Talks with North Korea? Better to apply financial pressure (+video)
South Korea and the US must be skeptical about future talks, not least because North Korea has no incentive to change. However, the North is vulnerable to financial pressure, as seen when the US once sanctioned an Asian bank that handled North Korean money.
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Nonetheless, the Banco Delta Asia case shows what is possible. The US Treasury Department’s financial intelligence capability is often excellent. A greatly expanded effort against North Korea’s illicit finances would demonstrate that there are serious consequences to the regime’s behavior.Skip to next paragraph
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The effort must be comprehensive and not rely on so-called “targeted sanctions,” which have little effect. Any competent despot can evade them, especially if he doesn’t mind abusing his own people, something at which North Korea’s leaders excel. Besides financial sanctions, the US and allies can aggressively crack down on the North’s other illegal activities, particularly illicit drug and counterfeit cigarette exports – major money-spinners for the regime.
This forceful effort against the underpinnings of the Kim Jong-un regime is not risk free. North Korea’s leadership is mercurial, putting it mildly, and most of Seoul, South Korea’s capital, is within North Korean artillery range.
But a far greater risk is a North Korea that has developed reliable missiles and nuclear weapons (obtained by brazenly flouting UN mandates). Then it can genuinely threaten Japan, South Korea, the United States and other nations it dislikes, and sell this technology to other unsavory regimes or terrorists. Preventing this is an objective that trumps everything.
Given the long-standing role of Chinese banks in handling North Korean money, a US Treasury-led effort against the regime’s finances will require pressure on a normally reluctant Beijing. However, even China should be frightened over events in North Korea.
China was content for years to have North Korea as a buffer on the Korean peninsula – useful, too, for bedeviling the US and Japan. However, a nuclear armed North Korea with accurate delivery systems becomes as much China’s problem as anyone else’s. Beyond provoking a Japanese defense build-up that possibly includes a nuclear capability, any outbreak of violence in the region will interrupt China’s foreign-investment and export-driven economy. The Chinese Communist Party depends on this economy to maintain tenuous internal stability.
Although no tears would be shed if the North Korean regime collapsed, this should not be the goal of pressuring the North Korean regime. Rather it should be to prod the regime to behave like a responsible country, obey UN sanctions on missile and nuclear development, and stop brutalizing its citizens. Do so and aid will follow, along with greater respect.
Until something is done to give the North an incentive to modify its behavior, another round of talks will accomplish little. Banco Delta Asia is a model worth revisiting.
Grant Newsham is a former US Foreign Service officer and is a long-time resident of Japan. In 2011-2012, he was a member of the World Economic Forum’s Transnational Organized Crime Global Agenda Council.