.

In return for funding and technology transfer, investors receive carbon credits, which can then either be traded on carbon markets or used to reduce their own emissions tally if they are subject to a domestic cap.

The Kyoto Protocol set emission caps for 38 countries through 2012, establishing the CDM as a worldwide carbon market. It is a cornerstone of the group’s efforts to tackle global warming.

The North Korea expert told RFA on Jan. 13 that Pyongyang intended to apply for funding via the CDM and that the regime might list its proposed hydro-electricity power projects under the U.N. mechanism.

UN refrains from comment

When contacted on the North Korea move, the U.N. Framework Convention on Climate Change (UNFCC), the secretariat charged with implementing the global environmental treaty to stabilize greenhouse gas concentrations, said it would refrain from commenting on individual country projects.

The North Korea expert estimated that one ton of carbon dioxide would trade for about U.S. $26 dollars and if a hydro-electric power project was registered under the CDM, depending on the carbon credit bid price, about U.S. $1 million dollars could be earned annually.

A hydro project registered under the CDM would need to be evaluated by U.N. inspectors for it to qualify for carbon credits. Usually, it would be evaluated continuously for about 14 years.

Details, including the amount of energy linked to the hydro project and potential reduction of greenhouse gas emissions, would have to be submitted.

North Korea has been mostly reluctant to share information about its energy generation activities.

According to the expert, North Korea has recently displayed “great interest” in the possibility of operating hydro-electric power stations to alleviate its domestic energy shortages and to acquire “carbon credits” that it could, in turn, sell on the international carbon market.

Hard currency

As North Korea’s economic crisis worsens, Pyongyang is seeking ways to earn hard currency following a failed currency reform and due to sanctions imposed by the international community over its nuclear and missile developments and provocations targeting South Korea.

The interest in the CDM is likely to be part of this search.

The North Korea expert also said that earning hard currency through “carbon credits” would not be subject to sanctions imposed on Pyongyang under UN Security Council resolutions, and that any North Korea’s application for participation under the CDM “may stand a chance.”

“For North Korea, this could be an opportunity to earn hard currency without engaging in illegal armament sales, while operating an electric power station in transparent fashion, and accepting strict monitoring by the UN, and abiding by applicable international standards.”

The United States has been pressing China to use its influence to persuade North Korea regime to end recent provocations and return to disarmament talks involving the three countries and South Korea, Russia and Japan.

The six-party nuclear talks were last held in 2008. The impoverished North has been seeking a restart to the nuclear negotiations, which propose to reward its gradual nuclear disarmament with phased infusions of economic aid.

In a bid to renew dialogue and ease chances of conflict, South Korea recently proposed holding a preliminary meeting with North Korea on Feb. 11 to prepare for high-level defense talks. On Friday, the North suggested parliamentary talks between the two sides.

Read the full story here:
North Korea Eyes Carbon Market
Radio Free Asia
1/29/2011

According to the New York Times:

The United States Navy intercepted a North Korean ship it suspected of carrying missile technology to Myanmar two weeks ago and, after a standoff at sea and several days of diplomatic pressure from Washington and Asia nations, forced the vessel to return home, according to several senior American officials.

Washington made no announcement about the operation, which paralleled a similar, far more public confrontation with North Korea two years ago. But in response to questions about what appears to be a growing trade in missiles and missile parts between North Korea and Myanmar — two of the world’s most isolated governments — American officials have described the episode as an example of how they can use a combination of naval power and diplomatic pressure to enforce United Nations sanctions imposed after the North’s last nuclear test, in 2009.

It was a rare victory: a similar shipment of suspected missile parts made it to Myanmar last year before American officials could act. Despite the Obama administration’s efforts to squeeze North Korea with both economic and trade sanctions, there are continuing reports of sophisticated missile technology exchanges, some of it by air, between North Korea and Iran, among other nations.

North Korea, aware that shipments leaving the country are under increased scrutiny, has found a profitable trading partner in the authoritarian government in Myanmar.

The extent of that trade is unclear to American intelligence agencies. Two years ago, Secretary of State Hillary Rodham Clinton publicly expressed suspicions that Myanmar was attempting to purchase nuclear weapons technology, but it recently said it was too poor to use such technology. And the evidence has been scant at best. (In 2009, India inspected a North Korean ship that was believed to be carrying equipment for a nuclear reactor to Myanmar, but quickly discovered that its contents were legal.)

The most recent episode began after American officials tracked a North Korean cargo ship, the M/V Light, that was believed to have been involved in previous illegal shipments. Suspecting that it was carrying missile components, they dispatched a Navy vessel, the destroyer McCampbell, to track it.

