European Council on Foreign Relations:
Sanctions have become a frequent tool in international relations – especially so for democracies, who fear the risks associated with outright military action, and even more for the United States, who have unique tools of investigation and compliance in their hands. This is, of course, not the case for countries that have themselves been subjected to sanctions, and for authoritarian regimes who fear, above all else, the creeping expansion of norms. For Europe, sanctions may be the only “weapon” truly available given its absence of collective hard power.
The case of sanctions against North Korea – where earlier resolutions were already adopted in 2006, 2009 and 2013 – provides a useful window into their efficiency and limits. All the more so because the debate on this latest round of sanctions has been long and hard (it has been nearly two months since the DPRK’s nuclear test of 6 January). As noted by ECFR’s Mathieu Duchâtel earlier this week, China and Russia have taken a big step towards tightening the noose around Pyongyang – by accepting to place limits on its external revenue, in areas that go much beyond the illicit activities directly targeted by the resolution. They have agreed to a ban on the export of coal, iron ore, rare earth and other minerals, as well as gold, and also to inspection of North Korean cargoes in other ports. The sanctions include North Korean diplomatic offices that harbour entities otherwise targeted by sanctions. All of these developments have the potential to be game changers. The fact that China – which received 90 percent of North Korea’s foreign trade given earlier sanctions – has agreed to the sanctions, certainly gives some indication of how vast the chasm between the Chinese and North Korean leadership is growing.
But more questions arise as a result of these sanctions, and on three different levels. Firstly, what are the limits of the resolution, secondly, how will it be implemented, and thirdly, what has been conceded or left out in order to secure this result at the United Nations Security Council.
The limits of these sanctions can be uncovered in the wording of the resolution itself. Almost all new sanctions can be overridden if the trade is being made for “humanitarian” or “livelihood purposes”. These exceptions only apply if they do not generate “revenue”, which would seem to reserve the provision of bona fide food or medical assistance. Alas, the resolution’s language appears to be contradictory in places. Point b of article 28 exempts trades which are “exclusively for livelihood purposes and unrelated to generating revenue for the DPRK’s nuclear or ballistic programs or other activities prohibited”. This clearly leaves the door open to other revenue streams. It is not clear whether the resolution will target North Korea’s export of indentured labour – not only in Russia, but in Poland and reportedly in Lithuania and Slovakia too. In these places there are North Korean workers remitting over 70 percent of their wages to the state – which leaves them with just $120 a month for living.
This loophole, along with the exclusion of oil imports from sanctions, has all the hallmarks of being imposed by China. There are many others too, such as the exclusion of coal re-exported from the port of Rason – a transit center for Mongolian coal towards Russia. Aviation fuel cannot be sold to North Korea but its planes can be fueled elsewhere on a return journey. North Korean financial institutions and firms elsewhere are subject to sanctions, with trade banned, but foreign firms already present in North Korea are not.
More important than these concerns is the undefined nature of “inspections” in foreign ports. In this respect, the US sanctions go much further by imposing checks on third parties. It will be interesting to see if the European Union, a champion of the “smart power” of sanctions, follows suit. Some, for example the French, who still suffer from the heavy fines imposed by the US on BNP Paribas because of its actions in Sudan, may beg to differ. In any case, the practical difficulties of checking, for example, on China’s immense export and re-export volume preclude an efficient implementation. What happens in Dandong, China’s notoriously opaque harbor that processes North Korea’s trade, is key. US sanctions will create moral hazard for traders, which is altogether a desirable but insufficient goal.
Which leads us to a third observation. The resolution has left a wide gamut of sanctions open to interpretation. In practice, these interpretations will be dictated by China, North Korea’s chief intermediary with the outside world. In some aspects, the resolution hands the key to North Korea’s economic fate to China, even if one might believe that North Korean diplomats are experts at circumventing restrictions, and creatively exploiting loopholes in “easy” third countries. After all, who will be checking the “humanitarian” nature of its relations with Namibia?
But it is China that has the power to turn the tap on or off. It has acquired this leverage at a very modest cost. Given the current crisis in coal and iron prices and China’s own interest in protecting its exports in rare earth metals, such as vanadium, there is little to lose should China decide to strictly implement the resolution. Against this, Washington has given up on a ban against oil imports – the only sanction sure to bring the regime to its knees in two months if China followed suit. And it is delaying – read, renouncing – the installation of Thaad anti-missile defence systems in South Korea.
One may legitimately think that the price is too high to gain an apparently consensual resolution. Giving China leverage over the defence systems that South Korea may acquire is a big strategic concession – when it could be preferable to solidify the South Korea-Japan-US triangle. It is hardly conceivable that China itself will bring about the downfall of the North Korean regime, yet Pyongyang’s extreme dependence on Beijing places it in a tricky position. On its part, South Korea, who recently deprived the North of around $500 million in receipts by shutting down the Kaesong Economic Zone (where 54,000 North Korean workers turn the majority of their wages over to the state) has gone much further. As has often been the case in the past, South Koreans – who massively supported the installation of anti-missile defence systems – will feel powerless to influence the course of events.
The resolution unquestionably goes one notch further in isolating Pyongyang. The cost is empowering China to make decisions regarding implementation. After decades of hoping that China would help the international community in scaling back North Korea’s nuclear ambitions, the US has essentially delegated the task to China, begging the question – is this smart power?
