How to Structure Sanctions Relief in Any Future DPRK Deal
North Korean leader Kim Jong Un will almost certainly seek sanctions relief in any future deal on denuclearization. It is important, therefore to consider how this relief should be structured to maximize US negotiating leverage and achieve a sustainable agreement. This article outlines three principles that should inform US decisions on the disposition of sanctions: 1) keep first steps achievable, concrete and clear; 2) maintain a balance in concessions and in options for reversal; and 3) preserve solidarity and punish offenders. An agreement that embodies these flexible principles would improve its prospects for surviving political conditions in Washington and Pyongyang and delivering on its promise.
The simplest approach to sanctions relief would be to have one major agreement in which everything is traded for everything; sanctions relief and denuclearization steps would occur simultaneously and there would be little left for future negotiations. Indeed, this is the Trump administration’s position. However, such a comprehensive arrangement is highly unlikely and, even if it could be reached its implementation would almost certainly be phased if for no other reason than the practical realities of project management, the practical and operational challenges of implementation, and verification. Pursuing an agreement in which denuclearization must first occur before any sanctions relief could be granted (as the Trump administration has maintained) would almost certainly doom the prospects of negotiations. It would lack legitimacy inside of North Korea as a negotiating position. Given the Trump administration’s posture on nonproliferation and arms control agreements to date, the North Koreans would have little confidence that promises would be delivered after a long implementation lag. Even if such an agreement were to be reached, it would reduce North Korea’s stake in the early implementation of an agreement (when many snags will undoubtedly occur and when signs of good faith will be sorely needed).
A variety of potential arrangements could be contemplated for the structuring, phasing and implementation of sanctions relief. The Joint Comprehensive Plan of Action (JCPOA) negotiated with Iran offers one example in which two agreements covered roughly four periods of sanctions relief to take place over approximately twelve years. The removal of sanctions on Libya—in which Libya took the first steps and was quickly rewarded with sanctions relief—offers another option, albeit one that would hardly inspire confidence or support among North Koreans given the ultimate collapse of the regime and Gaddafi’s death. The case of sanctions relief for India and Pakistan after they exploded nuclear weapons—limited application of sanctions with relatively quick, painless withdrawal—is not a terribly attractive model for the United States because it did nothing to arrest the nuclear programs of either country and arguably undermined US nonproliferation efforts by showing the limitations of sanctions application against proliferators who are strategic partners.
These examples notwithstanding, the specifics of the sanctions relief that ought to be part of a North Korea deal will have to be framed within the context of the agreement itself, with corresponding concessions made by the North Koreans on their nuclear and missile programs and the United States, United Nations and international partners on sanctions.
Keep First Steps Achievable, Concrete, and Clear
If there is one thing that sanctions relief-related episodes have taught us, it is that delivering tangible results up front to both sides of the transaction is vital in order to sustain momentum behind any agreement. Promises that remain vague or unfulfilled not only sap enthusiasm for negotiations on follow-on arrangements and implementation of whatever quid pro quos underpinned a deal, but also require considerable time and energy to resolve. The Korean Peninsula Energy Development Organization (KEDO) experience is a case-in-point: when the North Koreans perceived a slow-down in the construction of the two power reactors promised under the Agreed Framework it led to inevitable frictions that made negotiating on other issues much more complicated. A similar problem emerged with Iran in 2014, as the United States labored to facilitate Iran’s access to a limited portion of its previously restricted oil revenues. Iran also used the experience to argue for more comprehensive approaches to sanctions relief in the JCPOA and for greater US action to facilitate Iran’s reintegration into the global economy.
US-DPRK negotiations on denuclearization have thus far yielded little by way of practical sanctions relief for nuclear concessions. The North Koreans have demolished parts of its nuclear weapons test site, offered to dismantle the Tongchang-ri rocket engine test stand and launch platform, and expressed a willingness to permanently dismantle the nuclear facilities in Yongbyon if the US takes corresponding measures. There is speculation that North Korea only agreed to take these steps because it was finished with all three sites; moreover, none of these actions actually reduce the present threat posed by North Korean nuclear weapons. But that is beside the point: all three actions demonstrate a North Korean commitment to reduce its nuclear capabilities. And even if Yongbyon is only the tip of the iceberg for North Korea’s present nuclear program, it still has symbolic importance and would eliminate significant capabilities that North Korea could use to reconstitute its nuclear program should talks fail. The United States should start with Yongbyon, taking what the North Koreans are prepared to offer for a first phase, but linked to sanctions relief.