“This case had an interesting wrinkle: the ship was North Korean, but it was flagged in Belize,” one American official said, meaning it was registered in that Central American nation, perhaps to throw off investigators.

But Belize is a member of the Proliferation Security Initiative, an effort begun by President George W. Bush’s administration to sign up countries around the world to interdict suspected unconventional weapons. It is an effort that, like the military and C.I.A. drone programs, Mr. Obama has adopted, and one of the rare areas where he has praised his predecessor.

According to American officials, the authorities in Belize gave permission to the United States to inspect the ship.

On May 26, somewhere south of Shanghai, the McCampbell caught up with the cargo ship and hailed it, asking to board the vessel under the authority given by Belize. Four times, the North Koreans refused.

As in the 2009 case, which involved the North Korean vessel the Kong Nam 1, the White House was unwilling to forcibly board the ship in international waters, fearing a possible firefight and, in the words of one official, a spark “that could ignite the Korean peninsula.” Moreover, the Americans did not have definitive proof of what was in the containers — and a mistake would have been embarrassing.

“There is always a chance that the North is setting us up for a raid that they know will find nothing,” one official said. “So we want to make sure we don’t fall into a trap.”

By happenstance, a group of senior officials from the Association of Southeast Asian Nations — including a representative from Myanmar — was in Washington while the slow-speed chase was occurring 8,000 miles away. On May 27, when the group visited the Old Executive Office Building opposite the White House, Gary Samore, the president’s top nuclear adviser, addressed the officials, urging Vietnam, Thailand, Indonesia and Malaysia to fully join the nonproliferation effort.

He then surprised the Asian officials by telling them he had a “sensitive subject” to raise, and described the American suspicions, providing the group with a picture of the ship on its way to Myanmar. He reminded them that under United Nations Security Council Resolution 1874, which was passed in response to the North Korean nuclear test in 2009, its vessels are to be inspected if “reasonable grounds” exist to suspect that weapons are being exported.

“The Burmese official in the room protested that we were making accusations,” said one American official familiar with the exchange. Myanmar, formerly known as Burma, has denied stockpiling missiles or buying parts from North Korea. It repeated those denials during recent visits to the country by a midlevel State Department official and by Senator John McCain.

American officials dismiss those denials, pointing to years of evidence of missile-related purchases during both the Bush and Obama administrations. But they concede they are mystified about Myanmar’s motives. The missiles that they believed were aboard the M/V Light have a range of about 350 miles, meaning they could hit parts of India, China, Thailand or Laos — all unlikely targets.

The message apparently got across. A few days later, long before approaching Myanmar, the cargo ship stopped dead in the water. Then it turned back to its home port, tracked by American surveillance planes and satellites, and suffering engine trouble along the way.

And according to the Wall Street Journal:

Under pressure from the U.S. and other countries, a North Korean vessel called the M/V Light turned around in the South China Sea two weeks ago and returned to the North last week, U.S. and South Korean officials said Monday.

Among the countries that agreed to apply pressure was Myanmar, a previous destination for North Korean weapons, a senior U.S. official said. Some reports said the North Korean ship was bound for Myanmar, but the U.S. official, Gary Samore, special assistant to President Barack Obama on weapons of mass destruction, said its final destination wasn’t clear.

“It was headed for the Straits of Malacca, which would have required it to pass between Malaysia and Singapore,” Mr. Samore said. “Since we had alerted the Singaporean and Malaysian authorities, there might have been concern [in Pyongyang] whether it could pass through the straits without action by either of those countries.”

The ship turned around, without the U.S. resorting to force, before reaching the straits.

North Korea’s state media haven’t reported on the latest journey of the M/V Light, keeping with a silence it maintained over previous interceptions of its weapons-ferrying ships and planes.

The incident is unlikely to change the fundamental standoff between North Korea and other nations over its nuclear-weapons program. The U.S., China and other countries have tried to lure North Korea back to the so-called six-party talks, in which Pyongyang has been encouraged to give up its nuclear pursuit in exchange for economic incentives and security guarantees.

Mr. Samore said the multilateral cooperation is a signal to North Korea that other nations remain committed to enforcing the trade limitations set forth by the U.N. Security Council several weeks after Pyongyang tested a nuclear weapon in 2009.

…

U.S. officials in late May began tracking the M/V Light, and a U.S. Navy destroyer intercepted it on May 26 and followed it down the Chinese coast for several days. Meanwhile, American diplomats won agreement from several southeast Asian nations to stop the ship if it attempted to make port.

U.S. officials also discussed the M/V Light with North Korean officials several times via the North’s U.N. delegation, a so-called back channel the two countries use because they don’t maintain official diplomatic relations.

