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China Seen as Key to Financial Sanctions on North Korea

  • Jenny Lee

FILE - North Korean men stand on a boat used for trade between China and North Korea on the waterfront at the North Korean town of Sinuiju, opposite the Chinese border city of Dandong, Oct. 11, 2006.

China's willingness to implement existing sanctions is vital to financial pressure on the development of nuclear arms by North Korea, a former senior U.S. official said Tuesday.

Since early 2015, Washington has been applying incremental pressure on Pyongyang as it appears to be making strides in its nuclear and missile development, prompting Congress to pass new laws to help implement the executive orders signed by former President Barack Obama.

The orders enabled the U.S. to impose sanctions on North Korean individuals and entities, as well as on a third party linked to the country's nuclear program. In September, the U.S. Treasury sanctioned for the first time a Chinese firm — Dandong Hongxiang Industrial Development — that had allegedly been serving as a front company through which a blacklisted North Korean bank moved money for conversion into U.S. dollars.

FILE - A man in South Korea watches a TV news program showing a missile launch conducted by North Korea, Oct. 20, 2016.
FILE - A man in South Korea watches a TV news program showing a missile launch conducted by North Korea, Oct. 20, 2016.

China's cooperation

Daniel Glaser, who until recently served as assistant secretary for terrorist financing at the U.S. Treasury Department in the Obama administration, said although the U.S. effort against North Korea has placed "stress on the North's access to the international financial system," China, Pyongyang's longstanding ally, should cooperate fully with enforcing sanctions to make them effective.

"The key to North Korea financial pressure has always been — [and] remains — the willingness and the ability of the Chinese to crack down on North Korean access within the Chinese financial system," said Glaser in an interview with VOA.

Cash-strapped North Korea is known to be involved in various illicit activities such as counterfeiting U.S. dollars, drug trafficking and money laundering to obtain hard currency. A decade ago, the George W. Bush administration launched an intensive campaign to crack down on the activities. Glaser believes the reclusive regime is still engaged in such practices to raise funds.

FILE - U.S. Treasury Department's Deputy Assistant Secretary Daniel Glaser speaks to reporters in Hong Kong, March 17, 2007.
FILE - U.S. Treasury Department's Deputy Assistant Secretary Daniel Glaser speaks to reporters in Hong Kong, March 17, 2007.

Kim Jung Un's slush fund

Some experts suggest the U.S. should actively pursue North Korean leader Kim Jong Un's overseas slush fund. In an op-ed piece for CNN, Sung-Yoon Lee, an assistant professor at Tufts University's Fletcher School of Law and Diplomacy, and Joshua Stanton, a private attorney who follows international sanctions on North Korea as an analyst with One Free Korea, suggested the U.S. should block Kim's offshore hard currency reserves and income.

Glaser said that the U.S. is "constantly on the lookout for North Korean financial activities," including Kim's.

"I believe Kim Jong Un has sanctions levied against him to such an extent that a transaction [that involved] him and would touch the United States financial system, that transaction would be impacted," he added.

Pyongyang's fourth nuclear test in January 2016 — soon followed by a long-range rocket launch — drew strong protests from Washington and neighboring countries. Shortly after the launch, Seoul shut down the Kaesong Industrial Complex, an inter-Korean economic project that provided a revenue stream for North Korea. Recently, South Korean businessmen who ran factories in the complex called for the resumption of the project. Glaser, however, warned the reopening could undermine international efforts to pressure Pyongyang over its nuclear development.

"If the goal is to apply financial, economic pressure, then reopening the industrial complex is not going to be helpful," the former Treasury official said.

FILE - North Korean workers sew items at a factory of a South Korean-owned company at the jointly-run Kaesong Industrial Complex, in Kaesong, North Korea, Dec. 19, 2013.
FILE - North Korean workers sew items at a factory of a South Korean-owned company at the jointly-run Kaesong Industrial Complex, in Kaesong, North Korea, Dec. 19, 2013.

Crackdown on diplomats

The United Nations also imposed fresh sanctions on North Korea last year.

The latest resolution adopted in November calls for members to prohibit the communist country from using its diplomats and overseas missions for money-making activities.

Poland's Foreign Ministry told VOA on Monday that the Polish authorities "have not issued permission for the commercial rent" by the North Korean embassy in Warsaw of premises for diplomatic and consular purposes. The ministry said it will take additional actions to end the "unlawful procedure."

Other European nations, including Germany, Romania and Bulgaria, also said they are closely monitoring North Korean diplomats' activities in their territories.

Ham Jiha contributed to this report.

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