China-Pakistan-North Korea Nexus

US has come out with a new set of sanctions with the objective of denying access to the US financial system to any country that trades with or finances trade with North Korea.

China has promised both at the UN Security Council and General Assembly to give effect to the sanctions against North Korea. But China has not as yet made any significant attempts to rein in North Korea.

China’s links with North Korea go beyond the standard parameters of global commerce. The most apposite illustration in this regard is the case of DHID, which became a front for the Korea Kwangson Banking Corp, financing North Korea’s weapons proliferation. DHID used layers of obfuscation with a complex network of front companies based in the British Virgin Islands, the Seychelles, England, Wales and Hong Kong, apart from mainland China, the ship changed its name to Victory 3 after UNSC sanctions, though its IMO number remains the same.

The DHID came under the purview of US sanctions in October 2016, but its role has been seamlessly taken over by its subsidiary, the Liaoning Hongxiang trading conglomerate, which is headed by a Chinese national. This conglomerate is North Korea’s largest trading partner and claims to be a bridge between North Korea and the world. Unsurprisingly, the Liaoning Hongxiang Group (LHG) inaugurated the newest China-North Korea shipping route, from Longkou to Nampo, in late September 2015. This route has seen significant traffic despite existing international sanctions against North Korea.

The LHG also has significant connections with Myanmar. The conglomerate’s vice president is a Myanmarese business tycoon TayZa, who has been designated by the US Treasury Department as “an arms and narcotics dealer”. He has extensive interests around Myanmar, especially in the areas of aviation, military equipment, and fuel. He also owns a football club, one of Myanmar’s largest banks, and a company responsible for cargo clearing in the country’s international airports. He is reported to have been instrumental in organizing nuclear contracts with Russia and North Korea.

Given the above backdrop, North Korea is expected to be able to withstand the sanctions, as help from China and Chinese conglomerates is unlikely to be shut down. North Korea has been and will be a strategic asset for China. The Chinese leadership has traditionally felt that a unified Korea with American troops in the Korean peninsula, close to the Chinese border, is a major security concern. The US, on its part, cannot afford to take an excessively belligerent stance with China, which could affect its US $ 650 billion trade with the country, notwithstanding Trump’s claim that “all options are on the table”.

While India is a bystander on this issue, it needs to be on the alert. Pakistan’s links with North Korea are evident, The potential and overwhelming danger it presents cannot be underestimated. Continued caution to prevent any adventurist attempt by the Pakistan military needs to be at the top of India’s agenda.


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