“The North Koreans claimed the ship was going to Bangladesh with a cargo of industrial chemicals,” Mr. Samore said. “We have no way to verify whether any of that was true. And we had good reason to be suspicious with this ship, which in the past has been involved in the export of weapons to [Myanmar] and other locations in the Middle East.”

Read the full stories here:
U.S. Said to Turn Back North Korea Missile Shipment
New York Times
David Sanger
2011-6-12

North Korea Keeps Silent on Ship’s Turnaround
Wall Street Journal
Evan Ramstad
2011-6-14

Here is the press release from the UNSC:

Security Council
6553rd Meeting (AM)

SECURITY COUNCIL EXTENDS UNTIL 12 JUNE 2012 MANDATE OF PANEL OF EXPERTS

HELPING MONITOR SANCTIONS ON DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA

The Security Council this morning extended the mandate of the Panel of Experts helping monitor sanctions on the Democratic People’s Republic of Korea for an additional year, until 12 June 2012.

Acting under Chapter VII of the United Nations Charter, the Council unanimously adopted resolution 1985 (2011) maintaining the current mandate of the group that it established in June 2009. At that time, the Council also condemned a nuclear weapons test conducted by the East Asian country and toughened the sanctions regime on it, calling for stricter inspections of cargo suspected of containing banned items related to the country’s nuclear and ballistic missile activities, and tightening the arms embargo and financial restrictions. (See Press Release SC/9634)

Through today’s text, noting the importance of credible, fact-based, independent assessments, analysis and recommendations from the Panel, the Council also presented the group’s reporting and consultation requirements. It urged all States to cooperate with the Panel and the sanctions regime.

The meeting began at 10:10 a.m. and ended at 10:14 a.m.

Resolution

The full text of resolution 1985 (2011) reads as follows:

“The Security Council,

“Recalling its previous relevant resolutions, including resolution 825 (1993), resolution 1540 (2004), resolution 1695 (2006), resolution 1718 (2006), resolution 1874 (2009), resolution 1887 (2009) and resolution 1928 (2010), as well as the statements of its President of 6 October 2006 (S/PRST/2006/41) and 13 April 2009 (S/PRST/2009/7),

“Recalling the creation, pursuant to paragraph 26 of resolution 1874 (2009), of a Panel of Experts, under the direction of the Committee, to carry out the tasks provided for by that paragraph,

“Recalling the 12 November 2010 interim report by the Panel of Experts appointed by the Secretary-General pursuant to paragraph 26 of resolution 1874 (2009) and the 12 May 2011 final report by the Panel,

“Recalling the methodological standards for reports of sanctions monitoring mechanisms contained in the Report of the Informal Working Group of the Security Council on General Issues of Sanctions (S/2006/997),

“Noting, in that regard, the importance of credible, fact-based, independent assessments, analysis and recommendations, in accordance with the Panel of Experts’ mandate,

“Determining that proliferation of nuclear, chemical and biological weapons, as well as their means of delivery, continues to constitute a threat to international peace and security,

“Acting under Article 41 of Chapter VII of the Charter of the United Nations,

“1. Decides to extend until 12 June 2012 the mandate of the Panel of Experts, as specified in paragraph 26 of resolution 1874 (2009), and requests the Secretary-General to take the necessary administrative measures to this effect;

“2. Requests the Panel of Experts to provide to the Committee no later than 12 November 2011 a midterm report of its work, and further requests that, after a discussion with the Committee, the Panel of Experts submit to the Council its midterm report by 12 December 2011, and requests also a final report to the Committee no later than 30 days prior to the termination of its mandate with its findings and recommendations, and further requests that, after a discussion with the Committee, the Panel of Experts submit to the Council its final report upon termination of the Panel’s mandate;

“3. Requests the Panel of Experts to provide to the Committee a planned programme of work no later than 30 days after the Panel’s appointment, encourages the Committee to engage in regular discussions about this programme of work, and further requests the Panel of Experts to provide to the Committee any updates to this programme of work;

“4. Urges all States, relevant United Nations bodies, and other interested parties to cooperate fully with the Committee established pursuant to resolution 1718 (2006) and with the Panel of Experts, in particular by supplying any information at their disposal on the implementation of the measures imposed by resolution 1718 (2006) and resolution 1874 (2009);

“5. Decides to remain actively seized of the matter.”

Previous reports by the Panel of Experts can be found here and here.

According to Reuters:

North Korea was the supplier of a cache of defective weapons sold to Burundi’s army by a Ukrainian firm, said Western diplomats familiar with the case that has riled Burundi’s anti-corruption body.

