Implementing Sanctions against North Korea：A South Korean Perspective

North Korea’s latest nuclear and missile tests have compelled the international community to issue the most comprehensive round of sanctions against it. UNSC Resolution 2270 not only strengthens existing measures toward non-proliferation but also includes more effective financial and economic sanctions, and urges stricter enforcement by member states. . Significantly, it targets North Korea’s export of coal and mineral ores, which puts the responsibility of sanctions implementation squarely on China, the biggest importer of North Korean commodities.

Seoul wholeheartedly welcomed the new round of sanctions by the UNSC. The Korean Ministry of Foreign Affairs, with a bit of hyperbole, characterized Resolution 2270 as “…[the] strongest non-military sanctions resolution in the UN history.”¹ Such enthusiasm for sanctions represents a clear break from the administration’s prior efforts at engagement with North Korea, such as President Park’s Dresden speech, the trust-building process on the Korean Peninsula (한반도 신뢰 프로세스), and the Eurasia Initiative that would link South and North Korean railroads.

Seoul’s China policy is in the midst of the most significant reversal since the establishment of diplomatic relations in the early 1990s. Nominally, the impetus behind the reversal is said to have been disappointment over China’s lackadaisical reaction towards North Korea’s nuclear test.² Having joined President Xi on the podium during the Victory Day parade in September 2015, Park found herself expressing her disappointment with him less than six months later. With Seoul allowing the deployment of the Terminal High Altitude Area Defense (THAAD) in Korea, the gulf between the two leaders is unlikely to be bridged any time soon.

Seoul’s enthusiastic embrace of sanctions and the reversal of its hitherto friendly China policy are not coincidental. It marks a fundamental change in the administration’s approach to dealing with the North Korean nuclear issue, from engaging North Korea through China to compelling China to implement economic sanctions against North Korea. If Seoul used the soft power instruments of trade and culture to convince Beijing to view North Korea from the South Korean perspective, Seoul is now leveraging its security alliance with the United States as a hard power instrument to constrain China’s policy options on North Korea. Whether Seoul’s new, risky approach to the North Korean issue will be successful remains to be seen.

Change of Paradigm: Sanctions

Seoul is probably aware of the fact that the impact of Resolution 2270 on the North Korean economy is not likely to manifest itself for at least a couple of quarters. South Korean experts and businessmen operating in China believe that the commercial relations between Chinese buyers and North Korean producers are often bound by medium to long-term contracts. This would imply that, at the very least, it would take a couple of quarters for these contracts to unwind in the face of strict sanctions enforcement. What it would mean in practice would be that North Korea could shift its production factors from sanctioned industries to light manufacturing such as clothing, which are not banned by the UN resolution.

So what explains Seoul’s enthusiasm for the UN resolution? The Chinese agreement to it was a meaningful step in Seoul and Washington’s direction but by no means a game changer. But the South Korean government had itself upped the ante by shutting down the Kaesong Industrial Complex, in part to demonstrate to the Chinese its commitment to sanctioning the regime economically. Ever since North Korea detonated its fourth nuclear device in January, Seoul has been advocating that the only way to force the regime to decide between becoming a nuclear state and economic survival is by hurting the regime where it is most vulnerable, namely the economy. China had been the biggest skeptic of such arguments, but it finally agreed to implement sanctions of this nature. The passing of Resolution 2270 also minimized the domestic political fallout from the closure of the Kaesong Industrial complex, and it largely validated the South Korean government’s approach to North Korea to the domestic audience.

Nonetheless, South Korea is focused on enlisting China in the sanctions implementation because it believes North Korea will not give up its nuclear weapons unless the opportunity cost of keeping them is higher than the benefits. As long as North Korea keeps its nuclear arsenal, it will be deprived of economic benefits from trade and investment, challenging Kim Jong-un’s byungjin policy of dual pursuit of nuclear weapons and economic development. China, as North Korea’s biggest trading partner, is the key piece in South Korea’s strategy of increasing the opportunity cost of nuclear development for North Korea.

From this perspective, Resolution 2270 has been a major milestone, as the MOFA press release indicates. Previously, China had been opposed to sanction measures that could have real impact on North Korea for fear that they could destabilize the regime. Chinese reluctance to sanction North Korea proceeded in a manner that not only failed to punish North Korea’s provocative demeanor, but rather rewarded it with increased trade after each nuclear or missile test. In fact, according to researchers at the Korean Development Institute, each time the international community imposed a new round of sanctions, China would also curtail the border trade with North Korea for one or two quarters but the trade would return to its long- term growth trend.³ It is evident that China has the ability to punish North Korea by leveraging its trade relationship, but it does not do so because China’s desire for stability in North Korea takes precedence over denuclearization.

