Rethinking North Korean Sanctions: Lessons and Strategies for Long-Term Planning

After North Korea’s intercontinental ballistic missile test on November 29, 2017, the United Nations Security Council (UNSC) adopted Resolution 2397, imposing the strongest sanctions on North Korea to date. While sanctions have ramped up significantly in the past year, many experts agree that they will not have the desired effect of compelling North Korea to abandon its nuclear program and that achieving complete North Korean denuclearization is unrealistic. Instead, the United States and international community should pursue a long-term strategy of pressure, deterrence and containment. Such a strategy requires specially tailored sanctions that target North Korea’s nuclear capacity and elites while avoiding a humanitarian crisis that could fracture the international coalition, undermining the support needed to sustain a long-term strategy.

Lessons from Past: Iraq

In preparing a long-term strategy for North Korea, it is important to avoid past mistakes like those made with Saddam Hussein’s Iraq—a regime that, like North Korea’s, had a highly repressive and centralized leadership, demonstrated little concern toward its peoples’ welfare, and suffered prolonged sanctions for its provocative behavior and nuclear weapons pursuits.

In the wake of Operation Desert Storm, the Security Council adopted Resolution 687 (1991) with the goal of eliminating the Iraqi threat to regional security by removing all weapons of mass destruction (WMD) and eliminating the ballistic missile program. Resolution 687 continued all previous UNSC sanctions[1] until verification of Iraq’s disarmament compliance was achieved. However, the dual-use sanctions were applied in too indiscriminate a manner[2] and the prolonged sanctions had a devastating and disproportionate effect on the Iraqi people.[3] This resulted in a humanitarian crisis that splintered the P-5 (US, China, France, Russia and UK) unanimity causing uneven enforcement of sanctions.[4] The current strategy with North Korea is at risk of suffering similar perils.

The Case of North Korea

North Korea spends an estimated $10 billion of its annual gross national income of $30 billion on its military, from which a substantial amount is presumed to go toward its nuclear and missile programs. Additionally, a 2017 Nautilus report stated that in 2010, 31 percent of North Korea’s total oil use was accounted for by the military.[5] Given the military’s large share of revenues and energy supplies, sanctions that reduce hard currency export earnings and energy imports are assumed to have a major impact on North Korea’s military, including its nuclear and missile programs. But this has not necessarily been the case.

The DPRK’s military is the most highly prioritized sector and the last to experience budget and resource cuts. Even when earnings from the export of coal, minerals, and textiles or imports of oil products are squeezed, the remainder is channeled disproportionately into fulfilling military objectives. In almost all cases, this channeling of tightened resources comes at the expense of the general population, not the military or the regime’s other elites.

Furthermore, the hardships felt by North Korea’s general population will not generate public disapproval or civil disobedience, as DPRK leaders have systematically suppressed any semblance of a civil society. Instead, these sanctions fuel the regime’s propaganda strategy of justifying economic hardships and sacrifice as necessary to support the regime’s efforts to counter US hostility through its nuclear and missile programs. This same propaganda message has seen North Korea through economic collapse and famine[6]—neither of which resulted in domestic pressure against the regime, disloyalty among the elites, or meaningful constraints on the North’s WMD or missiles programs. Sanctions today are unlikely to change the regime’s calculus and are likely to have grave humanitarian consequences, especially if prolonged.

Possible Humanitarian Impacts: Exports

Kim Jong Suk Textile Mill in Pyongyang (Photo: Uriminzokkiri)

The sanctions focus on a variety of economic sectors with the intent of stifling hard currency earnings by banning all remaining categories of major DPRK exports, including prohibitions on coal, iron and iron ore, lead and lead ore, and other minerals, textiles, seafood,[7] agricultural products, machinery, electrical equipment, earth and stone, wood and vessels.

These targeted sectors also employ many North Korean workers. According to North Korea’s 2008 Census, of the employed population of 12,184,720, the agriculture, forestry and fishing sectors employed 4,386,895 people; mining and manufacturing: 3,601,177.[8]

Table 1: Working Population 16 Yrs. Old+ by Industry, labor productivity (2008 Census)
Industry Number of Workers
Agriculture, Forestry, and Fishing 4,386,895
Crop production 3,468,989
Fishing 178,979
Aquaculture 17,929
Mining and Manufacturing 3,601,177
Light Industry (Textiles) 1,323,366
Heavy Industry 1,559,616
Mining and Quarrying 718,195
Manufacturing 2,882,982

The populations most impacted by the export sanctions are not the economically privileged, but rather lower class citizens. While a positive side effect of these export bans may be increased domestic consumption, a more plausible effect will be a reduction in production intended for export. Workers will eventually be laid off and the basic needs of unemployed families will not be met.

