Sanctions

This Global Governance Working Paper is a new feature of the Council of Councils (CoC), an initiative of the Council on Foreign Relations. Targeting critical global problems where new, creative thinking is needed, the working papers identify new principles, rules, or institutional arrangements that can improve international cooperation in addressing long-standing or emerging global problems. The views and recommendations are the opinion of the authors only, do not necessarily represent a consensus of the CoC members, and are not the positions of the supporting institutions. The Council on Foreign Relations takes no institutional positions on policy issues and has no affiliation with the U.S. government. The Challenge A nuclear-armed North Korea is a threat to the fragile strategic equilibrium on the Korean Peninsula and to international security at large. Emboldened by a nuclear arsenal, the highly militarized regime of President Kim Jong-un could be tempted to embark on aggressive acts. Meanwhile, the United States could opt for preventive military action. Even if neither party seeks a military confrontation, conflict could ensue due to miscalculation or simple misreading of each other’s intentions. Limited military exchanges could spiral out of control, eventually involving not only North Korea, the United States, and its allies in the region—Japan and South Korea—but also China. The repercussions of North Korea’s nuclear challenge may not be limited to Northeast Asia, not least because the nonproliferation regime, a pillar of international security, would be dealt a serious, if not fatal, blow if regional adversaries sought to meet it by acquiring their own nuclear arsenals. The destabilizing effects of North Korea’s nuclear and ballistic programs on regional and international security cannot be overestimated. In devising a response to the North Korean challenge, regional actors should remain committed to the denuclearization of the Korean Peninsula, but they should also implement security measures with observable results short of full denuclearization. Specifically, the United States and its allies should concentrate on sanctioning North Korea and on diplomatic action, actively seeking the involvement of China and Russia, while employing a strategy of deterrence and containment. North Korea’s Objectives According to President Kim, North Korea’s nuclear and ballistic programs are meant to establish “equilibrium” with U.S. forces. Kim craves the ultimate deterrent: a nuclear-armed intercontinental ballistic missile (ICBM) capable of reaching the United States. In his eyes, this option is a necessary guarantee for his and his party’s continued rule—indeed, their survival. The brisk increase in number and scope of missile and nuclear tests in 2016 and 2017 is consistent with this goal. Kim may also be indulging in more daring thoughts, like taking advantage of North Korea’s nuclear and ballistic programs to militarily pursue unification with the South. Recommendations To minimize the risks of a regional conflict, strategic miscalculation, or North Korean adventurism, the United States and its allies should pursue the following recommendations. Avoid a preventive military strike. It is tempting to handle North Korea the way Alexander the Great used to untie knots, namely by swinging a sword at them. Yet, there is no Gordian knot solution to North Korea. The notion that U.S. bombing of North Korea’s nuclear and ballistic facilities holds the promise of a quick and definitive fix should be put aside. U.S. forces may be unable to find or destroy all nuclear and missile-related targets and would probably only slow down the North’s progress, at the cost, however, of a military confrontation that could escalate into a full-fledged regional war. The North’s arsenal of conventional capabilities and chemical and biological weapons has the capacity to inflict tremendous pain on South Korea, and no one should rule out the possibility of Kim using nuclear weapons. Nor can the eventuality of a reluctant China entering the fray to prevent the loss of a useful buffer between its own border and the U.S.-South Korean border be dismissed. Unsurprisingly, neither U.S. allies in the region nor China or Russia are in favor of preventive military action. Pursue a multipronged policy response. Containment and crisis management, not war, are the least bad ways to handle North Korea, and both warrant coordination among the regional powers. The wisest way to address this challenge is a policy mix involving defense and deterrence, sanctions, and diplomacy. While these different types of action can unfold independently, all actors involved should do their best to prevent actions in one area from undermining what can be done in another. The United States, Japan, and South Korea should work to improve their defense and deterrence assets while making an effort to coordinate with Russia and China, both bilaterally and in the United Nations, on sanctions and diplomacy. Strengthen U.S. and allied defenses. Strong defense and deterrence assets are essential to persuade the North that its opponents have the capacity to minimize the damage of an artillery or missile attack and respond to it effectively. Given the North’s growing ballistic capabilities, missile defense is an obvious starting point. The United States can bolster South Korea’s nationally operated missile defense assets, both on land (Patriots) and at sea (Aegis). Critically, U.S. and South Korean defense planners will have to work on overcoming technical and political impediments to the interoperability of the South’s system with the U.S.