U.S. slaps sanctions on Russian lender

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U.S. slaps sanctions on Russian lender

The U.S. Department of Treasury blacklisted a Russian financial institution accused of helping North Korea evade sanctions Wednesday on the eve of Chinese President Xi Jinping’s trip to Pyongyang.

The Treasury’s Office of Foreign Assets Control in Washington announced that it has sanctioned the Russian Financial Society for providing financial services to Dandong Zhongsheng Industry & Trade, a blacklisted entity controlled by a North Korean bank, enabling it to access the global financial system and generating funding for Pyongyang’s nuclear weapons program.

The Moscow-headquartered Russian Financial Society was flagged by the Treasury as a secondary sanctions risk and accused of having opened multiple bank accounts in 2017 and 2018 for Dandong Zhongsheng, which is linked to the Foreign Trade Bank, North Korea’s primary foreign exchange bank, which has been blacklisted by Washington and the United Nations (UN).

This latest U.S. sanctions measure came ahead of Xi’s first state visit to North Korea as president, and signaled Washington’s commitment to its maximum pressure campaign to get North Korea to completely denuclearize.

The Russian Financial Society is also alleged to have provided bank accounts for a North Korean chief representative of Korea Zinc Industrial Group, sanctioned for having sold or transferred zinc from North Korea.

Last August, the U.S. Treasury sanctioned Russia’s Agrosoyuz Commercial Bank for knowingly facilitating a significant transaction on behalf of Han Jang-su, the Foreign Trade Bank’s chief representative in Moscow, who is blacklisted by Washington and the UN Security Council.

“Treasury continues to enforce existing U.S. and UN sanctions against individuals and entities in Russia and elsewhere who facilitate illicit trade with North Korea,” said Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker in a statement. “Those who attempt to circumvent our authorities to provide the DPRK with access to international financial markets expose themselves to significant sanctions risk.”

DPRK is the acronym for North Korea’s official name, the Democratic People’s Republic of Korea.

Blacklisted entities are blocked from accessing U.S. assets, and Americans are prohibited from any transactions with them.

Pyongyang vehemently protested the U.S. seizure in May of a North Korean carrier ship, the Wise Honest, accused of illegally exporting coal in violation of UN sanctions.

The latest U.S. announcement of sanctions came as Xi’s fifth summit with North Korean leader Kim Jong-un takes place Thursday and Friday amid stalled denuclearization negotiations between Washington and Pyongyang. Xi will meet with U.S. President Donald Trump one week later at the Group of 20 (G-20) summit in Osaka, Japan.

U.S. top nuclear envoy Stephen Biegun, speaking at the Atlantic Council-East Asia Foundation Strategic Dialogue in Washington, emphasized that the “door is wide open” to negotiations with Pyongyang and called for a “flexible approach.”

Answering a question on Xi’s visit to Pyongyang and what it meant for the nuclear negotiations, Biegun said, “The Chinese government wants to create the conditions for peace and stability on the Korean Peninsula, and has many times said it seeks the elimination of weapons of mass destruction on the Korean Peninsula. That’s a good enough point for us and the Chinese to agree.

“We have forged a pretty good partnership with China in approaching the issues on the Korean Peninsula,” said Biegun, the U.S. special representative for North Korea, while acknowledging that the two countries “have many areas of competition and many areas of disagreement in our policies including in the region of East Asia.”

He noted, “In this case, Chinese national interests and American national interests coincide. That’s a pretty durable foundation for cooperation.”

Biegun added, “We have every expectation that President Xi will continue to send constructive but appropriate messages during his meetings over the course of the next two days in Pyongyang.”

During his keynote address, Biegun rejected the notion that the second summit in Hanoi, Vietnam, in late February between North Korean leader Kim Jong-un and U.S. President Donald Trump ended in failure, but pointed out that Pyongyang’s working-level nuclear negotiators need empowerment.

He recollected that despite constructive working-level talks leading up to the Hanoi summit, it ultimately became clear that his North Korean counterparts “were clearly not authorized or empowered to negotiate issues around denuclearization.” This presented “a challenge” and that the actual denuclearization talks were exclusively conducted by Kim Jong-un and Trump.

“And while they did not ultimately conclude with an agreement, in our view, it is far from the end of the diplomacy,” said Biegun. “And certainly as President Trump has emphasized many, many times, we are still open to continue negotiations to try to narrow the gaps between our two countries.”

During the Hanoi summit, North Korea and the United States failed to reach an agreement on the scope of denuclearization and when sanctions relief might begin. China and Russia have backed North Korea, supporting a more phased approach to sanctions relief, while the United States has maintained that complete denuclearization has to come first.

“Both sides understand the need for a flexible approach,” said Biegun. “This is the only way to move forward in diplomacy.”

He added, “We have made clear that the U.S. is looking for meaningful and verifiable steps on denuclearization. And we understand that in the North Korean view, this is possible, but needs to proceed in the context with broader discussions of security guarantees and improved overall relations.”

While acknowledging “something of a holding pattern” since the Hanoi summit, Biegun noted an “uptick in activity” over the past week with Kim’s letter to President Trump and inter-Korean meeting of senior officials in the truce village of Panmunjom, and Xi’s trip to Pyongyang.

Biegun called for a return to the principles of the June 12, 2018, joint statement signed by Trump and Kim in Singapore “to regain our momentum in our negotiations.”

Also speaking at the Atlantic Council, Lee Do-hoon, the South Korean special representative for Korean Peninsula peace and security affairs, said in a speech that “sanctions are not a magical solution,” and that “they are merely a tool for bringing about a solution through negotiations.”

Lee urged North Korea to respond to President Moon Jae-in’s invitation “to hold inter-Korean summit before President Trump visits Korea next week.”

The South Korean top nuclear envoy pointed out that the previous four summits between Kim and Xi were all followed by contact between North Korea and the United States.

Biegun noted, “When we resume working-level negotiations, the U.S. is prepared to discuss all the commitments our leaders made in Singapore. And in doing so maybe, just maybe, we can make further progress on the vision President Trump and Chairman Kim expressed in their first meeting one year ago - building a lasting peace and security on the Korean Peninsula.”

BY SARAH KIM [kim.sarah@joongang.co.kr]
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