The Failure of Maritime Sanctions Enforcement against North Korea

2018 update
Subsequent to the publication of this article, Raetsmarine Insurance provided evidence to the author to reflect that it insured the Kum San Bong (IMO 8810384) under the Mongolian flag, and not under the DPRK flag as was erroneously recorded in the MarineTraffic Database. The MarineTraffic Database has been updated accordingly. Raetsmarine’s policy is to prohibit the insurance of North Korean flagged vessels in order to be in compliance with the sanctions regime.

EXECUTIVE SUMMARY

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.

MAIN ARGUMENT

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 appear to be impeding 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.

POLICY IMPLICATIONS

• • 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.

• • he 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.

In February 2016 the United States escalated its enforcement of sanctions against the Democratic People’s Republic of Korea (DPRK), and in June 2016 it imposed a new set of prohibitions on the regime, citing evidence of gross human rights violations.¹ Sanctions, in the form of financial restrictions and the prohibition of marine traffic, have been increasingly imposed on a global scale against the DPRK in the past several years.² Many scholars and policy analysts have long questioned the efficacy of sanctions to alter the behavior of hostile countries or thwart human rights abuses.³ This article analyzes the efficacy of current sanctions on the DPRK, specifically those focused on curtailing marine traffic into the country.

Despite the latest round of UN Security Council sanctions in March 2016 and U.S. sanctions in June 2016, marine traffic into the DPRK continued throughout 2016. Between April 2016 and October 2016, I used automatic identification system (AIS) software from the International Maritime Organization (IMO) to analyze marine traffic into active DPRK ports and identified approximately 70 incoming vessels, mostly arriving from Chinese ports but also from other locations, including a vessel that traveled to Sinpo harbor from Vancouver, Canada. While the methods used in this article are insufficient to produce a conclusive account of all marine traffic into the DPRK, this study finds that, despite the existence of sanctions, marine traffic regularly enters DPRK ports owing to the reflagging of vessels under flags of convenience and ownership of vessels by offshore capital management firms. This...