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North Korea May Be Using Hong Kong for Money Laundering

Summary: Through the use of front companies and shell companies, the UN suspects North Korea is using the South China Sea port of Hong Kong to launder money and evade the current sanction regime. The prime suspect is Hong Kong based company Unaforte Limited, which appears to be a front company. Unaforte appears to have owned a North Korean bank and other ties to that regime. The use of front and shell is essential to North Korea, as it uses these companies to launder funds and obscure ownership in order to access the international goods markets in defiance of sanctions. The UN Panel of Experts on North Korea has identified Hong Kong as having the largest share of North Korean front companies, likely due to the port city being the closest international financial center to the Hermit Kingdom. Through collaboration with illicit mainland Chinese operations operating in Hong Kong, and by abusing the Clearing House Automated Transfer System to obtain currency conversions to US dollars without being targeted for sanctions, North Korea is able to utilize the relatively laissez-faire nature of Hong Kong’s banking infrastructure and incorporation rules to their own benefit.

Analysis: While not dealing with the South China Sea conflict directly, the issue deals with US interests in the region. If North Korean and illicit Chinese operations are able to continue operating effectively out of Hong Kong, it weakens not just the efforts of the US and UN to reign in North Korea at a time when the situation is particularly tense, but helps disincentivize any firmness on China’s part to enforce strict sanctions on North Korea, or consider expanding them. It also helps underline the connection between US opposition to China’s SCS policy while simultaneously trying to co-opt their cooperation in reigning in North Korea. Leaving the situation as it stands is problematic, but targeting Chinese interests in Hong Kong is always a politically sensitive topic for the government in Beijing. Perhaps all the more so when the economic connections are illicit ones, and exposing them causes them to lose face for being unable to stop such activity.


Election Fraud in Venezuela

There is outrage in Venezuela after the election on Sunday. The socialist government has managed to remain in power even after numerous polls showed overwhelming support for the opposition party. Numerous countries such as America and Puerto Rico have denounced the election as unfair. The opposition party called for an investigation of the election, however it is believed that no evidence turned up since they did not press the issue. Venezuela has been suffering an economic crisis that has left its people starving and often jobless, and a great deal of its citizens blame president Maduro and his regime. This is why the results are so shocking and hard to believe. Prior to the election, polls showed that the opposition would win more than half of the 23 states. Results showed them winning a mere seven; the government has been accused of purposefully confusing votes and sabotaging polls in opposition-leading districts. It seems that there will be little progress in the nation as long as Maduro is in power. Democracy in Venezuela will be nonexistent while he continues to run his dictatorship and the people will continue to suffer. If other countries desire to help Venezuela remove the corrupt regime from power, there needs to be some kind of international intervention, because the democratic approach is apparently no longer a viable option.


Mexico if NAFTA Ended


This week’s article detailed Mexico’s reaction to the fourth round of NAFTA talks. The possibility of the United States pulling out of the agreement or Mexico and Canada not accepting the terms that the US puts forward, has prompted Mexico to start talks with other state actors. Mexico’s president, Enrique Pena Nieto, has already started talks with China, Argentina, and Chile for possible new mainstream trading partnerships. The potential collapse of NAFTA threatens the number of exports to the US by taking away their duty-free access. The ability for Mexican companies/factories to export products without being taxed has helped trade thrive between the two states. Thus, the end of NAFTA could cause a halt in products going to the US for finished assembly and into a finished product. Another high risk, is the possibility that Mexico may move production to Asia, and buying product parts there instead of in the US. Even though the US accounts for a large portion of Mexico’s economic activity and even if NAFTA ends the US will still engage in trade with Mexico, it is in Mexico’s best interest to widen their trade network to include new and profitable state actors. This is especially true if Mexican companies will have to pay taxes, both high and low, for products being shipped to the US.  For the US, I believe it would be advantages to look to negotiate a new agreement with Mexico as the US gains a lot of economic activity by using Mexican trading markets and would see a decline in revenue if a deal isn’t made.


The Future Looks Uncertain in the Cyber Crystal Ball 


          President Trump’s decertification of the Iran Nuclear Deal is leading experts to believe that it may prompt Iranian cyber attacks toward the United States in the long-term. Since 2011 and 2012, when the U.S. and Europe were targeted by Iran with a series of DDoS attacks against financial institutions and foundational infrastructure threats, Iran has reportedly developed more strategic hacking initiatives. Although their recent, more sophisticated attacks have shifted to targets in the Middle East, there is fear that Iran may be provoked by the deal’s decertification and turn its sights back on the U.S. in the cyber realm.

          The United States should take potential cyber threats into serious consideration before accepting the House Republicans’ push for additional sanctions against Iran. Iran has already proven to be active in cyber threats towards America. Implementing sanctions similar to those that they worked to get lifted through their agreement to the deal could likely result in cyber backlash because it is a plausible method of retaliation. Cyber attacks operate in an ambiguous environment without explicit rules to date. Therefore, Congress should delay immediate implementation of sanctions to avoid such plausible threats to U.S. cyber security.


Attack in Somalia, deadliest attack on record.

The death toll has risen to 276, with more than 300 people wounded, after a truck bombing in Somalia. Somalia’s government has blamed the Al Qaeda-linked al-Shabab extremist group for the attack it called a “national disaster.” However, al-Shabab, which often targets high-profile areas of the capital with bombings, had yet to comment. This was the largest bombing that al-Shabab has ever performed in Mogadishu. The U.S. has 400 troops in this area that were not hurt during the attack. I believe that the Somalia government needs to give the U.S. forces more autonomy in highly populated towns like where this attacked occurred. By doing that they would be able to run anti-terror operations in areas that these extremists primarily shelter their forces and train. Keeping the terror group constantly moving because of these house raids would inevitably scare the al-Shabab forces into leaving the highly populated areas. Or even better, they would decease the amounts of attacks that they take part in annually.


