Sanctions and North Korea: The Good Old Days Are Gone for Good

“It isn’t necessary to imagine the world ending in fire or ice. There are two other possibilities: one is paperwork, and the other is nostalgia.”
Frank Zappa

“Nostalgia is a seductive liar.”
George Ball

I spent last New Year’s Eve celebrating the end of 2023 with a group of expatriate Russians, some of whom fled during the Soviet era and others who had just arrived in flight from the catastrophe that is the Putin regime and its invasion of Ukraine. As is often the case on New Year’s Eve in Russian households, the TV was on showing a Russian New Year’s Eve show. The show looked too free-wheeling and avant-garde to be streaming from Putin’s Moscow—if streaming from Moscow were even an option under current sanctions. When I asked my hosts about it, they said it was a recorded show from the late 1990s.

“I do so miss the nineties,” I commented.

“Not as much as we do,” the Russians all replied.

This is the same reaction I had to my respected former State Department colleague, Anthony Ruggiero’s, recent 38 North post on sanctioning the Democratic People’s Republic of Korea (DPRK or North Korea), Russia and China. I miss that moment in history when US geopolitical and economic power could shift North Korean behavior. Nothing would make me happier than to agree with the Joe Biden administration’s rhetoric about the use of sanctions in the current environment. (I wish I had not laughed out loud at the administration’s statement it was going to the United Nations Security Council to deal with Russia’s blatant violation of the prohibition on arms transfers from North Korea.)

It would be wonderful if we could play a recording of the unique set of circumstances at the end of the Barack Obama and the first year of the Donald Trump administrations that made effective sanctions against North Korea a genuine policy lever against Pyongyang. Alas, such nostalgia is best left to a melancholy Russian New Year’s Eve party. In 2024, geopolitics trumps finance and foreign perceptions of US policy now and its likely future behavior, undermining any hope that we can achieve the psychological dominance necessary to coerce better behavior in Pyongyang through sanctions.

Geopolitics Rule the Field

First, it is important to clear up a misimpression one could have about Russia when reading Ruggiero’s post. Russia has been hit very hard by sanctions. Hundreds of billions of dollars’ worth of assets have been seized. Russia has lost its stranglehold of the European oil and gas market. Its banks have lost easy, legal access to major financial markets. It has lost billions in foreign investment. It has to scramble through illegal channels to obtain civilian and military technology. It cannot legally buy weapons or weapons technology from the West, and it has not found other advanced suppliers willing to run openly the risks entailed in becoming alternate suppliers. It has turned to North Korea and Iran for weapons out of desperation.

But Russia is a great nation with a long history of suffering privation and isolation in pursuit of military victory. President Vladimir Putin—like his Tsarist and Communist predecessors—is gambling that his nation’s ability to suffer and bleed will outlast Ukraine’s supply of soldiers and the West’s attention span. It defies belief to think that any sanction applied to Russian banks or other entities over the acquisition of weapons will affect the race between Russia and Ukraine to complete economic and literal exsanguination.

Putin sees himself in a war that will determine if Russia will once again flourish as an empire or disintegrate. He has bet it all on victory in Ukraine. All else is a minor detail. Let us put aside any notion that a few more sanctions on Russian entities over North Korea will matter.

DPRK Analysis

Pyongyang agrees. It seems that the DPRK leadership believes—perhaps incorrectly—that the DPRK has recovered the geopolitical niche it had in the 1970s with the bonus of a nuclear arsenal under its control. Kim Jong Un sees himself profiting from a security relationship with Russia as strong as what existed in the Cold War, with China simultaneously protecting its own geopolitical position in Northeast Asia through open support against US sanctions as well as geopolitical counterpressure to give US allies pause.

Having lost considerable face with the failure of the Hanoi Summit, Kim is unlikely to see any benefit in reengagement with the Biden administration that seems unwilling to admit openly that the underpinnings of the last 30 years of US dealings with the DPRK have been swept away by a new geopolitical and new nuclear weapons reality in Northeast Asia.