The weapons deal with Burundi appeared to be a violation of the international ban on North Korean weapons exports which the U.N. Security Council imposed on Pyongyang in June 2009 after its second nuclear test, the diplomats told Reuters on condition of anonymity.

The case involved the supply of some 60 Chinese-made .50-calibre machine guns to Burundi by a Ukrainian firm called Cranford Trading, the diplomats said. The weapons, which were defective, were sold to the firm by North Korea, they added.

Diplomats say Pyongyang continues to try to skirt the arms embargo. Last year South Africa informed the Security Council’s sanctions committee about a seizure of North Korean arms bound for Central Africa.

The expanded sanctions were aimed at cutting off North Korea’s arms sales, a vital export that was estimated to earn the destitute state more than $1 billion a year.

Some facts about the Burundi weapons deal became known late last year when the country’s anti-corruption watchdog went public about irregularities it found. It said that the arms had been defective and that Burundi had been overcharged.

A report on a state audit of the deal, seen by Reuters, concluded that Cranford Trading provided Burundi’s army defective military material with the complicity of former Defense Minister Germain Niyoyanka, current army chief Godefroid Niyombare and his deputy Diomede Ndegeya.

The auditors’ report said that the bidding offer was $3.075 million, while the amount in the contract was for $3.388 million. A further $1.186 million was paid in transport fees, even though such fees were not agreed in the contract.

The auditors concluded that the defense ministry had spent a great deal of money on defective material and recommended the prosecution of all people involved on suspicion of graft.

North Korea was not mentioned in the auditors’ report.

Several officials at Burundi’s U.N. mission in New York declined to comment when contacted by Reuters.

NO CERTIFICATE OF ORIGIN

“The weapons were transferred by China to North Korea, which then sold them to Cranford,” a diplomat said, adding that the official documentation for the deal had been incomplete.

“There was no certificate of origin of the weapons, which is necessary to comply with international conventions,” the diplomat added. Another diplomat confirmed the remarks.

The contract between Burundi’s defense ministry and Cranford Trading covered the period between October 2008 through 2010. It was not clear how much North Korea would have received when it sold the defective arms to Cranford Trading.

It was not possible to track down Cranford Trading in Ukraine, since the company was not readily accessible in any public lists. Ukraine’s U.N. mission did not respond to an e-mailed query about Cranford and the arms transaction.

It was not clear when China transferred the weapons to North Korea, or who in China was responsible, or whether the Chinese government had knowledge of the deal.

The U.N. arms embargo does not ban the sale of small arms to Pyongyang, though it does require exporters to notify the Security Council’s North Korea sanctions committee in advance about any small-arms sales to Pyongyang.

If the transfer took place after the latest round of U.N. sanctions were approved in June 2009, the exporter would have been required to notify the sanctions committee.

A spokesman for China’s U.N. mission was not available for comment.

The diplomats said the sanctions committee has not been notified about the Burundi case.

Read the full story here:
Defective Burundi weapons came from N.Korea
Reuters
Louis Charbonneau
2/1/2011

According to The Australian:

The use of an Australian-owned cargo ship to smuggle weapons from North Korea to Iran has been highlighted in a report to the UN.

It was one of several breaches of UN sanctions against Kim Jong-il’s regime detailed in a report to the Security Council.

The report, which was submitted to the council recently after months of obstruction from China, found the North was making $US100 million a year through illegal arms sales to Syria, Iran and Burma.

Pyongyang used shadowy webs of front companies, false manifests and complex routes to try to get around sanctions aimed at stopping its arms proliferation, the investigation found.

The report flags the 2009 interception of the ANL Australia in Sharjah as one of at least four occasions that North Korea was caught out exporting arms or defence equipment.

The report said weapons were seized from the ANL Australia in the United Arab Emirates on July 22, 2009.

The cargo is thought to have included up to 10 containers of arms, including rocket-propelled grenades and trigger mechanisms and propellant, although this is not detailed in the report.

The cargo was packed and sealed in North Korea and shipped to China, where it was loaded aboard the ANL Australia en route to Iran.

The Bahamas-flagged vessel was owned by ANL Container Line at the time.

ANL, once Australia’s national shipping line, was taken over by French company CMA CGM.

Despite the breach of sanctions, an Australian government investigation found ANL was not responsible because the ship was chartered by a foreign company at the time.

“The Australian government’s inquiries into this matter indicated that at all relevant times the vessel was not under the operational control of its owner, but was rather being chartered by a non-Australian company,” a Department of Foreign Affairs and Trade spokesman said.

“No conduct relevant to the shipment can be attributed to an Australian person or body corporate,” he said.

ANL declined to comment.

