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North Korea: Witness to Transformation

Captain Renault Department: “Prosecutors Link Money from China to Iran”

by | September 7th, 2012 | 07:00 am

Our ongoing interest in sanctions has led us to consider opening a new tag called the Captain Renault Department. (If you don’t know the cliché, Renault is the cynical Vichy police captain in Casablanca who is “shocked—shocked—that gambling is  going on” at Rick’s, just as a croupier hands him his winnings).

In any case, the New York Times Jessica Silver-Greenberg has a well-reported story on suspicions that Iranian money may have passed through Chinese banks on its way to the HSBC’s and Standard and Charter’s of the world. These, among other European-based banks, have been in long-standing violation of US sanctions legislation (see our comment on these cases here and here).

We’re shocked—shocked! The US has already placed sanctions on one Chinese bank, the Bank of Kunlun, for facilitating weapons-related transactions. Investigations into the European banks could well yield more information on Chinese intermediaries. These financial concerns are on top of a series of cases of violations of trade sanctions; the CRS has a useful report on the subject (pdf here).

The issue is a much larger one. As China and other middle-income countries rise, the geography of trade and investment shifts and the ability of the US to use the American market to enforce extra-territorial constraints correspondingly diminishes. For our analysis of these issues  in the North Korean case, see our short monograph on the topic.