U.S. President-elect Joe Biden suggested during his campaign that he will engage in “principled diplomacy” with North Korea to achieve denuclearization. Pyongyang has yet to recognize Biden as the next U.S. president, but is likely hoping he will lift sanctions as an incentive to bring North Korean leader Kim Jong Un back to the negotiating table.
Yet lifting sanctions before Pyongyang dismantles major components of its nuclear weapons program would be a serious mistake. Like his father before him, Kim seeks to extract concessions from Washington and Seoul simply in exchange for talking.
Instead of conceding to Kim, the Biden administration should continue enforcing sanctions. This will require the United States to restore leadership within the United Nations focused on building coalitions among member states intent on exposing and pressuring governments enabling North Korean sanctions evasion, namely China and Russia.
Earlier this month, Representative Song Young-gil, the head of a National Assembly delegation from South Korea’s ruling party, suggested to members of the U.S. Congress that phased sanctions relief is the “only realistic solution.” This proposed solution refers to a process in which North Korea receives partial sanctions relief in exchange for a step in the denuclearization process.
This approach mistakenly assumes Pyongyang would negotiate away its nuclear weapons even after Washington and Seoul had given up their leverage. More likely, Kim would pocket the concessions, make vague promises to denuclearize, then do nothing.
Sanctions impose substantial costs on Pyongyang, but it has also demonstrated remarkable ingenuity when it comes to evading them, often with help from Moscow and Beijing. If Biden wants to achieve a breakthrough on the nuclear front, his first step should be to close the numerous blinds spots and loopholes that Kim exploits to survive the pressure.
The U.N. Panel of Experts that assesses North Korean sanctions enforcement continues to find that Pyongyang operates illicit overseas businesses to fund its weapons program. In particular, the regime formed elaborate financial networks around the world with the help of numerous foreign individuals, front companies and financial institutions. These networks enabled Pyongyang to evade banking restrictions, continue overseas export of labor and maintain trade of sanctioned goods such as luxury products, coal, oil and weapons.
The incoming administration should cooperate with South Korea and other like-minded countries to disrupt Pyongyang’s illicit access to foreign banks.
In August 2019, the U.N. Panel of Experts reported, “Financial sanctions remain some of the most poorly implemented and actively evaded measures.” This is because both U.S. and U.N. sanctions have barely targeted banks. According to the panel, North Korea continues to have nearly unfettered access to the international financial system by maintaining accounts in banks across Asia, Europe and the Middle East.
This vulnerability is the central node that enables all of North Korea’s illicit overseas ventures. Severing North Korean access to bank networks can have a major ripple effect in severely constricting North Korea’s other businesses, such as its trade in oil, coal and luxury items.
The United States can start this process by engaging and educating smaller banks that unknowingly support North Korean activity by failing to detect furtive North Korean methods. The Departments of State and the Treasury, in turn, should send outreach teams to help these vulnerable banks by offering them guidance on possible red flags indicating suspected North Korean operations and best practices to disrupt these efforts.
If Treasury continues to find that these banks are knowingly providing services to North Korea even after such outreach, it should then consider sanctions. To be sure, sanctioning a major Chinese bank could create negative consequences for the global economy. For example, in 2017, Treasury considered sanctioning the China Construction Bank and the Agricultural Bank of China, two of China’s largest financial institutions with assets of more than a trillion dollars each, for North Korean sanctions violations. Treasury officials, however, decided against this action because punishing lenders of this size could cause systemic damage to international financial markets if China launched retaliatory measures against U.S. banks.
While these concerns are valid, failure to act against these institutions constitutes a worse option, since it provides North Korea with a free pass to maintain its illegal bank networks. Instead of sanctioning the institutions themselves, Treasury should therefore consider designating the leadership of banks conducting prohibited transactions with North Korea. By sanctioning an individual leader rather than the bank, Treasury could both punish the bank’s bad behavior while also opening a clear path to rehabilitation. Treasury would resume normal operations with these banks once they end problematic behavior and appoint new leaders.
To complement Washington’s unilateral actions, the Biden administration should seek to rehabilitate U.S. leadership within the U.N. Security Council. Many former members of the U.N. Panel of Experts have said that America’s loss of political will hampered the council’s North Korean sanctions enforcement. Although President Donald Trump walked away from his second summit with Kim in Hanoi due to disagreement over Kim’s request for early sanctions relief, Trump still sought to preserve his personal relationship with the North Korean leader. The administration no longer prioritized enforcing sanctions, while Trump praised Kim’s testing freeze as a victory toward denuclearization, even though North Korea’s nuclear development and sanctions evasion continued.
Panel members asserted that U.S. delegates opposed the passage of new resolutions and failed to challenge countries — namely China and Russia — that argued against increasing sanctions, obstructed the panel’s reporting process and withheld important evidence ongoing violations of North Korean sanctions.
President-elect Biden must restore U.S. leadership within the U.N. system to help rekindle a collective political will among other like-minded U.N. member states. Creating this coalition will be essential for the U.N. Security Council to pressure Moscow and Beijing so they don’t veto future resolutions that close the sanctions gaps exposed by the U.N. panel. Katsu Furukawa, a former representative of the panel, recounted how before 2018, the United States “pushed really hard against China and Russia,” leading them to “compromise and eventually agree with the U.S. position on sanctions.” It is imperative that the Biden administration cultivates trust among other like-minded states to reduce Moscow and Beijing’s influence.
A strong coalition would also help the Biden administration address other challenging issues, such as maritime sanctions violations. North Korea continues to use deceptive shipping practices, such as falsifying vessel identity, conducting ship-to-ship transfers and manipulating vessels’ automatic identification systems, which show their locations, to continue trading sanctioned goods.
The U.S. will need other governments’ backing to earn support for future enforcement actions, such as holding ports and shipping registries worldwide more accountable in sharing information about deceptive North Korean shipping practices as well as bolstering maritime interdiction operations of vessels suspected of carrying goods for Pyongyang. Moreover, Washington’s diplomatic effort will help the new president regain the economic leverage and momentum that were so essential to bringing North Korea to the negotiating table in the first place.
The Biden administration must proactively adapt enforcement measures to North Korea’s evolving deception. The new U.S. leadership can create enormous economic leverage to enable Washington and its allies to negotiate with North Korea from a position of strength, not appeasement.
Mathew Ha is a research analyst focused on North Korea at the Foundation for Defense of Democracies (FDD). ©2020 – The Diplomat
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