What do the latest North Korea sanctions mean? A Q&A with Joshua Stanton of One Free Korea

As a journalist, there are times when you put work into an article, but it doesn’t actually result in a published piece. In that vein, I recently interviewed Joshua Stanton, author of One Free Korea and a drafter of a sanctions bill targeting North Korea, about President Barack Obama’s recent executive order aimed at Pyongyang, but the intended article didn’t come to fruition. It seems a shame to let the discussion go to waste, so I am publishing it here, in full. — John.

Q 1. Having looked at the White House press release, it appears these sanctions are potentially extremely broad, extending to anyone with dealings with the North Korean government. Would you agree with this characterizations, and you can you put these sanctions in context in terms of scope and nature compared to previous measures?

The potential breadth is clear, but I’m not 100% certain that this executive order is quite that broad in its immediate effect.

Let’s break this up into parts, starting with the North Korean entities designated in Sections 1(a)(i)-(iii). If this is intended to be immediate and universal, it doesn’t make sense to me that at the same time the President published this seemingly sweeping order, Treasury also released an annex designating only 10 small-fish individuals and three mid-level entities that had already been designated under other executive orders, years ago. Parse the words of the executive order carefully — “any person determined by the Secretary of the Treasury, in consultation with the Secretary of State … to be” — and it’s possible that that State and Treasury have to make an additional determination that a target is a North Korean government entity or official for that entity to be blocked. Which raises this question: Are Kim Jong Un’s billions in overseas assets blocked now, or only after State and Treasury get around to deciding that he’s an official of the North Korean government? To put it differently, have we decided that the Pope is Catholic?
With respect to those who have materially assisted or enabled (sec. 1(a)(iv)) North Korea, there will clearly have to be designations of the targets so that those designated will have an opportunity to respond, and so that the banks know whose assets to block. Even this discussion skips some important steps. Treasury certainly did not intend to impose an instant block on every bank and company that has ever dealt with North Korea. It would prefer to give them an opportunity to distance themselves on their own, so as to protect their reputations. But the administration’s interpretation of this provision will also be extremely important, because if other countries simply shift their North Korea transactions into the non-dollar economy, North Korea sanctions will fail the same way Cuba sanctions did. The key to the effectiveness of these sanctions will be how much diplomatic capital and brass the administration is willing to invest in getting China, South Korea, Japan, and Europe to cooperate in enforcing them. We remember the effectiveness of Treasury’s 2005 sanctions against Banco Delta Asia, but we forget that to really make them work, Treasury officials traveled all over Asia and Europe to meet with finance ministers and bankers. If you don’t see that happen, it means the administration isn’t really serious.
Potentially, this order is indeed very broad and sweeping. Depending on how this is interpreted, it could make our North Korea sanctions almost as tough as a lot of people (wrongly) believed they were all along. Our next good opportunity to find out these answers will be hearings in the new Congress, which could come as early as next week. I would encourage journalists to put these questions to Treasury, too, because I’d love to know the answers for my own edification.
Next, Treasury should start to issue rulings and opinions, to give some sense of certainty to those who finance transactions in food and medicine. Those institutions need to know that these transactions will not put them at risk. (Obviously, banks will still have to meet their “know your customer” obligations, and other standard requirements of regulatory compliance.) The need for this kind of early guidance has been a problem with sanctions against other countries in the past. No one wants to see unintended humanitarian consequences — least of all, those of us who believe in human rights in North Korea, and who also advocate for tougher sanctions as a way to force change that other strategies have failed to produce.
Finally, within the next few months, expect the Treasury Department to issue regulations clarifying the limits of this executive order. It will (and should) contain exceptions for legal services, emergency medical services, food and medicine, consular services, and other standard exceptions. That may be through a revision to 31 C.F.R. Part 510, or through the creation of a new subpart.

Q 2. Do you see these sanctions having any significant effect on the North’s relations with the U.S. or the South, and, if so, what?

