Evidence of meeting #37 for Foreign Affairs and International Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was korea.
A recording is available from Parliament.
5:05 p.m.
Liberal
The Chair Liberal Bob Nault
Thank you very much, Madame Laverdière.
We'll go to Mr. Wrzesnewskyj, please.
November 28th, 2016 / 5:05 p.m.
Liberal
Borys Wrzesnewskyj Liberal Etobicoke Centre, ON
Just prior to my asking a question, Ms. Berger, at one point you mentioned Russia meddling in Crimea. I'd like to point out that terminology matters. It was actually a military invasion and annexation of a sovereign country's territory, so it moves way beyond just meddling.
Back to North Korea, everyone's described to us how North Korea is fully dependent on China for the movement of goods, finances, a very significant movement of people as well. Is North Korea a de facto client state of China?
5:05 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
Well, first, I completely take your point on Russia. Sitting in the U.K., we see the threat development from Russia quite clearly, literally off the coast, sometimes, when it comes to Russian groups steaming through the English Channel. I didn't want to, for a minute, suggest that I don't have an appreciation of that threat, or indeed, that those on the other side of the pond don't either.
I'll take issue with the term “client state” as well, if I may. The relationship between China and North Korea is much more complex than that. While there is certainly a degree of dependency, it is an enormously difficult relationship from both sides. China's no doubt irritated at the trajectory of the North Korean nuclear missile issue. Indeed, they're aggravated by the current North Korean leadership. Whenever I speak to a Chinese official, they will often say that North Korea is being disrespectful to China, which I think is an interesting use of language as well.
China's view on North Korea is that they have a hierarchy, if you will, of concerns when it comes to the country, what we like to call the three noes: their priorities are no war, no instability, and no nuclear weapons, in that order. That shapes a lot of Chinese thinking towards the North Korean issue.
If no nuclear weapons is a subordinate priority to no instability, and the Chinese view of how to reduce the prospect of instability is through economic integration, then you can see where we run into an issue with the discussion we're having with China over sanctions implementation. To give you a broader sense, this is not a policy that China merely applies to North Korea; it's the foundation of their entire neighbourhood policy. The one belt, one road strategy that China has towards its neighbourhood rests on the idea that China will have a better relationship with its neighbours, a more manageable and stable relationship, if they're economically interdependent.
That same thinking applies to the Korean Peninsula, so what we're asking China to do by implementing very strong sanctions against North Korea is to actually discard that policy approach. In my view, we need to be realistic about what we're asking China, and whether or not they're likely to give it.
5:05 p.m.
Liberal
Borys Wrzesnewskyj Liberal Etobicoke Centre, ON
China, as a key member of the Security Council, technically is a partner in the sanctions regime against North Korea, so we're relying on China to be a natural partner in this sanctions regime, yet we've heard that, in fact, China is the country that facilitates in various ways hiding the sanctions busting that appears to be almost whole scale.
What approach should we be taking with China? By the sounds of it, technically, if China decided to shut the border with North Korea, we would actually have an incredibly robust sanctions regime. But in fact, it's not just looking the other way. After all, China is a totalitarian regime. They know what's going on within their country, so they know that all of these thousands of players—it is not individual cases—are involved in ways that break the actual sanctions regime, which at the UN, China is committed to being a partner to.
How do we approach that very difficult dilemma with China?
5:10 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
To some extent, I think North Korea is helping do the job for us. One of the issues underlying this discussion is the fact that, for a long time, China has assessed the North Korean threat in a different way than the U.S. and its allies have. When you talk to China about the nature of the North Korean threat, Chinese officials will sometimes turn to me and say, “Oh well, we think the North Korean nuclear missile programs are a real problem, too, because North Korean nuclear testing in mountains towards the Chinese border could create earthquakes, and there could be a potential theft of nuclear material from a North Korean nuclear facility.” If that's the basis of your threat assessment, and you play as important a role as China does in this picture, then we have a problem in terms of actually working on policies that are meant to be based on a common threat picture.
That said, it is becoming increasingly clear that North Korea's behaviour will, indeed, undermine Chinese security. That may be indirect, but the effect will be felt nevertheless. The way that impression is being created at the moment is actually through the U.S. and South Korean discussion over the deployment of ballistic missile defences to South Korea.
China detests ballistic missile defence and U.S. ballistic missile defence architecture. By making clear that the deployment is a direct response to a North Korean threat that is getting out of control and one that is not being actively curbed by China, we are reminding China that its security will be affected by the North Korean nuclear missile programs, even if those missiles aren't pointed at Beijing.
5:10 p.m.
Liberal
Raj Saini Liberal Kitchener Centre, ON
Thank you, Ms. Berger, for being here.
I want to talk about a very technical point, just so you can highlight this for us. I'm talking specifically about President Obama's executive order that changed the standard for listing individuals for sanctions to North Korea.
At that time you wrote, “Most importantly, this Executive Order only requires the Treasury to substantiate an individual or entity’s North Korean affiliation, rather than involvement in a specific proscribed activity.”
Can you explain the difference that you feel this has made in how sanctions are applied and whether or not this has helped the American government in targeting sanctions?