-built Terminal High Altitude Air Defense (THAAD), currently being deployed to the South. With the North having amplified its missile threat, and in the absence of any arms control arrangement, opposition to THAAD in South Korea has actually collapsed, with President Moon Jae-in, until recently a vocal opponent, now supporting it. However, China and Russia have fiercely opposed THAAD deployment for fear that its X-band radar would be used to track their own ballistic capabilities. Beijing, in particular, will likely continue its efforts to drive a wedge between Seoul and Washington on the deployment of missile defense systems in South Korean territory. More generally, China’s ability to exert pressure on South Korea to influence the latter’s decision-making on security matters should not be underestimated. In view of that, Washington and Seoul should make clear that THAAD is exclusively tailored to North Korea’s ballistic threat, even going as far as to issue a declaration that they may remove it if that threat eventually vanishes. These are opportune steps to assuage Chinese and Russian concerns. There may also be room for confidence-building measures to assure China that THAAD radars have only limited abilities to detect and track Chinese missile launches. Establish more credible deterrence. Bolstering deterrence will involve a delicate balancing act between dissuading North Korea and not alarming China or Russia. Potentially harmful side effects on the global nonproliferation regime should also be avoided. The latter point is critical. Cold military logic would suggest that Japan and South Korea, in agreement with the United States, should build their own arsenals. This step would contribute to making Tokyo and Seoul masters of their own destinies and reduce the risk that U.S. territory becomes the target of a nuclear attack. Northeast Asia does not exist in a vacuum, though. It is part of an international security system of which the nonproliferation regime based on the Nuclear Nonproliferation Treaty (NPT) is a fundamental component. The NPT would be severely, if not fatally, damaged by a withdrawal of Japan and South Korea, two of its staunchest supporters. With the treaty weakened or gone, power politics would be a greater factor—or perhaps the only factor—shaping nonproliferation dynamics, which would be a far weaker guarantee that countries such as Egypt, Iran, Saudi Arabia, Turkey, and many others (as varied as Argentina, Brazil, Indonesia, and Vietnam) would stick to nonproliferation commitments. The security benefits that Japan and South Korea would gain by going nuclear should be weighed against the risk of generalized, uncontrolled proliferation. A nuclear-armed Japan and South Korea would also change the regional power structure, probably leading China and Russia to adjust their deterrence policies. This would likely reduce any chance of regional cooperation on North Korea. Deterrence should therefore unfold along more traditional patterns—extended nuclear deterrence (by the United States) and conventional deterrence. Reassurance should go both ways. Mechanisms to ensure extended nuclear deterrence should be put in place incrementally to avoid or minimize frictions with Russia and China. Thus far, the United States has refrained from committing permanent deployments of strategic assets—bombers or dual capable aircraft, nuclear-armed submarines, and carrier groups—to land bases and ports in South Korea. Increasing their periodic deployment through more intensive rotations is the wisest choice. For the same reason, redeploying U.S. tactical nuclear weapons to South Korea (which were removed in the early 1990s) is not advisable. Such a move would carry a high risk of escalating tensions with the North—but also with China—while bringing no strategic benefits not already provided by U.S. nuclear-armed submarines and nuclear-capable bombers. South Korea will need to bolster the credibility of its so-called massive retaliation and punishment plan, involving assets to destroy North Korea’s heavy artillery along the thirty-eighth parallel in the shortest timeframe possible and beefed-up strike capabilities—all matters on which assistance from the U.S. government and coordination with U.S. forces are essential. To that end, the United States and South Korea should increase cooperation on target acquisition, while also coordinating more with Japan on intelligence gathering. Enhanced cooperation will also be needed to strengthen digital defenses and exploit the North’s cyber vulnerabilities. Coordinate sanctions with regional