U.N. Report Details How North Korea Evades Sanctions

A report written by a United Nations panel of experts has determined that North Korea is evading international sanctions with “seeming impunity,” but a bitter behind-the-scenes battle between Russia and the United States has prevented the report from being made public.

The 148-page document, researched and written over the past few months, presents a highly critical account of North Korea’s persistent evasion of sanctions on its oil and coal trade—sanctions designed to pressure Pyongyang to give up its nuclear weapons program.

Russia has tried to water down the report, which includes allegations that its companies routinely breached the sanctions. When the U.N. experts accepted a handful of Russian amendments to the report, the U.S. team headed by Ambassador Nikki Haley cried foul and blocked its publication altogether.

The unusually bitter feuding, taking place mostly in confidential meetings at U.N. headquarters, divided the United States and its allies, who believe the Russian amendments were reasonable, and undermined the U.N. Security Council’s ability to enforce the sanctions on North Korea and beyond, according to nearly a dozen diplomatic sources in New York and Washington.

It has also exposed the gaps between the position of U.S. President Donald Trump, who has cultivated warmer ties with Russian President Vladimir Putin, and Haley’s approach to the Russians at the United Nations.

“Russia has been cheating. And now they have been caught,” Haley told delegates in an emergency Security Council meeting on sanctions on Monday. “Lying, cheating, and rogue behavior have become the new norm of the Russian culture.”

U.S. officials have portrayed their action as necessary to prevent Russian interference in an important fact-finding process. But critics of the approach say the United States has gone too far, effectively undermining its own interests.

“The reasonable members of the sanctions committee all tried to find a solution. But the U.S. wanted to block any input by the Russians,” said one official involved in the negotiations. “They didn’t want a compromise; they were steamrolling over everyone.”

For more than a decade, the United States has championed the work of the U.N. panel of experts, a quasi-independent body established in 2006 to enforce a battery of U.N. sanctions on North Korea’s nuclear and ballistic missile program. It is led by a British expert on arms trafficking, Hugh Griffiths, and includes specialists from Britain, China, France, Japan, Russia, South Korea, and the United States.

The U.N. panel has produced a raft of reports exposing Pyongyang’s illicit efforts to finance its nuclear weapons program, while providing international legitimacy to America’s broader diplomatic effort to contain North Korea’s nuclear ambitions.

The latest report—which was obtained by Foreign Policy and remains blocked by the United States—details how North Korean financial brokers operate with little or no constraints in five main countries. It cites a group of nearly 300 foreign businesses and individuals, including 215 from China and 39 from Russia, that have allegedly flouted sanctions by forming prohibited joint ventures with North Koreans. An earlier version of the report was leaked to reporters in August.

The final confidential report—whose findings were previously reported by the Wall Street Journal—cites evidence that a North Korean national registered a company at the North Korean consulate in Vladivostok. The company, a joint venture set up with a Russian director, has operated multiple businesses in construction and real estate and managed a series of restaurants and bars on railway cars and ships.

The panel has also obtained evidence that a North Korean construction company, the Korea General Corporation for External Construction, or GENCO, and a Russian national co-own a construction company in Russia’s Sakhalin Oblast. GENCO has links to an alleged agent of the Reconnaissance General Bureau, North Korea’s intelligence agency.

But its most flagrant and effective method for evading sanctions involves the transfer of refined oil from foreign tankers to North Korean ships on the high seas.

The report details an April 10 incident in which the Russian-flagged vessel Patriot was seen unloading cargo at sea onto the tanker Wan Heng 11. Five days later, the North Korean tanker—which had previously been sanctioned by the U.N.—was photographed, most likely by U.S. surveillance cameras, unloading fuel in the North Korean port of Nampo. In an apparent effort to evade detection, the two ships shut off their electronic tracking systems during the transaction.