5:10 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
Sure. It effectively changes the legal burden when making the case for a designation because, in theory, any designated entity or individual has the opportunity to challenge that designation in court. The description of the designation that you put forth into the public domain has to stand up potentially to legal scrutiny. As a result of that, the legal authorities' description, in the form of the executive order, is important.
What the U.S. did—I believe that executive order was January 2015—was in effect say that they no longer need to prove that an entity or an individual had materially assisted proliferation, for example, or conventional weapons trade, or some other proscribed activity. All they need to do is prove that the entity or individual was connected to the North Korean government or had assisted someone who was connected to the North Korean government. It's a very broad brush, legal authority, in that executive order, and it's much easier to prove that a North Korean is connected to the North Korean government, or that someone who has created a company together with a North Korean is connected to a North Korean government, than it is to prove that they've necessarily facilitated a proliferation-related shipment, for example.
5:15 p.m.
Liberal
Raj Saini Liberal Kitchener Centre, ON
I have a follow-up to that question, and this is regarding when businesses are drawn into the sanctions regime. At one point you also wrote:
For sanctions to be both ‘targeted’ and strategic, lines between licit and illicit business must be drawn and observed, but they must also be communicated appropriately....
What kind of lines do you think should be drawn? Do you feel that the improved communication around sanctions would not only help explain the credibility of the sanctions, but would also help businesses understand how to be compliant with those sanctions?
5:15 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
That's an issue that's really at a higher level and actually relates both to conversations that we have with governments that are still doing business with North Korea, as well as individual companies. I would say this applies primarily to UN resolutions before 2016. In 2016 we got a lot more specific, and we're going to get a lot more specific this week as well. Previously there were some grey zones that we struggled with, language that hadn't been brought to a level of specificity where we could say convincingly, “No, this is arms related”, and “This isn't arms related” meant that we were having conversations with countries around the world where they were saying, actually, “We're compliant”, and we were saying “No, you're not compliant”, and it was just a matter of interpretation.
5:15 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
I was just going to say that I think at the international level we've been better at drawing those lines more clearly but, indeed, we're carving out new pathways for sanctions. That will mean we may have some of those grey areas again going forward, simply because we're covering new ground now with sectoral-based sanctions or commodity-based sanctions on minerals and metals, for example.
5:15 p.m.
Conservative
Dean Allison Conservative Niagara West, ON
Thank you, Ms. Berger, for your testimony today.
I want to return to what was discussed previously and your comments on those that help them circumvent, you know, in terms of Africa, the Middle East and Asia.
What do we do? That's a large part of the world. How do we deal with the fact that countries, and actually continents, are helping them circumvent some of these sanctions? What can be done?
5:15 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
It depends entirely on what the problem is at a country-by-country level. As I mentioned, you have some countries that know about the sanctions regime and have no interest in complying with it. There are countries in the Middle East and Africa, for example, that are doing completely illicit business with North Korea. They know it, have been told about it, and have very little desire to actually change course.
Now what we do in respect of those countries is a very different story than what we do toward countries that are ignorant of the sanctions regime, for example, that simply don't pay very much attention to the nuances and whether or not certain types of coal trade is allowed or isn't, or certain types of military co-operation is allowed or isn't. Ignorance is a different problem in terms of the solution. Then you simply have countries that are attentive to the fact, but their domestic legal frameworks mean that the fact of the matter on the ground and in practice is that the measures are not effective. That's where our technical assistance role comes in.
You move in the space anywhere from strong political pressure and, to an extent, public shaming for those who don't care about North Korea sanctions and flout restrictions quite openly, to an education role for those who are ignorant of the sanctions regime and need a bit of a push to understand that they're part of this North Korean global threat picture and they need to take it as seriously as anyone else, to a technical assistance function for states which really do need some help crafting export control arrangements or legislative frameworks to be able to take action in the event that they do get passed information that North Korean activity is touching their jurisdiction in some way.
5:20 p.m.
Conservative
Dean Allison Conservative Niagara West, ON
You also mentioned North Korea's a lot more complicated; in other words they work hard to avoid, as you mentioned and as we've read.
What happens then? It sounds to me that there's a huge lack of resources in being able to catch them up in what's going on with additional workarounds with banks, etc. These resources, obviously, would have to come country by country, or more resources for the UN. What are we looking at here in terms of trying to figure out how we can make sure these sanctions are going to remain in place?
5:20 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
I think that the UN certainly needs additional resources. That's obviously something that would have to be agreed multilaterally and at the UN itself. I think if you would ask many of those who work on it, from their perspective they acknowledge very much that they are heavily under-resourced.
From a national perspective, countries like Canada, and indeed a number of European countries, take this role as well, as do countries like Australia. They are active in facilitating this kind of monitoring that I was talking about. They are sharing information, as well, where possible.
Again, it's acknowledging potential limitations in information sharing between countries, but to the extent possible, they do that in the North Korea case. That helps go some way to addressing the under-resourcing issue that exists on a very large scale for the sanctions regime. Again, I think this is a place where Canada can potentially contribute expertise and its own resources at home in a way that is useful.