The North’s Nominally Numbing Numbers Conundrum

This week’s blog concerns 38Norths analysis the issue of a hypothetical North Korean nuclear strike on Seoul and Tokyo. The piece examined the expected number of fatalities and casualties generated by an air burst atomic explosion detonated in optimal condition. The piece begins with what a 250 kt warhead would produce in terms of casualties as well as the range of its effects on the Tokyo and Seoul metropolitan areas. The piece also then examines the number of fatalities and overall casualties produced by warheads of various other payloads that North Korea is assumed to have. The number of deaths from a regular nuclear strike on both cities is estimated to range from 400,000 to 2 million while a thermonuclear strike would see an estimated 1.3 to 3.8 million deaths.

These estimates provided by 38North, a project of the US-Korea Institute at Johns Hopkins, gives us a harrowing reminder of the stakes of the game world leaders are playing right now. The effects of the nuclear attacks on Hiroshima and Nagasaki still remain one of the more controversial events in American and world history to this point in time.

The 300,000 dead from both nuclear attacks over 72 years ago have had a lasting impact on the world and international diplomacy, such as Japan’s populace still fearing the idea of militarism and the idea of a “nuclear taboo” in international diplomacy. An attack in which the more conservative estimates say that already more people will die than in the nuclear attacks than did in Hiroshima and Nagasaki is harrowing prospect for the lasting impacts of such a horrifying attack.


Final Stages in Battle for Raqqah as U.S.-Backed Forces Continue Ousting ISIS

The final stages in the battle for Syrian city Raqqaah are underway. Islamic State militants are surrendering to coalition forces (Syrian Democratic Forces consisting of Arab and Kurdish militias) and it appears that the city will fall completely out of ISIS hands in a matter of days or weeks. The city has been under siege by several different fighting forces since June. Raqqah is one of only a few cities left in Syria that are being contested by ISIS militants. Nearly 4,000 Syrian civilians who have been trapped within the city are finally being freed. From a security standpoint winning control of Raqqah is more symbolic than strategic. Numerous ISIS led attacks were developed in and carried out from Raqqah. The main threat being addressed by anti-ISIS forces is keeping dangerous IS actors from leaving the city to regroup outside Syria only to return and pose a threat  at a later time. “We do not condone any arrangement that allows Daesh [ISIS] terrorists to escape Raqqah without facing justice, only to resurface somewhere else,” the coalition’s director of operations, Brig. Gen. Jonathan Braga, said Saturday.


General Nicholson Assesses Afghanistan

General Nicholson told NPR news , “With the policy decision announced by President Trump, the Taliban can’t win. It sets the conditions to get to a peaceful resolution of this conflict.” He claims that the additional support from the US for training the Afghans and additional weapon being sent to the war will be sufficient to not allow the Taliban to win. This will essentially continue the stalemate that has been going on since the troop surge in 2011 was sent home. He claims the stance that the Trump administration has taken to not put a time limit on how long the US will be involved will convince the Taliban that they can’t wait out the US to leave the country. While this may be true, it is only one portion of the path to peace in Afghanistan. Both sides ( to include the US) needs to see that they will not be able to win. Once both sides have come to this conclusion negotiation talks can begin to establish stability in the country. The third part of the road to stability in Afghan does have to be long term commitment ideally by a neutral third party to ensure the negotiation policies are kept in place. General Nicholson’s claim that stability can be established and handed over to the Afghan government in 5 years is simple an ignorant statement to make about a country that has been in a constant state of term oil for most of its existence.



Kurds Reject Baghdad’s Demand to Nullify Referendum Results


After meeting with Iraqi officials on Sunday, Masud Barzani said his government had rejected Baghdad’s demand to cancel the outcome of the independent vote and pledged to defend the autonomous region in case of an attack. Kurdish leaders renewed their offer to resolve this crisis peacefully with Baghdad. Originally, the Kurdish forces were given a deadline of 2 a.m. (local time) Sunday to surrender their positions and return to their pre-June 2014 positions. Tensions between the two allies (Iraq and the Kurds) in the war against the Islamic State have been escalating since the Kurdish referendum last month. After the referendum, the Iraqi parliament asked the prime minister for the permission to use armed forces.


If the Iraqi government and the Kurd’s can’t come to an official agreement, this could be a step back in the fight against the Islamic State. Their focus wouldn’t be completely on ISIS which could allow ISIS to obtain more area and become more powerful. This would hurt the U.S. and other nations that are involved in the fight against ISIS. It is in the best interest for everyone if the Iraqi government and the Kurd’s come to an official agreement as soon as possible.



Trump Denies Support for Nuclear Deal, but does not Scrap it.

Trump decided to disavow the Iran nuclear deal and he threatened that he would leave the deal if it was not amended. Trump wants to permanently block Tehran from building missiles or nuclear weapons. Trump did not certify the deal, he claims Iran is not complying with the all of the terms in the agreement. Congress needs to decide if it wants to reimpose sanctions. Trump stated, “In the event we are not able to reach a solution working with Congress and our allies,” he said, “then the agreement will be terminated.” If the agreement is terminated it could cause issues because Iran resisted in the idea that it would renegotiate the nuclear agreement. If the U.S. walks away the accord could collapse and Iran could abandon the deal. The collapse of the deal could lead to Iran to build a nuclear weapon and become a nuclear power.


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