China Slams "Wrong" US Sanctions Against North Korea-Linked Trading Firms

A day after China’s state-run airline closed its last remaining routes to North Korea – a decision the airline’s executives blamed on a sharp decline in business travelers due to restrictive UN Security Council sanctions – Communist Party spokespeople slammed new US sanctions targeting Chinese traders doing business with North Korean businessmen, calling them “wrong” while reminding the US that China has vigorously enforced the UN sanctions.

After announcing that the US would once again designate North Korea a state sponsor of terrorism due to its missile and nuclear tests and its trading in illegal arms with terrorist groups and unsavory governments, President Donald Trump revealed that the Treasury Department would be rolling out new sanctions over the next two weeks, the US’s latest volley in a "maximum pressure campaign" against Kim Jong-Un"s regime, AFP reported.

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As had been expected, the US Treasury Department announced on Tuesday that the list of North Korean and Chinese companies targeted by existing US sanctions has been expanded. It was this decision that angered the Chinese.

Only last week, Trump returned to the US from a five-nation tour of Asia with assurances from Chinese President Xi Jinping that China, the North’s primary benefactor which is responsible for 90% of its trade, would do more to economically pressure its restive neighbor.

 

Treasury sanctions trading, labor, and shipping companies and vessels
to further isolate North Korea and disrupt illicit funding of its unlawful nuclear and ballistic missile programs. Targets include one individual, 13 entities, and 20 vessels: https://t.co/CT9hMx3d6p

— Treasury Department (@USTreasury) November 21, 2017

 

The Treasury has added to a list of 10 Chinese companies believed to be doing business with the North in violation of international sanctions.

In response, a Chinese spokesman reiterated that China rejects unilateral sanctions against its companies and North Korea, saying these issues should be worked out through the Security Council.

"We consistently oppose any country adopting unilateral sanctions based on its own domestic laws and regulations and the wrong method of exercising long-arm jurisdiction," foreign ministry spokesman Lu Kang told a regular news briefing.

The sanctions are a sign that, despite Xi’s assurances, many doubts remain about China’s efforts to contain the North’s nuclear ambitions.

The spokesman called on Washington to provide "any solid evidence" that Chinese companies have violated the UN sanctions, according to AFP.

 

He added that if any companies or individuals have violated domestic laws, "we will severely deal with that in accordance with our laws and regulations".

While China has backed the Security Council sanctions – which it easily could’ve blocked with a veto – the country has been reluctant to take the more drastic step of cutting off oil supplies through a pipeline to North Korea"s lone refinery, fearing that regime collapse could lead to a flood of refugees and chaos on the China-North Korea border.

Still, US authorities believe some Chinese banks and trading firms continue to do business with the North in defiance of UN sanctions, US threats of unilateral action and warnings from the Chinese government.

Since the verbal standoff between Kim Jong Un and President Donald Trump began shortly after the latter’s inauguration, China has pressed for dialogue between the two countries, saying this week that "more should be done" to hold talks to resolve the crisis. Specifically, both Beijing and Moscow have pushed for a "dual track approach" which would see the US freeze its military drills in South Korea while North Korea would halt its weapons programs. Ultimately, the Chinese hope the US will remove its THAAD missile defense systems from South Korea, since the Chinese see the purportedly defensive systems as a potential offensive threat.

A Chinese special envoy also wrapped up a four-day trip to the North on Monday, during which the two sides discussed regional concerns but made no direct statements about the nuclear standoff.

US Treasury Secretary Steven Mnuchin said the sanctions would not only increase Pyongyang"s isolation but also expose "its evasive tactics."

"These designations include companies that have engaged in trade with North Korea cumulatively worth hundreds of millions of dollars," Mnuchin said.

 

"We are also sanctioning the shipping and transportation companies, and their vessels, that facilitate North Korea"s trade and its deceptive maneuvers."

In all, the new measures add one individual, 13 trading entities and 20 ships to US sanctions lists.

