19.11.2017 Author: Konstantin Asmolov

Otto Warmbier Law and Other Elements of the US Sanction Policy In Respect of the DPRK


On October 24, 2017, the US Congress House approved the draft law by an overwhelming majority (455 deputies for, and two against) on the introduction of the new anti-North Korean sanctions named after the American student Otto Warmbier, who was sentenced to 15 years of imprisonment for an attempt “to disrupt the unity of the Korean people” after he sneaked into the office of the hotel at night and tore off a propaganda poster from the wall. After 17 months, North Korea extradited him in a state of insensibility to the USA, and the student died 6 days later. Although the coroner did not name the death violent and did not find any traces of torture, the family of the deceased and North Korea’s haters are sure that the student was a victim of cruel treatment or torture that leaves no traces.

The draft law stipulates the “secondary boycott” measures, including the closure of access to the international financial system for foreign financial companies that cooperate with Pyongyang. It also obliges the government administration to strictly perform all the sanction measures.

In addition, the law prescribes the USA to use all the efforts and opportunities (literally their voice and vote) to prohibit the assistance of the World Bank and other international financial institutions to countries that do not follow the anti-North Korean resolutions of the UN Security Council, including other international measures. The companies using the services of the North Korean workers are also subject to the sanctions.

According to the media of the Republic of Korea, the draft law has a peculiar meaning in anticipation of the upcoming visit of the US President Donald Trump to the Asian countries. Trump is expected to persuade China to strengthen the pressure on the DPRK, and Warmbier Law should become instrumental is this issue, as it is primarily aimed at the Chinese companies and banks cooperating with the DPRK. In addition, the US Administration has killed two birds with one stone. Heart-broken relatives and their support group received a visible confirmation that they were not abandoned, and the authorities adopted a very important component of unilateral sanctions enforcing the policy of “either you are working with North Korea, or you are working with the United States.” This was directly announced by the major sponsor of the law Congressman Andy Barr, – the aim of the law is to motivate the foreign banks to stop the economic activities with the North and categorically cut off Pyongyang’s access to the resources that it needs for nuclear ambitions.

This measure is only one step on the way to strengthen the policy of the secondary boycott. Thus, on August 22, 2017, the US Treasury Department included ten companies and organizations in the sanction list – five companies from China and one from Russia (Gefest Group of Companies that cooperated with Tangun Trade Corporation), and two companies from Singapore and Namibia. One of the Namibian companies is managed by North Korea, at that. The list also includes six individuals – four Russians, one citizen of North Korea, and one Chinese.

According to the US Secretary of Treasury Steven Mnuchin, the listed legal entities and individuals are related to the export of labour force from the DPRK, to operations for the purchase and sale of coal and oil, to the North Korean nuclear program, and are involved in activities to promote the use of the international financial system by the North. Therefore, all their property and assets that are in the territory that falls under the US jurisdiction are frozen; they are prohibited to deal with the US companies. The US citizens are also prohibited to conclude any deals or to have any business relations with them.

Besides, the US Department of Justice has accused two Singaporean and one Chinese company of involvement in the laundering of money by the North Korean financial institutions and filed a suit to the Washington Prosecutor’s Office demanding the confiscation of part of the assets totalling to $11 million.

The Ministry of Foreign Affairs of the Republic of Korea has supported the sanctions. On August 23, a representative of the Ministry stated that such measures confirm the desire of the USA to solve the North Korean nuclear problem, and expressed hope that the US sanctions “will contribute to the joint efforts of the two counties to implement the resolutions and final elimination of the North Korean problems”.

Japan has also decided to introduce similar sanctions against four Chinese and two Namibian companies. The sanctions are introduced, in particular, against the Chinese Dandong Bank, which is suspected of aiding the missile and nuclear programs of Pyongyang. The Namibian companies are involved in the employment of the North Korean workers. Besides, one citizen from China and one from the DPRK were put under the sanctions. Currently, the Japanese sanctions are effective in respect of 72 companies and more than 80 individuals involved in the missile and nuclear programs of Pyongyang.

The US Treasury already reported the oil supply to the DPRK this summer, when it introduced sanctions against the Russian companies.

The ban for the American citizens to visit the DPRK came into effect on September 1. From now on, the US citizens’ passports will not be effective for travelling in the DPRK and for the transit through the country. The only exception is journalists, employees of the humanitarian organizations and for the trips to serve the interests of the US national security. In case of visiting the DPRK without prior permission from the State Department, the perpetrator may be fined or imprisoned for up to 10 years. It is also mentioned that a foreign passport can be cancelled in such cases. The ban for trips will be effective during one year, after which it can be cancelled or prolonged.

On September 26, 2017, the US Treasury announced the imposition of sanctions against eight more North Korean banks and 26 individuals working in their representations in different countries. Agricultural Development Bank, Cheil Credit Bank; Hana Banking Corporation, International Industrial Development Bank; Jinmyong Joint Bank, Jinsong Joint Bank, Koryo Commercial Bank, and Ryugyong Commercial Bank are subject to the sanctions. 26 North Koreans from the black list are heads of the subsidiaries of the specified banks in Moscow and Vladivostok, in China, Libya, and the United Arab Emirates.