The report found that while no ballistic missile or nuclear-related materials emanating from North Korea had been intercepted since sanctions were applied, evidence suggested “continuing DPRK (North Korea) involvement in nuclear and ballistic missile-related activities in certain countries, including Iran, Syria and Myanmar (Burma)”.

“To supplement its foreign earnings, the DPRK has long been involved in illicit and questionable international transactions (including) the surreptitious transfer of nuclear and ballistic missile-related equipment, know-how and technology,” it says.

The panel received government reports suggesting North Korea had helped build Syria’s Dair Alzour nuclear facility (destroyed in 2007 by an Israeli attack) along with details of Japan’s arrest in June 2009 of three individuals trying to illegally export a magnetometer, a device with potential missile-related uses, to Burma.

The report cited in the story is the “Panel of Experts” report to the UNSC.  You can read (and search) it here (PDF).

Read the full story here:
UN cites ANL in N Korea arms smuggling
The Australian
Rick Wallace
1/10/2011

According to Reuters:

The U.N. Security Council met in emergency session on Sunday to try to cool tensions on the Korean Peninsula, but the five big powers were split on whether to publicly blame North Korea for the crisis.

….

The 15 Security Council members were meeting behind closed doors to try to agree on a statement that Russian U.N. Ambassador Vitaly Churkin said he hoped would send a “restraining signal” to both the North and the South.

Western envoys inside the meeting said the five permanent veto-wielding members were split over whether to blame North Korea for the crisis, as the United States, Britain, and France — along with Japan — demand, or to urge both sides to avoid acts that could deepen the crisis, as Russia and China want.

I have been posting chronological links to Yonpyong stories here.

Read the full story here:
U.N. council split on North Korea statement: diplomats
Reuters
12/20/2010

UPDATE (12/7/2010): Austrian convicted for yacht sale to DPRK.  According to Reuters:

A Vienna court has fined an Austrian man 3.3 million euros ($4.4 million) over the sale of luxury goods, including yachts, believed destined for North Korean leader Kim Jong-Il, a court official said Tuesday.

The businessman, who was not named, was also handed a nine-month suspended sentence late Monday for the dealings which violate an international trade embargo against Kim’s impoverished state, court official Christian Gneist said.

“The amount was 3.3 million euros because this was the amount he received as payment,” Gneist said. The trade violated U.N. sanctions against North Korea imposed over its nuclear bomb tests.

Working with a North Korean intermediary close to Kim, the Viennese man tried to procure two yachts and received payment for them, Gneist said.

Prosecutors also accused him of lining up eight top-end Mercedes-Benz S-Class cars and musical instruments including a Steinway grand piano for Pyongyang, Austrian daily Kurier reported.

The Austrian man pleaded guilty and told the court he had not realized what he was getting into, Kurier said.

“It doesn’t have anything to do with atomic bombs. I am not interested in politics. I am a businessman,” the paper quoted him as telling the court.

Italian financial police helped to break up the sale of the yachts last year, which prosecutors believed to be a birthday present for Kim. The Austrian bought them from the Azimut-Benetti boatyard, one of the world’s leading yachtmakers. Azimut-Benetti was not accused of wrongdoing and had cooperated fully in the investigation, Italian police have said.

The sale of luxury goods to North Korea is banned under a U.N. resolution in retaliation for the country’s nuclear testing program. The U.N. Security Council unanimously voted to widen its sanctions after North Korea’s nuclear test in May last year.

ORIGINAL POST (7/23/2009): According to Reuters (via Washington Post), UN sanctions have prevented the sale of two Italian yachts to the DPRK.  To top it off, the DPRK purchaser lost the deposit!  According to the article:

Financial police in the city of Lucca in central Italy said the vessels were worth nearly 13 million euros ($18 million) and had been purchased by an Austrian intermediary from the Azimut-Benetti boatyard, one of the world’s leading yachtmakers.

The Austrian intermediary then ceded the contract to a Chinese company, which in turn paid a Hong Kong business to take delivery of the vessels, police said.

“The difficulty was tracing it back to a violation of the sanctions,” said Colonel Antonio Leone, the Finance Police’s commander in Lucca. Asked if Kim was the intended final recipient of the vessels, he said: “It is an irrefutable fact.”

“There has been a thorough investigation, partly in Austria, backed up by confessions and investigative breakthroughs.”

The yachts were initially confiscated by Italy’s Economic Development Ministry but have since been returned to the boatyard, which has been allowed to keep the deposit.

Azimut-Benetti is not accused of wrongdoing and has cooperated fully in the investigation, police said.

The sale of luxury goods to North Korea is banned under a U.N. resolution in retaliation for the country’s nuclear testing program. The U.N. Security Council unanimously voted to widen its sanctions after North Korea’s May 25 nuclear test.

