Singapore’s trade ban with North Korea yields more questions than answers

At first glance, this looks like the State Department’s biggest coup yet in its campaign of progressive diplomacy against Pyongyang.

“Singapore will prohibit all commercially traded goods from, or to, the Democratic People’s Republic of Korea (DPRK),” the city-state’s customs said in the notice sent to traders and declaring agents last Tuesday, referring to the country by its official name.

The suspension would take effect from Nov. 8, Fauziah A. Sani, head of trade strategy and security for the director-general of customs, said in the notice. [Reuters]

The first question is what this means. NK News adds the useful detail that this order will ban all commercial trade, “regardless of whether [it is] imported, exported, transhipped or brought in transit through Singapore.”

If this means anything, it will help end a brisk trade in prohibited luxury goods of the kind that fill elite shops in Pyongyang while people in the outer provinces barely survive. NK Pro’s remarkable investigation into OCN (S) Pte, Limited’s luxury good exports to Pyongyang, in partnership with Bureau 39, is behind a very high paywall, but it’s well worth reading if you can afford a subscription. If you can’t, this story or this one will give you the gist of it (see also). I’d think that this would end the role of Pan Systems Singapore as a middleman in the trade in components for Glocom’s wares, but someone should get a clear answer to that question.

For years, Singapore’s regulation implementing the U.N.’s North Korea sanctions was several resolutions out of date. Since then, Singapore has done a better job of keeping its regulation updated. Reuters describes Singapore as North Korea’s seventh-largest trading partner, but exporters like OCN, who want to avoid legal scrutiny, may claim a different country of destination for their merchandise. Be skeptical of any official trade statistics about North Korea.

The reports Singapore filed with the U.N. this year and last year on its implementation of North Korea sanctions suggest that Singapore already had tight export controls, and was already enforcing U.N. resolutions requiring the inspection of cargo going to and from North Korea. We now know that this wasn’t true. Just before NK News blew the whistle on OCN, Singapore told the U.N. that it had “completed its review and update of its existing list of luxury goods prohibited for transfer to” North Korea. In 2016, the U.S. offered to assist Singapore with a cargo monitoring system to detect exports of prohibited goods. Clearly, Singapore could use that help.

There is also the question of what this new ban does not cover. After all, Singapore’s main importance for North Korea isn’t as a direct trading partner, but as a hub for laundering its money and registering its front companies. Yet on its face, Singapore is only banning the trade in “goods.” It has said nothing about services.

The DPRK’s Jinmyong Joint Bank also operates a branch in Singapore, while a brochure for Pyongyang’s First Credit Bank claimed it has had ” a joint venture agreement with Singapore for 50 years.”

The U.S. Department of the Treasury in late August designated two Singapore-based companies ”“ Transatlantic Partners and Velmur Management ”“ for links to the North Korean state. [NK News, Dagyum Ji]

In 2013, the Burmese opposition website The Irrawaddy, citing unnamed businessmen, reported that a Burmese general designated by the Treasury Department and linked to the North Korea arms trade, and who visited North Korea in 2008 to seek help with Burma’s ballistic missile program, “may have opened several bank accounts in Singapore in past years in order to help Burma’s military sort out international arms deals.” It noted that “[t]he fact that many of the generals were on a US sanctions list has not hindered their opportunities to visit and do business in Singapore.”

We learned more about North Korea’s money laundering and front companies in Singapore from the Glocom case, from the Velmur forfeiture case, from the U.N.’s investigation of the Chinpo Shipping case, and from Chinpo’s appeal of the fine levied on it. Singapore’s implementation reports claim that it has complied with the U.N. asset freeze provision, but China’s interference and the inefficiency of the 1718 Committee — which still hasn’t even designated Glocom — means that relatively few North Korean entities are designated.

UNSCR 2270 bans direct and indirect correspondent services for North Korean banks, and UNSCR 2371 bans joint ventures with North Korea. If Singapore enforces the resolutions as written — and if its local bank branches know what’s good for them — they ought to shut Pan Systems, any other North Korean joint ventures, and all of their bank accounts.

Singapore also exports other services to North Korea. In 2015, NK News reported that a Singapore firm was building a department store for the elites in Pyongyang. U.N. resolutions do not prohibit the provision of construction services or materials to North Korea, but deals in non-sanctioned goods and services sometimes involve a sanctioned North Korean entity as a partner.

Singapore says it will not end diplomatic relations with North Korea. That’s within the Singapore government’s discretion, but UNSCR 2321 calls on all states to reduce the number of staff at North Korean embassies and require them to limit those staffers to one bank account each. Implementation reports filed by Singapore say nothing about compliance with those provisions. Singapore has warned its citizens against tourist travel to North Korea. Last year, it also ended visa-free entry by North Koreans.

The ultimate question is whether Singapore will follow through on its word. Yesterday, the State Department said that Sudan would also end all trade and military ties with North Korea. That would be the third time this “news” has been reported in the last year. North Korea’s commercial ties can be surprisingly resilient, and Singapore has long been a major hub for North Korea’s smuggling and money laundering operations. It will continue to be one as long as Pyongyang is allowed to post a large number of agents on Singapore’s territory under diplomatic cover. Be skeptical of this story until you see evidence that North Korean accounts are frozen, and that North Korean nationals are packing their bags and boarding flights back to Pyongyang.