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17 USC 102

Plugging the Gaps in North Korean Sanctions

October 29, 2017

 

A September UNSC resolution imposed tough sanctions on North Korea in response to the nuclear tests North Korea has conducted over the past few months. Passing UN resolutions leading to ever stronger sanctions against North Korea has been the standard response to North Korean aggression since 2006. These resolutions and the corresponding sanctions have not hurt the North Korean economy, or much less changed the behavior of North Korea. Last year, South Korea's central bank estimated that North Korea’s economy grew by nearly 4 percent and has managed to consistently fund its current account deficit with China every year despite increasingly “crippling” sanctions. It has become abundantly clear that North Korean sanctions are not being properly enforced.     

 

Recent events have provided further proof of this realization. Earlier this month, Egyptian officials with information shared from the American government found that a cargo ship under the Cambodian flag but with a North Korean crew was found shipping grenades worth nearly 23 million dollars to elements of the Egyptian military. This arms deal was in clear violation of the 2009 UNSC resolution that banned North Korean military exports and imports and called for all members states to inspect North Korean cargo, a task that both the Egyptian and the Cambodians would have failed at (if the US did not know of this deal beforehand). This event is indicative of the gap between sanctions that the UN imposes and how those sanctions are enforced. Since the UN does not have an enforcement mechanism for sanctions passed by the organization, it leaves the implementation of sanctions up to member nations. This state of events has led to North Korea still successfully exporting arms to finance their regime. The Small Arms Survey estimates that North Korea receives 100-300 million dollars’ worth of annual revenue from these arms exports.

 

Another aspect of North Korean sanctions that does not live up to international standards is China’s policy towards their implementation (as required by international law). In February 2017, the Chinese government announced that, in accordance with UNSC sanctions, it will suspend coal imports from North Korea. Yet how China decided to enforce the decision is through allowing companies to “self-verify” their compliance with sanctions. The aforementioned September UN resolution was intended to be the toughest sanctions imposed on North Korea thus far, but when American officials proposed that the US get UN authorization to interdict shipping suspected of smuggling for North Korea, both China and Russia opposed this amendment. The resolution that passed had this amendment dropped to gain China’s and Russia’s vote. This is consistent with China’s and (to a lesser extent) Russia’s policy of officially supporting sanctions on the regime to garner goodwill with the international community, but still allowing underground economic activity that props up North Korea.

 

The official sanctions regime imposed on North Korea, when looked at closely, is one full of holes that results in little actual damage to North Korea’s ability to fund their regime. The US needs to take a more aggressive stance on sanctions enforcement. The American government can enforce the UN resolutions by pursuing more secondary sanctions. Secondary sanctions are sanctions that are imposed on an entity that does business with a target country. An example is the US imposing sanctions on a Chinese company that does business in North Korea.

 

These secondary sanctions are necessary to compensate for the lax enforcement of sanctions in China and Russia. Companies in these countries need to be given an incentive for complying with the international sanctions regime and the US financial system, and a robust economy is far more important to the trading companies in China and Russia than North Korean business.

 

Justin Hastings at the University of Sydney has argued that North Korea’s entire economy is based around evading and avoiding sanctions. The reason North Korea can successfully evade sanctions is through lax enforcement with major trading partners and the inability of the UN to police the sanctions that it imposes. The US has the ability through its sophisticated financial system and economic power to incentivize and penalize entities that violate sanctions and target the companies that still do business with North Korea. The US needs to expand their set of secondary sanctions and use the full range of available policy resources to ensure UN sanctions are thoroughly enforced against North Korea.

 

Photo credit JA de Roo, Creative Commons

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