On November 30 the UN Security Council passed Resolution 2321, imposing yet another extensive sanctions package on North Korea. Coming somewhat unexpectedly—nearly three months after the Kim regime’s latest nuclear test, on September 9—and mere weeks after the election of Donald Trump as the next US president, the move received relatively little coverage from American news outlets.
Despite the quiet reception, the new resolution comes as a much-needed second act in the drama unfolding this year between the Security Council and North Korea over the latter’s nuclear ambitions. The better-reported first act came in early March, when Resolution 2270 imposed the harshest economic sanctions to date in reaction to a nuclear test on January 6. With its embargo of coal and other commodity exports, combined with extensive hard currency controls, this set of sanctions looked to be a potential game changer with which the UN, urged on by the United States, moved from tools of strong persuasion to mechanisms of increased coercion against the regime in Pyongyang.
Yet in practice, the March resolution neither deterred North Korea from further testing nor curtailed its ongoing evasion of sanctions. Thus it’s a welcome sign, and even cause for optimism, that the latest resolution aims to repair the shortcomings of its predecessor while also denying Pyongyang hard currency from various revenue streams that finance its weapons program. There are even reasons to believe the move could deter North Korea from conducting its next nuclear test, expected early in the new year. It might also bring the regime back to the negotiating table of the six-party talks.
Tightening the screws. Although the sanctions package passed in March restricted exports of coal from North Korea, it contained an ambiguous exception—coal used for “livelihood purposes”—that in practice became a loophole so wide the measure had no real impact on either the volume of coal exported or the significant revenue it brought in. With this new resolution, the Security Council has now set strict limits on both the metric tonnage and dollar value of the coal that North Korea is permitted to export. Not only does the measure state 2017 limits on coal trade, but, in a show of vigilance, even specifies a trade ceiling for the remainder of this year, so that the restrictions may begin immediately.
If properly enforced, these strictures will reduce North Korea’s largest export to about 40 percent of its 2016 level, resulting in an annual shortfall of $700 million. This in addition to another $100 million or more in lost revenue due to the resolution’s ban on the export of copper, nickel, silver, and zinc. A UN Panel of Experts created in 2009 to support the implementation of sanctions against North Korea is now also empowered to require those UN members that are allowed to receive North Korean coal exports to certify their tonnage and payment to ensure compliance with stated limits.
Because these new sanctions could block as much as quarter of the nearly $3 billion in hard currency North Korea generates annually, they are particularly biting. And they are further bolstered by the resolution’s prohibition on UN members issuing export credits, trade guarantees, or insurance for facilitating public or private trade with North Korea. In a set of far-reaching moves, states also are required to expel North Korean banking and financial officials, while foreign banks and investment houses have 90 days to cease operations in the North.
This shift in strategy is significant. Whereas prior measures concentrated on prohibiting trade and smuggling in specialized nuclear and missile materials, the new sactions deny the Kim regime both hard currency derived from commodity trade and access to international financial institutions and currency centers used to purchase these illicit goods.
Finally, in a much-needed improvement, the new resolution incorporates a series of recommendations offered in recent Panels of Experts reports on Pyongyang’s evasion techniques. It calls on member nations to reduce the size of North Korean embassy staffs they host and to limit their number of bank accounts. It also prohibits their roles in commercial activities. The resolution prohibits the sale of North Korean property abroad, explicitly high-priced statues, from which the regime has earned significant foreign currency. The resolution imposes serious restrictions on training and educational exchanges for North Korean scientists and engineers, and expands the list of prohibited dual-use materials for nuclear development.
Cause for optimism. Like earlier Security Council resolutions, 2321 will draw praise and skepticism. Optimists will say it repairs the commodity-trade mistakes of the March resolution and could devastate North Korea’s financial resources at home and abroad. Detractors will contend that the Chinese will agree with the sanctions in principle, as they have in the past, without putting them into practice. They might also say new sanctions hurt the Kim regime only at the economic fringes, and that Pyongyang will never abandon its nuclear program. All of these claims will be subject to the empirical test of coming events, yet I believe there is significant cause for optimism.
One reason is that these new sanctions are the product of extensive negotiations between Beijing and Washington, particularly regarding implementation and enforcement. Some might assert that China will be slow to implement sanctions that could hurt its own economy, yet these measures could not come at a better time for China or a worse time for North Korea. China cut its coal consumption by 2.9 percent in 2014 and by 3.7 percent in 2015. It has already committed itself to reduced levels of coal use and emissions, while increasing its reliance on solar, wind, and nuclear energy. Thus, despite being Pyongyang’s chief trading partner for coal, the new restrictions are quite tolerable for China.
When it comes to North Korea itself, observers have wondered for some time if sanctions could ever dampen the “Byungjin Line” policy established by its leader, Kim Jong-un, which sees economic and nuclear growth as strongly intertwined. Yet the currency strangulation brought on by new sanctions makes the union of these two components more vulnerable than ever before. Especially when combined with new national sanctions imposed within two days of the UN action by the United States, Japan, and South Korea, this latest sanctions resolution could force a bankruptcy crisis on the Kim regime.
Indeed, after protesting the March measures as “gangster sanctions,” Pyongyang’s silence to date regarding the new sanctions might reflect its recognition of this harsh reality. Furthermore, while North Korea will not end its nuclear program on the basis of this resolution alone, there’s no mistaking that the Security Council has significantly upped the ante. In addition to harsh economic penalties, the resolution contains a stark reminder that is rarely actually cited in official documents: States subject to UN sanctions may be suspended by the General Assembly from their UN rights and privileges.
With another nuclear test anticipated in early 2017, the international community has at least made the consequences of that detonation draconian, both economically and politically. This could even make renewal of the six-party talks a more attractive avenue than another nuclear test, as Kim ponders how to assert his regime’s claims to power and status. If that turns out to be the case, the Security Council will have done President-elect Donald Trump a huge favor, sparing him the early crisis that another nuclear test by North Korea would generate.
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