Any property or assets of the firms involved found to be in areas under US jurisdiction are to be frozen, and Americans are banned from trading with them. Three Chinese firms - Dandong Kehua Economy and Trade, Dandong Xianghe Trading Company and Dandong Hongda Trade - are said to have sold computers, minerals and ore to North Korea. Chinese businessman Sun Sidong and his company Dandong Dongyuan Industrial are accused of exporting vehicles, machinery, radio navigation and "items associated with nuclear reactors.” A woman who answered the phone at the company said it was not doing business with North Korea and suggested that the firm had halted its operations.

"We are not operating," she said.

Another woman at Dandong Kehua Economy and Trade denied knowing about the sanctions.

"We have temporarily suspended (trading)," she said.

In a surprise move, in addition to slapping sanctions on firms and North Korean ships, the Treasury added the Korea South-South Cooperation Corporation to its sanctions list. The firm is alleged to have sent North Korean guest workers to China, Russia, Cambodia and Poland. Foreign workers are a major source of income to the regime. Trump has repeatedly exhorted the US’s allies to expel North Korean guest workers, whose remittances provide a vital source of foreign currency to the regime.

Ironically, the stringent sanctions are being applied even as North Korea has, at least temporarily, ceased its missile tests. The North hasn’t launched a missile test since Sept. 15 – more than two months ago.

Some believe the North’s reticence is due to Chinese pressure. If this is accurate, we imagine Xi’s government might loosen its grip.
 

Reports Confirm North Korea Has Enough Oil To Survive An Embargo

Authored by Adam Garrie via TheDuran.com,

While a full scale oil embargo against North Korea is unlikely, the reality is that North Korea would be able to survive such a measure with comparative ease.

The United States has recently suggested a global oil embargo against North Korea, something both China and Russia oppose. The DPRK’s neighbours to the north support UN sanctions against Pyongyang, but have firmly opposed unilateral US sanctions against North Korea.

Russia and China have made a commitment never to support sanctions against Pyongyang which could negatively impact on the civilian population of their neighbour and this would almost certainly include a full-scale oil embargo.

On the contrary, Russia’s plan to de-escalate tensions on the Korean peninsula is to develop trilateral economic initiatives linking South and North Korea to Russia. Given the realities on the peninsula, Russia’s ‘carrot’ is seen as preferable on both sides of the 38th parallel to Washington’s increasingly bellicose ‘stick’.

But even if Donald Trump was somehow able to convince the world to engage in an oil embargo against North Korea, North Korea would appear to have enough domestic oil reserves to make up for the loss of imports.

In addition to large reserves of domestic coal and the increased reliance on green energy in the form of hydroelectric power , North Korea’s domestic oil reserves are likely far greater than previous conservative estimates have indicated.

Even prior to the new threat of sanctions, North Korea has been increasingly self-sufficient in beginning to tap its still largely unused oil reserves.

In 2015, when relations between the DPRK and the rest of the world were somewhat better than they are at present, independent oil exploration expert Michael Rego investigated North Korea’s oil potential.

The results of his report paint a broadly positive picture for North Korea, a state which has always striven towards economic self-sufficiency, a principle implicit in the Juche idea of the DPRK’s founder Kim Il-Sung, which remains Pyongyang’s guiding political programme.

An summary of Rego’s report, first published in GeoExPro, was published by The Maritime Executive. The key elements are as follows, with bold lettering added to emphasise the most pertinent findings.

“China conducted surveys off the west coast (of North Korea) in the 1960s. Subsequently, Russia has also conducted surveys along with Taurus Petroleum in Switzerland and Malaysia’s Petronas.

NK News reports Rego saying that the West Sea definitely has oil and has flowed oil at reasonable rates from at least two exploration wells.

However, the country’s political climate, including sanctions currently in force, and water depths of up to 2,500 meters off the east coast present barriers to development. A shortage of funds is likely to further hamper development. In the 1990s, North Korea couldn’t provide food for its population, and it continues to struggle to meet the energy demands of its population, generally falling short even in providing electricity to its capital city.

Despite the possible hurdles, some companies appear undaunted, reports NK News. The China Railway Investments Group recently said they were planning large scale investment in North Korea including the oil and gas sector.

