President Trump and Kim Jung-un met in Hanoi on February 27 and 28 to work toward a resolution on the denuclearisation of the Korean peninsula.
During the summit, President Trump floated the possibility of relieving economic sanctions on North Korea in return for denuclearisation steps from the Kim regime. Trump’s promise, however, may have little effect on North Korea as the regime has little incentive to comply with sanctions in the first place.
A more effective strategy Trump can pursue to provide strong incentives for the North Korean elite to denuclearise is integrating the national interests of regional powers - China and South Korea - into a positive sanctions regime focused on economic and security assurances. This strategy can be more effective than his strategy of maximum pressure in coercing the North Korean regime.
International organisations have levied strong negative sanctions to pressure North Kroea. The United Nations Security Council has sanctioned the import of luxury items, military equipment, and transport vehicles, and has frozen the assets of a multitude of individuals and organizations tied to North Korea’s nuclear program. The European Union (EU) passed restrictive measures against North Korea in 2006. The EU sanctions, which are updated frequently, currently ban admission and residency of persons involved with North Korea’s nuclear program; deny North Koreans access to specialist training in the EU; ban the export of luxury items; ban EU investment in North Korea; and cap remittances to North Korea.
Nations have also levied unilateral negative sanctions on North Korea. In 2016, The United Stated passed the North Korean Sanctions and Enforcement Act to “protect [sic] the international financial system from the risks of money laundering and illicit transactions emanating from North Korea.” South Korea has blocked North Korean ships from its waters and halted cultural exchanges with the May 24 Measures in 2010. In 2016, South Korea expanded its economic sanctions by closing the Kaesong Industrial Complex, a major source of economic activity in North Korea. Japanese sanctions include restricted commercial and diplomatic exchanges with North Korea; frozen certain North Korean assets; and banned entry of remittances over $880.
The use of negative sanctions works to isolate North Korea from the international economic system as punishment for continued nuclear expansion. These sanctions, however, have little effect on the ruling elite who can use shell companies, middle men, and evasive tactics such as money laundering to evade international sanctions.
Sanctions, however, do hinder several NGOs ability to send critical aid throughout the country to combat food insecurity, exacerbating the struggle of ordinary citizens in poverty stricken areas. While designed to pressure the government of North Korea, the current sanctions regime has disproportionately affected ordinary citizens with no ties to the nuclear program, and provides little incentive for the elite to consider denuclearisation.
Despite being ineffective, political leaders have defended the sanctions regime. Rex Tillerson, in a UN meeting on North Korea, said, “the regime could feed and care for its women, children, and ordinary people...if it chose the welfare of its people over weapons development.” Secretary of State Mike Pompeo told Fox News in September 2018 that the US has made clear “that the economic sanctions, the pressure that has caused Chairman Kim to come as far as he has come to date, will remain in effect until denuclearisation.” President Trump renewed economic sanctions on North Korea in June 2018, citing the extraordinary threat.
While it is imperative to not suspend negative sanctions on North Korea, “a policy of pressure and deterrence without political engagement,” as former South Korean Foreign Minister Yoon Young-kwan writes in Project Syndicate, “has been shown to breed distrust and repeated defection by North Korea from agreements.”
To avoid defection and build trust, political engagement with North Korea should include the establishment of a strong positive sanctions regime building on the interests and capabilities of local parties.
China can utilise its position to promote the development of a strong border economy with North Korea. First, Beijing can leverage political and economic capitol to promote Chinese small business investment in North Korea. China and North Korea can also work together to establish formalised investment mechanisms to assuage Chinese fears on investment in North Korea. Tourism is another mechanism Beijing can use. More tourist routes through Dandong and Jilin can be opened and China can expand visa free travel for Chinese citizens in North Korea.
Positive economic sanctions can be utilised by South Korea as well. Development of the inter-Korean rail-road can provide North Korea with strong economic incentives as regional trade starts to flow through the country. Inter-Korean projects such as the Kaesong Industrial Complex and the Kumgang Mountain resort can be reopened. While in operation these projects generated $3.14 billion and $909 million in economic activity for North Korea, respectively, and created around 56,000 jobs for North Koreans.
While South Korea and China can utilise positive economic sanctions, The United States can use positive security sanctions to show its shrinking military posture on the peninsula. The first step Washington can utilise is transferring wartime operational command to South Korea, a clear signal of a shrinking threat from North Korea. Second, Washington can restructure its military presence in South Korea, including shrinking its presence at the Demilitarised Zone. As Washington restructures its presence, it is imperative to maintain a strong comparative advantage. Finally, Washington can spearhead a negotiated settlement to the Korean War including a peace treaty.
Coordinating these sanctions can provide strong incentives to coerce North Korea. South Korea and China’s use of economic sanctions, especially around their respective borders, provides strong possibility for economic growth in North Korea. By restructuring its military posture, Washington gives North Korea the room to free up resources which could be better utilised.
The coordinated positive sanctions regime, as outlined above, presents North Korea with strong economic and security incentives to work towards abandoning its nuclear weapons program. Such a program also can assist in avoiding diplomatic breakdowns like Hanoi moving forward.
Author: Benjamin Zimmer
Benjamin is the founder of The Korea Page: News and Analysis from the Korean Peninsula and a current Master in International Affairs candidate at The Bush School of Government and Public Service at Texas A&M.