These dismissals miss an important point. The Philippines is one of North Korea’s few remaining non-China trade partners and has been a significant site of DPRK illicit operations, which generate hard currency to sustain the regime and its weapons programs.
Closing off these operations and the funds they supply would put increased international pressure on North Korea, in response to its recent nuclear and missile tests and latest inflammatory propaganda. Here are three important points about the Philippines’ role:
1) How deep are the links between the Philippines and North Korea?
According to WTO statistics, the Philippines was North Korea’s third-largest trading partner in 2016, with bilateral trade volume of around $87 million. This ranks the Philippines behind only China ($5.5 billion, around 90 percent of DPRK trade) and India ($140 million), which recently announced that it would restrict that trade. Even Russia trades less with North Korea ($76 million) than does the Philippines.
Equally important, the Philippines has been an important location for the complex illicit networks that sustain the Kim regime, fund DPRK weapons development and export arms abroad. In an ongoing research project, I track North Korea’s illicit activities from 1976 onward — a data set that now includes hundreds of events. Here are a few examples:
- In 1989, the Central Bank of the Philippines was the first to detect and report North Korean-made counterfeit $100 bills. These bills, distributed worldwide, were so good that they forced several currency redesigns and were nicknamed “Supernotes” by the Secret Service.
- Philippine authorities seized large methamphetamine shipments coming from DPRK vessels in 2001, in 2008 and again in 2012-2013. Methamphetamine coming from North Korea was in high demand because of its higher purity, and may have driven drug prices in the Philippines down by 50 percent. In 2015, a crime ring busted trying to smuggle DPRK-origin meth to the United States claimed to have stashed a full ton in the Philippines — advertising itself as the sole remaining channel for the higher-purity product.
- In 2016, the Philippines impounded two North Korean freighters, crewed by DPRK nationals but flying Sierra Leone and Tuvalu flags of convenience to avoid easy detection; one was subject to the asset freeze mandated under UNSCR 2270.
- In February 2016, cyber thieves stole $81 million from Bangladesh’s accounts at the New York Federal Reserve and transferred the funds to accounts in the Philippines. The funds were then withdrawn — and disappeared. Forensic firms traced the heist to a DPRK-based IP address, and U.S. officials termed the attack “state-sponsored.”
Illicit activities generate hard currency for the North Korean leadership. No one knows for sure which dollars entering DPRK coffers pay for Kim Jong Un’s luxury yachts and which pay for ICBM road launchers, but there’s a good argument that off-the-books illicit funding makes it easier to buy both.
Other research shows how income that goes directly to authoritarian leadership tends to prolong these regimes. Putting these funds at risk, then, would generate meaningful “pressure” on the North Korean regime.
2) Where does the Philippines fit in U.S. strategy?
The Philippines appears to be part of the Trump administration’s larger strategy to get Southeast Asia to pressure the DPRK — by tightening sanctions enforcement, preventing onward proliferation of DPRK missiles and weapons to other countries of concern, and downgrading or cutting off trade ties. President Trump has made personal calls to the leaders of Singapore and Thailand, while Secretary of State Rex Tillerson prioritized North Korea in a meeting with ASEAN foreign ministers last week.
Why Southeast Asia? Countries in the region are key sites of DPRK trade, weapons proliferation and illicit network activity. That’s especially true of Malaysia, where Kim’s brother Kim Jong Nam was assassinated with chemical weapons earlier this year, and where the DPRK was running an arms export operation remitting funds to Pyongyang in alleged violation of U.N. sanctions.
Other activities in the region — mining, restaurants, etc. — are designed to boost DPRK hard currency reserves. Southeast Asia is an important operating site for DPRK state trading companies and their financial networks. At least two countries (Malaysia and Singapore) offered North Koreans visa-free travel.
3) Can sanctions against the DPRK be more effective?
Critics of sanctions commonly argue that the DPRK is “heavily sanctioned,” so there’s little possibility of adding meaningful pressure. However, the number of individuals/entities sanctioned for DPRK weapons development is only around a quarter of the number sanctioned for similar Iran-related activities. That number could be increased.
Thus far, the entities designated are almost exclusively North Korean. There has been little use of “secondary sanctions” — measures targeting non-DPRK companies and banks that do business with sanctioned North Korean entities and enable them to continue to operate. The United States and its partners used secondary sanctions more widely in the pressure campaigns on Iran, Burma, Cuba and the like, and could elevate pressure on the DPRK to similar levels.
Last year was the first year that U.S. legislation targeted commercial trade with the DPRK, and not all commercial trade has been targeted as of this weekend’s missile test. Enforcement of existing sanctions is also incredibly weak: Of the 193 countries bound by the U.N. resolutions on North Korea, 116 — including some co-sponsors — have yet to submit a single implementation report. Pressure could be increased in all of these areas.
It is true that more pressure from the Philippines alone won’t do the trick. Meaningful pressure will be difficult to bring to bear without China’s participation, and so far Beijing has been reluctant to step up. Recent comments by state-run think tanks, however, suggest that China’s patience may be wearing thin, and secondary sanctions on Chinese banks and firms would provide added impetus for action.
This would make Southeast Asia — and the Philippines — all the more important. My research also shows, however, that North Korea’s moneymaking operations are highly adaptable. If Beijing turns up the heat, it’s important that North Korea not be able to rely on its southern neighbors as an easy revenue substitute. And for pressure to have maximal impact, it’s important that all of these things happen simultaneously, not gradually, so that Pyongyang doesn’t have time to adapt and insulate itself.
Observers who dislike Duterte’s rhetoric and harsh anti-drug policies are likely to reply that these factors still don’t merit a White House invitation. That’s a reasonable point, but it’s a different one, about how policymakers should weight dislike of Duterte’s actions against other considerations (including U.S. alliance obligations, security interests, and the wishes of Philippine citizens, who broadly approve of Duterte’s policies).
Sheena Chestnut Greitens is an assistant professor of political science at the University of Missouri, and a nonresident senior fellow at the Brookings Institution. @SheenaGreitens