It is here, however, that the apparent disconnect between US and South Korean negotiating approaches is potentially so problematic: the South Koreans have already made commitments on some of the sanctions relief that might have been easily included in a package in exchange for steps at Yongbyon. Restarting Kaesong, for example, as well as the Mt. Kumgang Tourism Project could have been presented to North Korea as part of an integrated package with steps by the United States, such as agreeing to license transactions that might facilitate these projects and avoiding actions that would impede foreign businesses interested in participating in them. The same could be said of reconnecting rail and road lines between the two Koreas. Such concrete deliverables are invaluable for initial stages of sanctions relief, proving both the commitment and the ability to make good on promises of sanctions relief.
For this reason, the announcement of a US-ROK working group to better coordinate approaches to North Korea is welcome. It may be possible—and should certainly be a goal—to use this group to link US sanctions relief the North Koreans would find meaningful to South Korean commitments on their own sanctions relief. Co-opting South Korea’s achievements in diplomacy is not the goal; rather, it is to add elements to these concessions to preserve US negotiating capital. Ideally, this working group would also identify the full range of North Korean “asks” for the negotiations, which could then be prioritized according to their difficulty, their permanence, and their strategic value in future talks. The United States would use this menu as the basis for selecting sanctions relief of comparative worth. For Yongbyon, for example, it may be worthwhile to offer relief from measures that would preclude the formation of joint ventures for the production of consumer goods and light manufacturing inside of North Korea. Or, if the North Koreans wish, the United States could follow past precedents with respect to the delivery of fuel oil and food by agreeing to explicitly license a defined list of goods, exempting them from both US primary and secondary sanctions (covering transactions involving US and foreign persons, respectively).
Maintain Balance in Concessions and in Options for Reversal
This last point highlights an additional principle: the need for balance in the concessions made by both sides and, in particular, their options for reversal. Some steps North Korea might take on denuclearization would be inherently reversible while others would be intrinsically harder to reverse. For instance, demolition of a facility is reversible, but only with considerable time, attention and resources. It is also potentially subject to verification and monitoring in a way that, for example, a commitment to forego nuclear weapons-related research may not be. North Korea is unlikely to undertake any destruction of nuclear infrastructure absent a similar level of commitment from the United States. Indeed, the North Koreans have explicitly linked any progress at Yongbyon to the United States taking “corresponding measures in accordance with the spirit of the June 12 US-DPRK Joint Statement.”
The same sorts of problems are present with respect to sanctions.
In the first instance, they are stickier to remove than they might seem, at least in practical terms, and their negative effects on business tend to linger after sanctions have been lifted. The Iran case here is very instructive. After removing sanctions, some believed that Iran would rapidly obtain the benefits of access to the global economy. Opponents of the JCPOA, in particular, emphasized the likelihood of quick Iranian reintegration into the global economy and the protection it would provide from future pressure and the re-imposition of sanctions. However, these assumptions were proven wrong as foreign businesses and banks sought to avoid Iran until they were confident the JCPOA would remain in place, a point never really reached with Donald Trump’s election to the presidency in November 2016, less than 11 months after the JCPOA was formally implemented.
In all likelihood, a similar dynamic would exist with respect to North Korea sanctions, especially after so many years of North Korea being ostracized and the likelihood of phased implementation as long as concerns remained about the US and North Korean political commitment to the process. Resuming business with North Korea would also be complicated by the operating environment in North Korea and the reputational risk for companies in doing business with a police state.
Thus, any denuclearization-for-sanctions-relief agreement would have to take into account the somewhat difficult nature of delivering sanctions relief. Accordingly, the agreement would have to build in tolerance for North Korean delay in implementing its commitments, perhaps by creating mechanisms for consultation. Moreover, it would have to specify in concrete terms what the United States and its partners would have to do to maintain North Korean compliance so that the United States and its partners are not held responsible for North Korea’s failure to meet a particular economic benchmark such as GDP growth rates. The United States, in turn, would have to be completely transparent about its own limitations in compelling business activity in North Korea while making clear that any sanctions relief would be conditioned on North Korean steps to facilitate business. In short, the United States would want to make certain that while it owned the responsibility to remove sanctions, North Korea owned the responsibility of managing the results of the relief.
