The World Health Organization-certified PyongSu Pharma joint venture (J/V) took “drastic measures” to keep operating in North Korea in order to avoid falling afoul of recent United Nations sanctions, Managing Director Remy Lardinois has told NK News.
A creative but risky solution now means that PyongSu Pharma will reportedly be able to continue operations in the DPRK despite a UN-mandated 120-day window for joint ventures to cease operations there passing on January 10.
“In order to avoid breaching UN sanctions, NDCP, the majority partner of PyongSu Pharma took drastic measures,” Managing Director Remy Lardinois said, referring to legislation obliging the end of J/V operations contained within UN Security Council Resolution 2375.
“Pyongyang Pharmaceutical Factory, our partner, agreed to hold onto NDCP shares until the sanctions are lifted or until PyongSu gets an exemption,” Lardinois explained.
NDCP stands for the Northern Development Pharmaceutical Consortium Ltd, the foreign partner in the PyongSu J/V – alongside the DPRK Ministry of Public Health-linked Pyongyang Pharmaceutical Factory.
“Considering the trust that’s been established over the past 16 years, I believe this move, though potentially risky, was the right one to make,” he continued. “Operating in breach of UN sanctions was not something the company or I were prepared to endure.”
NK News reported in October that PyongSu had applied for an exemption from the UN’s 1718 sanctions committee to continue operating in North Korea without breaching September’s UNSC Resolution 2375.
“Using the exemption option mentioned in Paragraph 18, and humanitarian contributions mentioned in Paragraph 26, I built a file which I already submitted to a number of individuals within the SC and 1718 Committee,” Lardinois told NK News at the time.
Paragraph 18 – the section banning joint ventures – provided a possible exemption for those J/Vs of a non-commercial or public utility infrastructure nature that are “approved by the Committee in advance on a case-by-case basis.”
Paragraph 26, for its part, said UN sanctions are not intended to have adverse humanitarian consequences for North Korean civilians, something which could be argued as likely to result from the shut-down of a pharmaceutical company like PyongSu.
Yet despite the two paragraphs, Lardinois said he was unable to secure approval from the 1718 Committee for PyongSu to continue operations in the DPRK.
“The main issue in our exemption process is to find a Member State to submit the exemption request on our behalf,” he said. “To date, responses have not been positive, despite two trips to New York and multiple meetings with various Missions.”
“The argument is that there should be a strong connection between the Member State and the Corporation for the Member State to take the responsibility to submit,” he explained.
However, NK Pro analyst Tristan Webb – who has written extensively about the DPRK sanctions regime – said that even if PyongSu were to find an appropriate means to submit the exemption request, hurdles would still remain.
“Even if it is submitted, any exemptions require unanimous approval from all UN Security Council member states’ representatives on the 1718 sanctions committee (see paragraph 5(a) of the Committees guidelines here)…” he said.
As a result, Webb explained that recent developments surrounding North Korea policy-making suggested it appeared uncertain if PyongSu would be able to win an exemption.
“The UK’s foreign minister said in Vancouver that he wants to ‘sharpen the choice’ for ‘the people of North Korea,’ and recently approved making humanitarian aid dependent on Kim Jong Un’s behavior (in contravention of humanitarian principles),” Webb said.
As a result, the UK, for example, “will probably be reluctant to approve an exemption for PyongSu Pharma, even if the application for exemption is successfully submitted.”
PyongSu – formed in 2002 – had otherwise seemed like a model candidate for getting grounds for an exemption, given its work supplying drugs to the International Federation of the Red Cross (IFRC) and the World Health Organization (WHO) in North Korea.
Webb said that following reports of obstacles to North Korea humanitarian work emerging due to tightening UN sanctions, “the Security Council’s repeated stock response that sanctions ‘are not intended to have adverse humanitarian consequences for the civilian population of the DPRK’ is increasingly looking like a fig leaf.”
After the first gulf war, when UN sanctions were said to have contributed towards a “genocidal” impact on the population of Iraq, the Security Council said it would take steps to avoid similar problems in future, Webb said.
After that, it was decided that future sanctions regimes would “be directed to minimize unintended adverse side-effects of sanctions on the most vulnerable segments of targeted countries,” and “allow unimpeded access to humanitarian aid … even without notification of relevant sanctions committees” (S/1995/300),” Webb said.
As a result, the Security Council “needs to be careful,” Webb concluded. “There is a strong argument against the UNSC that the levels of humanitarian harm caused or exacerbated by UN sanctions might be in violation of international law against the DPRK.”
Edited by Oliver Hotham
Featured image: PyongSu Pharma publicity photo
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