Given the complex chain of front companies involved in carrying out this transaction, the application of the UNSC resolution is a great illustration of what Haggard and Noland call “whac a mole“.  The North Koreans will now attempt to reconstitute their trade and proliferation networks using new front companies.  According to Haggard and Noland:

As a small country dependent on foreign trade and investment, North Korea should be highly vulnerable to external economic pressure. In June 2009, following North Korea’s second nuclear test, the UN Security Council passed Resolution 1874, broadening existing economic sanctions and tightening their enforcement. However, an unintended consequence of the nuclear crisis has been to push North Korea into closer economic relations with China and other trading partners that show little interest in cooperating with international efforts to pressure North Korea, let alone in supporting sanctions. North Korea appears to have rearranged its external economic relations to reduce any impact that traditional sanctions could have.

Given the extremely high priority the North Korean regime places on its military capacity, it is unlikely that the pressure the world can bring to bear on North Korea will be sufficient to induce the country to surrender its nuclear weapons. The promise of lifting existing sanctions may provide one incentive for a successor government to reassess the country’s military and diplomatic positions, but sanctions alone are unlikely to have a strong effect in the short run. Yet the United States and other countries can still exercise some leverage if they aggressively pursue North Korea’s international financial intermediaries as they have done at times in the past.

Read Haggard’s and Noland’s complete analysis here.

Read the full stories here:
Italy blocks sale of yachts to North Korea’s Kim
Reuters (via Washington Post)
7/23/2009

Sanctioning North Korea: The Political Economy of Denuclearization and Proliferation
Peterson Institute Working Paper 09-4
Stephan Haggard and Marcus Noland

Leaked version of the report here (PDF).  Thanks to a reader who apparently got it from Arms Control Wonk.

Information on the report below:

UPDATE 2 (11/10/2010): According ot the Washington Post:

The U.N. Security Council was preparing Tuesday to release a long-delayed report alleging that North Korea may have transferred ballistic-missile and nuclear technology to Syria, Iran and Burma, according to diplomats.

The 75-page report, whose release has been blocked for six months by China, an ally of Pyongyang, reinforces U.S. claims that North Korea has emerged as a key supplier of banned weapons materials to Washington’s greatest rivals.

A copy of the report was seen by The Washington Post.

The findings are based on interviews with several foreign governments, U.N. nuclear inspectors and news media reports.

Those accounts, according to the U.N. report, indicate North Korean “involvement in nuclear ballistic missile related activities in certain other countries, including Iran, Syria and Myanmar,” Burma’s official name.

Nonproliferation experts have been concerned about North Korea for years. In his new memoir, “Decision Points,” former president George W. Bush reveals that, in 2007, U.S. intelligence determined that Syria had built a nuclear reactor with North Korean help. (Israeli jets destroyed the reactor, after then-Prime Minister Ehud Olmert’s request that the United States bomb the facility was rebuffed, Bush recounts, adding that Olmert “hadn’t asked for a green light.”)

In addition to voicing alarm over the reactor in Syria, the seven-member panel that produced the U.N. report said it was investigating “suspicious activity” by a sanctioned North Korean firm in Burma, as well as reports that Japan had arrested three individuals last year for “attempting to illegally export a magnetometer to Myanmar.”

A magnetometer – which has civilian and military uses – is one of numerous items that can be used in the production of a ring magnet, a component in a centrifuge. It can also be used in a missile guidance system.

An earlier version of the U.N. panel report’s findings was reported by the blog Arms Control Wonk. But David Albright, a nuclear weapons expert, said the report’s formal release will be important because it places a U.N. imprimatur on allegations by Western intelligence agencies and independent experts.

“It’s significant that they are saying it,” Albright said.

The earlier move by China to block the report underscores the country’s increasing efforts to prevent the Security Council from vigorously enforcing a broad range of global sanctions that have targeted key Chinese allies, and in some cases, turned up awkward evidence of Chinese arms in some of the world’s most deadly conflict zones. China recently sought to block the release of another U.N. panel report showing that Chinese ammunition has found its way into Darfur, in violation of U.N. sanctions.

Its decision to lift the hold on the report comes two days before President Obama is due to meet Chinese President Hu Jintao in Seoul, where the two leaders are attending a summit of the Group of 20 major economies. The United States has been the strongest proponent of imposing tough U.N. sanctions against North Korea in an effort to persuade the hermetic communist regime to curtail its nuclear ambitions.

China’s press spokesman, Yutong Liu, did not respond to a request for comment.

The Security Council expanded U.N. sanctions against North Korea last year and revived a moribund sanctions panel to ensure the enforcement of measures aimed at curbing North Korean trade in nuclear and ballistic-missile technology. China supported the resolution’s adoption, but it has voiced concern privately over the public disclosure of highly sensitive findings.