Achieving this balance would be doubly complicated because the United States would want to maintain an ability to snap-back sanctions against North Korea for any violations of agreements. The Iran case would likely make North Korea wary of such mechanisms, but the simple truth is that the absence of trust and North Korea’s own independent means of snapping back into place its nuclear program would make such devices necessary, especially because even complete denuclearization would still likely leave North Korea with a latent nuclear weapons capability since its scientists would retain the theoretical ability to restart their program at will.
The United States would be wise to demand such mechanisms in any agreement. Although the re-imposition of sanctions may seem inherently easier than the construction of a building, this is not the case because the international sanctions regime against North Korea is fundamentally built on the compliance and cooperation of foreign rather than American actors. The United States and North Korea have never had substantial economic ties and, consequently, the imposition of primary sanctions against North Korea has been of almost no practical import. The real weight of US sanctions comes from their ability to influence foreign partners of North Korea and this effort has taken considerable time and energy to advance as far as it has. As a direct consequence, reversing course on sanctions relief is harder than it might otherwise seem, given that the only real change is the issuance of new guidance for how sanctions will be enforced that companies, banks, and individuals can either accept or ignore.
This is particularly important with respect to UN-related sanctions, which comprise the bulk of the international community’s measures against North Korea. Unlike with Iran, where the United States had imposed extensive secondary sanctions that did much to depress international business with the country, UN sanctions on North Korea are substantial and having an effect. But herein lies a problem: securing the reversal of UN sanctions would be relatively easy for the United States, particularly since it had to do so much work to secure their imposition in the first place. Russia and China are hardly likely to object to a resolution removing the sanctions.
In contrast, re-imposing sanctions in response to North Korean cheating would be far more difficult, starting with definitional issues of what constituted “cheating” and whether snapping back sanctions would be appropriate in every potential scenario. Russia and China, especially but not solely, would likely set a very high bar for what would meet the terms of snap-back if left with discretion on this point. For this reason, the United States would be wise to consider adapting the provision of UN Security Council Resolution 2231—which endorsed and implemented the JCPOA—that provided for snap-back of UN sanctions against Iran in the event any one permanent member of the UNSC decided it was necessary. The fact that the Trump administration did not trigger this authority when it withdrew from the JCPOA was counterproductive but may help to assuage concerns that the United States would imprudently wield this tool in the event of future North Korean nuclear noncompliance. Indeed, though the Trump administration might itself be accused of capriciousness in future scenarios involving such a mechanism, its own interest in preserving an agreement that it reached as well as the absence of such a trigger in the Iran case may give some comfort to the UNSC.
Preserve Solidarity and Punish Offenders
Finally, sanctions relief in nonproliferation agreements must be part of a coherent, organized and controlled approach. For sanctions relief to work properly—both as an incentive and a means of ensuring continued fulfillment of nuclear-related obligations—it has to be linked to and commensurate with the steps taken by the subject of the sanctions. If North Korea were to receive sanctions relief absent taking the steps required, it would have no compelling reason to abide by the terms of its agreement.
It is for this reason that reports of widespread Chinese and Russian sanctions evasion are so damaging: they give North Korea some of the benefits that would normally accrue from sanctions relief without any quid pro quo, undermining the attractiveness of relief in an agreement and the urgency that North Korea ought to attach to it. Ironically, therefore, it is imperative that the United States and the UNSC respond to these reports by immediately imposing sanctions on entities and individuals involved in sanctions busting. These actions run the risk of souring the environment for negotiations but they improve the chances that, if negotiations take off, they actually can achieve their intended results.
Sanctions relief is almost certain to be part of any serious negotiation with North Korea, but it has to be well-structured in order to contribute meaningfully to both a negotiated outcome and the strength of the agreement. There are many different ways to organize sanctions relief, but to be effective it must be concrete, clearly administered, subject to reversal, and delivered as part of an integrated strategy. If these criteria are not met, any denuclearization agreement that meets US national security requirements will be far more difficult to reach and implement without provoking major disagreement and distrust among the parties