A genuine lack of information about North Korea’s economy makes designing export sanctions difficult. For instance, one expert I interviewed believed cutting off seafood exports would greatly impact military pockets, as the fishing industry was operated by the military; however, another source insisted the fishing industry in North Korea has been largely privatized since the 1990s and that the seafood ban would impact tens or hundreds of thousands of North Koreans who depend on the industry for their income. As we have limited credible sources to prove who runs what in North Korea, effective export sanctions are little more than a guessing game whose losers are everyday North Koreans.

Possible Humanitarian Impacts: Imports

Additionally, the sanctions also limit North Korean imports of gas, oil and petroleum: a full ban on the supply, sale or transfer of all condensates and natural gas liquids; a cap on the supply, sale or transfer of crude oil at 4 million barrels or 525,000 tons annually; and a limit on refined petroleum products at 500,000 barrels annually, a drastic cut of close to 90 percent from the summer 2017 level.

Assuming one-third of oil imports are earmarked for the military, two-thirds remain to be rationed for all other domestic uses. To meet these constraints, North Korea could take actions like limiting gasoline for civilian use and public transportation, reducing electricity and kerosene use by residential and non-essential commercial entities, and raising power prices.[9] These actions would impact the most vulnerable individuals and have devastating long-term impacts.[10]

Humanitarian organizations on the ground in North Korea are already reporting that sanctions are affecting their operations. Tapan Mishra, the UN resident coordinator in Pyongyang, wrote to UN officials in October saying “crucial relief items, including medical equipment and drugs, have been held up for months despite being equipped with the required paperwork affirming that they are not on the list of sanctioned items.”[11] An American neurosurgeon operating in North Korea, Kee Park, explained, “It’s going to be the people who are the most vulnerable, the people outside of Pyongyang, who will suffer.”

Possible Fractures

As sanctions are prolonged and these aforementioned humanitarian consequences become severe—as was the case with Iraq—we could expect that a weakening of sanctions implementation will follow. Russian Deputy Foreign Minister, Igor Morgulov, has already asserted that Russia will not be a part of the “economic strangulation of the DPRK” and that “economic pressure alone would not lead to the outcome we seek, the resolution of the nuclear problem in the Korean Peninsula.” He further stated, “There is a humanitarian dimension, since sanctions hurt ordinary people in the first place, which we have to take into account.” China has expressed similar concerns about the humanitarian and refugee crisis that may ensue should sanctions continue.

Long-Term Sanctions Strategy

Learning from past experiences, caution should be taken regarding a prolonged sanctions strategy applied to Pyongyang. A long-term strategy should focus less on using draconian sanctions and instead focus on the following:

  1. Monitor humanitarian impacts: If the international community maintains sanctions for years to come, the overall impacts of those sanctions on the North Korean population should be carefully monitored. The Security Council Committee established pursuant to Resolution 1718 (2006) should be called upon to monitor the humanitarian situation on the ground in North Korea and given the authority to carry out that mandate. The Committee’s periodic reports to the UNSC members would enable the Council to make changes or adaptations to sanctions.
  2. Establish a humanitarian barter arrangement: If the UN Sanctions Committee identifies severe humanitarian impacts, a barter arrangement should be established allowing North Korea to trade previously embargoed exports, likely coal, for humanitarian goods from a premeditated list. Ideally, the arrangement would come with an enforcement mechanism for overseeing its operations to prevent the corruption.
  3. Target hard-currency conduits: A report by C4ADS revealed 5,233 Chinese companies traded with North Korea from 2013 to 2016, accounting for nearly 85% of North Korea’s total trade. The report identified a complicated network of entities including shell companies that, if targeted, could disproportionately disrupt Pyongyang’s nuclear and missile pursuits. The international community should carefully monitor trade flows of dual-use goods and target top-tier entities in the illicit network. Additionally, continuing to ban North Koreans from working overseas would reduce hard currency flowing back to North Korea by an estimated $250 million. Furthermore, the United States should apply sanctions to countries buying North Korean arms which earn the DPRK military an estimated $100 million annually.
  4. Strengthening Supply-Chain Management: US companies outsourcing jobs to China may find their goods produced by North Korean workers in China or being further outsourced from China to the DPRK. Reports show that Chinese companies get around these restrictions by smuggling “Made in China” tags into North Korea. Other reports have found some American companies producing goods in China benefit from using North Korean laborers. American companies implementing rigid guidelines on where and who produces their goods impacts funds flowing into North Korea.
  5. Focus sanctions on cutting off luxury goods: For years, there have been efforts to impede imports of luxury goods into North Korean borders. The Kim regime offers these luxury items to ruling elites to ensure their loyalty. Stifling the imports of luxury goods directly targets the loyalty of elites, potentially impacting their willingness to support the regime and its destabilizing programs. Efforts to restrict transfers of luxury goods have so far been ineffective. Information on unauthorized channels for importing luxury goods may be difficult to find, but evidence from prior investigations show North Korean embassies are fronts for criminal operations. Forty-seven countries host a DPRK embassy. They should be encouraged to actively enforce the luxury goods ban by limiting DPRK embassy staff numbers, limiting the types and quantities of goods embassies purchase, and requiring embassies to be paid for by the North Korean Foreign Ministry instead of self-financing.
  6. Encourage China to monitor Chinese-Korean passport holders: An estimated 10,000-15,000 Chinese North Koreans, or Huaqiao, are integral to trade between China and North Korea. These individuals act as intermediaries for businesses impacted by tightening sanctions because they may travel freely across Chinese-North Korean borders. Some of the special freedoms afforded to these individuals include allowing them international phone lines in their homes. This group of individuals remains one obvious channel for both lawful and illicit business dealings with North Korea.
  7. Avoid any additional sanctions on the general working population: In particular, sanctions should not impede crop production, as this sector employs and feeds a large number of North Koreans. Reports estimate, due to a drought in 2017, rice production may be limited. While sanctions should continue to target dual-use items, agricultural chemicals and machinery require special attention.

