North Korean Economy Watch

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.

UPDATE (10/29/2010): According to the Straits Times:

Singapore has tightened its trade controls by imposing new prohibitions on transactions with North Korea and Iran.

Singapore Customs said in a statement on Friday that the latest regulatory revisions, effective from Nov 1, are timely in the light of ongoing global efforts to curb illicit diversions of controlled goods and technology to rogue entities and sanctioned countries such as North Korea and Iran. Both countries stand accused of trying to start nuclear weapons programmes.

At present, prohibitions on them include arms or related materials, certain vacuum systems and pumps, compressors and gas blowers. They also cover luxury goods such as cigars, wines and spirits and even plasma televisions. But in the revised list, there will be new prohibitions on any arms as defined by the United Nations Register of Conventional Arms, and related materials.

These include among other things: weaponry, battle tanks, combat aircrafts, warships, armoured combat vehicles. The latest amendments to the list of prohibited imports, exports and goods to or from North Korea and Iran are in line with recent United Nations Security Council Resolutions’ sanctions imposed on the two countries, as well as Singapore’s continuous commitment to its international obligations.

Singapore’s trade with North Korea and Iran accounted for less than 0.4 per cent of the Republic’s total trade value of $747 billion last year. The small amount of trade typically revolved around commodities and other agricultural, tobacco and consumer goods.

Traders are strongly encouraged to implement effective internal export control compliance measures to screen the consignees and end-users of their exports, Singapore customs said.

ORIGINAL POST: According to Today Online:

After relying on its existing laws for more than a year, Singapore is adding more bite to its implementation of United Nations sanctions against North Korea.

According to documents on the Government’s electronic gazette website, the Republic is introducing additional legislation to meet its obligations to the resolution adopted in June last year by the UN Security Council (UNSC).

From Nov 1, it will be an explicit offence to breach the measures imposed by the UNSC on various individuals, entities and goods and services from the hermit kingdom.

The prohibitions will apply to all persons in Singapore and any Singaporean abroad and cover a wide range – from financial and bunkering services to the supply and procurement of certain items.

These not only include military-related material but also luxury goods, if it is believed to be in relation to any person who might be involved in North Korea’s weapons programmes. The Singapore Customs website lists 14 categories of luxury goods, such as cigars, wines and spirits, fur products, perfumes and cosmetics, plasma televisions, personal digital music players and luxury cars. Works of art and musical instruments are also included.

When the UNSC adopted the resolution last year, Singapore’s Permanent Representative to the UN, Ambassador Vanu Gopala Menon, had informed the council that the city-state had the “necessary legislative framework in place to meet its obligations”. Such laws include the Strategic Goods (Control) Act, the Merchant Shipping Act and the Immigration Act.

When contacted, a Ministry of Foreign Affairs spokesperson said the Republic “is obliged to implement the UNSC Resolutions on North Korea. We take these obligations seriously”.

But in his letter dated Aug 3 last year, Mr Menon also said that a regulation was being drafted to give effect to the provisions of Resolution 1874 (2009), which had been imposed in response to North Korea’s second nuclear test in May last year.

The upcoming legislation comes more than a year after the Monetary Authority of Singapore prohibited financial institutions from carrying on transactions and services with North Korea relating to banned material and listed individuals.

Few companies incorporated in Singapore have dealings with North Korea, though.

One such company is Maxgro Holdings.

According to its website, it is a concession owner and infrastructure development company that holds a 70-per-cent stake in a joint venture with the Pyongyang government to grow eight million hard-wood timber trees on a $23-million, 20,000-hectare plantation near Pyongyang. Other dealings with the Communist state include pharmaceutical and tourism projects.

Previous Singapore/DPRK posts can be found here.

Read the full story here:
S’pore toughens laws against trade with N Korea
Today Online
Esther NG
10/8/2010

According to Senator Lugar’s web page:

On October 22, 2010, Senator Lugar, U.S. Senate Foreign Relations Committee Ranking Member, released a Congressional Research Service (CRS) report on implementation of sanctions for North Korea.

Following renewed interest in sanctions against North Korea in the wake of the sinking of South Korea’s Cheonan ship, which killed 46 individuals, Lugar asked the CRS to evaluate the implementation of the U.N. sanctions already in place.

You can read Sen. Lugar’s original request for the report here. (PDF)

The CRS report he received can be found here. (PDF)

I have added this report to my growing collection of DPRK-focused CRS reports found here.

According to Kathimerini:

Authorities in Piraeus today were to continue their inspection of a German-flagged French-owned vessel that had been en route to Syria from North Korea with a cargo believed to comprise banned weapons.

Following a tip-off from another country, which was not identified, Greek authorities intercepted the vessel and ordered its mooring at the port of Piraeus so checks could be carried out. Coast guard officers, military experts and members of the National Intelligence Service (EYP) participated in the inspection, which did not result in the discovery of any weapons but did turn up a large quantity of what a government source yesterday described as “nonmilitary material that could have a dual use.” This material reportedly included pieces of metal and pipes that could be used in the construction of missile launchers.

