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| To Build a Ski Resort Under U.N. Sanctions, North Korea Turned to China | To Build a Ski Resort Under U.N. Sanctions, North Korea Turned to China |
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| BEIJING — After North Korea’s leader, Kim Jong-un, ordered his army to build a world-class ski resort, the imported equipment for it was soon at hand, including snowmobiles, snowblowers and even a mile-long cable car system manufactured by a leading Austrian company. | BEIJING — After North Korea’s leader, Kim Jong-un, ordered his army to build a world-class ski resort, the imported equipment for it was soon at hand, including snowmobiles, snowblowers and even a mile-long cable car system manufactured by a leading Austrian company. |
| By almost any estimate, the sale of such items appears to violate the intent of United Nations sanctions meant to punish the North for its nuclear weapons program — specifically, sanctions targeting luxury goods, intended to cover products like Champagne and caviar, yachts and expensive cars. | By almost any estimate, the sale of such items appears to violate the intent of United Nations sanctions meant to punish the North for its nuclear weapons program — specifically, sanctions targeting luxury goods, intended to cover products like Champagne and caviar, yachts and expensive cars. |
| But China, whose companies were involved in providing the equipment for the Masikryong ski resort, which opened in 2013, told a United Nations panel that those sanctions did not apply because skiing is a “normal activity” in North Korea, a country where most of the population is impoverished and food shortages are common. “Skiing is a popular sport for people, and ski equipment or relevant services are not included in the list of prohibited luxury goods,” the Chinese said, according to last year’s annual report from the United Nations panel, which monitors sanctions violations. | But China, whose companies were involved in providing the equipment for the Masikryong ski resort, which opened in 2013, told a United Nations panel that those sanctions did not apply because skiing is a “normal activity” in North Korea, a country where most of the population is impoverished and food shortages are common. “Skiing is a popular sport for people, and ski equipment or relevant services are not included in the list of prohibited luxury goods,” the Chinese said, according to last year’s annual report from the United Nations panel, which monitors sanctions violations. |
| Weeks after North Korea detonated its fourth nuclear bomb, and days after it said it would soon launch another long-range rocket, the United States and China are still at loggerheads over how — or whether — to deepen sanctions against the isolated nation. And as the example of the skiing equipment shows, even the sanctions currently in place often prove toothless. | Weeks after North Korea detonated its fourth nuclear bomb, and days after it said it would soon launch another long-range rocket, the United States and China are still at loggerheads over how — or whether — to deepen sanctions against the isolated nation. And as the example of the skiing equipment shows, even the sanctions currently in place often prove toothless. |
| The United Nations sanctions, imposed in 2006 and gradually tightened since then, still allow China to trade with North Korea in such vital sectors as oil, banking and shipping — but billions of dollars’ worth of luxury items also manage to slip through, chiefly through China. | The United Nations sanctions, imposed in 2006 and gradually tightened since then, still allow China to trade with North Korea in such vital sectors as oil, banking and shipping — but billions of dollars’ worth of luxury items also manage to slip through, chiefly through China. |
| While luxury goods may seem a relatively minor issue, experts on North Korea say they help to ensure the loyalty of the tiny elite around Mr. Kim, helping to keep his government intact. | While luxury goods may seem a relatively minor issue, experts on North Korea say they help to ensure the loyalty of the tiny elite around Mr. Kim, helping to keep his government intact. |
| Tensions between Washington and Beijing over who is to blame for North Korea’s growing nuclear arsenal burst into the open this week, after the North said Tuesday that it would launch a satellite into orbit this month. The United States and its allies believe the true purpose of such launches is to eventually develop an intercontinental ballistic missile that can deliver a nuclear warhead. | Tensions between Washington and Beijing over who is to blame for North Korea’s growing nuclear arsenal burst into the open this week, after the North said Tuesday that it would launch a satellite into orbit this month. The United States and its allies believe the true purpose of such launches is to eventually develop an intercontinental ballistic missile that can deliver a nuclear warhead. |
| Daniel Russel, the United States assistant secretary of state for East Asian and Pacific affairs, said such a launch would be “an unmistakable slap in the face to those who argue that you just need to show patience and dialogue with the North Koreans but not sanctions,” a clear reference to China. | Daniel Russel, the United States assistant secretary of state for East Asian and Pacific affairs, said such a launch would be “an unmistakable slap in the face to those who argue that you just need to show patience and dialogue with the North Koreans but not sanctions,” a clear reference to China. |