What relations? But with respect to South Korea, remember that the Kaesong Industrial Complex relies heavily on payments to the North Korean government in U.S. dollars. Unless the businesses at Kaesong are granted a general license, they’ll have to make some difficult choices. That’s a good thing, because for years, Kaesong has been sending bulk cash to North Korea, no questions asked. That’s impossible to reconcile with U.N. Security Council resolutions that require financial transparency in dealings with North Korea — requirements that Kaesong has never met. Whether North Korea would be willing to accept financial transparency and adopt fair labor practices will be an important test of whether Kaesong can really be the engine of change we were all promised, or whether it will continue to be a crass exchange of bulk cash for slave labor.

Q 3. As you probably know, the two Koreas are presently in a phase apparently conducive to talks. There has been some comment in the left-leaning press here that the latest U.S. sanctions could hold back inter-Korean ties. What do you think about this view?

Has there ever been a time when South Korea’s left-leaning press wasn’t saying that? Not after the Cheonan and Yeonpyeong attacks, and not after any nuclear or missile I remember. That’s why they’ve lost so much credibility. It hate to seem argumentative, but I don’t even agree with the premise of the question. Obviously, you’re referring to an offer of talks Kim Jong Un made in his New Year speech. I’ve been watching North Korea make these speeches long enough to see a parade of analysts see the same things in each year’s inkblots, year after year. You’d get just as much predictive value from an asthmatic nonagenarian’s horoscope.

In this specific case, I read the offer of a summit as possibly conditioned on the cancellation of annual military exercises, which Kim knows is a non-starter. I’ve been open to downsizing USFK since I was assigned to it myself long ago, but I think everyone agrees that if USFK stays, it has to stay prepared. President Park has accepted Kim Jong Un’s offer just as the left-leaning press chooses to frame it, and there are good political reasons for her to have done that. My guess is that by setting a February deadline for action, she’s calling Kim’s bluff. But when Park came to Washington to address a joint session of Congress in 2013, she outlined North Korea’s cycle of provocation and reconciliation. Even in Park’s politically weakened state, she must be smart enough to see through this for what it is. She knows that these phases never last more than a few months.
On the other hand, if Kim Jong Un feels that enough international pressure is building against him, he might take a more conciliatory position in an effort to divide the U.S. and South Korea. He used that tactic with some success to divide Japan from the U.S. and South Korea last year.

Q 4. Sanctions on North Korea are nothing new. What, if anything, makes these measures any more likely to deter North Korean aggression than previous efforts?

Before you say that they aren’t new, you have to understand what they were to begin with. At least until January 2nd, America’s North Korea sanctions were a lot of nothing. They were far weaker than our sanctions against either Belarus or Zimbabwe, and not remotely comparable to our Iran, Burma, or Syria sanctions. Few people realize that it was none other than George W. Bush who gutted them. Don’t just take it from me, Google what Kurt Campbell has been saying about this. As for U.N. sanctions, hardly anyone has bothered to enforce them except in the most egregious cases. Many people will tell you that trade sanctions alone have a poor record of changing the behavior of governments, and I don’t disagree with them. The practical sum of our U.N. sanctions against North Korea today is, in effect, a subset of trade sanctions — the interdiction of some arms shipments. That’s a good thing, but the only thing that will force North Korea to change its behavior will be what worked in 2005 — targeted, aggressively enforced financial sanctions that force Pyongyang to make choices it would rather not make.

What makes these sanctions different? I think that goes back to my first answer — it depends on how they’re interpreted, applied, and enforced. For the reasons I stated, it’s too early to know the answer to those questions.

