China Shipping Oil To North Korea, “Caught Red Handed”

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Following Pyongyang’s most successful missile launch to date, the UN placed a new round of sanctions on North Korea last week. The latest batch of sanctions reduces exports of refined oil products to North Korea by 89%, while blocking four North Korean ships, including the Sam Jong 2, from entry into foreign ports. In September’s round of UN sanctions, ship-to-ship transfers were banned altogether as a preventative measure against smuggling.

Despite China’s agreement to the sanctions, US intelligence reports indicate that satellites have captured images of Chinese ships making transfers to North Korean ships 30 times since the sanctions were passed, giving birth to accusations of China shipping oil to North Korea. This week, the South Korean newspaper Chosun Ilbo reported that Chinese and North Korean ships have been convenining in open waters for oil transfers now in violation of UN rulings, seeming to confirm the accusations.

The US Perspective

In response, yesterday, President Donald Trump accused China of enabling illegal fuel transfers between Chinese and North Korean ships at sea. The President, never one to mince words, tweeted Thursday morning, “Caught RED HANDED – very disappointed that China is allowing oil to go into North Korea. There will never be a friendly solution to the North Korea problem if this continues to happen!”

Thursday night The New York Times published an impromptu interview with the President in which he admits to having been “soft” on trade with China in hopes that they will exert economic pressures on the regime in Pyongyang. President Trump told The Times, “Oil is going into North Korea. That wasn’t my deal! If they don’t help us with North Korea, then I do what I’ve always said I want to do.” President Trump could be referring to trade regulations or actions against China’s alleged currency manipulation.

If the allegations of North Korea oil transfers are true, it should come as no real surprise. In November, the regime was fingered by the US Treasury Department for utilizing ship-to-ship transfers and other illicit shipping methods, resulting in the Treasury Department blacklisting several North Korean and Chinese companies. The UN Security Council echoed these concerns on December 22nd, claiming that North Korea may be, “illicitly exporting coal and other prohibited items through deceptive maritime practices and obtaining petroleum illegally through ship-to-ship transfers.” The US has called on the Security Council to blacklist 10 ships, but China and Russia insist that they need more time to consider the decision.

South Korea Takes Action

Speaking on Wednesday about the accusations against China, Hua Chunying, a spokeswoman for the Chinese Foreign Ministry said, “What made them conclude that these ships violated the Security Council resolutions? Any solid evidence?”

South Korean authorities were quick to substantiate President Trump’s accusations against China, seeming to confirm the fears of the UN Security Council.

Today, South Korean authorities confirmed that they had seized a Chinese oil tanker registered to Hong Kong in October. The ship, called the Lighthouse Winmore, allegedly transferred 600 tons of oil to a known North Korean vessel.

The Lighthouse Winmore has no immediate connections to the Chinese government; the ship is currently being leased by a Taiwanese company called Billions Bunker Group Corporation. However, the ship is actually owned by a Hong Kong based Chinese company, Win More Shipping. Further complicating matters, ownership of industrial vessels is often hard to uncover, as owners may register ownership in foreign countries, a sometimes illicit business practice known as a “flag of convenience.” Because a ship is subject to the laws of the country in which it is registered, owners often register in a foreign country to avoid the regulations, laws, and costs of their home country.

On October 11th, the Lighthouse Winmore initially docked in the Port of Yeosu, South Korea, where it loaded more than 14,000 tons of refined petroleum. The tanker then left South Korea a few days later, reporting that they were en route to Taiwan.

According to South Korean sources, the vessel instead rendezvoused with four different ships at sea, transferring refined petroleum, originally sourced from Japan, to each of them. These illicit transfers were already in violation of international agreements regardless of who the receiving party was, however South Korean authorities uncovered that one of the ships was the sanctioned North Korean vessel, the Sam Jong 2.

The Lighthouse Winmore eventually returned to South Korea in late November, allowing South Korean authorities the opportunity to investigate the ship’s mysterious and possibly illegal actions. After questioning the crew and inspecting the premises, South Korea has officially impounded the vessel. The 25 man crew, 23 of whom are Chinese, are expected to be detained in South Korea until the investigation is complete.

The anonymous government officials making the report to Chosun Ilbo claim that South Korea is sharing their intelligence with the US in regards to the suspected North Korea oil transfers.

China Shipping Oil?

Although the sanctions seem harsh, they do still allow for some trade to the authoritarian regime. The sanctions cap the export of refined petroleum to North Korea at half a million barrels a year, while four million barrels of crude oil can still be shipped to North Korea per annum. Because China is responsible for 90% of Pyongyang’s international trade, the burden of the sanctions is placed largely on Beijing’s shoulders.

Beijing has denied that China is shipping oil to North Korea. In response to President Trump’s tweets, spokeswoman Hua Chunying, said that Beijing has remained “completely and strictly” in compliance with the sanctions. She added that the Chinese government has investigated the allegations and found them to be false. Ren Guoqiang, a spokesman for the Defense Ministry of China echoed these claims, telling reporters this week, “The situation you have mentioned absolutely does not exist.”

In his interview with The New York Times, President Trump referred to North Korea as a “nuclear menace” and highlighted the threat the unstable, nuclear capable dictator, Kim Jong-un, could serve to his neighbor and communist ally in the future.

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