Whatever Path US Diplomacy Takes, Sanctions on North Korea Are Here to Stay

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Whatever Path US Diplomacy Takes, Sanctions on North Korea Are Here to Stay

Washington might be looking for a course correction on engagement with North Korea, but don’t expect any change to sanctions policy.

Whatever Path US Diplomacy Takes, Sanctions on North Korea Are Here to Stay
Credit: White House photo

North Korea’s recent ballistic missile tests are just the latest in a string of provocations that some fear will end with the country conducting its seventh nuclear test. Meanwhile, some experts believe that Washington’s appetite for its “lather-rinse-repeat” approach to North Korea may be waning, arguing that the 30-year effort to convince North Korea to abandon its nuclear ambitions has failed. For North Korea, however, this is unlikely to yield any practical change in U.S. or international sanctions policy.

At a U.S. State Department briefing in early October, spokesperson Ned Price stated that “even as we focus on our defense and deterrence, we are making very clear that we want to make this transition back from an area of provocation to an era … of pragmatic engagement.” Price further noted, however, that while the United States will continue to seek engagement and diplomacy, it will also continue to enforce “costs” (i.e., sanctions), as well as uphold its defense commitments to South Korea.

Although it is not entirely clear yet what a “less provocative” U.S. policy toward North Korea might entail, sanctions will likely be part of, if not central to, the discussion. The problem, however, is that U.S. sanctions policy will not — and possibly cannot — change in any practical way that North Korea would see as acceptable. The failed talks in 2019, for example, showed that Pyongyang is not interested in accepting measured economic concessions in exchange for reciprocal steps toward denuclearization. Instead, North Korea is demanding a maximalist approach of all-or-none when it comes to lifting sanctions.

Easing International Sanctions: Easier Said Than Done

The United Nations sanctions regime against North Korea is now entering its 17th year. Since 2006, the U.N. Security Council has imposed increasingly comprehensive financial and economic sanctions against North Korea, usually after significant escalations, like nuclear tests. Except for certain humanitarian activities, the resolutions prohibit nearly all trade with North Korea.

The most recent round of international sanctions came in 2017 amid heightened tensions between the United States and North Korea – with Pyongyang conducting its sixth nuclear test. Since then, however, the U.N. Security Council has been unable to find a response to subsequent provocations, including several ballistic missile tests.

In recent years, Moscow and Beijing have become increasingly critical of the sanctions regime and have sought to push the Security Council to lift certain prohibitions. In 2021, for example, the two countries put forward a proposal to lift the ban on overseas labor from North Korea. The draft resolution ultimately went nowhere.

Earlier this year, Russia and China vetoed a proposal that would have imposed additional sanctions in the wake of North Korea’s ballistic missile launches.  And, in what may be the coup de grace for the sanctions regime, Russia recently sought to purchase conventional arms from North Korea for its aggression against Ukraine – a clear and willful violation of its commitments and sanctions obligations.

Meanwhile, the U.N. Security Council is missing in action, unable to agree on even the most modest of responses to North Korea’s provocations. All the while the UN Panel of Experts – the eight-member body responsible for monitoring sanctions implementation – found that North Korea continued to successfully evade international sanctions, according to its most recent report.

Is Washington Hand-cuffed to Its Own Policy?

While the U.N. sanctions regime is floundering, Washington would be hard-pressed to make any meaningful changes to its own sanctions policy. Many of the designations are imposed through executive orders under the International Economic Emergency Powers Act, which gives the president broad authority to regulate international trade and commerce to address national security crises. While these sanctions have some flexibility in terms of lifting or suspending, others are enshrined in Congressional legislation. The combination of the two makes for an exceedingly difficult legal and regulatory landscape to navigate.

The 2017 Korean Interdiction and Modernization of Sanctions Act, for example, set out to consolidate much of the prior legislation and executive orders about sanctions against North Korea. Specifically, the legislation includes, among other requirements, mandatory designations, asset blockings and asset blockings – to include prohibitions on servicing, either directly or indirectly, correspondent bank accounts that could be used by designated persons.

Apart from the sanctions imposed to curb North Korea’s ballistic missile and nuclear weapons ambitions, the United States has also aimed at the country’s human rights abuses, designating several senior figures of the Kim regime. In 2017, the Trump administration declared North Korea a state-sponsor of terrorism, imposing additional financial and economic sanctions. North Korea had the moniker previously removed in 2008, as part of an effort by the Bush administration to jump-start failing nuclear negotiations.

Furthermore, North Korea has posed a significant threat to the integrity of the international system and remains a subject of both U.S. and international banking restrictions. In December 2016, for example, the United States imposed a “Section 311” designation against North Korea, labeling the country as a “jurisdiction of primary money laundering concern.” The rule ultimately prohibits U.S. banks from servicing correspondent accounts of a foreign bank in the United States, if such a transaction “involves a North Korean financial institution.” This sanctions-like designation has the effect of freezing North Korea out of the international financial system altogether.

Finally, the Financial Action Task Force (FATF), which is the international body responsible for setting global anti-money laundering standards, has labeled North Korea as a “high-risk jurisdiction” for its “significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threats they pose to the integrity of the international financial system.” The designation requires countries to take special precautions and apply “effective countermeasures” to all business relationships and transactions with North Korean companies and individuals. Again, the practical effect is a near prohibition on conducting business with North Korea.

What does this all add up to? Even if Washington were capable of admitting to a failed policy against North Korea, the reality is that there is very little that can be done beyond the current approach. The practicalities of turning the sanctions boat around in any appreciable way that would lend itself to successful negotiations with North Korea would require a tremendous level of not only domestic political support but also multilateral coordination. Both are unlikely.

For now, both U.S. and international sanctions will likely continue with a “business as usual” scenario, with all sides digging in their heels – the United States continuing ad-hoc designations against North Korean proliferators and sanctions-evaders and Russia and China chipping away at the international sanctions regime.