5:20 p.m.
Liberal
Marc Miller Liberal Ville-Marie—Le Sud-Ouest—Île-des-Soeurs, QC
The North Korean sanctions regime, in terms of sanction regimes writ large, is probably the most closed system we have compared to any other ongoing regime. Yet, you've identified a number of holes, and principally I guess they deal with workarounds in the system.
Could you speak briefly to what you see the North Koreans doing, and where they're trending in terms of trying to work around these things?
5:20 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
There are a couple of key areas, ones that I've alluded to already.
The whole North Korean evasive ability rests on being able to conceal that they're North Korean overseas, to varying degrees. In some places they have to do that less than others. The North Korean label, in other words, in some places doesn't attract as much scrutiny as it does, for example, in places like Europe. That's the starting point for North Korean evasion: don't make yourself look North Korean.
Having that strong network in China is a great starting point, primarily because with global trade flows at this moment, indeed so many foreign manufacturing sectors want to do business with China. They want to expand either their footprint in China or their business with China on a bilateral basis. That involves engaging with small and medium enterprises, in China potentially, which you may not know that much about. North Korea exploits that quite significantly.
It's the same patterns that you see overseas outside of China as well. North Korea uses foreign facilitators quite heavily. If you look at company registration documentation for a North Korean firm in Southeast Asia, you may not see a North Korean name on paper; you'll see Singaporean, Malaysian, or Vietnamese names, just as an example.
Similarly, in terms of banking, this same problem applies. Those foreign facilitators or companies that are opening accounts in the countries they're located in with fairly reputable banks, indeed banks of pretty much every shape and size, are able to do that often without financial institutions being aware of the fact that, in the process, they've exposed themselves to quite substantial risk.
North Korea has a very good head start in getting around the complicated sanctions regime that we've put in place. They've been working on their evasive ability for well over a decade now. We have a big game of catch-up to play in terms of our ability to detect how they're moving next.
5:25 p.m.
Liberal
Marc Miller Liberal Ville-Marie—Le Sud-Ouest—Île-des-Soeurs, QC
This may not be in your realm of expertise, but I would like to hear some of your reflections on the impact of the North Korean people. Obviously, news is sporadic and probably unreliable, but you do hear of periodic famines and crop shortages.
There's that, and if you do have time, could you touch on consular relations? Obviously Canada has none. Most countries do not have any. I believe the Swedes have an embassy, and that's pretty much about it, with a few more exceptions.
What is your view on limited openness and engagement with the North Korean people?
5:25 p.m.
Deputy Director, Proliferation and Nuclear Policy, Senior Research Fellow, Royal United Services Institute, As an Individual
Let me start on that side of the picture. Between 2012 and 2014, together with the U.K. Foreign and Commonwealth Office, I've led the U.K. bilateral engagement on security issues with North Korea. The U.K. and, in addition, Germany and Sweden, as you mentioned, maintain diplomatic relations with North Korea, with active embassies there, and in the U.K.'s case, a cross-accredited defence attaché, so there are indeed EU nations, other than just the three I mentioned, that have a presence in Pyongyang and whose ability to do business is undoubtedly being affected by the sanctions regime. There's no question about that.
It is difficult to get necessary goods and funds flowing in. That applies, I would say, more so to international organizations doing work in North Korea. Organizations that are co-housing with foreign embassies in Pyongyang for their housing are having difficulty paying their rent, for example, as a consequence of sanctions, because so many banks don't want to touch anything that looks like it's going towards something connected to North Korea.
There is undoubtedly an impact that's being had on consular relations and on diplomatic relations. Is it possible to make that work in an age of sanctions? Yes. Will it be difficult? Yes, but in my view, I think it would be a real shame if countries such as Germany, Sweden, and the U.K. were to feel that they no longer had the ability to operate as they wanted to in North Korea. Again, in my view, there needs to be an open door and a table for North Korea to come back to if sanctions are to have any relevance. Part of that, I think, involves continuing diplomatic channels where that's possible.
On the broader effect on the North Korean people, it is extremely challenging to assess that. It's not something that I've looked at in great detail. First, it's hard to get a sense of the spread of the humanitarian situation around the country and, in addition, North Korea has an incentive for trying to make it seem as if they are absolutely resilient to sanctions, so the information flow is truly very poor in pretty much any way that you can construe that term. The honest answer to you on that front is that I simply don't know.
5:25 p.m.
Liberal
The Chair Liberal Bob Nault
Thank you, Mr. Miller.
Ms. Berger, on behalf of the committee, I want to thank you for sharing your expertise on North Korea and the whole discussion of sanctions. As a closed process for North Korea, one of the things we're trying to get a better handle on is the whole issue of monitoring and the abilities to monitor sanctions to create the kind of effective regime we expect when we put either individuals or corporations, or even the state itself.... I want to thank you very much for that. We appreciate the hour that you've spent with us today.
I'm going to wrap it up there, colleagues. We're going to go in camera for two minutes and do a little bit of business, but I'll let Ms. Berger go. I think she's spent enough time with us. We very much appreciate it.