Category Archives: Commentary

North Korea: 2016 in review and the challenges of 2017

By Ian K. Bolton, Research Associate Interdictions and PSI (ian.bolton@kcl.ac.uk)

2016 was an exceptionally busy year for the world of counter-proliferation (CP); in January, Implementation Day of the Joint Comprehensive Plan of Action with Iran was reached. By November, the United Nations’ First Committee voted to begin negotiations in 2017 on a global legally binding instrument to prohibit nuclear weapons for all countries. However, it was North Korean events which were the most dramatic.

On 6 January 2016, North Korea conducted its fourth nuclear test, with a yield believed to be in the region of 10 kilotons[1]. The nuclear test was widely condemned; notably China seemed to be genuinely angered by the test[2]. Before the world had been able to respond through the United Nations, North Korea escalated matters. On 7 February, North Korea confirmed it had launched a long-range rocket from its Sohae site, claiming the rocket was carrying a satellite for its space program. However under Security Council resolutions, North Korea is prohibited from conducting any such activity which is contributing to their ballistic missile programme.

The International Community delivered its response to the January nuclear test on 2 March, passing a new UN Security Council Resolution – UNSCR 2270. This resolution created one of the most wide‑ranging sanctions regimes against North Korea in the UN’s history. The restrictions adopted under UNSCR 2270 are broad and include entire sectors, such as coal and iron ore. The exception to these restrictions were when they would impact on the livelihoods of North Korean nationals. UNSCR 2270 also introduced an obligation on UN Member States to inspect all cargoes originating in, or destined for, North Korea.

Before the ink of UNSCR 2270 was dry, North Korea was once again challenging the resolve of the International Community. On 15 April, they tested the Musudan Intermediate Range Ballistic Missile. Although the test was seen by the CP community as having failed, this was indicative of things to come. On 23 April, North Korea tested a Submarine Launched Ballistic Missile[3]. By the end of August there been 7 further ballistic missile tests, ranging in their success. One North Korean watcher described this pattern of testing as Mr. Kim having ‘missile lust’, and not giving up on efforts to develop them further[4].

The next significant provocation came on 9 September when the regime conducted their fifth and largest‑to‑date nuclear test[5]. The test sparked international condemnation and heightened tensions across the region, with the US conducting an overflight of South Korea by two US B-1B Strategic Bombers. Once again the International Community looked to take decisive action. On 30 November 2016, the UN Security Council passed a new resolution, UNSCR 2321, which built on UNSCR 2270.

Adopted unanimously by the UN Security Council, resolution UNSCR 2321 tightened even further the sanctions and controls on North Korea[6]. The new resolution looked to address some of the issues which had come to light in the aftermath of UNSCR 2270, such as easy work-arounds on sectoral sanctions. New restrictions were put in place on mineral sectors, including copper, nickel, silver and zinc. The amount of coal North Korea could export was also restricted to defined amounts. It introduced restrictions on North Korean workers based overseas, as well as the provision of statues from North Korea. Additionally the UNSCR raised concerns about the activities of North Korean diplomatic missions and holdings and how these could be misused. All in all UNSCR 2270 and UNSCR 2321 together have created one of the most extensive UN sanctions regimes ever to be passed.

Challenges in 2017

It is clear that international condemnation, pressure and sanctions have not deterred North Korea from carrying out further provocations. Proof of this can be seen in the ballistic missile test that took place yesterday, 12 February 2017. The successful testing of the Pukguksong-2 missile will be an early test of the International Community’s resolve and ability to respond. Indeed satellite imagery and evidence[7] suggests North Korea has restarted its nuclear reactor at Yongbyon, the reactor used to produce plutonium for North Korea’s nuclear weapons programme[8]. This action would seem to indicate North Korea is preparing to conduct further nuclear tests.

The Trump administration has been sabre rattling in the region, both during the recent visit by Defence Secretary Mattis[9], in President Trump’s tweets[10], and during the visit of the Japanese Prime Minister. The critical question is what will the International Community, and the Trump administration, do in response to further provocations? It is hard to see what further scope there is for tightening sanctions on North Korea, and were such tightening to be suggested there would be concern regarding the humanitarian impact, a key concern for many countries, including Russia and China. Trump has already pointed the finger at China for failing to control North Korea[11], but traditionally China has resisted pressure to tighten its sanctions implementation. Given the antagonistic relationship between Trump and China so far, the US may undertake some form of unilateral military action against North Korea, though highly unlikely. Apart from further sanctions and possible military action, the best hope for a change in direction is the potential restarting of 6-party talks; the US administration has said they are willing to talk to North Korea. In practice it is difficult to see what this could accomplish, but the same was said by many before the start of Iran talks.

