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North Korea: Witness to Transformation

Limited Effect Likely from New Sanctions on North Korea

by and Stephan Haggard | March 7th, 2013 | 01:34 pm
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On Thursday March 7, the United Nations Security Council approved Resolution 2094, imposing a new round of sanctions against North Korea in response to its underground nuclear test last month. The penalties include some measures we have seen in the past–such as designating individuals and companies–but also some new curbs on North Korean trade and financial transactions, and potentially even on diplomatic shenanigans as well. The  bottom line question is whether this new sanctions package is likely to  contribute ending the North’s provocative behavior.

When thinking about sanctions directed at North Korea, it is useful to distinguish between “defensive” sanctions aimed at impeding the North Korean nuclear weapons program and its  proliferation activities and “punitive” sanctions aimed at changing the regime’s behavior by inflicting pain. The bulk of  Security Council Resolution 2094 consists of a modest expansion of the “defensive” sort, aimed at disrupting North Korean activities that threaten world peace. The new resolutions also nods toward intensifying the luxury goods ban introduced in UNSC Resolution 1718  (2006) following the first North Korean nuclear test.

On the “defensive” side, the United Nations sanctions committee has documented a number of cases in which North Korean exports of weapons or weapons components have been deterred or seized.  There are no public cases of disruptions of the  imports feeding North Korean military programs.  The current resolution expands the net by increasing the number of individuals and entities subject to travel bans and asset seizures. It also includes new language urging member states to prohibit financial flows associated with these programs. For example, a state could  block the opening of North Korean banks or the establishment of correspondent relationships with banks in their jurisdictions “if they have information that provides reasonable grounds to believe that these activities could contribute to the DPRK’s nuclear or missile programs” or evasion of sanctions imposed under previous resolutions.

Likewise, the new resolution calls on member states to deny ports or over-flight rights to ships and airplanes believed to be involved in the military programs or evasion of sanctions, and even calls for “enhanced vigilance over DPRK diplomatic personnel” to prevent them from engaging in proliferation activities.

The problem with these latest steps  is that each has a kind of “credible information” clause. A government that does not want to enforce them can say that they lack credible information, or that the information that they were provided did not meet the standard of “reasonable grounds.” On the other hand, the resolution also provides cover for a campaign to intensify financial restraints on the country on the grounds that virtually all of its external transactions ultimately feed back into a central pot from which the country’s excessive military expenditure is drawn. Expect continuing diplomacy from the US and its allies to secure support for an expansive definition of proscribed trade and financial transactions.

With respect to the “punitive” sanctions—the luxury export ban—the resolution establishes for the first time a common definition of luxury goods. Up until now the definition  had been left for each individual country to decide. But the list is extremely short, consisting only of jewelry, yachts,  luxury autos, and racing cars. This is a far, far, shorter list than the list produced by countries or groups of countries such as Australia, the European Union, Japan, or even Russia. It omits such standard items as expensive fur coats and watches; high-end consumer electronics; and top-of-the-shelf liquor and tobacco products. The regime’s cognac and big screen HDTVs are safe.

Which brings us to China. Beijing  is the key actor with regard to all the banking and trans-shipping issues.  It is in China that military-connected North Korean entities have established banks or other institutions to intermediate the financial flows associated with proliferation activities. Likewise, China is the relevant country with respect to over-flight issues.  On the luxury goods ban, China has never published a sanctions list, and exports of luxury goods to North Korea have risen monotonically for years. If the Chinese government chooses to enforce resolution 2094 rigorously,  it could seriously disrupt if not end, North Korea’s proliferation activities. Unfortunately, if past behavior is any guide, this is unlikely to happen.

The immediate reaction to the rumor of a draft resolution was a Foreign Ministry statement that was even more bellicose than normal. As we noted in a post on the annulment of the armistice several days ago, it becomes harder and harder to escalate a war of words when you have already made all of the threats it is possible to make. But leave it to Pyonyang: the new addition is the threat of pre-emptive nuclear strike. That this is not going to happen goes without saying, but the “second and third countermeasures” mentioned in the statement suggest the possibility of another round of nuclear and missile tests. Given the modesty of this package and North Korea’s apparent determination to build its nuclear and missile programs, UNSC 2094 is unlikely to advance the denuclearization agenda unless China decides to treat them as a floor rather than a ceiling and really applythe pressure. We are not holding our breath.

Which brings us to the bottom line question. Will the resolution end the North Korean proliferation challenge?  It goes  without saying that sanctions alone will not. They can only buy time. Given the  modesty of this package and North Korea’s apparent determination to build its  nuclear and missile programs, regrettably, UNSC 2094 is unlikely to have a  great effect.