On 30 November 2018, the Japanese agencies spotted the North Korean vessels engaged in offshore ship-to-ship transfers with foreign vessels conducting illegal activities on the consecutive days.¹ The offshore couplings is among the scores of illicit activities documented in the latest report of UN Panel of Experts (PoE) on North Korea, indicating that Pyongyang is successfully skirting international sanctions designed to coerce the reclusive regime into giving up its nuclear and missile programmes.² For the past year, the UN Panel Report shows that North Korea has markedly increased the illicit activities at the sea using ship-to-ship transfers of coal, oil, and other goods.

The massive increase in illegal offshore activities, according to the report, has rendered the latest international sanctions largely “ineffective”. ³ Additionally, the UN Panel experts also examined North Korea’s illicit arms sales overseas and pointed to the involvement of international arms traffickers like Hussein Al-Ali, who colluded with the North Korean military to procure arms for various rebel groups in the West Asian region including the Houthi rebels in Yemen. From arms smuggling and other illicit dealings, North Korea has reportedly generated an estimated US$ 200 million. Further, it adds that, “financial sanctions remain some of the most poorly implemented and actively evaded measures of the sanctions regime” and that the “individuals empowered to act as extensions of financial institutions of North Korea operate in at least five countries with seeming impunity.”⁴

The findings of the latest UN report clearly do not bode well for President Trump’s “maximum pressure” strategy which seeks to disarm nuclear North Korea through stringent military and economic sanctions. ⁵ Since early 2017, the Trump administration has pushed for putting maximum pressure on the Kim Jong-un regime through a range of targeted sanctions and rallied the international community including Russia and China to effectively enforce embargoes against Pyongyang. As part of the strategy, the trump administration imposed a new range of financial measures to intercept North Korea’s financial dealings with shadow firms around the world. Simultaneously, the Trump administration also sought to diplomatically engage Pyongyang which opened the way for a negotiated settlement on North Korea’s nuclear and missile programmes at the historic Singapore Summit in June 2018.⁶

The early diplomatic gains of the “maximum pressure and engagement” strategy during the Singapore Summit led many in the Trump administration to believe that sanctions alone could force a change in Democratic People’s Republic of Korea’s (DPRK) behaviour and that the international community must ensure strong enforcement of embargoes in order to pressurise the Kim regime. As the two countries decided to hold their second summit meeting in Hanoi, President Trump yet again reiterated that sanctions are “on in full” and pushed Kim Jong-un to “Go Bigger” by completely dismantling its WMD programmes in return for full sanctions relief and diplomatic normalisation with the international community.⁷

President Trump’s “Go Bigger” move during the Hanoi summit, however, failed to induce Pyongyang to unilaterally give-up it’s nuclear and weapons of mass destruction (WMD) programmes. The ‘all-or-nothing’ position of US negotiators effectively stalled discussions with Kim Jong-un, leading to the collapse of their second summit meeting at Hanoi.⁸ The outcome of the Hanoi Summit and the revelations about Pyongyang’s evasion of sanctions raises concerns about Trump administration’s ‘maximum pressure’ strategy that seeks to rely on sanctions as a primary tool of coercing Pyongyang. The idea of imposing additional sanctions through restrictive banking measures and oil embargoes as contemplated by many U.S. officials after the Hanoi summit is likely to miss the mark for a number of reasons.

For instance, the evidence presented in the latest as well as in the earlier UN panel reports confirms the fact that North Korea is getting adept at violating the sanctions with seeming impunity. Although recent statistics on North Korea’s trade and economy have shown that UN Security Council sanctions enacted after Pyongyang’s 2017 nuclear tests are hurting the country to a large extent, the North Korean economy is clearly far away from any breaking point. An estimate by the Seoul-based Bank of Korea suggests that North Korea’s economy is reduced by a whopping 3.5% in 2017.⁹ Similarly, the statistics from China’s custom department shows that exports from North Korea have shrunk significantly compared to 2016 and 2017, thereby significantly reducing its foreign exchange earnings.¹⁰

Being North Korea’s immediate neighbour, China plays a central role in keeping a strong check on Pyongyang’s evasion of international sanctions. However, China reportedly continues to provide succour to Pyongyang from the fear of its complete breakdown due to economic hardships leading to mass exodus into its territory. Beijing allegedly provides a lot of cushion to Pyongyang by allowing its companies to trade with the North Korean firms.¹¹ Additionally, the latest UN panel report has identified as many as five countries where North Korea has been violating sanctions and secure cash earnings. A study by Andray Abrahamian, a noted U.S.-based sanctions experts, suggests that the North Korean military takes no more than two weeks to skirt new wave of embargoes.