Another key challenge in 2017 will be the full implementation of both UNSCRs 2270 and 2321. UNSCR 2321 followed so quickly on the heels of UNSCR 2270 that many countries have not yet fully implemented UNSCR 2270, and as such have not submitted implementation reports to the UN as set out in the resolution[12]. Individual national legislation will need to be adopted by many in order to enforce the sanctions. This legislation will need to give countries powers to seize vessels and cargoes as prescribed by the UNSCRs. Countries will need legislation and capacity to allow all cargoes going to, or originating in, North Korea to be inspected. Furthermore, countries will need to ensure they can inspect cargo travelling via land and rail transportation, as well as sea and air, an often overlooked area. For many countries, especially in South East Asia given the high traffic of North Korean activity, there may be a need to dramatically increase customs enforcement capacity. Countries will need to be able to enforce the sectoral controls introduced by the UNSCRs, this will include an ability to analyse and identify what materials/ores they may be dealing with and if they are sanctioned.

Even more complicated will be how restrictions on coal, which essentially provides export limits, will actually be enforced, especially by China, North Korea’s biggest coal customer. North Korea watchers are already pointing out the potential frailties of this[13]. Domestic ship, registries, agents, insurers and companies will need to be looked at to ensure they are not misused by North Koreans. Countries will also need to examine their ship registries to de-list North Korean owned, operated or controlled vessels. Countries will need to take action to prevent public and private financial support to North Korea by persons or entities within their jurisdiction, unless by prior approval of the UN North Korean Sanctions Committee. And all of this is just a snapshot of the many new obligations and capacities countries will have to undertake.

Given this huge implementation challenge, the international community, and in particular countries like the US and UK, along with institutions, such as the European Union and United Nations, must have a focus on providing critical assistance to other countries, especially those with limited enforcement capacity. It is this that really will be the biggest challenge of 2017. Without this, having extensive and wide ranging sanctions on North Korea is worthless.

[1] http://www.bgr.bund.de/DE/Gemeinsames/Oeffentlichkeitsarbeit/Pressemitteilungen/BGR/bgr-160909_nordkorea_BGR_kernwaffentest.html?nn=1542132

[2] http://www.telegraph.co.uk/news/worldnews/asia/northkorea/12084087/North-Korea-hydrogen-bomb-Kim-Jong-un-earthquake-live.html

[3] http://edition.cnn.com/2016/04/23/asia/north-korea-launches-missile-from-submarine/

[4] Thomas Karako, director of the Missile Defense Project at the Center for Strategic and International Studies, told Business Insider: http://uk.businessinsider.com/timeline-of-north-korea-tests-2016-10?r=US&IR=T/#february-7-the-rogue-regime-fires-a-long-range-rocket-2.

[5] https://www.nytimes.com/2016/09/10/world/asia/north-korea-nuclear-weapons-tests.html?_r=0

[6] https://www.un.org/press/en/2016/sc12603.doc.htm

[7] https://www.theguardian.com/world/2017/jan/28/north-korea-has-restarted-reactor-to-make-plutonium-fresh-images-suggest

[8] http://38north.org/2017/01/yongbyon012717/

[9] http://www.bbc.co.uk/news/world-asia-38824008

[10] https://twitter.com/realdonaldtrump/status/816057920223846400?lang=en

[11] https://twitter.com/realDonaldTrump/status/816068355555815424

[12] Currently just over 60 countries have completed implementation reports of UNSCR2270 as evidence on the UN website: https://www.un.org/sc/suborg/en/sanctions/1718/implementation-reports.

[13] http://38north.org/2016/12/aberger121616/

Putin, Trump and the JCPOA

By Ian K. Bolton, Research Associate Interdictions and PSI (ian.bolton@kcl.ac.uk) and Alexandra V. Dzero, Associate Sanctions and Illicit Trade (Alexandra.dzero@kcl.ac.uk).

