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Our S Korean ally has a plan to bail Kim Jong-un out, but it’s no better than the rest of them

I really think South Korean President Moon Jae-in wants to bail Kim Jong-un out more than I want my next breath. Even before he was sworn in, he called for the reopening of Kaesong and other joint projects to ease the burden of U.S.-led sanctions. Once in office, he called for major investments in North Korea until a call from the Treasury Department scared his bankers away. He turned a blind eye to purchases of North Korean coal, and probably to the smuggling of luxury goods, into and through South Korean ports, and failed to seize the ships involved (as mandated by U.N. resolutions). He sent fuel and machinery to Kaesong and failed to report the shipments to the U.N. When he was found out, argued that Kaesong doesn’t really count as North Korea (page 151, table 13, paragraph 13).

Meanwhile, Moon lobbied Washington and the U.N. relentlessly for sanctions exemptions, despite Kim Jong-un making neither concessions nor progress toward disarmament. He wanted to build a railroad through North Korea (he won an exemption for a survey only). Most recently, he has tried to use tourism as a sanctions dodge, despite suspicions that the only viable venue for that now, Kumgang, is under the control of U.N.- and U.S.-sanctioned Bureau 39. Now, Moon’s nominee to become the next Minister of Unification, Lee In-young, has the next big idea for how to bail Kim Jong-un out.

You would think that an administration filled with lawyers (human rights lawyers, no less) could employ someone with basic competence at reading legal documents. Instead, Lee’s plan is an embarrassing concession of legal ignorance, lawlessness, or both. Leave aside the political and diplomatic costs Seoul would incur by defying its security guarantor in Washington and the U.N. Security Council, to which South Korea owes its very existence, and all of the blessings its people consequently enjoy. Does Lee think he invented the idea of using barter transactions as a sanctions-evasion tool? Does he really think sanctions only cover cash transactions?

As you must have guessed by now, the answer is “no.” U.N. sanctions apply to “transfers” of “economic resources.” U.S. sanctions apply to “property and interests in property,” and these blocked assets “may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” It is true, of course, that U.S. jurisdiction usually only reaches transactions by U.S. persons and within the United States (as dollar transactions are, because they are cleared by correspondent banks in the United States). So maybe Lee is hanging his theory on the fact that it is theoretically possible to barter goods without touching U.S. jurisdiction, if one doesn’t care about violating U.N. sanctions.

But as Pyongyang learned to its great cost recently, what is theoretically possible and what is practically possible are two different things. Take the case of the M/V Wise Honest, formerly Pyongyang’s second-largest bulk cargo carrier and also, its second-greatest monument to irony, after “Democratic People’s Republic of Korea.” Until 2018, this large, floating dumpster was the property of the Korea Songi Trading Company, a Treasury-designated front company for the North Korean army. In 2018, the Wise Honest sailed for points south with a cargo of coal, to be bartered for machinery (probably for the heavily sanctioned mining industry) it would carry home on its return voyage. It seemed like a perfect sanctions-proof plan, despite the fact that by then, the U.N. Security Council had banned North Korea’s exports of coal and its imports of machinery, the North Korea Sanctions and policy Enhancement Act had banned its coal exports, and Executive Order 13810 had banned any transactions with North Korea’s mining and transportation industries.

I speculate that when Indonesian authorities seized the ship in April of 2018—just before Donald Trump stepped in and started micromismanaging North Korea policy personally—they were acting at the request of U.S. authorities. Prosecutors in the Southern District of New York were ready. They immediately filed a seizure warrant and a civil forfeiture complaint against the ship. On what basis? Songi’s pwags had used dollar transactions to buy spare parts and repairs to pass safety inspections. They also sent payment instructions to the purchaser of the coal to remit $750,000 in payments (the North Koreans tried to use Renminbi for their transactions, but the vendors insisted on dollars). That was enough for the prosecutors to argue that the entire ship constituted “proceeds” of money laundering and sanctions violations. As it does, Pyongyang ignored the suit, and so it lost the ship.

Is Lee looking for an end run around only U.S. sanctions? Probably not. That raises the question of just what Seoul and Pyongyang would barter. Most of Pyongyang’s exports (coal, metals, ores, fish, seafood, wood, and other agricultural products) are sanctioned. So are many things it would import, including luxury goods, metals, machinery, and all kinds of vehicles. This Korean-language article tells us that Lee would like to trade South Korean rice for North Korean liquor, except that liquor falls within the export ban on “food and agricultural products,” between the HS Codes for soup and flour.1 It stands to reason that a state with a malnourished population that relies on foreign food aid should use its land to grow food, not booze, tobacco, and ginseng to export for hard currency.

Then, how would Lee organize these transactions? Would it involve public or private support for trade with North Korea (banned) or a joint venture or “cooperative entity” with North Korea (also banned)? Would the North Korean trading partners be a fronts for U.N.- or U.S.-designated entities (banned)? Would Seoul do what it did for years at Kaesong and Kumgang, and simply turn a blind eye to the probability that the revenue is being used to make missiles and nukes to point at American cities? The diplomatic tolerance for that has waned as Pyongyang has refused to reform or disarm.

Finally, if the north-bound goods are U.S.- or E.U.-sourced, end user rules would likely apply to them. A South Korean company sending U.S.-sourced goods across the DMZ might find itself on the Commerce Department Entity List (thus denied additional US-sourced technology) or worse. Just ask ZTE.

It never fails to amaze me how senior officials and nominees in the Moon administration can’t be bothered read the sanctions or obtain competent legal advice before advancing their grand plans to circumvent them. For whatever reason—the fear of a latent threat, Stockholm Syndrome, ethnonationalist affinity, political opportunism, financial greed, or ideological sympathy—Moon Jae-in’s cabinet is desperate to break sanctions designed to disarm a psychopath who killed his own half-brother, along with countless North Koreans (and now, Syrians), and who wants better ways to kill more of us. What Moon wants to bail Kim out from is precisely the pressure that it’s U.S. policy to create, to persuade Kim to choose between his weapons of mass destruction and the survival of a regime that is a scourge on its subjects. The U.S. and South Korea may be nominal allies, but their North Korea policies are in direct conflict.

As Donald Trump has proven in his usual fashion—though inadvertence and ineptitude—there is no win-win between the United States and North Korea. In our zero-sum struggle to slow a global metastasis of proliferation, Moon has chosen sides, and we are not the side he has chosen. Do you want to ask why the alliance between the United States and South Korea is falling apart? There’s a lot you could blame Trump for. Just don’t forget to blame Lee In-young, and his boss, too.

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1. UNSCR 2397 bans Pyongyang’s exports of food and agricultural products but introduces ambiguity by specifying HS Codes 7, 8, and 12, but does not specify the HS Codes for other foodstuffs in codes 16-24, including meat, fish, seafood, sausage, sugar, processed foods made of cereals, pasta, bread, vegetables, fruit, tobacco, or alcohol. If the HS Codes in the resolution are really meant to be an exclusive list, the ban on food exports is rendered absurd. In any event, the NKSPEA clearly does authorize sanctions for importing food from North Korea. You’re welcome, humanity.

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