26.05.2016 Author: Konstantin Asmolov

How Russia Implements Sanctions Against North Korea

45345454According to the press reports, Russia has made the decision to suspend its financial relations with the Democratic People’s Republic of Korea and discontinue importing products of the North Korean mining sector. A draft presidential decree on the implementation of the UN Security Council’s resolution (adopted on March 2 in response to Pyongyang’s nuclear-missile tests) prepared by Russian Foreign Ministry and posted on regulation.gov.ru provides the details. The immediate measures include the closing of subsidiary organizations, branches and representative offices of North Korean banks, joint ventures with the participation of North Korean banks, and the prohibition of equity participation in the ownership or correspondent relations with North Korean banks. The draft decree also envisions the shutting down of Russian representative offices, branches of banks and the closing of bank accounts in North Korea if the Russian party involved has “reasonable grounds to believe the respective financial services can contribute to the development of North Korea’s nuclear-missile program.” Citizens of the Democratic People’s Republic of Korea working for companies or individuals listed in the UN Security Council’s blacklist will become subject to deportation from Russia. Russia is also considering banning imports of North Korean coal, iron, iron ore, gold, titanium and vanadium ore as well as rare-earth minerals. The transit of Russian coal via the North Korean port of Najin will not be affected (as an exception).

When South Korean mass media conveyed this news, it stressed that “North Korea had pushed its luck. Now even Russia has introduced sanctions against it.” They also emphasized that previously the Russian President would only sign orders on the implementation of UN Security Council resolutions about seven months after their issue. This time, however, a corresponding draft presidential decree was released only two months later. 

Unfortunately, such “news interpreters” traditionally express their “wishful thinking” rather than facts. If we compare the sanctions introduced by Russia to those defined in the resolution of the UN Security Council, we will notice that Russia was not acting on a whim. On the contrary, it acted in line with the document adopted by the Security Council. Unlike the US or South Korea, which devised some additional sanctions, Russia introduced only those prescribed.

There is one more point. When reading the draft presidential decree, pay attention to its wording. All listed prohibitions are subject to application only if there are “reasonable grounds” to believe that the money received from transactions will be spent on the development of the North Korean nuclear program. Since no detailed explanation of the “reasonable grounds” is provided in the document, it means that Russia will decide on a case-by-case basis whether such “reasonable grounds” exist or not. Largely, decisions will be determined by the political situation in Russia. Of course, the North Korean defense industry will not receive any explicit support, as it would be too easy to detect. On the other hand, if there is no concrete evidence that the proceeds will be used for the development of the North Korean nuclear-missile program, why should Russia refrain from trading with North Korea? After all, the principle of the presumption of innocence still exists.

As for the subsidiary companies and branches of North Korean banks, they are mostly “fictional entities” and their harsh eradication would be a good way for Russian officials to once again practice “tilting at windmills.”

As for the Russian economic interests, they were hardly impacted. The sanctions will not affect the shipment of Russian coal to South Korea and China via RZD rail route and its transshipment in the North Korean port of Najin. The ban imposed on the imports of North Korean raw materials to Russia cannot be considered a significant measure either. According to the customs statistics published by Russian newspaper Kommersant, only 39.6 tons of raw zinc, worth of $60.1 thousand, were imported to the member states of the Eurasian Economic Union from North Korea in January-February 2015. The lion’s share of imports, both in terms of tonnage and cost, constitutes seafood: in the two first months of 2016, the share of seafood in the total imports amounted to 75.7%, in 2015—to 25%. The shares of textiles and musical instruments were 23.5% and 15.5% respectively. North Korea ranks only 113 in the list of Russia’s foreign trade partners, and its share in the total trade volume is only 0.01%.

There was one more news item, which was largely overshadowed by the news concerning sanctions. At one of the latest sessions of the UN Security Council, it was Russia that basically torpedoed new resolutions and subsequent sanctions against North Korea related to the launches of North Korean Musudan missiles. Despite the fact that the launches were declared unsuccessful, the US and South Korea regarded them as a substantive enough violation of the Security Council resolutions for the imposition of new restrictive measures. Russia’s take on the incident was that Musudans do not belong to the family of military-grade ballistic intercontinental missiles, and that both North Korea and South Korea have the right to fire missiles when conducting military drills. Russian representatives also noted that while both countries have the right to demand that the other party discontinue military drills, they also have the right to refuse the demand on the grounds that any country can conduct any sorts of drills in its territory as long as they do not violate the territorial integrity of other countries.

Ultimately, Russian-North Korean relations are not limited strictly to sanctions. Their landscape is definitely more diverse. Therefore, it is quite natural for the following questions to arise. What general line should Russia take when generating decisions related to the “Korean issue”? Should Russia give ground to China in this domain? What solutions can Moscow actually come up with to resolve the problem? However, hese issues are too fundamental and will be discussed in a separate article.

Konstantin Asmolov, Ph.D, Chief Research Fellow of the Center for Korean Studies, Institute of Far Eastern Studies, Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook.