U.S. Presses Persian Gulf States to Scale Back North Korea Ties

By Ian Talley in Doha, Qatar, and Nicolas Parasie in Riyadh, Saudi Arabia Features Dow Jones Newswires

Trump administration officials, eager to choke off North Korea's global networks, have in recent days urged Persian Gulf countries to clamp down harder on the nuclear-armed state's ties to the region.

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In three days of high-level talks in the United Arab Emirates and Qatar, U.S. Treasury officials pushed regional leaders to tighten financial oversight and reduce the number of North Korean laborers working in the region, many of whom are employed in the construction industry.

"We had very productive discussions about that and their willingness to work on that," U.S. Treasury Secretary Steven Mnuchin said in an interview.

Mr. Mnuchin's weeklong tour of the region was focused primarily on improving cooperation to fight terror financing and ratcheting up diplomatic pressure on Iran. But tightening the screws on North Korea is also a top priority for the administration, and the Treasury Department has kept a watchful on Pyongyang's ties to the region.

In September, President Donald Trump authorized the Treasury Department to impose a new range of sanctions on banks, companies and individuals that help fund the regime in Pyongyang.

The North Korean labor contingent in the Gulf, which analysts say consists of between 5,000 and 10,000 workers, is a source of hard currency for Pyongyang. They are part of a global work force that helps fund Kim Jong Un's nuclear and ballistic-missile programs, defectors, U.S. officials and analysts said.

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In addition to the money generated from the contracted work performed by North Koreans, analysts said laborers and diplomats are often also used to carry cash, gold and jewels through financial hubs in the Middle East.

North Korea has said such allegations, which have also been documented in United Nations reports, are fabricated.

The Trump administration and Japanese officials have urged Gulf states in recent weeks to stop using North Korean labor and comply with U.N. sanctions on Pyongyang.

Officials in Qatar said they have stopped issuing new visas to North Koreans and haven't done so since 2015. Although about 1,000 workers remain in the country, officials say that number will decline as contracts expire and no new visas are issued. Similarly, the United Arab Emirates expelled North Korea's ambassador this month, ended its presence in Pyongyang and said it wouldn't issue additional visas.

Most of the economic activity between the region and North Korea has been concentrated in Kuwait, though Pyongyang maintains low-level diplomatic ties with most of the Gulf states, except Saudi Arabia.

Diplomatic activity occurs mainly through North Korea's only regional embassy, in Kuwait. Gulf states typically maintain ties with all members of the U.N., including politically isolated regimes like North Korea.

However, Kuwait recently downgraded Pyongyang's diplomatic presence in the Gulf state, citing North Korea's "continuing lack of commitment" to U.N. resolutions. The North Korean Embassy in Kuwait didn't respond to requests for comment.

North Korean workers came to the Gulf during a construction boom more than a decade ago when there was a shortage of foreign manpower. They are considered skilled and hardworking and they rarely take vacations.

But U.S. officials and North Korea watchers have accused the country of human-rights abuses. Last week, the Treasury Department added several state-linked entities and individuals to its sanctions list for their role in the export of North Korean laborers. The department said one of those North Korean firms, Ch'olhyo'n Overseas Construction Co., has had operations in Kuwait, Oman, Qatar and the U.A.E.

The State Department said in a special report that employees of Ch'olhyo'n "are kept in slave-like conditions, including having salaries and passports withheld by [North Korean] security officials assigned as site supervisors, meager food rations, poor living conditions, and severe restrictions on their freedom of movement." The firm couldn't be located for comment.

In the U.A.E., there are still two North Korean restaurants with North Korean staff, part of an international chain of outlets serving traditional fare.

In Riyadh last week, Mr. Mnuchin said the U.S. was gearing up to use new sanction powers granted by the president.

"We now have the ability to suspend correspondent accounts and freeze assets of any foreign financial institution that knowingly conducts significant transactions in connection with any trade with North Korea," he said in a speech to top finance officials and investors.

"We will use these new tools carefully to cut off flows of funds available to North Korea to pursue its dangerous and destabilizing nuclear and missile programs," he said.

Write to Ian Talley at ian.talley@wsj.com and Nicolas Parasie at nicolas.parasie@wsj.com

(END) Dow Jones Newswires

October 31, 2017 13:59 ET (17:59 GMT)