The United Nations Security Council agreed in June last year to ban the export of all weapons from North Korea.

According to Reuters:

The expanded sanctions were aimed at cutting off its arms sales, a vital export estimated to earn it more than $1 billion a year.

North Korea’s biggest weapons sales come from ballistic missiles, with Iran and other Middle Eastern states as customers, according to U.S. government officials.

Read the full stories here:
Ship checked for weapons
Kathimerini
9/29/2010

Greece searches ship for North Korean arms – source
Reuters
9/28/2010

According to the AFP:

North Korea is forging trade documents and changing the names of its trading firms to try to dodge international sanctions, a Seoul intelligence official and a media report said Wednesday.

Pyongyang changed the name of the Korea Mining and Development Corp to Kapmun Tosong Trade after the UN Security Council blacklisted the firm following the North’s missile test in April 2009, Dong-A Ilbo newspaper reported.

The communist state also renamed weapons trader Tangun Trade as Chasongdang Trade when the company was put on the sanctions list after the North’s second nuclear test in May 2009.

The tests prompted the Security Council to impose tougher sanctions targeting Pyongyang’s weapons exports and blacklisting companies suspected of such dealings.

The sanctions also called on UN member states to inspect ships and planes suspected of carrying banned cargo to or from the North.

Since then, the North has mostly used China to transport its arms exports, Dong-A said.

It had forged trade invoices on military products, for instance by labelling torpedoes as fish processing equipment and anti-tank rockets as oil boring machinery, the paper added.

A spokesman for Seoul’s National Intelligence Service confirmed the report but declined to give details.

“Intelligence authorities in South Korea and the United States are trying to crack down on the North’s forging of company names and export invoices, but it is becoming increasingly difficult since the North keeps coming up with new schemes,” the paper quoted one South Korean official as saying.

The impoverished North faces multiple sanctions imposed by the UN and the United States and targeting its illegal trade in arms, drugs and luxury goods.

The US Treasury Department announced Monday it was imposing sanctions on four people and eight organisations accused of aiding the communist government through illicit trade.

Of course these games are nothing new. About this time last year DPRK sanctions enforcement was in the news.  Marcus Noland referred to the task as “Whac-a-mole”.

Read the full stories here:
N.Korea forges trade documents to dodge sanctions
AFP
9/1/2010

N. Korea Fakes Trade Documents to Export WMDs 
Donga Ilbo
9/1/2010

According to the Daily NK:

The 1718 Committee of the UN Security Council has published the final version of its “Report to the Security Council from the Panel of Experts established Pursuant to Resolution 1874,”

In the report, of which the Daily NK has obtained a copy, the 1718 Committee revealed North Korean overseas accounts which had likely been used for North Korea’s illicit activities such as conventional weapons transactions and luxury goods, and the names of entities and individuals involved in those activities. The lists were submitted by UN member states.

The report singles out 17 North Korean officials thought likely to violate UN Resolutions 1718 and 1874, and outlines the reasons why they were designated by the UN member states.

They are Jang Sung Taek, Vice-chairman of the National Defense Commission and the closest associate of Kim Jong Il, Vice-chairman of the National Defense Commission Oh Keuk Ryul, Kim Young Chun, the Minister for the People’s Armed Forces, Director of No. 39 Department Kim Dong Woon, Military Supplies Secretary in the Central Committee of the Party Jeon Byung Ho, former Yongbyon technical director Jeon Chi Bu, First Vice-director of the Ministry of the Munitions Industry Chu Kyu Chang, Standing Vice-director of the People’s Army’s General Political Department Hyun Cheul Hae, President of the Tanchon Commercial Bank Kim Dong Myung, Member of the National Defence Commission Baek Se Bong, Deputy Director of the General Political Department of the People’s Armed Forces Park Jae Kyung, President of the Academy of Science Byeon Youong Rip, Director of the General Bureau of Atomic Energy Ryeom Young, Head of the Department of Nuclear Physics of Kim Il Sung University Seo Sang Il, President of Kohas AG Jacop Steiger and Alex H.T. Tsai, who is known to have provided financial, technological and other support for KOMID, and his wife, Su Lu-chi.

It also released a list of autonomous designations provided by member states, covering 19 North Korean entities. That list was made based on information collected as of April 30th this year.

They are Amroggang Development Banking Corporation, Global Interface Company Inc., Hesong Trading Corporation, Korea Complex Equipment Import Corporation, Kohas AG, Korea International Chemical Joint Venture Company, Korea Kwangson Banking Corp, Korea Kwangsong Trading Corporation, Korea Pugang Trading Corporation, Korea Pugang Mining and Machinery Corporation ltd., Korea Ryongwang Trading Corporation, Korea Ryonha Machinery Joint Venture Corporation, Korea Tonghae Shipping Company, Ponghwa Hospital, Pyongyang Informatics Centre, Sobaeku United Corp., Tosong Technology Trading Corporation, Trans Merits Co. Ltd., and Yongbyon Nuclear Research Centre.

13 out of the 19 have direct or indirect links to Tanchon Commercial Bank and Korea Mining Development Trading Corporation (KOMID).

