Analysis of UNSCR 2321 Sanctions on North Korea

Marcus Noland (PIIE)



The latest multilateral sanctions resolution on North Korea, UNSCR 2321 (the text will be posted soon), marginally tightens restrictions on transportation, particularly shipping. Insurance providers are essentially called on to limit provision of insurance to “any vessels owned, controlled, or operated, including through illicit means, by the DPRK.” Financial operations will be made somewhat harder by limiting the ability of embassies to have multiple bank accounts, including not only for sanctions-busting activities but for commercial activities as well; indeed, the resolution calls on—but does not require—a reduction of embassy staff and reminds member states that these personnel should not be involved in commercial activities at all. Technical exchanges are proscribed. The new package “calls out,” but does not ultimately restrict the organized export of labor, a growing source of foreign exchange earnings.

But the big innovation of UNSCR 2321 is the imposition of a $400 million ceiling on the “livelihood purposes” exemption with respect to the exportation of coal. (The exemption is also defined in volume terms, but for simplicity, I just work with values.) Excluding inter-Korean trade, last year North Korea’s recorded exports were roughly $2.7 billion; coal accounted for a bit more than $1 billion. So, if enforced, the new sanctions would reduce coal exports by approximately $650 billion or more than 20 percent of the value of merchandise goods exports.  Additional constraints are imposed on exports of copper, nickel, silver, and zinc—approximately $100 million a year—as well as monuments. Take that!

The balance of payments hit is surely enough to get the attention of Pyongyang. But it also even more assuredly not enough to induce North Korea to abandon its missile and nuclear programs, particularly as the game now shifts to the cat-an-mouse game of enforcement. China currently does not even provide information on its oil exports to North Korea. It has reported coal and other minerals, but will it enforce these restrictions or not? And how would we know?

Adding to the skepticism about this move is the fact that it has taken so long to be negotiated. As pointed out in yesterday’s post the time between nuclear tests and UNSCRs has steadily lengthened; this one took 82 days. Sanctions fatigue has clearly set in, with these measures marking only marginal additions to the innovations in UNSCR 2270.

Sanctions may play a role in bringing North Korea back to the negotiating table, but they are highly unlikely to bring an end to the country’s nuclear program in and of themselves. That will take a diplomacy for which we are currently ill-prepared, both in the US and South Korea. If these measures prove to have more bite than appears, North Korea may not respond by crawling back to the table; to the contrary, it could prove more risk-prone. Indeed, the more the sanctions bite the louder the bang is likely to be. Stay tuned; we will take a more detailed look over the next several days.

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