The counter-proliferation world holds its breath just near two weeks on from the inauguration of Donald Trump as the 45th US President. What has been of key concern is the future of the Iran deal – the Joint Comprehensive Plan of Action (JCPOA). During his presidential campaign Donald Trump stated several times that if he became president he would rip up the deal which he stated was “one of the dumbest deals ever”. However, despite the raft of Executive Orders issued by President Trump so far, there has been no action on Iran so far. Israel’s Prime Minister Benjamin Netanyahu remains opposed to the deal and keen to see Trump deliver on his promise. However, Israel’s military, intelligence and foreign services are advocating the deal remain in place but be rigorously enforced. US allies France, Germany and the UK also back the deal. During her US visit, Theresa May has made clear that she understands Iran’s ‘malign influence’ in the world but sees the Iran Deal is vital to regional stability.

One of the key factors in any US reneging on the JCPOA will be the Kremlin, especially if Trump is interested in establishing more positive relations with Russia. Any move by Trump to renege on the deal will almost certainly cause tensions between Washington and the Kremlin. Russia’s President Putin will almost certainly push the US to allow the JCPOA deal to remain in place. For the Kremlin, the JCPOA allows Iran to re-establish itself as a ‘normal’ state, and allows for increased trade and nuclear cooperation. Given their geographic proximity, Russia and Iran have had ongoing relations, both positive and antagonistic, since Tsarist times. In modern years, they have been drawn together by a mutual distrust of the US. Russia’s views Iran as a strategic neighbour, and a key state along its southern periphery with whom it shares mutual interests in energy, security and trade. The Russian defence industry however has been one of the primary beneficiaries of Russian-Iranian relations, selling Iran weaponry and hardware not allowed to be sold by Western states.

Russian trade with Iran has been relatively small – in 2015 amounting to only 1.2bn USD, having declined from around 3.5bn USD since Russia reluctantly joined in with UN mandated sanctions in 2010-2011. However, this is expected to grow substantially. With ongoing sanctions against Moscow and Iran’s gradual opening to trade following the JCPOA, Russian business stakeholders have already begun to scope out the opportunities. Soon after Iranian sanctions were lifted, Lukoil wasted no time in beginning to investigate investments in Iran’s oil and gas sector. Rosatom, the Russian nuclear energy corporation, is looking for new orders to complete after it finishes constructing reactors at Bushehr. The Russian aerospace industry has also become involved, with an alleged agreement for the license-production of Sukhoi Su-30MK fighter variants in Iran’s aerospace factories.

The Kremlin will try to dissuade Trump from ripping up JCPOA and will almost certainly aggressively advocate for the deal to remain in place if Washington insists to renege it. Russia-US relations will be soured significantly if President Trump acts on his statements. If Trump does go ahead with his plans for the deal, Russian pressure will play a key role in preventing the JCPOA’s demise.

China and Proliferation: Significant Progress, But Risks Remain

Over the past two decades, significant positive advances have been seen in China’s non-proliferation policies. Since the early 2000s, China has worked to establish an export control system and made ongoing efforts to align the country’s system with international supplier regimes. However, despite these positive developments, there is evidence that the non-proliferation practices of the Chinese authorities have often fallen short of government policies. Several risk areas remain; this article will consider China’s export controls and the risks posed by Chinese entities.


China’s Export Control System
Since 2002, China has worked to develop a system of export controls which is broadly aligned with international standards. In 2004 China joined the Nuclear Suppliers Group; the country has also pledged to adhere to the MTCR, and as a UN member state it must comply with UN sanctions resolutions. China’s export control system is in place to ensure that the country meets its obligations in this regard. It is administered by the Ministry of Commerce (MOFCOM) and draws on the expertise across government.
However, China’s relatively weak capacity to administer and enforce its controls presents a significant challenge.[1] In some specific cases there has also been a lack of will to enforce or follow up on breaches of legislation.[2] The growth of the Chinese industrial sectors capable of producing or exporting sensitive goods also poses a significant regulatory challenge. China is clearly expanding its capacity to administer and to enforce export control legislation. However, good intentions alone will not suffice if adequate resources are not invested in enforcement, outreach and engagement.
To facilitate industry’s compliance with the controls, China has made some attempts to engage its private sector on non-proliferation and export compliance issues. However, these efforts have been relatively limited in scope to date. The implementation of a comprehensive private sector engagement strategy is required in order to minimise proliferation risks. The development of a stronger and more pervasive compliance culture would help China overcome some of the challenges posed by a rapidly growing private sector.

