Diplomat author Mercy Kuo regularly attracts subject experts, policy practitioners and strategic thinkers from around the globe to gain a diverse understanding of US Asian policy. This conversation with Lucas Kuo – Senior Analyst at C4ADS and co-author of “Black Gold: Reveals North Korea’s oil purchasing network, ”A collaborative publication between the Center for Advanced Defense Research (C4ADS) in Washington, DC and the Royal United Kingdom Institute of Services (RUSI) in London – is the 269th publication in the Trans-Thai“ Series Insight View. Binh Duong “.
Briefly explain North Korea’s fuel procurement strategy.
North Korea is completely dependent on foreign fuel sources for economic, military and weapons programs. The United Nations Security Council first imposed a limit on North Korea’s fuel imports in 2017, but since then, the Security Council has breached the limit every year.
North Korea’s illegal oil supply chain depends on both Korean and foreign tankers participating in a “shuttle system” in which fuel from on-shore facilities is passed through the STS consecutively. [ship-to-ship] transfer before transferring directly to North Korea. On the efficiency front, we’re seeing what anti-money laundering experts call “layering” in financial transactions, where every step in the supply chain makes it difficult for investigators to connect North Korea. with initial selling point on more shore. Our analysis shows that transnational smuggling organizations coordinate these complex deliveries, not only for North Korea but also for others in a vibrant regional black market.
Describe the role of China and Taiwan in this strategy.
China and Taiwan are important logistics centers in the space shuttle system. DPRK’s affiliated tankers – including those that have been sanctioned by the UN – often moor in Chinese waters near Fujian province between shopping or delivery trips. Across the strait, the waters north of Taipei and south of Kaohsiung have become hot spots where DPRK affiliate tankers buy fuel through STS transshipment.
The differences in the oil pricing regime in China and Taiwan have created significant differential opportunities in the cross-strait fuel trade, thus attracting experienced and reputable smuggling groups into the country. market. For example, China sets a floor price for retail oil products to protect domestic refineries, and Taiwan allows foreign tankers to buy diesel fuel duty-free at ports that are considered commercial zones. free trade. North Korea benefits from the black market that these patchwork policies have created, and from powerful trading companies involved.
Explain the function of the Singapore-based Winson Group in North Korean oil procurement.
Founded in 1998, Winson Group is a private oil transportation and trading company headquartered in Singapore and with offices throughout Asia. Winson is an industry powerhouse that, as of March 2021, owns or manages dozens of tankers and has access to billions of dollars in credit facilities, according to maritime and financial databases. financial documents.
Our report identifies many oil shipments associated with the DPRK from 2017 to 2020 that appear to have originated from Winson Shipping Taiwan, the Winson Group’s Kaohsiung-based office. Notably, our report – as well as the New York Times investigation – shows that two tankers affiliated with Taiwan Winson Shipping have repeatedly encountered the DIAMOND 8 in 2020, a large tanker. Most foreign flag carriers are known to have delivered fuel to North Korea.
In addition, our investigation has uncovered several other companies and individuals involved in the DPRK’s fuel-smuggling vessels that have commercial ties with the Winson Group. Winson’s relationship with DPRK’s other networks, as well as Winson’s ability to participate directly in DPRK’s shipments suggest the company appears to be an important node in the supply chain illegal North Korean fuel.
How is North Korea’s fuel supply chain linked to criminal networks?
Asia’s long-standing black market fuel market has nurtured sophisticated smuggling networks with the ability to fuel North Korea despite an important international surveillance mission. Our investigation found that many illegal fuel shipments to North Korea by 2020 could be traced back to individuals linked to organized crime, smuggling and bribery. We have seen North Korea handle organized crime in historical cases that generate illegal revenue, but our analysis is new evidence that crime and corruption continue to undermine efforts. Nuclear non-proliferation force recently.
Identify ways in which the United Nations, the United States, the EU and Asian governments can blame Pyongyang for illegal oil purchases.
The international community should make more effective use of the information disclosed in the monitoring and verification mission about North Korea. Our investigation reveals how much action information can be generated from unsorted sources that can be easily shared with the media, customs authorities, and financial institutions. key and other regional partners are at the front line of implementing UN sanctions on North Korea.
One of the leading organizations in this mission-driven effort that can benefit from more information sharing and integration with public information is an Execution Coordinated Cell (ECC). ECC is a multinational coalition led by the US and its partner countries in the Five Eyes coalition (Australia, Canada, New Zealand and the UK) as well as France, Japan and South Korea overseeing evasion of sanctions. DPRK’s maritime navigation, including tracking the tankers that illegally fueled Pyongyang. The ECC generates a lot of intelligence on fuel smuggling activities in the region, which needs to be declassified regularly to better inform non-member states (including China and Taiwan), The United Nations and other stakeholders in the financial, shipping and environmental oil sectors in which the North Korean network of oil purchases operates. Given the complexity and transnational nature of the matter, the flexibility provided by public information can provide strong complementary capabilities for governments to attract more stakeholders.