| In response, a Chinese Foreign Ministry spokesman, Lu Kang, suggested Wednesday that it was the United States that had lost the most from the North Korean announcement. “As for whose face the D.P.R.K. slapped, the country itself knows well,” Mr. Lu said, using the initials for North Korea’s formal name, the Democratic People’s Republic of Korea. | In response, a Chinese Foreign Ministry spokesman, Lu Kang, suggested Wednesday that it was the United States that had lost the most from the North Korean announcement. “As for whose face the D.P.R.K. slapped, the country itself knows well,” Mr. Lu said, using the initials for North Korea’s formal name, the Democratic People’s Republic of Korea. |
| But the North’s announcement was an embarrassing setback for China, coming just hours after one of its senior diplomats, Wu Dawei, had arrived in Pyongyang. Both China and the United States had known, based on satellite imagery, that the North was planning another launch, and one of Mr. Wu’s main goals for the trip had been to persuade the North Koreans not to proceed, diplomats said. The dates the North gave for the launch suggested it was likely to occur as China celebrates its weeklong Lunar New Year holiday, starting Sunday. | But the North’s announcement was an embarrassing setback for China, coming just hours after one of its senior diplomats, Wu Dawei, had arrived in Pyongyang. Both China and the United States had known, based on satellite imagery, that the North was planning another launch, and one of Mr. Wu’s main goals for the trip had been to persuade the North Koreans not to proceed, diplomats said. The dates the North gave for the launch suggested it was likely to occur as China celebrates its weeklong Lunar New Year holiday, starting Sunday. |
| On his return to Beijing on Thursday night, Mr. Wu conceded that China had little leverage over its recalcitrant ally. “I said everything that must be said. I did what must be done,” he told reporters. “But what the outcome will be, I don’t know yet.” | On his return to Beijing on Thursday night, Mr. Wu conceded that China had little leverage over its recalcitrant ally. “I said everything that must be said. I did what must be done,” he told reporters. “But what the outcome will be, I don’t know yet.” |
| Mr. Wu had an unpleasant task, said Cheng Xiaohe, an associate professor of international studies at Renmin University. “That the North Koreans carry on regardless and announce their launch plans makes it more embarrassing for China, which has been arguing against more crippling sanctions and urging countries to solve the problem peacefully,” he said. | Mr. Wu had an unpleasant task, said Cheng Xiaohe, an associate professor of international studies at Renmin University. “That the North Koreans carry on regardless and announce their launch plans makes it more embarrassing for China, which has been arguing against more crippling sanctions and urging countries to solve the problem peacefully,” he said. |
| The Chinese hope to prevent tougher sanctions for fear that the North will become a hostile neighbor, a policy that diplomats said appears to have been shaped by President Xi Jinping last summer. In talks last week with his Chinese counterpart, Foreign Minister Wang Yi, Secretary of State John Kerry made little headway in persuading China to toughen sanctions against North Korea, and he warned that the United States would most likely move ahead on its own. | The Chinese hope to prevent tougher sanctions for fear that the North will become a hostile neighbor, a policy that diplomats said appears to have been shaped by President Xi Jinping last summer. In talks last week with his Chinese counterpart, Foreign Minister Wang Yi, Secretary of State John Kerry made little headway in persuading China to toughen sanctions against North Korea, and he warned that the United States would most likely move ahead on its own. |
| Tougher sanctions legislation is moving through Congress that, among other things, would target Chinese banks that do business with North Korea. The administration has been reluctant to call for such sanctions, known as secondary sanctions, and it is not clear what the White House would do about the legislation, American experts said. | Tougher sanctions legislation is moving through Congress that, among other things, would target Chinese banks that do business with North Korea. The administration has been reluctant to call for such sanctions, known as secondary sanctions, and it is not clear what the White House would do about the legislation, American experts said. |
| “Given the broad and variegated bilateral relationship between the United States and China, U.S. officials have been reluctant to confront and economically punish China with secondary sanctions in case it should undermine other key priorities in the bilateral relationship,” said Elizabeth Rosenberg, senior fellow at the Center for a New American Security. | “Given the broad and variegated bilateral relationship between the United States and China, U.S. officials have been reluctant to confront and economically punish China with secondary sanctions in case it should undermine other key priorities in the bilateral relationship,” said Elizabeth Rosenberg, senior fellow at the Center for a New American Security. |