When you ask me if these sanctions will “deter” North Korea, I have two problems with that question. First, deterrence isn’t the principal objective of sanctions. Their objective is to put enough financial pressure on the target to force it to make difficult policy decisions, or failing that, to weaken its hold on power. Second, the question of whether any policy option can deter Kim Jong Un is more a psychological question than a legal one. My non-expert view is that Kim Jong Un may not have an easily deterrable personality. His past behavior suggests that he’s impulsive, temperamental, hubristic, and prone to exercising poor judgment based on emotional reactions. Many of his decisions — his public association with Rodman, the execution of Jang, the closure of Kaesong in 2013, and the Sony hack — are really the the actions of an imbecile. That assessment would be just as valid or invalid if we didn’t sanction him, and opted for military force or appeasement instead. Sanctions are one of two potentially effective, non-kinetic ways I can see to pressure him (a subversive campaign of information operations being the other). Given time, once his advisors are forced to explain what he can’t buy or maintain because his assets are blocked, we’ll see a cycle of reactions that should eventually result in a more compliant regime, in some form. Before that, things could get scary. I wish I knew of an alternative that wasn’t even worse.

Q 5. There is still considerable doubt that North Korea carried out the Sony hacking. Do you think the legitimacy of these sanctions will suffer as a result?

I suppose that depends on who you ask. After 9/11, everyone with a GeoCities account was suddenly a structural engineer, but I’m not an expert on computer forensics and won’t pretend to be. I can only hope that the FBI was very confident about its conclusions before making such a serious charge. Its conclusions are obviously based on classified evidence, but it would be a mistake to assume that the FBI is basing its conclusions on computer forensics alone. I don’t know what the FBI knows, and neither do the inside-job theorists. Unfortunately, intelligence agencies have to keep their sources and methods secret, or else they won’t have those sources and methods for long. From what I’ve read, the inside-job theories are largely based on computer forensics, and most their arguments begin by stating that computer forensics are highly inexact. Of course, the FBI isn’t always right, but nothing has persuaded me that they’re wrong about this.
I don’t see any motive for the FBI or the President to fabricate this. If you’ve been watching this administration’s North Korea policy, what’s remarkable is the extraordinary efforts it has made to ignore North Korea; hence the term “strategic patience.” In fact, this administration has been forced to turn to a whole series of foreign policy problems that it would have preferred to ignore — the Arab Spring, the Green Revolution in Iran, Libya, the South China Sea, Ukraine, Syria, the rise of ISIS, and now, North Korea. The last thing it wanted was yet another foreign policy crisis, or for North Korea to make it look incapable of protecting the United States from the tantrums of a porcine adolescent heir to a blighted kingdom.
The legitimacy of sanctioning North Korea never depended on the Sony hack; it existed years ago. The greater shame is that it took the Sony hack to get the President to finally impose them. To be completely fair, however, in his executive order, the President also cited North Korea’s “provocative, destabilizing, and repressive actions and policies,” its violations of multiple U.N. Security Council resolutions, and its “commission of serious human rights abuses” as justifications.
Unlike the President, the House of Representatives started pushing for tougher North Korea sanctions for all of those other reasons more than a year ago, back in April 2013. That bill passed the House with strong bipartisan support. The Senate Democrats introduced their bill just as (and perhaps even slightly before) the Sony story hit page one, and their bill had been in the works for months. I think Anne Applebaum got it partially right today, when she argued that the Sony hack has distracted us from Kim Jong Un’s greater crimes, which the U.N. General Assembly just referred to the Security Council. I also disagree with Ms. Applebaum in another sense. Assuming (as I do, until I’m convinced otherwise) that the FBI was correct in accusing North Korea, I can’t recall another time when a foreign dictator censored freedom of expression in the United States so effectively as this. Imagine who else might feel encouraged to learn from his example. Remember when it was briefly fashionable to speak of Hollywood as an instrument of “soft power,” during President Obama’s first campaign? Unless others are deterred from similar tactics, you can say goodbye to that, and to so much more.
Unfortunately, I see a great temptation in some quarters of our society to seek out alternative explanations that would relieve us from the burdens of confronting these hard questions. As always with North Korea, the pathology of the North’s political system is the origin of our problems with it. This is why I argue that whatever the FBI ultimately concludes, there were many, many good reasons for tougher sanctions against North Korea long before the Sony hack.



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