North Korea sanctions watchers warn against US going after Chinese banks: ‘you can’t fire that gun twice’

The ‘generational failure’ of US-led sanctions against Pyongyang has led some observers to suggest penalising Chinese banks for enabling Kim Jong-un
But sanctions critics say this ‘nuclear option’ would have catastrophic consequences for the global economy – and do little to make North Korea change

North Korea

Reuters

Published: 12:02pm, 8 Nov 2022

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Economic sanctions, the primary means the United States has used for years to try to exert pressure on North Korea, have abjectly failed to halt its nuclear and missile programmes or to bring the reclusive northeast Asian state back to the negotiating table.

Instead, North Korea’s ballistic missile programme has become stronger and it has carried out a record-breaking testing regime of multiple types of weapons this year – including of intercontinental ballistic missiles designed to reach the US mainland. Expectations are that it may soon end a self-imposed five-year moratorium on nuclear bomb testing.

Now, US policymakers and their predecessors can do little more than pick through the wreckage and seek to determine what went wrong, and who might be to blame.

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“We’ve had a policy failure. It’s a generational policy failure,” said Joseph DeThomas, a former US diplomat who worked on North Korea and Iran sanctions and served in the administrations of Democratic Presidents Bill Clinton and Barack Obama.

“An entire generation of people worked on this. It’s failed … so all right, now we have to go to the next step, figure out what we do about it.”

Biden administration officials concede that sanctions have failed to stop North Korea’s weapons programmes – but they maintain they have at least been effective in slowing North Korea’s nuclear programme.

“I would disagree with the idea that sanctions have failed. Sanctions have failed to stop their programmes – that’s absolutely true,” a senior administration official said on condition of anonymity. “But I think that if the sanctions didn’t exist, [North Korea] would be much, much further along, and much more of a threat to its neighbours to the region and to the world.”

In response to a request for comment, the State Department said, in apparent reference to China and Russia: “The UN Security Council has passed multiple resolutions to establish a robust sanctions regime intended to impede these unlawful weapons programmes. It is incumbent upon all member states to fully implement these resolutions, and we will continue to call upon them to do so.”

Former officials and experts say sanctions were never imposed and enforced robustly enough for long enough and blame faltering US overtures to North Korea as well as pressures like Russia’s war in Ukraine and US-China tensions over Taiwan for making them ineffective and easy for North Korea to circumvent.

This photo distributed by the North Korean government shows what it says was a test-fire of a Hwasong-17 intercontinental ballistic missile at an undisclosed location in March. Photo: Korean Central News Agency/Korea News Service via AP

North Korea has long been forbidden to conduct nuclear tests and ballistic missile launches by the UN Security Council.

The Security Council has imposed sanctions on North Korea since 2006 to choke off funding for it nuclear and ballistic missile programmes. They now include exports bans coal, iron, lead, textiles and seafood, and capping imports of crude oil and refined petroleum products.

However UN experts regularly report that North Korea is evading sanctions and continuing to develop its programmes.

Russia and China backed toughened sanctions after North Korea’s last nuclear test in 2017, but it is not clear what UN action – if any – they might agree to if Pyongyang conducts another nuclear test.

Sanctions haven’t been enforced ‘since mid-2018’

The senior Biden administration official said that Washington believes China and Russia have leverage to persuade North Korea not to resume nuclear bomb testing. But the Biden administration has accused China and Russia of enabling North Korean leader Kim Jong-un.

Anthony Ruggiero, who headed North Korea sanctions efforts under former President Donald Trump, said they were only pursued vigorously enough from the last year of the Obama administration to early in Trump’s second year. They then dropped off in the ultimately vain hope of progress in summit negotiations between Trump and Kim.

Some critics like sanctions expert Joshua Stanton, a lawyer and founder of the “OneFreeKorea” blog, fault both the Trump and Biden administrations for failing to exert maximum pressure to stop China allowing North Korea’s sanctions evasion. They point to the powerful option of imposing sanctions on big Chinese banks that have facilitated this.

“The sanctions we don’t enforce don’t work, and we haven’t been enforcing them since mid-2018,” Stanton said, noting that history had shown a correlation between stronger enforcement and North Korea willingness to engage diplomatically.

The Biden administration’s most significant failure is its failure to prosecute or penalise the Chinese banks we know are laundering Kim Jong-un’s money

Joshua Stanton, OneFreeKorea blog founder

“The Biden administration’s most significant failure is its failure to prosecute or penalise the Chinese banks we know are laundering Kim Jong-un’s money,” he said.

Some experts like DeThomas argue that taking what some call the “nuclear option” of going after Chinese banks could exclude huge Chinese institutions from the international financial system and have catastrophic consequences not just for the Chinese, but for the US and global economies – something Stanton considers unfounded.

“Going full-bore against the Chinese over North Korea is always a possibility, but it’s a high-risk option,” said DeThomas, arguing that such a measure should be reserved for an even more pressing scenario, such as deterring any move by China to all-out support for Russia’s war in Ukraine.

“You want them to be thinking about that. And you can’t fire that gun twice,” he said. “And even if you sanctioned the Chinese banks, you wouldn’t get the North Koreans to change.”

Some US academic experts argue that Washington should recognise North Korea for what it is – a nuclear power that is never going to disarm – and use sanctions relief to incentivise better behaviour.

“I do think we can buy things other than disarmament with our economic leverage,” Jeffrey Lewis, a non-proliferation expert at the Middlebury Institute of International Studies, told a conference in Ottawa on Wednesday.

The senior Biden administration official said maintaining sanctions was not just punitive, but about the international community showing it is united.

He rejected the idea that Washington should recognise North Korea as a nuclear-armed state.

“There is an extraordinarily strong global consensus … that the DPRK should not, and must not, be a nuclear nation,” he said. “No country is calling for this … the consequences of changing policy, I think would be profoundly negative.”