The Department of the Treasury announced March 30 that it had imposed penalties on a Swiss company, along with one of its owners, for procuring “goods with weapons-related applications” for North Korea. The move follows about a dozen similar sanctions under a June 2005 executive order issued by President George W. Bush and comes as multilateral talks designed to resolve the nuclear crisis on the Korean peninsula remain stalled.
A Treasury Department press release said it had designated Kohas AG and its president, Jakob Steiger, as being involved in the proliferation of nuclear, chemical, or biological weapons or related delivery vehicles.
Describing the firm as an industrial supply wholesaler, which acts as a “technology broker in Europe for the North Korean military,” the press release added that both the company and Steiger have been involved in activities of “proliferation concern on behalf of North Korea since the company’s founding in the late 1980s.” The department did not provide further details.
The designation freezes any U.S. assets either of the company or Steiger. It also prohibits the company or Steiger from engaging in transactions with any U.S. citizens or companies. Whether this action will have any practical effect on the entities is unclear. The Treasury Department cannot disclose whether designated companies have any U.S. assets, a department spokesperson told Arms Control Today April 24.
Moreover, the assets may already be frozen. The Treasury Department last October similarly punished Korea Ryongwang Trading Corp., a North Korean company that owns just under half of the Swiss firm’s shares. Any U.S assets the company had “would have been frozen at that time,” the spokesperson said.
Steiger owns the remainder of the firm’s shares, the press release said. The spokesperson emphasized that the designations also “prohibit the individuals and entities from accessing the U.S. financial system.”
Both the company and the Swiss government have disputed the Treasury Department’s account. Othmar Wyss, an official at the Swiss State Secretariat for Economic Affairs, stated, “we don’t believe the company has shipped goods to North Korea without approval or that these goods have been used for the production of weapons of mass destruction,” Reuters reported March 31.
Steiger told Reuters the same day that the company imported aluminum brackets from North Korea to manufacture shelving. But the firm does not export to that country, he said. He also denied that North Korean entities owned any part of his company, Reuters reported.
North Korea’s proliferation activities have long been a source of concern. Stuart Levey, the Treasury Department’s undersecretary for terrorism and financial intelligence, said March 30 that North Korea’s efforts “to build and sell weapons of mass destruction depend on a vast network, the reach of which extends beyond Asia.”
North Korea is believed to have used overseas networks to transfer ballistic missiles and related technologies as well as acquire components for a suspected clandestine nuclear weapons program.
During an April 6 Senate hearing, Levey touted the success of other recent U.S. actions to curb Pyongyang’s proliferation activities, such as the Treasury Department’s September designation of a Macau bank as a “money laundering concern.” The United States asserts that Banco Delta Asia provided financial services to North Korean government agencies and front companies engaged in such activities as drug trafficking, the distribution of counterfeit U.S. currency, and smuggling of counterfeit tobacco products and pharmaceuticals.
Since the September designation, the bank has frozen the relevant accounts. Other financial institutions have also curtailed their dealings both with the bank and North Korea, according to U.S. officials.
Levey also indicated that the United States would continue such efforts, saying the Internal Revenue Service’s investigation would “exploit underlying North Korean account information at Banco Delta Asia.” Such an investigation will enable the United States to “gain an even greater understanding of...[North Korea’s] illicit activities,” he said.
Meanwhile, the Treasury Department has undertaken another measure designed to stem North Korean illicit activities. The department announced April 6 that it is amending the Foreign Assets Control Regulations to place new restrictions on U.S. transactions involving North Korean property. The amendment prohibits “[U.S.] persons from owning, leasing, operating, or insuring any vessel” flying the North Korean flag. The new restrictions become effective May 8.
Still No Talks
Despite a March meeting between North Korean and U.S. officials to discuss the Banco Delta Asia matter, Pyongyang continues to refuse to agree to another round of six-party talks, citing its objections to the actions taken against the Macau bank. The six parties, which also include China, Japan, Russia, and South Korea, last met in November. (See ACT, April 2006.)
North Korea has repeatedly called on the United States to lift the “financial sanctions,” which Pyongyang asserts are part of a U.S. policy to undermine the regime and to pressure the country to make concessions in the six-party talks.
The Chosun Ilbo reported April 13 that North Korean Vice Foreign Minister Kim Gye Gwan told reporters Pyongyang would return to the talks if the United States lifted the freeze of Banco Delta Asia’s funds, which total approximately $24 million. Kim reportedly tried to meet with Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill during the conference, but Hill refused to do so.
Washington maintains that it is ready to return to the talks but has not indicated that it will agree to Kim’s request. Hill reiterated the Department of State’s position that the two sides could meet bilaterally in the context of the six-party talks to discuss the Banco Delta Asia issue, South Korea’s semi-official Yonhap News Agency reported April 11.
For their part, other participants in the talks have continued to call on North Korea and the United States to be more flexible. For example, Chinese President Hu Jintao acknowledged during an April 20 press conference with Bush that the negotiations “have run into some difficulties” and said that all parties should “further display flexibility, work together, and create necessary conditions for the early resumption of the talks.”
New Details Emerge On NK Enrichment ProgramA former Department of State official familiar with Pyongyang’s nuclear program told Arms Control Today April 18 that North Korea’s suspected uranium-enrichment program has received a more advanced type of centrifuge from a black-market network than has previously been made public. The claims had first been reported in the New York Times the previous day. The official said that North Korea received the advanced P-2 centrifuge from Pakistan. Pakistani President Gen. Pervez Musharraf acknowledged last fall that a proliferation network run by former Pakistani nuclear official Abdul Qadeer Khan had provided Pyongyang with 12 to 20 complete centrifuges, as well as centrifuge designs and components. (See ACT, October 2005.) U.S. officials had earlier claimed that Pyongyang received centrifuge components from the Khan network. Libya is also known to have obtained P-2 centrifuges from Khan (see ACT, July/August 2004). Iran has acknowledged obtaining P-2 centrifuge designs from the network but has denied receiving the actual centrifuges (See "Security Council Mulls Response to Iran"). Gas centrifuges enrich uranium hexafluoride by spinning it at very high speeds to increase the concentration of the relevant fissile isotope. Highly enriched uranium can be used as fissile material in nuclear weapons. Pyongyang has repeatedly denied having a uranium-enrichment program. Even if North Korea has received P-2 centrifuges, it is not clear whether or to what extent North Korea has made use of either of the centrifuge technologies. State Department officials told Arms Control Today last fall that North Korea has enough components sufficient for a “pilot” enrichment facility. But there appears to be considerable doubt as to whether Pyongyang has an operating facility or possesses all necessary centrifuge components. North Korea also has a plutonium-based nuclear weapons program. In 2003, Pyongyang restarted a nuclear reactor and related facilities whose operation had been frozen under a 1994 bilateral agreement with the United States. Pyongyang claims to have extracted plutonium from the reactor’s spent fuel and used it to produce nuclear weapons. (See ACT, December 2005.) The U.S. intelligence community assesses that North Korea probably has nuclear weapons but has not yet confirmed the accuracy of Pyongyang’s claims.
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