UN Report Discusses DPRK Arms Trade

Jul 1, 2010

By Oliver Bloom

The UN Security Council established a Panel of Experts pursuant to Resolution 1874 to examine and improve the implementation of UN sanctions on North Korea and report on issues of noncompliance and recently issued a report (mentioned by the Associated Press) that ArmsControlWonk managed to snag. The report offers few surprises regarding the DPRK’s continued arms imports and exports, but does offer detailed and interesting insights into the DPRK’s methods for eluding international sanctions. 

Not surprisingly, but perhaps most worryingly, the report concludes (having reviewed “several government assessments, IAEA reports, research papers and media reports”) that the DPRK continues to be involved
in nuclear and ballistic missile related activities in certain other countries including Iran, Syria and Myanmar [and] a number of government and private experts with whom members of the Panel of Experts have spoken also expressed concern that the DPRK has the capability as well as the propensity to provide nuclear and ballistic missiles-related equipment, facilities, technical advice to and through clients overseas
The report acknowledges that the DPRK
has established a highly sophisticated international network for the acquisition, marketing and sale of arms and military equipment, and arms exports.
In the face of these worrying trends, the report comments on the methods the DPRK uses to circumvent UN sanctions, as well as hurdles the international community will face in curtailing the DPRK’s illicit activity. Faced with increasing international scrutiny of its exports, the Panel notes that
the DPRK appears now to rely increasingly on foreign-owned and –flagged ships to carry all or part of its illicit cargo.
In its attempts to continue arms exports, the Panel concludes that  
the DPRK has used a number of masking techniques in order to circumvent the Security Council measures, including false description and mislabeling of the content of the containers, falsification of the manifest covering the shipment, alteration and falsification of the information concerning the original consignor and ultimate consignee, and use of multiple layers of intermediaries, shell companies, and financial institutions.
The report says, for example, that in August 2009, the UAE reported that they had seized a ship—the ANL Australia—owned by an Australian company, registered on a Commonwealth of the Bahamas Ship Registry, and shipped by an Italian company. What’s more, the shipping documents falsely described the cargo as an oil boring machine. The cargo had been custom sealed and loaded onto a cargo ship in North Korea and then transferred multiple times on its way to its declared destination of Iran.  
In addition to masking the origins and contents of its cargo, the report concludes that
A technique now being used by the DPRK to conceal its arms exports is to ship components for the assembly of arms overseas in the form of “knock-down kits” which can be delivered to foreign assembly plants
which are often then assembled by DPRK support staff in the recipient country. A South African seizure of military material in Durban harbor headed for the Republic of Congo was said to be shipped in this manner. In the case of the shipment to the Republic of Congo, it
had its origin in the DPRK and was forward to Dalian, China where it was loaded aboard the UK flagged vessel CGM Musca, owned by the French company CMA CGM, on 20 October 2009. A large quantity of rice grains packed in sacks lined the containers. The shipper was subsequently identified as Machinery Exp. and Imp. Corp. in the DPRK. After leaving Dalian, China, the cargo was offloaded in Port Klang, Malaysia and transferred to the Westerhever, a ship flying the Liberia flag chartered by Delmas Shipping, a subsidiary of CMA CGM. The shipping documents listed the contents of the containers only as “spare parts of bulldozer.”
In addition to masking its shipping cargo, the DPRK has responded to the possibility of international interdiction by using alternative means of transit. In particular, the report states that
the DPRK is also believed to use air cargo to handle high valued and sensitive arms exports.
Such air cargo can sometimes be sent direct to the recipient country (Iran, for example, is close enough that certain modern cargo planes can fly nonstop from the DPRK to Iran). While most aircraft would have to stop for refueling, and thus could be inspected (as was the case with the arms shipment seized in Thailand) the report still notes that
difficulties involved in inspection of the cargo in these aircraft in transit, and inability to subject direct flights, to the inspection procedures contained in resolutions 1874 (2009) leaves in place an important vulnerability with respect to the implementation of the resolution.
In regards to the finances behind the arms imports and exports,
the DPRK also employs a broad range of techniques to mask its financial transactions, including the use of overseas entities, shell companies, informal transfer mechanisms, cash couriers and barter arrangements. However, it must still, in most cases, rely on access to the international financial system to complete its financial operations. In structuring these transactions, attempts are made to mix illicit transactions with otherwise legitimate business activities in such a way as to hide the illicit activity.
And while the UN sanctions designated eight entities and five individuals for financial sanctions, the report was equally quick to note that
these few designations seriously understate the number of known entities and individuals engaged in proscribed activities, and are inadequate to the task of effectively inhibiting key DPRK parties from engaging in proscribed activities. No account has yet been made also to deal with those substituting for or acting for or on behalf of these entities and individuals.
The report concludes on a slightly more positive note, arguing that the various UN resolutions and import/export prohibitions
have significantly constrained the DPRK’s ability to market and export arms, and other proscribed nuclear and ballistic missile items which had previously provided a significant source of the DPRK’s foreign earnings.
It nevertheless encourages full implementation of the various UN Security Council resolutions (1718 in 2006 and 18784 in 2009) and increased vigilance by all states. 
It seems apparent that the international community will continue to play a cat and mouse game with the DPRK over arms exports and barring increased vigilance by the international community, the DPRK will manage to find ways to outsmart the best international efforts aimed at limiting its arms trade. As long as there are countries in the world that want North Koreans weapons and expertise, the North Koreans will have incentive to continue to circumvent sanctions, while these recipients will have incentives to not fully implement or enforce them. What’s more, as long as various countries, especially the ROK and China, continue to trade with North Korea, the DPRK will have a means to smuggle arms out. Given that an international embargo could spark the collapse of the DPRK, in turn causing instability and massive refugee migration, both China and the ROK have incentives to maintain some trade with the North Koreans. Accepting both an ever present demand by pariah states for North Korean arms and a desire by China and South Korea to prevent a sudden DPRK collapse, the best the international community can do is to try to enforce the sanctions regime to the fullest extent possible and keep the sanctions regime up to date as to keep up with North Korean attempts at deception.  This report is a step in that direction.  



//Walter Rademacher under a Creative Commons license