Thus, during this year, the sanction list has been renewed 5 times and increased to 33 objects and 48 individuals, including 10 banks (two banks of the DPRK –Central Bank and Foreign Trade Bank – already have been the sanctions’ objects). According to experts from the Republic of Korea, the inclusion of a number of the North Korean financial institutions in the sanction list may indicate the readiness to introduce sanctions against foreign banks cooperating with them. According to them, these measures may seriously affect Russia and China.

On October 26, the USA enlarged the sanction list by another seven individuals and three legal entities. Now, it includes the Military Command of the Korean People’s Army, its head Cho Gyeong-chol and the Deputy Sin-Yeon Il, the Bureau of External Construction and its Director Kim Gang Jin, as well as Cholhyon Construction Company.  The individuals included in the list are the Minister of Labour Chon Yong-soo, the First Deputy Minister of Public Security Ri Tae Chol, the DPRK Consul General in Shenyang City Kun Soon Sop.

According to the Head of the US Secretary of Treasury Steven Mnuchin, these measures are targeted at representatives of the military and political leadership of the DPRK involved in human rights violations (which, “as it is known” are some of the most terrible in the world), as well as individuals who help preserve the financial assistance of the regime through forced labour of ordinary northerners. According to the sanctions’ authors, the military command conducts executions without trial, arranges constant surveillance of citizens and applies torture (although, as a rule, such activity is the prerogative of other institutions of power). Cholhyon Construction Company is involved in transferring the North Korean workers to China and the countries of Africa. The Bureau of External Construction exercises control over companies that send northerners to work abroad. The Minister of Labour Chon Yong-soo heads the department, which is considered one of the key ones in the organization of the forced labour of citizens. The Deputy Commander of the Korean People’s Army Sin-Yeon Il is the organizer of the kidnappings and imprisonment of northerners who tried to obtain political asylum in other countries (obviously, they refer to the procedures of illegal immigrants’ readmission, because neither the author nor the objective media know anything about the “kidnapping”). Kun Soon Sop and Kim Min Chol are also involved in shadowing and forcing the repatriation of northerners to their homeland. The First Deputy Minister of Public Security Ri Tae Chol is responsible for “the management of forced labour camps, the restriction of movement and the expression of one’s own opinion.”

Meanwhile, the sanctions list “has perspectives for growth”. As the Wall Street Journal reported on October 6 referring to the data of the UN investigation team on sanctions against the DPRK, 43 of 57 companies of the DPRK, China and Malaysia recognized as the sources of finance for Pyongyang’s nuclear and missile programs are still not included in the sanction list. The most representative of them are the front Malaysian company Glocom, the North Korean Wonbang Trading and the Chinese Bestone Trading. According to the American media, Glocom is under control of the Pyongyang’s subsidiary of Pan Systems Company from Singapore, which is managed by the DPRK General Intelligence Bureau. Glocom sends various equipment and spare parts for military needs from Malaysia to the DPRK. Wonbang Trading is the North largest company transporting coal, which is also controlled by the intelligence services. The Chinese Bestone Trading owned the North Korean Chison vessel that was detained in August 2016 in Egypt with 30 thousand ammunitions for grenade launchers on board.

In addition, in the USA there sound urges to adopt separate sanctions against the North and its sponsors, which would not need to consider opinions of Russia and China, as it was made in the last resolution of the UN Security Council. Thus, the article by Edward Royce, a Congressman, demands to introduce sanctions against the Agricultural Bank of China and China Merchant Bank: as the US strategy against the DPRK does not work, it is necessary to begin to oppose, as soon as possible, those who contribute to the activities of Pyongyang, primarily the financial institutions of China, which will undermine the precarious position of Kim Jong-un.

The UN Security Council Committee on the DPRK sanctions has also expanded the list of materials and equipment, import and transfer of which to the North are prohibited. The list includes 32 items of equipment, materials, and technologies that might be used to develop nuclear and missile weapon. It concerns the radiation survey equipment, equipment for radiographic control, seismic sensors and others. The list also includes particle accelerators, software for hydrodynamic calculations, and radiation-resistant cameras.

The Republic of Korea has not determined the content of the anti-north Korean sanctions yet. This was announced by the representative of the Ministry of Unification Paek Tae Hyun at the regular briefing on October 18. According to him, this issue is being discussed. The Republic of Korea and the global community are ready to consider any measures to strengthen the pressure on the North if Pyongyang continues its provocative policy. According to the Chosun Ilbo, which refers to some sources in the government of South Korea, despite the fact that the USA had demanded the government of South Korea to introduce additional unilateral sanctions against Pyongyang, Seoul evaded this for various reasons.

Thus, the commemoration of the student who has fallen into a coma under unknown circumstances is one of the steps towards the establishment of an economic and financial blockade of the DPRK through the “secondary boycott” system.

Konstantin Asmolov, Ph.D. (History), leading researcher at the Center for Korean Studies of the Institute of Far Eastern Studies of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.