Sanctions can work
The author is an economics professor at Seoul National University.
North Korean leader Kim Jong-un’s subterfuge and U.S. President Donald Trump’s timeline are what triggered the collapse of their second summit last month in Hanoi, Vietnam. North Korea attempted to complicate their proposals by minimizing the number of working-level discussions with the United States ahead of the summit. Instead, it wanted to strike a deal directly with Trump. In the months following the first U.S.-North summit last June until early this year, Pyongyang refused to negotiate with Washington in lower-level dialogues, focusing all resources on the Kim-Trump meeting. North Korea thought it could pull cheap tricks on Trump, who did not seem fastidious.
Pyongyang’s tricks were exposed in North Korean Foreign Minister Ri Yong-ho’s late-night press conference on Feb. 28 after the summit fell apart. North Korea tried to trade its Yongbyon nuclear facility for the lifting of 5 out of 11 sanctions imposed by the United Nations (UN) Security Council since 2016. The five sanctions related to civilian use hurt the North Korean economy the most. At the conference, Ri said that if the United States helps lift those five sanctions, that would be advantageous to the United States. But, in fact, the five UN sanctions in question were the most effective ones.
The United States seems to have expected such demands. In January, when the mood for a second U.S.-North summit was ripened, North Korea’s high-level official Kim Yong-chol visited Washington. But he did not present a negotiation plan. Washington officials later said that Kim stubbornly asked for sanctions relief. U.S. Special Representative for North Korea Stephen Biegun apparently tried to bridge the gap between the two countries by hinting at the option of a simultaneous action-for-action approach.
Yet as no progress was made on his trip to Pyongyang, Biegun and his team seem to have prepared for the option of striking no deal in the second Trump-Kim summit. U.S. officials must have reassured Trump that he does not have to rush, saying time is on their side. Upon confirming North Korea’s tricks, the United States came up with the proposal of a “big deal,” but North Korea rejected it. That was the end of their second summit.
A bright side of the collapse is that, for the first time, both countries were able to learn what the other wants. Pyongyang wanted to dismantle its Yongbyon nuclear facility in exchange for sanctions relief, but Washington responded that lifting sanctions could only come after denuclearization. Neither side will back down for a while and could exchange empty words.
In poor market conditions, people are forced to lower their price tags. For Kim to lower the price for his nuclear arsenal, sanctions will have to have a greater toll on the North Korean economy. The effectiveness of sanctions can be calculated by the equation of time multiplied by the sanctions’ force. According to my index of sanctions effectiveness, on a scale of 0 to 100, the effectiveness of sanctions on North Korea in the second half of 2018 was 57. Converting that to a school grade, that would be counted as a B.
Over the last two years, North Korea has felt sanctions sink in. The consequences have resulted in plunging trade volumes and apartment costs. Pyongyang would feel even more anxious by now because of its inability to predict how much of its foreign exchange reserves will shrink or how household earnings will fluctuate. The North does not know how to draw up precise statistics and did not know how much the sanctions would undermine its economy when they were first imposed.
South Korea needs to share its knowledge about inner North Korean society with the United States. It is good to see the United States trying to study North Korea’s economy; that way, Washington can include a development plan in its denuclearization roadmap. As of now, the sanctions must continue until North Korea can be economically engaged. If Seoul tries to ease sanctions now, it will only help Pyongyang escalate the price for its nuclear weapons.
President Moon Jae-in’s tenacious push for inter-Korean economic cooperation only helps North Korea drag its feet. In that case, South Korea will be forced to pay tributes to a nuclear-armed North Korea to ensure peace.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, March 20, Page 31