North Korea sanctions

What will China say to US ‘blunt’ call to expel North Koreans?

Senior American official also calls on Hong Kong to close regulatory loopholes allowing Pyongyang to fund its nuclear ambitions

PUBLISHED : Wednesday, 24 January, 2018, 9:52pm
UPDATED : Wednesday, 24 January, 2018, 11:32pm

Washington has again asked Beijing in “blunt and candid” talks to expel North Korean nationals who the US says are helping Pyongyang fund its nuclear weapons programme, a senior American official said on Wednesday.

In Hong Kong after a stop in Beijing, Sigal Mandelker, US Treasury undersecretary for terrorism and financial intelligence, said China needed to do more to rein in North Korea.

Mandelker said she also urged Hong Kong officials to plug loopholes in the city’s rules and regulations allowing Pyongyang to breach international sanctions.

But a Commerce and Economic Development Bureau spokesman defended Hong Kong’s regulatory regime, saying it was on par with places such as Britain and Singapore.

Beijing would never enforce the sanctions from the US government, no matter what pressure Washington applied
Liu Weidong, US affairs specialist at the Chinese Academy of Social Sciences

“[Our] Companies Registry has a robust and efficient supervision system in place,” he said, adding that Hong Kong had strictly implemented United Nations Security Council sanctions.

He said the city’s legislature passed two amendment bills on Wednesday to strengthen the rules and the changes would come into effect on March 1.

Mandelker issued her calls amid suspicion in Washington that China has illegally sold oil to North Korea and international concerns that Hong Kong has become a major source of dirty funds for Pyongyang.

In November, a Hong Kong-registered ship chartered by a Taiwanese company was caught transferring oil to a North Korean vessel in international waters, a breach of UN sanctions against China’s isolated neighbour.

Mandelker said she repeatedly pressed Chinese and Hong Kong officials to ratch up pressure on North Korea to counter Pyongyang’s smuggling and financing.

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“We had candid and blunt conversations about where we see the threats and what we think other countries need to do to work with us to aggressively enforce the sanctions,” she said, suggesting the parties did not narrow their glaring differences over Pyongyang.

“One point we pressed repeatedly is that those individuals need to be expelled to the extent that they are in China, and a number of them are.

“Every country has obligations under United Nations Security Council resolutions to do so, and we place a lot of emphasis on that point, among others.”

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She was referring to 26 individuals and nine banks named by the US Treasury Department in September as breaching UN sanctions. More than a dozen others are on another UN list.

But Beijing has dismissed the US list as a unilateral sanction beyond the scope of the UN’s framework, and has repeatedly refused to help with the US action.

“China always opposes other countries’ unilateral sanctions based on their own laws, and ... ‘long-arm jurisdiction’,” Chinese foreign ministry spokesman Lu Kang said in October.

Analysts said China was unlikely to heed the US expulsion call, especially with tensions easing on the Korean peninsula following Pyongyang’s decision to take part in the Winter Olympics in South Korea next month.

Liu Weidong, a US affairs specialist at the Chinese Academy of Social Sciences, said China would only comply with UN – not US – sanctions on North Korea.

“Beijing would never enforce the sanctions from the US government, no matter what pressure Washington applied,” Liu said.

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In Seoul, Hwang Jae-ho, a Northeast Asian regional security analyst at Hankuk University of Foreign Studies, said Beijing would not risk escalating tension on the peninsula now.

“The Winter Olympics is a precious opportunity for possible discussions over the North Korea problem, and Beijing would be pushing Pyongyang to extremes if it adopted US sanctions,” Hwang said.

US President Donald Trump has praised China for its efforts to restrict oil and coal supplies to North Korea but was furious about Beijing’s alleged involvement in oil smuggling, saying last week that Beijing could do much more to help constrain Pyongyang.

Mandelker said she had “productive, candid conversations” with Hong Kong officials about the need to step up regulatory measures to ensure North Korea abuse the city economic and financial systems.

“Hong Kong, of course, is an international financial hub and at the same time it has company formation and registration rules that we think need to be stronger,” she said.

Hong Kong should continue to improve and enforce laws to send a strong message that it would not be a place to “facilitate front company, shell company” activities, she said.