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The United Nations Security Council voted today on a new round of sanctions on North Korea. These sanctions are politically significant, particularly in signaling the changing attitude of Beijing toward developments on the peninsula. However, it is highly unlikely that the sanctions, in themselves, will have immediate effect on North Korea's nuclear program or the increasing threat of proliferation. North Korea has escalated in response to sanctions in the past, and there are ample reasons to believe that current policy is a function of domestic political developments as much as external inducements or constraints. Sanctions need to be coupled with a nuanced policy that includes a strongly-stated preference for a negotiated solution as well as the defensive measures of which the sanctions are only one part.
UN Sanctions
On April 5, 2009, the DPRK launched a multistage rocket, only the latest development in a long-standing program to upgrade its missile capabilities for both deterrent purposes and for export. The United Nations Security Council (UNSC) responded quickly through a Presidential Statement, which noted that the launch violated the terms of an earlier UNSC Resolution (UNSCR1718) adopted in the wake of North Korea's nuclear test in October 2006. However, the Presidential Statement also had teeth, and moved to implement provisions in UNSCR 1718 by convening the UN Sanctions Committee and designating three North Korean companies as targets. Claiming that the Security Council action was a violation of its sovereignty and even an act of war, North Korea withdrew from the Six Party talks, announced its intention to once again reprocess spent fuel rods into fissile material, and ultimately undertook a second nuclear test in May.
The new resolution goes beyond UNSCR in both the scope of products covered and the means of enforcing the sanctions. As with the earlier resolution, the new one calls on North Korea to cease and desist with respect to its nuclear and missile programs, to return to the Six Party Talks and to abide by its various international commitments.
With respect to product coverage, UNSCR 1718 focused on trade in major weapons systems, all products related to production of weapons of mass destruction (WMD), and luxury goods imported by the elite. The new resolution extends this to all arms-related trade, as well as to all training or assistance related to it. The latter is particularly important because North Korea not only exports weapons systems but has recently engaged in various forms of collaboration on both missiles and nuclear technologies, including with both Iran and Syria.
It is important to underscore that the resolution does not constitute an embargo on North Korea; most trade with the country is in fact not covered by the resolution, and humanitarian assistance and support for denuclearization are specifically excluded. However, the resolution does call on member states not to undertake new grants, financial assistance, or concessional loans to the DPRK. Moreover, the resolution sets a floor rather than a ceiling on what individual states can do, and some countries may interpret the scope of product coverage quite broadly. For example, some North Korean enterprises engage in both weapons-related trade and other commercial activities; the resolution would not prevent the targeting of such companies.
The most interesting features of the resolution have to do with means of enforcement. In 2003, President Bush launched the Proliferation Security Initiative (PSI), a loose effort to secure international cooperation in monitoring and interdicting ships that might be trafficking in WMD or WMD-related materials. The new Security Council Resolution comes close to making the PSI a formal multilateral effort. The resolution calls upon Member States to inspect vessels on the high seas or escort them to port if they have reasonable grounds to believe that they are carrying prohibited cargo. It also precludes provision of bunkering services to any ships suspected of prohibited trade.
An important loophole is that such interdiction must have the assent from the country under which the vessel is flagged. This provision could provide incentives for North Korea to do more shipping under its own flag. But there are clear constraints in doing so because of the country's pariah status, and the major flags of convenience, such as Panama and Liberia, would come under strong pressure to comply. This obligation will almost certainly generate a confrontation at some point given that North Korea has stated unambiguously that it would view such action as an act of war.
In addition to interdiction, the UNSC resolution explicitly provides for the use of financial means for stopping the flow of WMD-related trade. These measures are potentially more sweeping than those related to trade sanctions per se, since the resolution permits the blocking of transfers and even the freeze of any assets that “could contribute” to the DPRK's weapons programs or activities. Such a provision is similarly open to quite broad interpretation.
Finally, the new resolution establishes a new process for overseeing the sanctions effort by creating a Panel of Experts. The panel will oversee implementation of UNSCR 1718 and the new resolution, monitor efforts on the part of Member States, and provide recommendations to the Security Council.
Constraints on the Use of Sanctions
The passage of this resolution has an extremely important political function. In particular, it shows the growing depth of Chinese disaffection with North Korea's behavior since the missile and nuclear tests of 2006. This resolution is by far the strongest public Chinese signal to North Korea to date.