But while the report concludes Wan Heng 11 is in violation of U.N. sanctions, it says that a loophole in the sanctions regime permits sanctioned vessels to transfer fuel and other cargo to other ships on the high seas. It recommends closing that loophole to prevent the Patriot and other ships from legally abetting sanctions busters.

“[North Korea] has not stopped its nuclear and missile program and has continued to defy Security Council resolutions through a massive increase in illicit ship to ship transfers of petroleum products, as well as through transfers of coal at sea,” the report says.

“These violations render the latest United Nations sanctions ineffective by flouting the caps on the import of petroleum products and crude oil by the DPRK [North Korea], as well as the coal ban.”

The United States tried in early July to convince the panel that North Korea was in breach of U.N. sanctions, just weeks after Trump’s historic summit in Singapore with North Korean leader Kim Jong Un. On July 6, U.S. officials provided the U.N. panel of experts with intelligence suggesting North Korea had already imported the maximum amount of petroleum allowed in 2018 under the terms of U.N. sanctions.

The U.S. informed the U.N. experts it had a dozen satellite images showing 89 tankers unloading into the North Korean ports of Nampo, Najin, and Wonsan between Jan. 1 and May 30. According to U.S. calculations, those vessels had the capacity to unload nearly 1.4 million barrels of oil, nearly three times the volume allowed under U.N. sanctions. Even if they carried one-third of their load, they would have reached their annual cap of 500,000 barrels.

But Russia challenged the U.S. accounting, noting that the U.N. Security Council sanctions committee’s own officials figures indicated that North Korea had only imported a quarter of its cap. Moscow insisted that its objections be reflected in the final report.

“There are no formal grounds for suspending the export of refined petroleum products to the DPRK,” Russia contended in a July 30 formal letter. Shortly after, the Russian and Chinese experts on the panel, Dmitry Kiku and Jiahu Zong, filed a dissent and withdrew their signatures from the report, a clear sign that Russia was likely to block its publication.

Faced with the prospect that the report would be suppressed, U.N. officials and diplomats from Britain, France, and the Netherlands began quiet discussions to see if they could mediate a compromise. Among the options the U.N. considered was a British proposal to publish the Russian note in an annex to the report. But the United States opposed the initiative, which was never formally presented to Russia.

Faced with a big-power deadlock, the U.N. panel finalized the report on Aug. 3 and sent it to the U.N. sanctions committee to prepare it for publication. But Russia’s U.N. ambassador, Vassily Nebenzia, signaled later that month, that his delegation had problems with the report, and he moved to stall its release.

The United Nations secretariat, meanwhile, opened up a separate channel of negotiations with the Russians and struck a compromise deal. It included an agreement to have a paragraph in the final report noting Russia’s reservations about the reliability of America’s claim that North Korea had exhausted its annual oil import cap. It also stipulated that a list companies and individuals that have joint ventures with North Korea—including 39 Russian firms—would be relegated to a secret annex of the report. (In the original report, the names of the Russians companies had been redacted anyway.)

The United States reacted furiously to the pact, accusing the panel members of having capitulated to Russian pressure. The decision to open up a completed panel report for amendments set a troubling precedent that would invite others to seek to rewrite independent panel reports in the future.

The U.N. panel of experts “is the only tool the international community has to ensure sanctions are fully implemented and enforced,” a spokesperson for the U.S. mission to the U.N. told FP. “It gives the world an impartial, independent means of ensuring accountability for violators.

“If Russia is allowed to taint that process, they’ll do it again. And others will follow their lead,” the spokesperson added. “It will essentially give the Russians—and any other country on the council—permission to violate sanctions and then cover their tracks.

But the U.S. decision to block the release of the North Korea report, which was signed by all seven panel members—including the American expert —put Haley’s delegation on the spot. And it placed Russia in the unlikely role of champion of a U.N. report exposing sanctions violations by its own nationals.

“You are the ones who are preventing the publication of an independent report,” Nebenzia told Haley in the Security Council earlier this week. “I do have a request to you: Please lift the hold on the panel of experts report and make sure that it sees the light of day.”