UNSCR 2371: An Invitation to Evasion

This article appeared originally at 38 North.

The Nuts and Bolts

Sanctions Impact

Sponsors claim the resolution will cut North Korea’s foreign exchange earnings by a third, saying it will cost the DPRK as much as $1 billion annually. This seems rather optimistic. Some of the economic impact being claimed for the new resolution seems to be double counted with items already caught by UNSCR 2270. Except for coal, mineral exports were already captured, and the Chinese had already halted coal imports for 2017 under the “people’s livelihood” provision. Prohibiting seafood exports could well cost the DPRK hundreds of millions of dollars as long as one remembers that the fishing industry has been successful for years in evading regulation and enforcement. Chinese, Russian, and Japanese fishermen are no doubt determining the best locations to rendezvous with North Korean fishing vessels to obtain their catch at sea.

Evasion is an even bigger problem on two other big-ticket items in the resolution. The resolution does not ban the export of North Korean labor. It caps work authorizations for them in states receiving them. The foreign guest worker industry is replete with abuses. It is a business in which there are many ways to have people work “off the books.” In the absence of a total ban on North Korean workers, it is hard to imagine how this provision is going to be enforced effectively even for governments that want to. To a lesser extent, the same can be said for the cap on joint ventures. This is a useful step in theory, since the North Korean economy has been benefiting from such investments in recent years, but the players in the joint venture game in North Korea and from abroad can be a shady lot with considerable experience in evading oversight and regulation. The recent C4ADS report on North Korean sanctions evasion details how skillful the network of Chinese joint venture partners is in assisting the DPRK. This complex network of front companies linked to key North Korean entities is highly likely to find clever ways to skirt this investment ban.

This is not to say the resolution is doomed, but it will require a great deal of effort and international cooperation to enforce it. Simply put, there will be violations, particularly in China, even if the Chinese government is fully on board and cooperative. Thus, while the resolution is a step forward, it may well disappoint in terms of the immediate damage it inflicts and it is likely to generate frustrations and tensions in the United States in particular.

Strategic Impact

Even if the resolution inflicts the damage its sponsors hope, it will be insufficient to change Pyongyang’s policy. As we have seen in the past, the Kim regime will simply shift its remaining foreign exchange resources to its strategic priorities and allow those outside the defense and political elite establishment to shoulder the pain. This was the sad experience of those of us who wielded the even more powerful sanctions against Saddam Hussein under UNSCR 661. Highly repressive regimes with a narrow political elite can successfully shift the pain of even severe sanctions to the innocent.

While having these sanctions is better than diving into a preventive war, we should not expect this resolution to solve our problems. On its own, it is simply too little, too late. Rather, it is a card to be played in a much larger game involving military deterrence and US-China, US-ROK, China-DPRK and US-DPRK diplomacy. However, whether or not the leaders in Washington, Pyongyang, Beijing and Seoul, are up to that complex effort is very unclear.