Conclusion

The current US strategy of “maximum pressure” on North Korea may end up stifling the North Korean economy, but it is unlikely to achieve denuclearization. As the United States and its international partners settle-in for a long-term strategy involving prolonged sanctions, they should seek to avoid severe adverse consequences for vulnerable populations, which would have the secondary effect of weakening international support for sustaining sanctions. Thus, smarter sanctions are needed that target the elites and weapons programs while insulating the general population as much as possible. A long-term, multilateral strategy is conceivable, but it should avoid the mistakes of the past if it is to be successful.


  1. [1]

    As a direct response to Iraq’s invasion of Kuwait (1990), the UNSC imposed sanctions that froze all Iraqi foreign assets and banned trade (imports and exports) with the exception of food and medicine, and established a Sanctions Committee to monitor the implementation of sanctions (Res. 661, 1990). Additional sanctions included the inspection of maritime shipments to and from Iraq (Res. 665, 1990) and a ban on flights to and from Iraq unless for food or humanitarian purposes (Res. 670, 1990). When these sanctions failed to achieve the intended outcome, the UNSC escalated the pressure by approving the use of “all necessary means” to end Iraq’s occupation of Kuwait, which led to the US military operation against Iraq.

  2. [2]

    The “dual-use” restrictions referred to items that had both civilian and military applications. The meticulous restrictions were problematic from a humanitarian standpoint because many items needed for water purification, sewage systems, healthcare (medicines, hospital equipment), electricity generation, oil field equipment and communications infrastructure were considered dual-use. NGOs and private organizations grew frustrated with the inability to transfer what they considered to be legitimate civilian items. Nearly everything except foodstuffs was dealt with on a case-by-case basis, with each member of the committee holding the ability to veto individual requests. The US, taking a highly restrictive approach towards screening dual-use imports, exercised its veto power more frequently than other committee members.

  3. [3]

    Before the war, sanctions had already weakened Iraq’s domestic infrastructure. Even though Resolution 687 allowed for imports for humanitarian purposes, its broad restrictions on imports prevented the acquisition of even the most basic items needed for rebuilding or repairing key infrastructure and providing medical care. Various reports showed drastic humanitarian impacts including extreme child malnutrition (800,000 children in 2000), a sharp rise in infant mortality rates (the rate doubled after 1990), and excessive general population mortality (potentially over 400,000 in total from August 1991 to June 2002).

  4. [4]

    By 1995, a division within the Permanent-5 was widening as France and Russia began pressing to ease or end sanctions on humanitarian grounds. Enforcement of sanctions became uneven as some UN members consciously chose not to comply fully.

  5. [5]

    Something closer to 40 percent of gasoline and diesel use, and 50 percent of kerosene and jet fuel, were also used by the military.

  6. [6]

    The famine of the 1990s killed an estimated 2 to 3 million people in North Korea.

  7. [7]

    Including fish, crustaceans, mollusks and other aquatic invertebrates in all forms.

  8. [8]

    The 2008 Census conducted by the Central Bureau of Statistics of North Korea is the most recent available data to come out of North Korea. Accordingly, these numbers likely look slightly different today.

  9. [9]

    Radio Free Asia recently reported that electricity costs have risen drastically to an unaffordable level, with other reports saying that, as a result, power has been reduced to just one or two hours a day for most North Koreans, with only elites having access to electricity throughout the day.

  10. [10]

    Potential long-term impacts could include: lack of household energy for heating and cooking; limited manufacturing of products to meet basic needs; deterioration of basic infrastructure; limitations on hospitals and clinics; increases in biomass and charcoal production causing environmental concerns like erosion, flooding and lower crop production, leading to food shortages.

  11. [11]

    Others have reported that wheelchairs, water purification tablets, anesthesia and X-ray machines have been blocked.


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