The Failure of Maritime Sanctions Enforcement against North Korea
PDF free through March 31, 2017.
This article examines the ineffectiveness of current sanctions on marine traffic into the Democratic People’s Republic of Korea (DPRK) by identifying four weaknesses that allow traffic there to continue: flags of convenience, misidentification or false registration, offshore ownership, and shell-firm owners, managers, and insurers.
Based on a review of automatic identification system data tracking approximately 70 vessels that entered DPRK ports between April 2016 and October 2016, current sanctions on North Korea do not impede marine traffic into the country. The majority of marine traffic into the DPRK during this period was from Chinese ports by vessels flagged by several countries in Africa, the Caribbean, and the DPRK. The registration and flagging of vessels trading with North Korea occurs via offshore firms that are based outside sanctions enforcement zones in places such as Hong Kong, the British Virgin Islands, and the Seychelles. Sanctions against North Korea are thus largely symbolic gestures of disapproval that do not demonstrate any capability to change the political behavior of the Kim Jong-un regime. For sanctions to influence the regime’s behavior, it would be necessary to pursue restrictions on the capital flows that allow marine traffic to enter the country rather than sanctioning the regime itself.
The role of offshore capital reduces the potency of smart sanctions and recent financial measures against North Korea. If offshore interests are not taken into consideration, then it is unlikely that these policies will have any real effect on the regime’s political behavior.
The intermediaries of vessel owners, managers, and insurers are all financially gaining from trade with the DPRK, which presents an important target for financial measures. Insurers of some of these vessels are situated in countries that do uphold sanctions, notably the United Kingdom, Switzerland, the Netherlands, South Korea, and New Zealand.
The Banco Delta Asia case demonstrates an important aperture in sanctions enforcement by relying on financial measures that do not target the regime itself but go after the surrounding capital networks on which it relies.