Proliferation Risks posed by China
When considering the nature of proliferation risks in China, a number of key dimensions of the problem can be highlighted. These risks are both posed by the Chinese government, but perhaps more significantly by private sector entities operating to divert goods onto programmes of concern.
While China has put in place a system of export controls, there are still shortcomings in how the system is operationalised. In some cases, this has allowed for the transfer of sensitive goods to WMD programmes. In short, there is a risk of continued proliferation posed by the interpretation of the licensing criteria by the Chinese authorities in licensing transfers that abide by the letter, but not necessarily the spirit, of national legislation or international commitments. A key example here is the apparent reluctance of the Chinese authorities to invoke catch-all controls, or to prevent the transfer of non-controlled goods to WMD programmes.[3]
However, by far the most significant proliferation risk posed by China relates to Chinese companies. Many Chinese businesses, intentionally or due to lack of awareness, still seek to transfer goods without an appropriate licence or authorisation, and to programmes of concern. The reluctance of the Chinese authorities to follow up on cases of illicit transactions can facilitate this. The types of Chinese entities involved in WMD-related trade have evolved over time. During the 1990s and early 2000s, numerous state-owned entities were sanctioned by the US for their involvement in proliferation.[4] Many of these enterprises have since altered their behaviour and put in place compliance programmes.[5] Now risks are more frequently documented as being posed by entities of the Chinese private sector.[6]
Alongside exporters of sensitive goods, the Chinese financial and transportation sectors continue to be utilised by proliferators, especially with regard to China’s neighbour North Korea.[7]The risks posed by Chinese intermediaries, and the role of transportation hubs, have been found to constitute some of the most significant challenges to the non-proliferation of WMD.

Doing Business in China
Exporters doing business in China should take into account the risks posed by Chinese entities to avoid involvement in illicit trade.Before entering business relationships with Chinese companies, firms should conduct extensive due-diligence. Steps should be taken to ensure the Chinese company has in place a rigorous export compliance system. If in doubt, firms should contact their national authorities.

The following resources are available to firms conducting business in China:

China Country Profile
Red Flags and Due Diligence

The following case studies may be of interest:

Li Fang Wei

[1] Chin-Hao Huang, “Bridging the gap”: Analysis of China’s export controls against international standards’, Final Project Report to the Foreign and Commonwealth Office Counter-Proliferation Programme (April 2012), 14.
[2] US Embassy, Beijing, ‘China Urged to Investigate And Halt Shipment Destined for Iran’s DIO’, 08BEIJING2674, 9 July 2008, http://wikileaks.org/cable/2008/07/08BEIJING2674.html, accessed 20 December 2012.
[3] Secretary of State, ‘Missile Technology Control Regime (MTCR): China’s Record On Controlling Missile-related Exports’ 1 October 2008, Cable no. 08STATE105132, https://wikileaks.org/plusd/cables/08STATE105132_a.html, accessed 8 February 2013; ‘PRC Urged to Investigate A Chinese Firm’s Missile-related Transfers to Iran; Update Sought on PRC Investigation of a Second Chinese Firm’, 08BEIJING1463,16 April 2008,  http://wikileaks.org/cable/2008/04/08BEIJING1463.html, accessed 20 December 2012.
[4] See for example the sanctions on NORINCO P. C. Saunders and S. C. Lieggi, ‘What’s behind US Non-proliferation Sanctions against NORINCO’, James Martin Center for Non-proliferation Studies; with Kan, ‘China and Proliferation’, p.73.
[5] See for example the case of China Great Wall Industry Corporation (CGWIC) ‘US Removes Chinese Firm from Sanctions Blacklist Over Iran’, Associated Foreign Press, 19 June 2008,
http://afp.google.com/article/ALeqM5h8UAMuXVNkqRYXpTh9iHspgJSz5g, accessed 19 February 2013.
[6] See for example the case of Li Feng Wei: William Maclean and Ben Blanchard ‘Chinese trader accused of busting Iran missile embargo’, Reuters, 1 March 2013,
http://www.reuters.com/article/2013/03/01/us-china-iran-trader-idUSBRE9200BI20130301, accessed 1 July 2013.
[7] See for example: Julian Ryall, “Chinese Firms Breaking UN Embargo on North Korea”, The Telegraph, 8 June 2012; Jack Kim & Louis Charbonneau, ‘North Korea uses Cash Couriers, false names to outwit sanctions’, Reuters, 15 February 2013,
http://www.reuters.com/article/2013/02/16/us-korea-north-money-idUSBRE91F00K20130216, accessed 18 February 2013.

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