For many such reasons, Pyongyang has so far managed to keep away maximum pressure which gives it sufficient space to negotiate sanctions relief without giving up its nuclear programme unilaterally. If the United States is to have any hope of successfully negotiating a deal with North Korea, it needs to evolve a series of mutually agreeable quid-pro-quo’s through a credible negotiation strategy instead of relying upon sanctions in their entirety. To begin with, the administration should set-side the ‘all-or-nothing’ approach that promises sanctions relief only after North Korea completely dismantles its WMD infrastructure.

The demand for complete denuclearisation is unlikely to be accepted by Pyongyang under any circumstances. Instead, Washington should focus on developing a roadmap with Pyongyang that lays out a step-by-step approach involving requisite sanctions relief for Pyongyang’s step-by-step dismantlement of its nuclear arsenal. The US should clearly determine what types of embargoes it would be willing to lift in return for Pyongyang’s offer to dismantle the Yongbyon complex, other WMD installations, and the existing arsenal.

The failure of the Hanoi summit thus unexpectedly offers a yet another opportunity for the U.S negotiators to initiate fresh negotiations and work towards concluding a model agreement for DPRK’s complete denuclearisation. Revamping this diplomatic process would not only allow Washington to adroitly exercise the limited leverage of sanctions in order to extract maximum commitments from Pyongyang but also to take the first concrete step towards denuclearisation of the Korean Peninsula. To being with, the Trump administration must admit that the use of sanctions to change North Korea’s behavior and roll back its proliferation policies has outlived its utility.

Sanctions are mainly premised on the logic that country’s leaders will ultimately realise that the cost of their policies outweighs the benefits and would, therefore, change the course of their actions. While the Kim Jong-un is aware of the difficulties that sanctions are causing to the people of North Korea and is motivated to get out of it, it is equally true that he views nuclear weapons his only guarantee against the United States. Only by accepting this grim reality, the Trump administration can embark upon fresh negotiations in order to conclude a viable deal that can place verifiable restrictions on Pyongyang’s nuclear programme. The insistence on complete denuclearisation in return for sanctions relief is likely to prove a path to nowhere.

Notes:

1. Suspicion of illegal ship-to-ship transfers of goods by AN SAN 1, North Korean-flagged tanker, and vessel of unknown nationality - January 18, 2019”, Ministry of Foreign Affairs of Japan, January 24, 2019, URL: https://www.mofa.go.jp/fp/nsp/page4e_000975.html.
2. Report of the Panel of Experts established pursuant to resolution 1874 (2009), S/2019/171, United Nations Security Council, 5 March 2019, URL: https://documents-dds-ny.un.org/doc/UNDOC/GEN/N19/028/82/PDF/N1902882.pdf?OpenElement.
3. Ibid, see executive summary, S/2019/171.
4. Ibid.
5. Pennington, M. (2017), “Trump strategy on NKorea: ‘Maximum pressure and engagement”, Associated Press, April 15, 2017.
6. Stracqualursi, V. & Liptak, K. (2018), Trump says North Korea summit talks continue: 'Could even be the 12th, CNN, May 25, 2018, URL: https://edition.cnn.com/2018/05/25/politics/trump-north-korea-canceled-summit-reaction/index.html.
7. “North Korea must take 'meaningful' steps to earn sanctions relief, says Trump”, Agence France-Presse, February 21, 201, URL: https://www.theguardian.com/world/2019/feb/21/north-korea-must-take-meaningful-steps-to-earn-sanctions-relief-says-trump. Also, see, N. Korea effectively sought removal of all sanctions: U.S. official, Yonhap, March 01, 2019, URL: https://en.yna.co.kr/view/AEN20190301004652315.
8. Needham, K. (2019), “Trump-Kim summit collapses with no agreement”, Sydney Morning Herald, February 28, 2019, URL: https://www.smh.com.au/world/asia/trump-says-no-rush-for-deal-as-talks-get-underway-with-kim-jong-un-20190228-p510vt.html.
9. See, Gross Domestic Product Estimates for North Korea in 2017, Bank of Korea, July 20, 2018, URL: https://www.bok.or.kr/eng/bbs/E0000634/view.do?nttId=10046123&menuNo=400069.
10. “Sharp fall in China’s trade with North Korea as UN sanctions bite”, Agence France-Presse, January 14, 2019, URL: https://www.scmp.com/news/china/diplomacy/article/2181965/chinas-trade-north-korea-sees-sharp-fall-un-sanctions-bite.
11. Lee Kil-seong, Kim Myong-song (2018), “China Doubles Oil Shipments to N.Korea After Kim's Visit”, Chosunilbo, July 19, 2018, URL: http://english.chosun.com/site/data/html_dir/2018/07/19/2018071901286.html.