Guns and money: Why US’ top North Korea diplomat is in Southeast Asia

Hong Kong (CNN)When US Ambassador Joseph Yun visits Myanmar this week, he’ll likely be trying to convince a longtime military partner of Pyongyang to join US efforts to rein in Kim Jong Un’s nuclear efforts.

It’s a tough task for the man who made headlines for helping to free American Otto Warmbier from North Korean detention last month.
But the trip, say analysts, is emblematic of a key tactic from the Trump administration: cutting off North Korean revenue, no matter how small or obscure the source.
    Yun’s first stop was in Singapore for talks at the Northeast Asia Cooperation Dialogue, a multilateral forum for discussing security issues.
    But there may have been an ulterior motive in choosing the destination — Singapore-based businesses have been accused in recent years of helping North Korea evade sanctions.

    Arms trade

    Before elections in 2015, the military junta that previously ran Myanmar was believed to be one of the top purchasers of North Korean arms and weapons technology, according to the US Treasury Department.
    The proceeds, in turn, help to fund Pyongyang’s own weapons programs and the lavish lifestyle of North Korea’s elite.
    Though no longer fully in power, the Myanmar military still wields a significant degree of influence — and has come under scrutiny for its relationship with North Korea in recent years.
    “At a minimum, he’s going there to remind them that we (the United States) are watching,” said Anthony Ruggiero, a former deputy director of the US Treasury Department and an expert in the use of targeted financial measures, during a panel sponsored by the Foundation for Defense of Democracies last week.
    CNN has reached out to the Myanmar Ministry of Foreign Affairs regarding the trip and Myanmar’s relationship with North Korea, but they have not responded.

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    Cutting off North Korea’s illicit revenue streams has become increasingly important in the aftermath of what North Korea called its first successful intercontinental ballistic missile test.
    US Secretary of State Rex Tillerson doubled down on American efforts to go after states violating international law in their dealings with Pyongyang.
    “Global action is required to stop a global threat,” Tillerson said. “Any country that hosts North Korean guest workers, provides any economic or military benefits, or fails to fully implement UN Security Council resolutions is aiding and abetting a dangerous regime.”
    Tillerson’s statement days after the US announced it was cutting financial ties between US banks and China’s Bank of Dandong, which the administration claims acts as a pipeline to support alleged illicit North Korean financial activity.
    “We will cut the money off to North Korea until they behave properly,” said US Treasury Secretary Steven Mnuchin.
    China’s Foreign Ministry denounced the move, with spokesman Lu Kang saying Beijing was “against other countries imposing long-arm jurisdiction over Chinese entities or individuals based on their domestic law.”

    Guns and missiles

    Firms in both Singapore and Myanmar have been accused of buying or selling weapons from North Korea.
    A United Nations report earlier this year accused a company named Pan Systems Pyongyang of using an extensive network of agents, companies and offshore bank accounts in China, Indonesia, Malaysia, Singapore and the Middle East to bypass sanctions to procure and market arms-related material.
    Pan systems did not respond to CNN’s calls for comment in March. Calls and emails to Pan Systems Singapore also went unanswered.
    A representative for Pan Systems in Singapore denied in March that the organization had any links to the Pyongyang branch of Pan Systems. “They use (the) Pan Systems (name) and say it’s a foreign company, but they operate everything by themselves,” Louis Low, managing director of Pan Systems, told Reuters.
    Another notable cases came in 2014, when the Singapore-registered Chinpo Shipping company was criminally charged in Singapore for doing business with North Korea’s Ocean Maritime Management company, which had been the target of international sanctions,according to the Singapore Foreign Ministry.
    Chinpo was later convicted and fined due to its violations.
    Myanmar was for years accused of purchasing Pyongyang’s ballistic missile technology. Before free elections led to the rise of Aung San Suu Kyi, Myanmar’s leader, the country’s military was considered among the key allies of North Korea.
    “Of course, Burma (Myanmar’s previous name) was different back then,” Ruggiero told CNN.
    “The question I would have (now), is how many people in the Burmese military are still sort of around and interested in having that relationship with North Korea. And I don’t know how much control she (Myanmar leader Aung San Suu Kyi) has over all of the government … it only takes a couple of military officials who want to continue that relationship for it to continue.”
    Though plenty of sanctions have been lifted on Myanmar since the country’s reforms, those with respect to North Korea have stayed in place, according to Ruggiero.
    The extent of Myanmar’s relationship with North Korea is not fully known, but analysts say it still exists, which is why Ambassador Yun’s trip is important to the US.
    Myanmar’s Directorate of Defense Industries (DDI) was one of 30 foreign entities sanctioned earlier this year for violating the Iran, North Korea, and Syria Nonproliferation Act.
    The State Department would not specify to CNN if DDI violated the law with respect to North Korea. But the US Treasury Department accused it of doing business with North Korea in 2012.
    The following year, the Treasury Department sanctioned Lt. General Thein Htay, the chief of the Directorate of Defense Industries.
    He’s made no public statements regarding the accusation.

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    Options

    The problem is global, with countries as far away as Africa being accused of violating UN sanctions against North Korea this year.
    The State Department, for its part, on Tuesday extended the review period on sanctions targeting Sudan in part to ensure “that Sudan is committed to the full implementation of UN Security Council resolutions on North Korea.”
    Senior administration officials say Sudan is making progress, but needed more time to review the issue.
    The UN’s 2017 Report from the Panel of Experts on North Korea accused Pyongyang of supplying guided rockets and missiles to Sudan in 2013.
    The Sudanese government responded to the recent decision by freezing talks with the United States on the sanctions issue until October, according to the state-run Sudan News Agency.
    With Yun’s Singapore trip, the United States is likely trying to telegraph to North Korea that it will step up its own operations in places like Southeast Asia, where North Korean illicit activity has been tracked in past years, according to Ruggiero.
    “The message to North Korea should be, if you’re here, we’re here, and we’re going to give these countries and these banks and companies a choice — continue to do business in the US dollar or work with North Korea,” he said.
    Pyongyang has been a part of the Northeast Asia Cooperation Dialogue that Yun is attending, though theState Department spokeswoman Heather Nauert said she was told North Korea is not participating this year.
    Though the strategy could potentially starve North Korea of some of its money, it’s unlikely to really tighten the noose on North Korea without the buy in of China, Kim Jong Un’s most important benefactor.
    Beijing accounts for about 85% of Pyongyang’s imports, according to UN data, providing a key lifeline for the North Korean economy.
    President Trump has repeatedly criticized China over its trade with North Korea, calling on it to exert more pressure on Kim Jong-un’s regime. He called out the almost 40% increase in trade in the first three months of the year, on Twitter, last week.
    “Certainly billions of dollars are coming from China, but there’s nothing wrong with concentrating on millions when it comes to Southeast Asia,” Ruggiero said.

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