The Energy Information Administration (EIA) states, as of July 2015, that the country has no proven oil reserves or petroleum and other liquids production. During North Korea’s industrial peak in the 1970’s and 1980’s, the country was able to import oil from China and the Soviet Union at below market prices. Following the end of the Cold War, these deals ended, and North Korea’s oil consumption dropped from 76,000 barrels per day (b/d) in 1991 to 17,000 b/d in 2013.

It is difficult to get an exact estimate of the amount of oil imported into North Korea each year, states the EIA. Some estimates report that North Korea imports more than half of its oil from China and some volumes from Russia. North Korea has the capacity to refine 64 thousand barrels a day, however as a result of the economic decline, has utilization rates below 20 percent. Despite this, North Korea is able to refine enough crude oil to meet some of their domestic demand.

North Korea is currently under international United Nations economic sanctions due to its nuclear weapon and ballistic missile programs. These sanctions restrict North Korea’s access to international banking, trade and travel. North Korea is also under economic sanctions from individual nations such as the United States, China, the United Kingdom, Canada and Japan”.

The report clearly indicates that in spite of sanctions limiting some of North Korea’s ability to extract its own oil, the country does have enough proven reserves, which as of 2015, the country was able to refine in order to meet the needs of domestic consumption. These needs have not changed significantly since 2015.

In 2004, the UK company Aminex PLC estimated that a North Korea oil shelf off the Sea of Japan which was first explored in a joint effort between the DPRK and another British company in 1998, contains 4-5 billion barrels of crude oil.

Sputnik reports,

“Simultaneously, the Mongolian company HBOil conducted exploration activities in the area south of Pyongyang and drilled 22 wells. Most of wells contained crude, allowing the DPRK to extract an average of 75 barrels per day from each of them”.

As Rego’s report stated, in spite of lacking the means (due primarily to sanctions) to purchase modern drilling/extracting equipment from abroad, North Korea still has it within its capabilities to extract enough oil to supply domestic needs.

While most of North Korea’s drilling equipment as of 2015 was purchased from Romania dating back to the Ceausescu period, the country also possesses more widely produced Soviet equipment.

Most experts believe that North Korea has the ability to reverse engineer its existing imported equipment to build contemporary versions without the need to import any specific supplies.

While North Korea’s detractors often focus on what the country lacks in terms of foreign made technological devices, both in the civilian, military and energy sectors, the reality is that considering this artificial deprivation, North Korea has done remarkably well in designing its own computer systems, weapons systems and in many ways most importantly, energy extraction systems.

Based on North Korea’s own claims as well as those of independent experts and contractors who have no reason to exaggerate North Korea’s oil wealth, it is simply a matter of North Korea utilising existing oil extraction systems more effectively combined with building additional new systems based on reliable old models, in order to be largely embargo-proof when it comes to energy.

In any event, the political tensions Donald Trump has created between the US on one hand and China and Russia on the other, means that such an oil embargo is unlikely in any case. But given the tense political atmosphere and the traditional North Korean emphasis on understanding Autarky in positive terms, North Korea may well be immune to such threats sooner rather than later, in any case.

North Korea Is "Begging For War": Haley Tells UN "The Time For Half-Measures Is Over"

U.S. United Nations Ambassador Nikki Haley is escalating the rhetoric from Trump"s "we"ll see" comment and aggressive tweets as she tells an emergency meeting of the U.N. Security Council, that "enough is enough" and that North Korea"s leader, Kim Jong Un, is "begging for war" with his "abusive use of missiles."

Haley admonished the council, urging the "strongest possible" response...

“The time for half measures in the security council is over. The time has come to exhaust all of our diplomatic means before it is too late.

We must now adopt the strongest possible measures. Kim Jong Un’s action cannot be seen as defensive.”

Just last month, the 15-member Security Council unanimously adopted new sanctions to slash by a third Pyongyang"s US$3 billion annual export revenue, which could be channeled to fund its nuclear and ballistic missile programs.

Some additional quotes from Haley include:

"We have taken an incremental approach, and despite the best intentions, it hasn"t worked."

"War is never something the United States wants, we don"t want it now, but our people"s patience is not unlimited."

"We have kicked the can down the road long enough. There is no road left."

Finally, Haley warned,

"The United States will view every country that does business with North Korea" as aiding their nuclear ambitions."

