April 24, 2019

Amid Putin-Kim Summit, Some Russian Firms Continue North Korean Business

By Megi Hakobjanyan and Edmund Xu

Sanctions are expected to be on the agenda of the first summit between Russian President Vladimir Putin and North Korean leader Kim Jong Un, set for this week in Vladivostok.

The two leaders are scheduled to meet Thursday at Far Eastern Federal University, according to Russian media reporting. Kim arrived Wednesday in Vladivostok by train ahead of the summit.

Vladimir Peskov, press secretary of the Kremlin, said that the agenda of the talks will be broad, ranging from bilateral relations to denuclearization to regional cooperation, but the main items are “mutual consideration of each other’s interests and mutual trust - communication will be built upon these principles.” North Korean officials have praised Russia’s defiance in the face of sanctions levied in response to Russia’s annexation of Crimea.

Although Russia voted in favor of strengthened United Nations sanctions against North Korea in 2017, it has since called for easing those sanctions. Trade between the two countries dropped by more than half in 2018, due in part to Russian compliance with international sanctions against North Korea, according to Yuri Ushakov, a Putin aide quoted Tuesday by TASS.  

Despite the sanctions, Russian companies are active in facilitating North Korean economic activity, especially in the maritime, energy, construction and timber industries.

Russian companies have facilitated North Korean vessels’ maritime trading activities, which have been closely monitored by the U.N. One company in particular, Profinet Pte. Ltd., was sanctioned by the U.S. Treasury Department last August for providing port services on at least six occasions to North Korean-flagged vessels. Its director general, Vasili Aleksandrovich Kolchanov, was also sanctioned; he was involved in North Korea-related deals and interacted directly with North Korean representatives in Russia, the Treasury said. Kharon wrote about Profinet’s North Korean connections in November 2018.

Profinet has continued, as recently as February, to service sanctioned and non-sanctioned North Korean vessels, such as UN PHA 2. The vessel was sanctioned on Feb. 23, 2018; at the time, it was named KUM GANG 3.

Russian firms have also worked in the North Korean energy sector, which is under restrictions by both the U.S. and U.N. Moscow-based Independent Petroleum Company (IPC) was sanctioned by the U.S. in June 2017 for shipping more than $1 million worth of petroleum products to North Korea and “may have been involved in circumventing North Korean sanctions,” according to the U.S. Treasury.

Kharon research

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