Interview: Sanctions Could Force Change in North Korea

nkorea-truck-april2012.jpg North Korean workers ride in the back of a truck in Pyongyang in a file photo.

In an effort to stem the flow of illicit funds to the North Korean regime, the U.S. House of Representatives unanimously passed the North Korea Sanctions Enforcement Act on July 28, about 14 months after it was introduced. Though it has to go through the Senate before being signed into law by the President, many expect the bill will inflict real pain on the North Korean regime when enforced.

Changsop Pyon of RFA’s Korean Service interviewed Joshua Stanton—a long-time advocate for North Korean human rights and editor of the website One Free Korea—about  various aspects of the bill and its likely impact on the North Korean regime. Also an attorney, Stanton was actively involved in helping lawmakers draft the bill, while working tirelessly for many years to raise awareness of the sufferings of North Koreans.

Q: I understand you worked hard for a long time to make this bill come to light. What does its passage by the House mean?

A: It could possibly represent a game changer in U.S. policy toward North Korea. This bill would not have been possible if Congress thought that the existing strategies of presidents Clinton, Bush, and Obama—which have been pretty much the same strategies—were working. I think members of both parties in the Congress concluded that the strategy of changing North Korea through things like the “Sunshine Policy” and by weak sanctions and a weak negotiating position—the idea that this would change or reform North Korea—has clearly failed.

Again, this is a bipartisan bill. I think members of Congress of both parties think it’s time to do things differently, and that the only strategy that has ever been effective or worked against Kim Jong Il was financial sanctions and financial pressure. And that a similar strategy, if expanded and maybe even made stronger, could be effective even against Kim Jong Un.

Q: You just mentioned “financial sanctions” as an effective tool to press the North Korean regime. Is this the first time such provisions were included in the bill?

A: Well, there has never been a bill quite like this for North Korea. There were bills like this for Iran, and they proved so effective that even I was surprised by how well financial pressure worked against Iran, which has a much larger and more diverse economy than North Korea’s. North Korea’s economy is small, and its links to the [international] financial system are weak and vulnerable. We have trade sanctions against North Korea, and there are U.N. sanctions against North Korea now. And a lot of people simply look at that and say, “Well, there are already sanctions, and sanctions are working.”

But that’s a very simplistic conclusion. You have to look at what kind of sanctions we have and how well they are being enforced. We all know that China is not enforcing the U.N. sanctions. China is North Korea’s most important trading partner. So how do you get China to enforce the sanctions?  Well, the answer is that Chinese banks and companies that are dealing with North Korea and supplying it with a lot of material and technology and money also need access to the U.S. economy.

The Chinese companies and banks that are violating U.N. sanctions can lose their access to the U.S. economy by helping North Korea break its sanctions. They have to make a choice. Most of the companies would choose to stop trading with North Korea because the American economy is a much more important market. This bill essentially forces companies that are doing business with North Korea, without knowing where the money goes, to choose to do business with the United States or North Korea.

Q: Some people point out that this bill isn’t as strong as the Iran-Libya Sanctions Act with the secondary boycott sanctions by the U.S. government.  Simply put, the secondary boycott sanctions are sanctions imposed extraterritorially against particular non-U.S. companies and individuals for their activities related to Iran. Do you agree?

A: Not entirely.  First I would have to say that Iran sanctions were not all promulgated in this part of one bill. There were several pieces of legislation that built up Iran sanctions year after year. There was a bill in 2010 that proved highly effective, but the Congress saw the need to improve and strengthen those sanctions, so they passed an additional sanctions bill in 2012, and I suspect that with North Korea we will see a similar approach where in the future, if N. Korea continues to behave in a dangerous and irresponsible way, the sanctions will be strengthened year after year.

Q: The question is whether this bill, if enforced, would bring about the same effect that the U.S. Treasury saw after imposing financial sanctions on the Banco Delta Asia (BDA) in 2005. In March 2007, the U.S. Treasury ordered U.S. companies and financial institutions to cut links with the bank because of allegations concerning BDA's business with North Korea, which was keeping about $25 million at the bank in various accounts. Even now, the bank remains blacklisted by the U.S. government and is not authorized to conduct transactions in U.S. dollars.