Nonetheless, there are several reasons to believe that the sanctions effort is not likely to yield immediate results, and could indeed appear to backfire in the short-run.
First, the North Koreans have typically responded to pressure not by complying but by escalating. The most recent cycle of escalation, culminating in the nuclear test, was in fact triggered by the sequence of UN actions described above.
A second reason why sanctions are not effective has to do with the changing geography of North Korea's trade and investment. Those countries most inclined to sanction North Korea do not trade or invest with North Korea and have even seen economic relations decline. Japan, once an important mainstay of the North Korean economy through transfers, has drifted toward a near-embargo. The United States has a plethora of sanctions and little leverage through additional restrictions on trade. Indeed, the North Koreans even rejected the last important economic link to the United States by declining to continue a generous food aid program negotiated last year. Aid from South Korea has dropped to a trickle, and commercial relations through the Kaesong industrial park have also been held hostage by new North Korean demands to renegotiate contracts.
What about financial sanctions? Are they likely to have more bite? In 2005, the United States Treasury signaled that a small Macau bank, Banco Delta Asia, was possibly engaged in money laundering activities on North Korea's behalf. Without any further action, the bank immediately suffered a run on its deposits and was forced into receivership, freezing $25 million of North Korean funds. The issue became a major sticking point in the Six Party Talks, but also appeared to motivate the North Koreans to return to them, setting the stage for agreements reached in 2007.
The lesson has been drawn that such financial sanctions might still give the US leverage. We are skeptical. First, the North Koreans have undoubtedly learned the lesson of putting too many eggs in one financial basket and diversified their holdings. But it is also important to note that at the time, the Six Party Talks process was in play; there were at least some channels of communication to which the North Koreans could return. Those channels are currently broken.
Finally, as with all sanctions efforts, their effectiveness will depend on implementation, and in this regard China has become more and more important. Partly as a result of sanctions efforts on the part of other states, North Korea's reliance on China has grown dramatically. For well-rehearsed reasons, China has been reticent to fully exercise its capabilities: fear of refugees and collapse on its border, fear of further radicalization in North Korea, and lingering geo-strategic concerns of siding too openly with the US. The UN sanctions resolution sends the signal, but much will depend on how China massages its relationship with North Korea through bilateral channels.
What To Do about the North Koreans?
In dealing with the North Koreans, it is important to have modest expectations. Sanctions have failed in the past, but so have inducements, including quite generous ones. There is ample evidence, which we review elsewhere, that current North Korean behavior is not driven by the external environment but by complex domestic developments that we understand poorly. These include Kim Jong Il's health, succession struggles, shifts in the power of internal factions, and domestic economic developments that have weakened the hold of the government over a fraying socialist system. We should not believe that fine-tuning of incentives—either carrots or sticks—is likely to succeed at this particular juncture; much will depend on how things evolve in Pyongyang.
With those reservations, there is merit in the broad approach outlined by William Perry in 1999; this policy involved two clear tracks. On the one hand, the United States should stand willing to discuss all issues on the agenda. We should not hold communication hostage to North Korean behavior. We should stand ready to send a special envoy to North Korea to outline our concerns and to hear any and all that the North Koreans might want to say. Even in the face of provocation, it is important to leave the offer on the table of improved relations. The United States should remain committed to the principles outlined in the September 19, 2005 agreement, which included both the complete and verifiable denuclearization of the peninsula and an improvement and ultimate normalization of relations with North Korea.
However, in the interim we should also communicate that the United States and its allies
have little choice but to take protective or defensive measures. "Sanctions" should be explained in defensive terms; the UN Resolution is rightly focused on trade in weapons that immediately affect the security not only of the five other parties engaged in the Northeast Asian talks but the wider international community as well. This distinction between offensive and defensive actions may not be appreciated in Pyongyang, but the principle is important nonetheless.
Finally, much of our diplomacy at the present should be addressed to Beijing as well as Pyonyang. We need to simply state the obvious: that what is currently taking place on the Korean peninsula is directly counter to Chinese interests. Recent developments risk escalation on China's Northeast border and a wider regional arms race. If we pursue this two-track approach—olive branch and defensive measures—it becomes much harder to blame the United States for lack of effort. Up until this point, too much of the onus of the Six Party Talks has been placed on the United States. It is time to make them more genuinely multilateral and a locus for all of the five parties to coordinate on a common strategy: an olive branch coupled with a willingness to act aggressively to limit the contagion from Pyongyang's recklessness.