UPDATE  1 (11/9/2010): According to Reuters:

After months in limbo due to Chinese objections, a U.N. report suggesting North Korea may have supplied Syria, Iran and Myanmar with banned nuclear technology is heading to the Security Council.

The latest report by the so-called Panel of Experts on Pyongyang’s compliance with U.N. sanctions was delivered to the Security Council’s North Korea sanctions committee in May.

Normally such a report would be reviewed and passed to the council for consideration of possible action. But the report on North Korea did not move for nearly six months due to Chinese objections and its fate was unclear until Friday, council diplomats told Reuters on Monday.

The North Korea report should be published on the sanction committee’s website as early as Tuesday, they said.

The attempt to prevent the report’s transfer to the Security Council and release to the public, envoys said, was emblematic of China’s increasingly self-confident approach to international diplomacy as it seeks to protect states like North Korea and Sudan to which it has close ties.

Reuters reported in May that the report said there was reason to suspect North Korea — under U.N. sanctions for testing nuclear devices in 2006 and 2009 — has become a proliferator of banned technology.

The 75-page document, obtained by Reuters, said the panel was concerned about reports of “continuing DPRK (North Korea) involvement in nuclear and ballistic missile related activities in certain countries including Iran, Syria and Myanmar.”

Last week, China chose to keep silent when the sanctions committee asked its members — the 15 nations on the Security Council — if they had any objections to the report. That allowed it to formally move to the council.

“China has suddenly decided to allow this very damning report to go to the Security Council,” one diplomat said on condition of anonymity. “I think Syria and Myanmar were happy the Chinese were blocking it. Now China has other priorities.”

But China is unlikely to allow the report to be used for further sanctions against Pyongyang, envoys said.

CHINESE FURY

China’s other priorities, diplomats said, include blocking a similar report by another U.N. panel of experts on compliance with an arms embargo for Sudan’s conflict-torn western Darfur region. That report, unlike the one on North Korea, directly implicates China by raising concerns that Chinese firms may have been violating the Darfur arms embargo.

The Sudan report has infuriated China, which for weeks has prevented the Sudan sanctions committee from passing it to the Security Council to consider the panel’s recommendations.

Sanctions committees work on the basis of consensus, which means each member has a virtual veto.

In its report, the Sudan expert panel said Chinese bullets were found at the site of attacks against U.N.-African Union peacekeepers in Darfur, although it did not suggest the government was in any way responsible.

It is unclear when and if the Sudan report will be published.

Diplomats said they had feared China was trying to put the brakes on activities of all Security Council sanctions committees overseeing compliance with U.N. measures imposed on states China is friendly with, like Sudan and Iran.

“Maybe China has decided not to block all sanctions reports and they’ve got to have some give and take,” a diplomat said.

While China has allowed the council to impose sanctions on Iran and North Korea, it has refused to expand the 2005 arms embargo in Sudan and joined Russia in vetoing a 2008 attempt by Britain and the United States to sanction Zimbabwe’s leaders.

It has also blocked all attempts to sanction Myanmar, a country the United States and Britain have suggested deserves to be sanctioned for human rights abuses.

U.N. Secretary-General Ban Ki-moon said Myanmar’s first election in 20 years on Sunday was “insufficiently inclusive, participatory and transparent.”

ORIGINAL POST (10/28/2010): (Thanks to a reader)  Here is the final report of the ”Panel of Experts” to the UN Security Council pursuant to Resolution 1874.

I post the executive summary followed by a link to the PDF of the entire report.

Executive Summary:
1. On 12 June 2009, the Security Council unanimously adopted resolution 1874 (2009) in which it requested the Secretary-General to establish a Panel of Experts mandated to: gather, examine and analyze information regarding the implementation of the measures imposed by the Council in resolutions 1718 (2006) and 1874 (2009), in particular incidents of non-compliance; make recommendations on actions the Council, the Committee or Member States may consider to improve implementation of those measures; and, assist the 1718 Committee in carrying out its functions.

2. The measures imposed by resolution 1718 (2006) and strengthened by resolution 1874 (2009) include: (a) a ban on the provision to and the procurement from DPRK of nuclear-related, other weapons of mass destruction-related and ballistic missile-related items as well as all arms and related materiel, except for small arms and light weapons and their related materiel provided to the DPRK; (b) a ban on the transfer to or from the DPRK of services and assistance related to the provision, manufacture, maintenance or use of the proscribed items; and (c) a ban on the provision of luxury goods to the DPRK.