| The luxury goods sanctions are one area where there is plenty of room to close loopholes exploited by Chinese middlemen and traders, to whom the government turns a blind eye, experts on North Korea say. | The luxury goods sanctions are one area where there is plenty of room to close loopholes exploited by Chinese middlemen and traders, to whom the government turns a blind eye, experts on North Korea say. |
| Chinese customs data showed that North Korea imported $2.09 billion in luxury goods between 2012 and 2014, according to recent congressional testimony by Bonnie S. Glaser, senior adviser for Asia at the Center for Strategic and International Studies. Among the items that have slipped through the sanctions are Mercedes-Benz S-Class cars, photographs of which appeared in last year’s United Nations report. An unidentified American company armored the cars, the report said. It also said that a luxury yacht worth as much as $6 million, made by a British company, Princess Yachts International, made it into North Korea and has been used by Mr. Kim. | Chinese customs data showed that North Korea imported $2.09 billion in luxury goods between 2012 and 2014, according to recent congressional testimony by Bonnie S. Glaser, senior adviser for Asia at the Center for Strategic and International Studies. Among the items that have slipped through the sanctions are Mercedes-Benz S-Class cars, photographs of which appeared in last year’s United Nations report. An unidentified American company armored the cars, the report said. It also said that a luxury yacht worth as much as $6 million, made by a British company, Princess Yachts International, made it into North Korea and has been used by Mr. Kim. |
| In 2014, China exported $37 million worth of computers; $30 million of tobacco; $24 million of cars; and $9 million of air-conditioning equipment to the North, according to trade statistics from the United Nations Department of Economic and Social Affairs. In all these categories, China was the top exporter, the United Nations said. | In 2014, China exported $37 million worth of computers; $30 million of tobacco; $24 million of cars; and $9 million of air-conditioning equipment to the North, according to trade statistics from the United Nations Department of Economic and Social Affairs. In all these categories, China was the top exporter, the United Nations said. |
| The cable cars for the Masikryong ski resort, which are at least 30 years old and out of fashion on European ski slopes, were made by Doppelmayr, an Austrian company, and used for years in Ischgl, a skiing town in Austria. After the resort decided to install new cable cars, the old ones were sold to an Austrian secondhand dealer, Pro-Alpin, according to Ekkehard Assmann, head of marketing at Doppelmayr. | The cable cars for the Masikryong ski resort, which are at least 30 years old and out of fashion on European ski slopes, were made by Doppelmayr, an Austrian company, and used for years in Ischgl, a skiing town in Austria. After the resort decided to install new cable cars, the old ones were sold to an Austrian secondhand dealer, Pro-Alpin, according to Ekkehard Assmann, head of marketing at Doppelmayr. |
| Pro-Alpin, in turn, sold the cable cars to an unidentified Chinese company, according to Pro-Alpin’s website. The Chinese company then arranged for the equipment to be shipped to North Korea. | |
| The luxury goods sanctions have a glaring loophole: Each country is permitted to define what it considers luxury goods. The United States has published a detailed list, down to such items as vanity cases, binoculars and television sets larger than 29 inches. The European Union says “articles and equipment for skiing, golf, diving and water sports” are luxury goods and bans them from export to North Korea. | The luxury goods sanctions have a glaring loophole: Each country is permitted to define what it considers luxury goods. The United States has published a detailed list, down to such items as vanity cases, binoculars and television sets larger than 29 inches. The European Union says “articles and equipment for skiing, golf, diving and water sports” are luxury goods and bans them from export to North Korea. |
| But China has failed to publish such a list and has not honored those of other countries, the documents of the United Nations panel show. Because it has never said what it considers to be luxury goods, China can argue that cable cars for Mr. Kim’s prestige resort were permissible, even justifying them as equipment for the masses. | But China has failed to publish such a list and has not honored those of other countries, the documents of the United Nations panel show. Because it has never said what it considers to be luxury goods, China can argue that cable cars for Mr. Kim’s prestige resort were permissible, even justifying them as equipment for the masses. |
| “China appears impervious to shame,” said Marcus Nolan, of the Peterson Institute for International Economics in Washington, who said there were no penalties for flouting the luxury goods sanctions. | “China appears impervious to shame,” said Marcus Nolan, of the Peterson Institute for International Economics in Washington, who said there were no penalties for flouting the luxury goods sanctions. |