Written by Gyubin Choi.

Inter-Korean relations could hardly be worse than they are currently. After North Korea’s third nuclear test on 12 February 2013, the military hot line between the two Koreas was disconnected, and the last symbol of inter-Korean economic cooperation, the Gaeseong Industrial Complex suspended its operations.[1] In response to the UN Security Council Resolution 2094, adopted on 7 March, 2013, Pyongyang declared a ‘state of War’ with South Korea and the United States, urging foreign embassies in Pyongyang to evacuate. It is incontestable that North Korea is primarily responsible for the current increase in tension on the Korean peninsula in the first place. However, the fatigue of the ‘North Korean problem’ also has to do with ineffective sanctions approach driven by the US and UN. It was frustrating to watch the repeating pattern which could be summarized by: 1) Pyongyang’s missile and nuclear test; 2) UN condemnation and imposition of economic sanctions; and 3) Pyongyang’s counter with more rocket and nuclear tests. As former U.S. Secretary of State Colin Powell demonstrated, although “Pyongyang is playing a very dangerous game”, unfortunately, North Korea seems to have won during the course of the sanctions battle. What is wrong with economic sanctions?

Can sanctions be smart?

North Korea watchers often say that the best way to curb North Korea’s nuclear ambitions is to impose stronger sanctions that restrict North Korea’s access to international financial markets while increasing the cost of North Korea’s development of nuclear weapons and proliferation. In a similar vein, they suggest inventing smart sanctions which are able to harass the leadership in Pyongyang rather than the innocent population. It sounds plausible, but it is hardly possible in practice. Why?

First, no matter what type of sanctions are devised, if the nature of the sanctioner’s goals are deeply involved with the target states’ vital interests, economic sanctions are unlikely to achieve political goals. Since North Korea’s pursuit of nuclear weapons was connected to a strategy of regime survival, being a matter of life or death, the sanctions approach to eliminate North Korea’s nuclear programme is highly unlikely to attain the policy goals. North Korea’s obsession with its nuclear and missile programmes contravenes the international norm of non-proliferation and seems irrational to outside observers. However, in order to understand North Korea’s negotiation behaviour, it is necessary to remember that the nuclear and missile programmes are the only cards that Pyongyang has [2]. In fact, they enabled it to open negotiations with the West, particularly the United States, and in the course of reaching an agreement, North Korea’s nuclear cards made it possible to obtain the food and energy they needed. Since North Korea’s vital interest is regime survival based on the possession of nuclear weapons, regardless of the degree of punishment imposed by the international community, North Korea is not likely to give up its valuable and only deterrent asset. Faced with international isolation and economic sanctions the fear of the Kim regime, stemming from uncertainty of preserving his regime and the burden of maintaining ideological cohesion, has driven the North Korean elite to stick to their similar behaviour patterns which at least deter external aggression, and which guarantees regime survival. Thus, a diplomatic approach to getting North Korea to abandon its nuclear programme should consider how to deal with the root of their fear.

Second, during the sanction period, North Korea’s foreign economic relations have not been seriously constrained by economic sanctions. Despite its progressively tougher sanctions between 2006 and 2009 (UN Security Council Resolution 1718 of 2006 and UN Security Council Resolution 1874 of 2009), North Korea’s trade has grown steadily over the last seven years.[3] North Korea’s trade with the South had grown from $1,349.7 million in 2006 to $1,713.9 million in 2011. Even under Seoul’s ‘May 24 sanctions’ of 2010,[4] the amount of goods produced at the Gaeseong Industrial Complex had increased steadily until 2011 (from $1,442.8 million in 2010 to $1,697.6 million in 2011).[5] It is interesting to note that as sanctions against North Korea continued by South Korea, the trade with China had become more important for North Korea. Between 2006 and 2011, the trade volume between North Korea and China increased by more than three times from $1,699.6 million to $5,629 million. Its feature is obvious when compares the shares of trade with South Korea and China in North Korea’s total trade. While the proportion of trade with South Korea decreased from 31% to 21% between 2006 and 2011, the proportion of trade with China increased from 39% to 70% during the same period.[6] It shows that whereas the significance of inter-Korean trade relatively decreased, North Korea’s economic reliance on China is remarkably increasing.

Third, in reality, designing smarter sanctions may not be a simple task. Unless a set of existing sanctions is expanded to the level of ‘a sweeping naval blockade on North Korea’, cutting off Kim regime’s financial lifelines – China will be most unlikely to assent to such sanctions – it won’t be feasible to completely detect, disrupt, and deter trade of North Korean ballistic missile and nuclear technology. In principle, smart sanctions are likely to be effective on the condition that all UN member states stop trading with North Korea. To make targeted sanctions effective, they should be able to investigate all transportation documents and bank accounts of certain agents or companies, admitted or suspected in proliferation activity.

Most importantly, North Korea has not given up its nuclear weapons ambitions. It has been continually testing and developing this capacity. North Korea now insists on being recognized as a nuclear weapon state. Although it is not acceptable to the United States, many experts admit that North Korea is close to attaining this position. David L. Asher who took a leading role in designing financial sanctions toward North Korea in 2005, saying that “Although heavy sanctions are in place, they are obviously not sufficient. They are neither deterring the regime, nor interfering effectively in its WMD programs.”

One of the fundamental limitations of economic sanctions is that while the tighten sanctions may increase economic pressure on the North Korean regime, and may delay or suspend North Korea’s development of nuclear weapons and missiles, it is unlikely to be a measure that encourages reform and opening within North Korea. It is true that the use of economic sanctions can be an alternative option for policy makers when military measures are either unavailable or too risky. Yet, the fact is, economic sanctions are follow-up measures rather than a means to resolving a problem. A heavy emphasis on sanctions alone is unlikely to encourage North Korea to take a path to opening and reform. The goal of a nuclear-free Korean peninsula should not be given up. Yet, for the last decade, the use of economic sanctions has failed to make Pyongyang renounce or relinquish nuclear weapons, and has shown its limitations in restraining North Korea’s external trade. The strategy should shift its focus on how to encourage North Korean reform and opening. On this matter, the current punishing sanctions are not the answer.

Gyubin Choi is a PhD Candidate in Politics and International Studies, University of Leeds. 

[1] On 25 April, 2013, the South Korean government decided to withdraw all workers from the Gaeseong Industrial Complex.

[2] Christoph Bluth, “North Korea: How Will It End?”, Current History, September 2010, pp. 238.

[3] It does not necessarily mean that the aims of the two resolutions were primarily designed to impinge on North Korea’s commercial trade.

[4] In response to the sinking of the South Korean Navy warship, Cheonan, the South Korean government implemented sanctions called the ‘May 24 measures’ against North Korea. As a result, all inter-Korean exchanges and cooperation were suspended with the exception of the Gaeseong Industrial Complex.

[5] Yet, the ‘May 24 measures’ led to a marked decrease in the flows of goods in general trade, processing-on-commission trade, and non-commercial trade.

[6] This calculation was based on the fact that North Korea’s total trade volume in 2006 and 2011 was $4,036 million and $8,031 million respectively.

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