Here are the countries that trade with North Korea, based on 2015 data from MIT"s Observatory of Economic Complexity.

• China is the biggest player, buying 83% of North Korean exports and selling 85% of the goods that North Korea imports. China is also the United States" largest trade partner. The countries traded $578 billion in goods last year.


• India is second, accounting for 3.5% of exports and 3.1% of imports from North Korea.


• All told, Asian countries buy 92% of North Korean exports and source 93% of North Korean imports


• Russia is a European leader in North Korean trade, but accounts for less than 2% of imports and exports.


• Over 100 additional countries trade with North Korea, including France, Mexico, Pakistan, Saudi Arabia, Brazil and Chile.


• North Korea"s exports increased 54% from $1.83 billion to $2.83 billion from 2010 to 2015.


• Coal comprises a third of North Korean exports, and garments represent another third.

Additionally, in a veiled swipe at China, she also said it is "insulting" to propose a so-called "freeze for freeze" under which South Korea and the U.S. would suspend its annual military exercises that provoke Pyongyang in exchange for a halt to the North"s provocations.

Finally, we noted that at the top of the emergency meeting, Axios reports, a top U.N. official said North Korea"s hydrogen bomb test blast was 5 times as powerful as those resulting from the attacks on Hiroshima and Nagasaki.

Treasury Slaps Sanctions On China, Russia Entities And Individuals Over North Korea

In a move that is certain to infuriate China further and result in another deterioration in diplomatic relations between Washington and Beijing, moments ago the United States slapped both Chinese and Russian entities and individuals with new sanctions in the Trump administration"s escalating attempts to pressure North Korea to relent and stop its nuclear program and occasional missile launches.

The Treasury Department"s Office of Foreign Assets Control said it would target 10 entities and six individuals who help already sanctioned people who aid North Korea"s missile program or "deal in the North Korean energy trade." The U.S. also aims to sanction people and groups that allow North Korean entities to access the U.S. financial system or helps its exportation of workers, according to the Treasury:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 10 entities and six individuals in response to North Korea’s ongoing development of weapons of mass destruction (WMD), violations of United Nations (UN) Security Council Resolutions, and attempted evasion of U.S. sanctions.  Today’s sanctions target third-country companies and individuals that (1) assist already-designated persons who support North Korea’s nuclear and ballistic missile programs, (2) deal in the North Korean energy trade, (3) facilitate its exportation of workers, and (4) enable sanctioned North Korean entities to access the U.S. and international financial systems. 

As a result of the latest action, "any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them."

Speaking on today"s sanctions, Steven Mnuchin who, or rather whose wife today is in the news for an entirely different reason, made the following statement:

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” said Treasury Secretary Steven T. Mnuchin. 

“It is unacceptable for individuals and companies in China, Russia, and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region.  We are taking actions consistent with UN sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future.”

Among the companies sanctions in regards to North Korea"s "WMD program" are the following:

OFAC designated China-based Dandong Rich Earth Trading Co., Ltd. for its support to UN- and U.S.-designated Korea Kumsan Trading Corporation, an entity OFAC previously designated for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, the UN- and U.S.-designated General Bureau of Atomic Energy, which is responsible for North Korea’s nuclear program.  Dandong Rich Earth Trading Co., Ltd. has purchased vanadium ore from Korea Kumsan Trading Corporation.  UNSCR 2270 prohibits North Korea’s exports of vanadium ore, and requires member states like China to prohibit the procurement of vanadium ore from North Korea.

OFAC designated Gefest-M LLC and its director, Russian national Ruben Kirakosyan, for support to the UN- and U.S.-designated Korea Tangun Trading Corporation, also known as Korea Kuryonggang Trading Corporation, which is subordinate to the UN- and U.S.-designated Second Academy of Natural Sciences, an entity involved in North Korea’s WMD and missile programs.  Gefest-M LLC, a company based in Moscow, has been involved in the procurement of metals for Korea Tangun Trading Corporation’s Moscow office.

