U.N. Cites New Evidence That North Korea Is Violating Sanctions

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Japan’s Ministry of Defense released this photo earlier this year that it says shows a North Korean-flagged tanker, left, and a Chinese ship transferring goods between them in violation of United Nations sanctions.

Japan’s Ministry of Defense released this photo earlier this year that it says shows a North Korean-flagged tanker, left, and a Chinese ship transferring goods between them in violation of United Nations sanctions.


Photo:

/Associated Press

WASHINGTON—North Korea is poking significant holes in global economic sanctions, according to a new United Nations report that cites fresh evidence of illicit arms sales, disguised fuel shipments and outlawed financial dealings.

The still-confidential report, prepared by a U.N. panel that monitors sanctions compliance, says North Korea has been caught selling arms to Syria, Yemen, Libya and other conflict zones around the world. The U.N. investigators found a massive rise in fuel imports through transfers involving Russian and Chinese ships. The report also cited numerous examples of coal shipments from North Korea to China that were structured to avoid surveillance.

The illegal trade is weakening U.S. efforts to pressure the regime to abandon its nuclear program, the panel says, citing intelligence reports.

“These violations render the latest U.N. sanctions ineffective by flouting the caps on the [North Korea’s] import of petroleum products and crude oil as well as the coal ban imposed in 2017,” the U.N. experts warned in the report, which was reviewed by The Wall Street Journal.

China and Russia have rejected U.S. accusations that they aren’t fully enforcing U.N. sanctions on North Korea. North Korea disputes the legality of the sanctions.

The panel’s reports are eventually made public, but a spat between the U.S. and Russia over some of the findings has kept it confidential until now. The U.S. scheduled a U.N. Security Council meeting for Monday to challenge Russia on its efforts to classify a list of joint ventures and to inject skepticism about fuel-oil deliveries, a U.N. diplomat said.

The report follow a May summit in Singapore between President Trump and North Korean leader Kim Jong Un aimed at denuclearizing the Korean Peninsula and normalizing relations. Diplomatic efforts have since stalled but the two countries are trying to revive them.

The U.N. panel’s findings are the latest indication that North Korea continues to engage in banned activities even as it engages in these diplomatic efforts.

The Wall Street Journal reported this week about a group of North Korean operatives in China using U.S. social media to pursue online schemes benefiting the regime. Also this week, the Journal reported North Korean ships had brought in 89 illicit cargoes of fuel in the first five months of the year obtained via ship to ship transfers primarily with Chinese or Russian counterparts. 

 And earlier this summer, the Journal reported on influx of North Korean laborers into Russia, where they are contracted out to work in areas including construction and lumber.  

The Journal reported Friday that the U.S. is convening a multinational coalition to significantly expand surveillance of ships smuggling fuel to North Korea in violation of United Nations sanctions.

North Korean soldiers marched earlier this month during a parade for the 70th anniversary of North Korea's founding day in Pyongyang, North Korea.

North Korean soldiers marched earlier this month during a parade for the 70th anniversary of North Korea’s founding day in Pyongyang, North Korea.


Photo:

Ng Han Guan/Associated Press

North Korea’s tightly sealed borders and limited information flow make it hard to assess how deeply the sanctions are affecting the country’s economy, but they are widely believed to have had an impact last year, when the economy is thought to have contracted.

Yet there are some signs the pressure is now less acute. After tripling late last year in the wake of the new U.N. import cap, fuel prices have fallen back to near pre-quota levels, according to data collected by the South Korea-based website NK Daily.

The exchange rate has been stable. At the border city of Sinuiju on Aug. 21, for example, a dollar traded for 8,140 won, only up a hair from 8,100 in October 2016.

Many economists say Pyongyang is burning though its foreign currency reserves to help prop up the won and prevent hyperinflation. But others argue the won’s stability show the sanctions haven’t been effective in severing North Korea’s financial and trade ties.

U.N. investigators cited in the report found evidence a Syrian arms trafficker brokered a deal for Houthi rebels in Yemen to buy tanks, rocket propelled grenades, ballistic missiles and an array of other weapons from North Korea. The trafficker also allegedly arranged deals with Sudan for North Korean antitank systems, the U.N. report says.

U.N. investigators also documented a number of visits by North Korean weapons technicians to Syrian military factories last year.

Earlier this year, the investigators suggested North Korea was helping Syria develop its chemical weapons program, citing intelligence provided by U.N. member states.

The U.N. called out Chinese companies for buying tens of millions of dollars worth of North Korean iron, steel, textiles, food and other products, though Beijing disputed the figures. Citing official trade data, the U.N. said China bought more than $100 million in textiles from North Korea the last three months of 2017, $95 million more than Beijing reported directly to the panel. China disputes the U.N.-reported figures.

The U.N. panel also said it found more than 200 Chinese joint ventures with North Korea, collaboration banned last year by the Security Council. According to a U.S. Treasury Department advisory published in July, those companies conduct a vast array of business including software development, construction and aquaculture.

In Russia, which has also been criticized for what U.S. and U.N. officials say is lax sanctions enforcement, investigators found 39 joint ventures.

North Korean financial agents also continue to operate in Russia and China, the U.N. report said, despite the mandate to expel any bank representatives. Establishing and managing bank accounts allows North Korea to collect the illicit revenues generated overseas. When accounts were closed in the European Union, North Korea operatives simply transferred the funds to others in Asia, the U.N. report says.

“Financial sanctions remain some of the most poorly implemented and actively evaded measures of the sanctions regime,” the report says, with agents operating in at least five countries “with seeming impunity.”

Write to Ian Talley at ian.talley@wsj.com