By agreeing to implement Resolution 2270, China has effectively acknowledged that its approach of valuing stability above denuclearization has had the opposite effect of triggering instability, and that economic sanctions are the last remaining means of pressure short of the military option. As a result, it is highly likely that the international community will respond to North Korea’s future provocations by resorting to additional economic sanctions. Therefore, even if China is opposed to exercising a level of pressure that can buckle the regime today, it is unavoidable that the sanctions would get closer to the regime’s economic breaking point if North Korea continues to carry out nuclear provocations.

This path dependency built into the sanctions regime is not the only aspect of the resolution that constrains Chinese policy options regarding North Korea. Economic sanctions can be quantitatively assessed for their impact on the target. This implies that China can be held accountable for its actions (or inactions), with secondary boycott measures that target Chinese entities and individuals dealing with North Korea; this would be the immediate consequence.    

THAAD Effect

Whether China will fully implement Resolution 2270 against North Korea is the subject of heated debate in South Korea, given the widespread perception that the degree of China’s cooperation is correlated with South Korea’s reciprocity in respecting Chinese strategic interests in the region. THAAD deployment is the focus of this debate. Kim Young-hee at Joongang Ilbo opined recently outlining exactly such a link.⁴ In it, he stated that South Korea should not go ahead with THAAD deployment because such a move will be interpreted by the Chinese as tacit South Korean support for the US effort to contain China, which could lead to relaxation of sanctions on North Korea and even China’s reevaluation of North Korea as an active Chinese ally.

After THAAD deployment was announced on July 8, the South Korean opposition’s argument against THAAD echoed the logic in Kim’s op-ed. While the main opposition party, the Minjoo Party of Korea, stated that it did not have an official position regarding THAAD deployment, its former leader and the likely presidential candidate for 2017, Moon Jae-in, declared that he opposed it. Another influential opposition politician, Park Jie-won of the People’s Party also declared his opposition to THAAD deployment, citing the same arguments as found in the column.

But the argument that China may support North Korea to penalize South Korea for allowing THAAD deployment on its soil ignores the fact that the North Korean nuclear program also threatens Chinese core interests in the region. It is no accident that Vice President Joe Biden recently mentioned the possibility of allowing Japan to go nuclear in order to counter North Korean nukes. While the possibility of such an outcome is rare, Biden’s remark touches China’s nightmare scenario of a nuclear domino effect in East Asia. While for South Korea and the United States, THAAD is an acceptable solution to the North Korean nuclear issue, to China, both THAAD and North Korea’s nuclear program are problems. Relaxing sanctions on North Korea in order to counter THAAD in South Korea would only exacerbate both problems at once. It is in China’s interest to continue implementing sanctions against North Korea regardless of THAAD.

Conclusion

Resolution 2270 is, indeed, a milestone in the sense that the central concept in the diplomatic framework over the North Korean nuclear issue has shifted from engagement to sanctions. Unlike engagement, sanctions can be evaluated for impact and adjusted accordingly. Yet the impact of the resolution does not depend on North Korea, for whom the measures are still not powerful enough to reconsider its nuclear policy, but with China. For the Chinese, this will significantly constrain their policy options regarding North Korea. It is inevitable that North Korea will carry out another nuclear test or long range ballistic missile test in the near future. In such a case, strengthened sanctions measures would surely be considered by the UN Security Council, the enforcement of which would mostly fall on China, as North Korea’s biggest trading partner.
The looming fifth nuclear test by North Korea will complicate China’s reaction to South Korea’s THAAD decision. The magnitude of Chinese retaliation against South Korea would manifest through China’s attempts to water down additional measures against North Korea in the Security Council in the aftermath of the hypothetical fifth nuclear test. To oppose any Security Council action under those circumstances would leave China isolated, and push South Korea further away from China. The United States could also mobilize the international community toward sanctions outside the Security Council with secondary effects on Chinese firms and individuals that conduct transactions on behalf of sanctioned North Korean entities. In fact, such measures could gradually be implemented by the US government even without additional North Korean provocations, in order to prevent Beijing from turning a blind eye to the North Korean efforts at defeating sanctions by using Chinese intermediaries.

Seoul’s dealings with Beijing, before the nuclear test, relied on the personal relationship between the two leaders. The Park administration had invested heavily in its relationship with Beijing in order to bring China’s perspective on the North Korean issue in line with its own (and the rest of the world’s, by extension). The growing relationship between the two countries culminated in 2015, with the signing of the China-South Korea Free Trade Agreement in June and the South Korean president’s participation in the Victory Day Parade in September.

With North Korea’s fourth nuclear test and especially with THAAD deployment, it is very unlikely one will again witness warm encounters between the two leaders any time soon. Yet, with sanctions, Seoul has unwittingly achieved what for years it could not have, i.e., attaching consequences to Chinese options regarding North Korea. China can no longer impose and lift sanctions on North Korea according to its internal political agenda. It will now have to answer to the international community in a manner that carries consequences.