OFAC also designated China- and Hong Kong-based Mingzheng International Trading Limited (“Mingzheng”).  Mingzheng acts as a front company for UN- and U.S.-designated Foreign Trade Bank (FTB), and it has provided financial services to FTB by, among other things, conducting U.S.-dollar denominated transactions on behalf of FTB.  FTB is North Korea’s primary foreign exchange bank; it was designated by the United Nations on August 5, 2017 as part of UNSCR 2371.  OFAC designated FTB in 2013 for facilitating transactions on behalf of North Korea’s proliferation network, including for UN- and U.S.-designated Korea Mining Development Corporation and Korea Kwangson Banking Corporation.  On June 29, 2017, OFAC designated Mingzheng’s owner, Sun Wei.

The Treasury also designated three Chinese coal companies collectively responsible for importing nearly half a billion dollars’ worth of North Korean coal between 2013 and 2016.  Dandong Zhicheng Metallic Materials Co., Ltd. (“Zhicheng”), JinHou International Holding Co., Ltd., and Dandong Tianfu Trade Co., Ltd. have sold, supplied, transferred, or purchased coal or metal, directly or indirectly, from North Korea, and the revenue may have benefitted the nuclear or ballistic missile programs of the Government of North Korea or the Workers’ Party of Korea.  JinHou International Holding Co., Ltd. and Dandong Tianfu Trade Co., Ltd. also were designated for operating in the mining industry in the North Korean economy.

Meanwhile, top U.S. officials have said they do not want to take military action against North Korea unless it is a last resort, and as a result getting China to cooperate is seen as a key part of a diplomatic solution.

Of course, what this latest round of sanctions will achieve, is to further anger Beijing and the local population, in the process making a diplomatic solution even more unlikely and "forcing" America"s ruling Generals, Kelly and McMaster to launch the first "preemptive" shot against Pyongyang.

US Urges All Nationals In North Korea To "Depart Immediately", Bans Tourists From Visiting

Dennis Rodman will be disappointed to learn that the US is set to ban all citizens from traveling to North Korea, according to two agencies that operate tours there. Koryo Tours and Young Pioneer Tours said the ban would be announced on 27 July to come into effect 30 days later, the BBC reported. "After the 30-day grace period any US national that travels to North Korea will have their passport invalidated by their government." The ban comes one month after US student Otto Warmbier died following his imprisonment by the Kim regime.

China-based Young Pioneer Tours, which had taken Warmbier to North Korea, and Koryo Tours said the ban will come into force on July 27 - the anniversary of the end of the Korean War - with a 30-day grace period. Koryo Tours added that the Swedish embassy in Pyongyang, which handles consular affairs for the United States in the North, informed it of the ban, but did not say how long it would last. The U.S. embassy in the South Korean capital, Seoul, did not immediately respond to a request for comment.

Rowan Beard said that the 30-day grace period would "give leeway for any [Americans] currently in the country as tourists or on humanitarian work". Simon Cockerill, of Koryo Tours, said: "It remains to be seen what the exact text is, but the indication is it"s just a straight up ban on Americans going." Mr Cockerill told the BBC the agency would still conduct tours and take Americans until the ban came into effect.

Additionally, Rowan Beard of Young Pioneer Tours, told the BBC the embassy was urging all US nationals to depart immediately. He said the embassy was trying to check on the number of US tourists left in the country.

For now there has been no official confirmation from the US: the state department continues to have an alert dated 9 May strongly warning US citizens not to travel to North Korea.

As the BBC adds, there has been movement towards a ban for a while in the US, which increased with the Warmbier death.

In May, two congressmen introduced the North Korea Travel Control bill to cut off the foreign currency the country earns from American tourists. The House foreign affairs subcommittee is scheduled to take up the draft legislation on 27 July but it would still have to go to the Senate. So there could be an executive order. Last month, Secretary of State Rex Tillerson said: "We have been evaluating whether we should put some type of travel visa restriction to North Korea. We have not come to a final conclusion, but we are considering it." Apart from the treatment of Americans in North Korea, tension has been increasing over Pyongyang"s nuclear programme.

Some are suggesting the US is using the date the ban is set to be announced - 27 July - to cloud North Korea"s Victory Day on the same day. It was not clear if the urge to clear out US citizens from North Korea is a precursor to more "aggressive" (or kinetic) action by the US government.