3. Resolution 1874 (2009) also introduced a strong interdiction system, which calls upon all Member States to inspect all cargo to and from the DPRK in their territory and to inspect vessels with the consent of the flag State on the high seas, if the Member State concerned has information that provides reasonable grounds to believe the cargo contains proscribed items. A Member State discovering such items is required to seize and dispose of them. The inspecting Member State is also required to submit a detailed report on such cases to the 1718 Committee.

4. No official allegations have been presented to the Committee since the adoption of resolution 1718 (2006) concerning the provision of proscribed nuclear-related or ballistic missile-related items, technology or know-how to or from the DPRK. Nevertheless, the Panel of Experts has reviewed several government assessments, IAEA reports, research papers and media reports indicating continuing DPRK involvement in nuclear and ballistic missile related activities in certain countries including Iran, Syria and Myanmar. The Panel of Experts believes that special attention should be given by all Member States to inhibit such activities. Further study of these suspected activities by the DPRK should be conducted for a more thorough understanding of the facts.

5. The 1718 Committee has been notified, since the adoption of resolution 1874 (2009), of four non-compliance cases involving arms exports. An analysis of these cases indicates that the DPRK continues to engage in exporting such proscribed items. In these cases, the DPRK has used a number of masking techniques in order to circumvent the Security Council measures, including false description and mislabeling of the content of the containers, falsification of the manifest covering the shipment, alteration and falsification of the information concerning the original consignor and ultimate consignee, and use of multiple layers of intermediaries, shell companies, and financial institutions. The Panel of Experts recommends in this regard that extra vigilance be exercised in accordance with local norms at the first overseas maritime port handling such DPRK shipments or transshipments with regard to containers carrying cargo originating from the DPRK. The Panel also recommends that consideration be given to introducing procedures that, without overburdening international maritime commerce, would assure that onward transshipment ports are aware of the cargo’s DPRK origin so that they could also apply extra vigilance.

6. The Panel of Experts also notes that air cargo poses certain other issues and vulnerabilities. Difficulties involved in the inspection of cargo in an aircraft in transit and inability to subject direct flights to inspection leaves in place important vulnerabilities with respect to the implementation of the resolutions. The Panel recommends that consideration be given by Member States over whose territory such aircraft may fly, stop or transit, that efforts be undertaken in those cases to closely monitor air traffic to and from Sunan and other DPRK airports, and that cargoes to and from the DPRK be declared before over flight clearance is provided.

7. The Committee has also received two reports of seizure of luxury goods. There was a clear understanding in both of these cases that the goods involved were proscribed luxury items. However, such understanding is not always present. Most national implementation reports omit any mention of luxury goods. National definitions of luxury goods vary and associated national export controls are implemented in an uneven manner, which risks undercutting the effectiveness of this measure vis-à-vis the DPRK. To close these potential gaps, the Panel of Experts proposes in this report basic principles and important factors that should be considered in designating luxury goods.

8.The DPRK also employs a broad range of techniques to mask its financial transactions, including the use of overseas entities, shell companies, informal transfer mechanisms, cash couriers and barter arrangements. However, it must still, in most cases, rely on access to the international financial system to complete its financial operations. In structuring these transactions, attempts are made to mix illicit transactions with otherwise legitimate business activities in such a way as to hide the illicit activity. Therefore, the Panel of Experts underscores the importance of exercising extra vigilance to assure that financial transactions and services do not contribute to the DPRK’s proscribed activities. Special attention is drawn, in this regard, to non proliferation and anti-money laundering and combating the financing of terrorism (AML/CFT) principles and guidelines published by the Financial Action Task Force (FATF) and to FATF’s Typologies Report on Proliferation Financing.

9. The Committee has designated eight entities and five individuals for financial (and travel in the case of individuals) sanctions. These few designations seriously understate the number of known entities and individuals engaged in proscribed activities, and are inadequate to the task of effectively inhibiting key DPRK parties from engaging in proscribed activities. No account has yet been made also to deal with those substituting for or acting for or on behalf of these entities and individuals. Thus, all Member States should be invited to provide to the Committee for its consideration the names of entities and individuals who are believed to be engaged in proscribed activities, and especially those that have been implicated in non-compliance cases reported to the Committee. Consideration should also be given to making sure that those entities and individuals that are already designated are not able to avoid the Security Council measures through the use of aliases.

10. Special attention is drawn also to the fact that a substantial number of Member States have not yet filed the national implementation reports called for in the resolutions. These reports are essential to an overall evaluation of the steps being taken to implement the Security Council measures and to ensure they are implemented effectively.

Here is a link to the full report (PDF).

The report is full of data and I have added it to my Economic Statistics Page (with many other great sources of data).  You can see them all here.