Amroggang Development Banking Corporation is the financial arm of KOMID and related to Tanchon Commercial Bank, which has also been designated by the 1718 Committee. Additionally, Global Interface Company Inc. is owned by Alex Tsai, who is thought to have provided, or attempted to provide, support to KOMID.

Sobaeku United Corp. is involved in activities related to natural graphite, producing graphite blocks that can be used in missiles.

The report points out, “North Korea has established a highly sophisticated international network for the acquisition, marketing and sale of arms and military equipment, and arms exports have become one of the country’s principal sources for obtaining foreign exchange,” and goes on to say, “Agencies under the National Defense Commission (NDC), the Workers’ Party of Korea (WPK) and the Korean People’s Army (KPA) are most active in this regard.”

The report explains, “The Second Economic Committee of the National Defense Commission plays the largest and most prominent role in nuclear, other WMD and missile-related development programs as well as in arranging and conducting arms-related exports.”

It adds, “The General Bureau of Surveillance of the Korean People’s Army is involved in the production and sale of conventional armaments.”

The report points out that North Korea has opened 39 accounts with 18 overseas banks in 14 countries. 17 of which are held with Chinese banks.

Besides China, 11 banks in eight European and former Soviet countries (Russia, Switzerland, Denmark, Hungary, Poland, Italy, German, Belarus and Kazakhstan) hold 18 North Korean accounts. There is one account in Malaysia.

“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,” the report notes.

According to experts on North Korea, since North Korean overseas illegal activities are all led by the loyal group surrounding Kim Jong Il, U.S. financial sanctions in accordance with UN Security Council resolutions 1817 and 1874 and also U.S. Executive Order (E.O.) 13382 have the potential to be a great pressure on the Kim Jong Il regime.

The Panel of Experts, which was appointed by the UN Secretary-General on 12 August 2009 to author the report, are David J. Birch (United Kingdom of Great Britain and Northern Ireland, coordinator), Masahiko Asada (Japan), Victor D. Comras (United States of America), Erik Marzolf (France), Young Wan Song (Republic of Korea), Alexander Vilnin (Russian Federation), and Xiaodong Xue (People’s Republic of China).

Read the full story here:
Report Explains Sanctions Decisions
Daily NK
Kim Yong Hun
8/6/2010

According to the Daily NK:

Despite the implementation of UN Security Council Resolution 1874 in June, 2009, North Korea’s weapons exports last year earned the country approximately the same amount as they have since Resolution 1718 was passed in 2006.

Song Young Sun, a lawmaker sitting on the National Defense Committee of the National Assembly, told reporters on Wednesday, “South Korea’s intelligence organizations have obtained a figure of around $50 million, and they assume that in practice the North has exported much more than that.”

Intelligence authorities apparently believe that the reason is that North Korea has exported parts and supported foreign munitions factories in other ways, rather than exporting finished weapons.

In September of last year, a Georgian cargo plane containing 35 tons of weapons parts including those for the Taepo-dong 2 was intercepted in Bangkok. Two months later, a ship heading for Congo was also revealed by South Africa to contain parts of the T-54 and T-55, North Korean tanks based on Soviet designs.

Meanwhile, the most successful period for the sanctions regime was immediately after UN Resolution 1718 was imposed on North Korea in 2006, when North Korean exports are estimated to have been reduced to $30 million, just 1/7th of the previous year’s total.

Read the full story here:
North Korea’s Arms Exports Stay Steady
Daily NK
Kim Min Su
8/5/2010

According to the Choson Ilbo:

Luxembourg has promised to cooperate with UN and U.S. financial sanctions against North Korea, Radio Free Asia reported Wednesday.

A spokesman for Luxembourg’s Finance Ministry told RFA that the country is closely watching for any illegal activities by the North using offshore accounts and will take “appropriate legal steps” if it finds them.

He claimed Luxembourg regularly updates domestic laws in accordance with international norms to monitor and punish those involved in illegal activities.

The country is committed to implementing sanctions against the North under UN Security Council Resolution 1874, he added.

In March, the Daily Telegraph said North Korean leader Kim Jong-il has a US$4 billion slush fund stashed away abroad in case he has to flee the North. Kim’s operatives “withdrew the money — in cash, in order not to leave a paper trail — and transferred it to banks in Luxembourg,” it said.

But at the time, the office of the grand duchy’s prime minister said it had no information about North Korean financial assets and there was no need to check. Although Luxembourg is a member of the EU, it is not easy to keep track of bank accounts there because it has a different bank payment and settlement system from other members.

On July 22, Hong Kong started a legal review of Taepung International Investment Group, a North Korean firm founded to attract foreign capital, and other North Korean companies.

Open Radio for North Korea on Wednesday quoted a North Korean source as saying the country’s former ambassador to Switzerland Ri Chol returned to the North in March to make sure Kim Jong-il’s secret accounts overseas are safely handed over to Kim Jong-un, his son and heir apparent.

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Luxembourg to Help Track N.Korean Bank Accounts
Choson Ilbo
7/29/2010