A: If properly enforced by the administration, yes.  I am optimistic that President Obama would enforce the law as written. And if he does so, this would be a very powerful tool to force all kinds of banks, whether Chinese or European or Southeast Asian, to really think carefully about their business relationships with North Korea. And maybe they would cut those business relationships.

Q: Another striking feature of this bill is its provision on imposing sanctions on North Korean officials who knowingly engage in serious human rights violations. What do you make of its inclusion in the bill?

A:  Well, five months ago the U.N. Commission of Inquiry on Human Rights in North Korea released a 372-page report finding that North Korea was responsible for crimes against humanity on a massive scale—keeping at least 100,000 men, women, and children in concentration camps where the survival rate dropped steadily as conditions in those camps became worse over time, and finding that North Korea allowed perhaps 2 million of its own people to starve to death. These human rights violations were in all probability worse than anywhere else in the entire world today. What has the world done about this? Nothing. What has the Obama administration done about this? Nothing. What plans do they have to do anything about any of this? Nothing.

I don’t speak for the Congress, but a lot of people in Congress think the United States ought to have a real policy option for imposing consequences on North Korea’s crimes against humanity. We have sanctions against officials in Iran, Belarus, Sudan, and other countries who commit crimes against humanity or human rights violations. If the crimes in North Korea are worse, why are there no human rights sanctions against North Korea?  So the bill is trying to address that imbalance.

Q: In other words, this bill seeks to address not only North Korea’s illicit funds but also its cruel human rights violations, right?

A: It’s focused on all of those things. The government in Pyongyang builds nuclear weapons and violates human rights. So the objective of the bill is to show the government in Pyongyang that its actions have consequences, and that it must show responsible behavior and respect human rights or it will face sanctions that are crippling to its economy.

Q: When do you expect the North Korean regime will start feeling the pain?

A: Well, there would be no visible consequences for a while. It would take a while for sanctions to work, just as they worked for Iran. I guess it was more like three years before the Iranian economy really began to suffer and crack, and before the Iranian government returned to the nuclear talks.

Now, in the case of Iran, the U.S government did a really tremendous job of paying full attention to the enforcement of those sanctions. I would suppose that if all other things are equal, and if the U.S Treasury Department really works hard to enforce the North Korean sanctions, maybe at some point two to five years in the future we would really see North Korea have a change of attitude. Aggressive enforcement in the past has worked against North Korea, so I am optimistic that it could work again.

Q: Are you really optimistic about the effects of the sanctions during this specific time frame?

A:  Well, it could be as little as one year, and as much as five or six.  It depends on how strongly we could enforce. But I think what we would see begin to happen is that the financial transactions that are sustaining the North Korean government depend on the cooperation of banks. And some of those transactions involve spending money North Korea has pulled up from foreign banks, with some of them simply selling North Korean coal and other raw materials to buyers mostly in China.

What you would begin to see is that banks would stop processing such transactions, and North Korea would suddenly become strapped for hard currency. They would attempt to evade those sanctions by doing things like selling gold, which is what we saw in 2006. The U.S. Treasury Dept. has been dealing with sanctions, evasions, and money laundering by governments and drug traffickers and other criminals for a long time.

Q: In that respect, what really matters is the political will of the U.S. government, right?

A: Absolutely, it’s essential. They’re the ones who are responsible for enforcing it. In the case of Iran, the administration was highly effective. If they were to do the same thing in the case of North Korea, I think we would see results.

Q: In short, what message do you think this bill will send to the North Korean regime?

A:  Well, the message, if the bill is enforced, is it’s going to deny the North Korean government the ability to close its borders and to oppress the North Korean people. It will deny them the ability to do things like track down cell phones, cut down ‘Sotoji’ [small farmland] crops in private farms—those crops farmers are growing in the countryside—and close down the markets. In other words, it will deny the government the means to maintain absolute control over the people. And that would mean an imbalance of power inside North Korea, and that imbalance of power would be increased by the fact that the government lacks the money to pay its officials, its military, and its police.

So North Korea would have a choice over time of whether to negotiate in good faith to disarm and stop threatening its neighbors or whether it would face the risk of essentially collapsing under the weight of the grievances of its own people. So that’s the choice North Korea will eventually have to face at some point. But the behavior of North Korea toward the rest of the world can’t be separated from the way it behaves toward its own people. Those are both aspects of the same thing.

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