PSI, Financial Blockade Best Tools

As expected, North Korea launched a long-range rocket on the morning of April 5, 2009. It is not in doubt that the Kim Jong Il regime has displayed the capacity to produce intercontinental ballistic missiles (ICBM), irrespective of the fact that the shape of the rocket and the flight path gradient were those of a satellite launch. This latest act has highlighted the need to address shortcomings in the sanctions regime that is currently in operation through U.N. Security Council Resolution 1718.

The South Korean government sternly criticized the event in a statement, “North Korea’s launch is… a provocative act threatening Northeast Asian peace and security regardless of North Korean insistence.”

Yu Myung Hwan, the Minister of Foreign Affairs and Trade emphasized, “Our government intends to take specific countermeasures through negotiations with the UN and other related countries.”

U.S. President Barack Obama mentioned “the launch of a Taepodong-2 missile,” on Sunday in the Czech capital, where he was giving a scheduled speech. “North Korea broke the rules, once again, by testing a rocket that could be used for long-range missiles,” he said, asserting, “This provocation underscores the need for action – not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons. Rules must be binding. Violations must be punished. Words must mean something.”

U.N. Security Council Resolution 1718 covers materials, equipment, goods and technology which could contribute to the DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programs. It also prohibits the sale of luxury goods.

Regarding economic sanctions, Resolution 1718 says, “All Member States shall, in accordance with their respective legal processes, freeze immediately the funds, other financial assets and economic resources (of North Korea).” However, China and Russia have never fulfilled the requirement. Additionally, economic sanctions on North Korea do not work very efficiently because the North’s rate of dependence on imports and exports is low. Moreover, it is hard to restrain individual traders from doing illegal business across the permeable North Korea-China border.

Therefore, the UN sanctions should move to target the Kim Jong Il regime directly. There are several ways: fundamental blockade of the North’s exports of weapons including missiles, which is a major source of hard currency, and squeezing other sources of illegal funding, which are only used for maintaining the Kim dictatorship anyway. If the UN sets up firm principles, exposing the Kim regime’s illegal acts like money laundering (for example the Banco Delta Asia issue of September, 2005) or currency counterfeiting then a decisive blow to the finances of the dictatorial regime could be struck. This could in turn be a highly effective way to subdue the regime.

As a consequence of the luxury goods provisions in Resolution 1718, the Japanese news agency Jiji Press reported on the 5th, “EU financial authorities have confiscated part of the funding for two luxury yachts for the Kim family, amounting to millions of dollars.” This, a result of detective work by Italian authorities on an opaque deal between Italian yacht builder Azimut Yacht and North Korean officials stationed in Europe, is a practical and effective economic sanction, netting around twenty million dollars.

Most of Kim’s dollars are not for the activities of the people but for the dictatorship of Kim Jong Il himself, so international society should use tactics that desiccate those foreign currency reserves.

Another way to cope with Kim Jong Il is to pressure his military through the Proliferation Security Initiative (PSI). This, coupled to putting pressure on his funding opportunities, is the core of the most important countermeasures the international community can impose.

Therefore, the South Korean government should join the PSI as planned, and the international community should work harder to catch North Korean illegality on all fronts.

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