The Robust North Korea Sanctions Mirage

Source: Korean Central News Agency.

As a key component of its effort to help Ukraine defend itself against Russia, the Biden administration has sought to isolate Moscow. In fact, the White House has gone so far as to boast recently that US sanctions and export controls had forced Russia to “become increasingly isolated on the world stage.” Yet the Democratic People’s Republic of Korea (DPRK or North Korea) continues to send ballistic missiles to Russia—in violation of United Nations (UN) Security Council resolutions—in exchange for military assistance of its own. Russia fired those North Korea-origin missiles at Ukraine several times beginning late last year. Washington has tried to shame Vladimir Putin and Kim Jong Un into stopping their relationship. The problem is, neither dictator has any shame.

Clearly, whatever policy the Biden administration has been employing against Pyongyang isn’t working. Instead, Washington must cripple Kim’s revenue flow to change his calculus.

John Kirby, the National Security Council Coordinator for Strategic Communications, used a glitzy presentation from the White House press briefing room on January 4 to threaten consequences for continued DPRK-Russia proliferation activities. Kirby said those consequences would start with going to the UN Security Council to demand that Russia be “held accountable for yet again violating its international obligations.” But the United Nations is a lost cause. Russia has a veto ensuring that no substantive action against it can occur, and, as a result, the New York-based organization remains nothing more than a glorified debate club. For example, the US Mission to the UN issued a strongly worded statement, but neither Moscow nor Pyongyang blinked. Dictators like Kim and Putin do not quiver at statements, whether they are issued in the Brady Room or Turtle Bay.

Washington also imposed sanctions to “disrupt” and “expose” the arms transfers. But the Department of State’s own press release inadvertently highlighted the problem with those sanctions. It reminded readers that a November 2023 transfer of North Korean ballistic missiles and missile-related cargo had been facilitated by a company that had been previously sanctioned in May 2023. The parties used two airplanes that had been previously identified as blocked property in the May sanctions action. Thus, the department highlighted that sanctioning airlines and aircraft has not stopped this relationship and, worse, has not prevented the illegal shipments. Doing the same thing and expecting a different result is not an effective policy.

Unfortunately, these sanctions and similar botched responses to Pyongyang’s other provocations reinforce the fact that the administration is not serious about North Korea sanctions.

For instance, Kim’s September visit to Russia elicited a pledge from Putin to help the North with its space efforts. Two months later, on November 21, North Korea successfully placed a military reconnaissance satellite in orbit. The White House’s initial response did not mention sanctions or Russia; instead, it meekly encouraged North Korea to “choose engagement.” Kim chose otherwise, understanding that he can continue provocations without fear of the consequences.

A week later, the administration issued North Korea sanctions on consecutive days. However, this did not signify a shift in the administration’s approach. A deep dive into the actions reveals that the Biden administration simply checked the box of responding to the launch to get back to its other foreign policy priorities.

On November 29, the Department of the Treasury sanctioned a virtual currency mixer that North Korea used to launder proceeds from its cyber hacks. The UN Panel of Experts reported that North Korea stole $1.7 billion in cyberthefts in 2022. The Treasury Department’s sanctions acknowledged that the North Korean cyber heists occurred in March and June 2022. The year-and-a-half lag between the crime and the punishment reinforces that these sanctions are not a serious effort to address the Kim regime’s activities.

The next day, the United States, Australia, Japan and South Korea announced new North Korea sanctions. Treasury sanctioned eight foreign-based North Korean commercial and financial representatives. The State Department celebrated the unprecedented action and pledged to “continue to pursue actors who support the DPRK’s illicit activities and work with our allies and partners to deprive the DPRK of the funds to advance its destabilizing missile and weapons of mass destruction programs.” If only the rhetoric matched the administration’s actions.

The sanctioned North Korean weapons representatives are either based in China or Iran. The financial representatives are based in Russia or China. But, despite the fact that every transaction must have at least two endpoints, the administration did not sanction any Russian or Chinese banks, companies, or individuals—the administration only sanctioned those on the North Korean side of the transaction. In one example, Treasury highlighted that the Iran-based representatives tried to sell Chinese-origin aluminum and traveled to China multiple times. It defies common sense to believe that the representatives are not relying on Chinese banks, individuals and companies to further their sanctions evasion.

Thus, the administration continued its long-standing practice of targeting North Korean representatives without addressing the entire network of third-party sanctions evaders.

Washington should return to the robust North Korea sanctions campaign of 2016-2018. The majority of all sanctions placed against North Korea since 2005 occurred in this period. The impact goes beyond just numbers: During this time frame, Washington made an unprecedented qualitative change. The United States was willing to sanction Chinese banks, individuals and companies. These sanctions violators had allowed North Korea to launder more than $1 billion through the US financial system.

While Pyongyang’s nuclear weapons and ballistic missile development continued, the Kim regime changed its approach once sanctions were fully implemented. Over 20 countries ended diplomatic or commercial relationships with North Korea, severely impacting its overseas network. China started implementing sanctions, including on cross-border trade and overseas North Korean laborers, and the Wall Street Journal reported in 2018 that Pyongyang could face an economic crisis in 2019. China also prohibited its banks from opening new accounts for North Korea.

Faced with increased sanctions pressure, the Kim regime turned to negotiations and leader-level summits with former President Donald Trump in 2018.

The United States has lost that sanctions focus—and we have seen the consequences of ignoring North Korea’s weapons and diplomatic advances. The best way to change Kim’s approach is to put his strategic priorities—nuclear weapons, ballistic missiles, elites and the military—at risk. Pursuing this strategy will either lead to negotiations or reduce the DPRK’s ability to simultaneously develop its prohibited nuclear and missile programs while also aiding Putin’s war in Ukraine.

The administration can do that by targeting Kim’s revenue. The administration should start by issuing comprehensive sanctions against North Korea’s cyber activities; interdicting vessels carrying prohibited coal exports and petroleum imports; and cutting off access to commerce and financing in China. Only with new actions do we have a chance of achieving new results.

The US-China relationship is different now than the 2016-2018 period, and the Chinese government will object to this new focus, but its banks will comply because they fear losing access to the US financial system. Reports recently emerged of this dynamic on Russia sanctions where Chinese banks are reportedly scrutinizing relationships with Russia because of US sanctions. Biden should use that same focus on the North Korea problem.

If the administration does not act, Congress must conduct oversight of the administration’s policy and force it to justify its ineffective sanctions policy.

The Kim regime is building a nuclear arsenal targeting the homeland and US troops in the region. If Kim is worried about his revenue, then he will curtail his extracurricular activities. Biden should stop treating Kim like a spoiled toddler and begin protecting Americans from North Korea.

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