Given former President Trump’s rhetoric in the current US presidential campaign, Kim most likely has no reason to believe a second Trump administration will return the policy of “fire and fury” that spooked Beijing and Pyongyang into summitry with the US. Indeed, he would have every reason to believe that a second Trump administration will appease Russia, abandon Ukraine, and weaken or perhaps even end US alliances in Europe and Asia.

Certainly, one can poke many holes in this rosy scenario for Kim. Were President Putin to get a deal with the West on Ukraine that he could call victory, he would be willing to cast Kim aside without a second thought. But it is not hard to understand why Kim would be unimpressed by any effort to cut into his revenues. Even if the unlikely happened and the Biden administration chose to come down hard on Chinese sanctions violations and (equally unlikely) China buckled rather than retaliating by backing Russia full bore in Ukraine, Pyongyang and Beijing would believe they had a 50-50 chance come next January of having a much more malleable administration to deal with.

Getting Tough with China

It is true that effective sanctions—ones that will hurt the DPRK—can only be achieved with Chinese compliance. With so many other risks entailed in US-China competition, including Taiwan, the South China Sea, trade, the growth of China’s strategic nuclear arsenal, and Ukraine, it would be a bold stroke indeed to try to force Chinese compliance with UN sanctions on North Korea today. Perhaps some banks could be intimidated out of the business, but Beijing always has small “sanctions-proof” banks with few ties to the international system to turn to.

Given the flagrant nature of Chinese violations, however, it seems unlikely violations could be halted without some pretty risky actions, such as interdicting ships hauling prohibited cargo between North Korea and China. This is a step with very large military implications. I can only imagine such a step being taken by the US military in response to an acute threat to US security.

Perhaps an administration could be found that would be willing to put severe pressure on the Chinese banking system at a time when that system is debt-riddled and at risk—but one hopes the Secretary of the Treasury and Federal Reserve would know what that might mean for the international financial system.

Of course, the administration has let it be known that there are situations in which China would be exposed to severe US sanctions. That threat was made in the context of deterring China from directly aiding the Russian invasion of Ukraine. It seems to have had at least some of the desired effect, but this also means if the administration were to sanction China heavily for other reasons, Beijing might well be freed to do much more to help Putin’s aggression.

Getting tough on China, therefore, is a feasible avenue of sanctions action, but it is one that could have very negative consequences and probably would not achieve the policy end we desire.

It Was a Very Good Year

Ruggiero is quite correct that the period from 2016 to 2018 was the high point of North Korea sanctions. Kim’s behavior had alarmed and alienated China. President Trump’s over-the-top rhetoric had everybody in the region (and Washington) spooked. Broad-based and reasonably enforced sanctions against North Korea looked to China as a good alternative to “fire and fury” on its border. Unlike today, US politics and geopolitics provided an excellent tailwind for sanctions.

But the subsequent summitry took the force out of the tailwind for good. Trump wanted a legacy-making peace agreement and tossed aside sanctions. China became alarmed about a possible DPRK realignment towards the US, and Russia took its own measure of the Trump administration and proceeded down a different path. The factors that permitted sanctions effectiveness in that golden era for sanctions just can’t easily be recreated in 2024. The world has moved in an almost revolutionary fashion since then.

The Ball Has Dropped in Times Square

I regret that this piece might sound like an overly harsh reaction to Ruggiero’s post. He is a consummate sanctions professional, and he is one of the first people I would consult on any aspect of sanctions policy. My genuinely harsh reaction is targeted elsewhere: at the inability of the Washington policy establishment—including the Biden Administration—to see how radically the geopolitical environment has shifted in Northeast Asia. So much of today’s policy rhetoric sounds like that recorded New Year’s Eve show from the 1990s.

Ladies and gentlemen of the policy world in Washington: the ball has dropped. We are in a new environment, one in which nostalgia for a bygone era is poison.