powers. The purpose of sanctions is to punish and deter flagrant breaches of nonproliferation commitments—an important message also sent to any other potential proliferator. Targeted sanctions can also contribute to containing the Kim regime by denying it access to resources that could be crucial for the advancement of its nuclear and ballistic programs. These secondary functions of sanctions against North Korea remain important even if it continues its nuclear weapons program. Recent developments show that it is possible to build and keep a united diplomatic front involving such major powers as China and Russia around a robust package of sanctions. The UN Security Council (with resolutions 2371 and 2375) has prohibited North Korean exports of coal and textiles, banned natural gas imports, capped oil imports, curtailed financial transactions, and forbade arrangements that would result in additional North Korean citizens working abroad. The United States has gone much further with an executive order that threatens the freezing of assets held in the United States by foreign companies and individuals engaging in any financial or trade transactions with North Korean entities. These measures have the potential to inflict heavy pain on North Korea. Revenue from coal and textile exports and remittances are Pyongyang’s only significant remaining licit sources of foreign funding. North Korea’s heavy reliance on China for oil (and food) is also an important vulnerability, while targeting financial transactions is meant to curtail the North’s ability to get foreign currency, often through front companies set up abroad. With China apparently willing to play along with U.S. sanctions, North Korea may soon be under economic siege. Whether this will be enough to induce a change of course, however, remains open to question. The Kim regime has the luxury of not having to worry about the effects of sanctions on the population, widely subdued by years of propaganda and ruthless repression. In addition, thanks to some modest domestic reforms, the North’s economy has performed decently recently, which provides the regime with some slack. Moreover, China, frustrated as it may be by North Korea’s nuclear bravado, will refrain from taking steps that could lead to its collapse. China’s cooperation with the United States has increased lately, but Beijing’s fundamental strategic calculus—that a nuclear-armed North Korea would be better than a unified U.S.-allied Korea at its border—has not changed. Washington should bear this in mind, particularly when it comes to applying secondary sanctions. It is an open secret that China, like Russia (and many other countries), opposes such measures because they give the United States de facto extraterritorial jurisdiction. The United States would be wise to apply the new sanctions only against companies in violation of UN Security Council resolutions. Explore options for realistic diplomacy. Sanctions can, and should, be used as bargaining chips in negotiations. Ideally, the dormant Six Party Talks should be resumed, although direct contact between the United States and North Korea and between the North and the South will be needed too. Even if the lifting of sanctions should be linked to denuclearization, limited exemptions and waivers could be promised in return for de-escalating measures by the North. In exchange for a moratorium on nuclear and missile tests, the United States could also offer not to increase its military activities and presence on the peninsula. Perhaps even more critically, the parties could agree on mechanisms to prevent accidental escalation, including hotlines, military-to-military contacts, and regular exchanges of information. There are also a number of incentives unrelated to sanctions that the regional powers can put on the table in order to persuade the North to exert self-restraint. South Korea could envisage the reopening of the Kaesong industrial complex and discuss the disputed maritime demarcation line in the Yellow Sea; Russia could be allowed to develop infrastructure projects in the North; and the United States, China, and South Korea could signal their readiness to start talks on a formal peace treaty. Conclusion North Korea’s nuclear and ballistic weapons development is a threat to international security and imperils the global nonproliferation regime. This strategy of deterrence and containment combined with regional power coordination would defuse the risk of events spiraling out of control. The most that can be reasonably hoped for in the current circumstances is not a resolution of the North Korea crisis, but injecting a higher degree of predictability into regional relations. For as long as all parties know where the trip wire triggering a major conflagration is, the risk they will deliberately walk or accidentally stumble into it will be far lower than it is now.

For now, Russia is able to achieve many of its foreign policy goals despite the limitations of its economy, but that will not last forever. The United States should prepare to seize future opportunities for a more constructive relationship.