US must have stomach for sanctions on Pyongyang and Beijing

Peeved by North Korean missile launches and starting to realize that China is not going to help with North Korea, last week the Trump Administration imposed sanctions against a Chinese bank, two individuals, and a shipping firm for facilitating illegal transactions with the rogue state.

This is sensible – Mr. Trump was wise to hold plenty in reserve. But there are a few things to consider about sanctions:

Timing matters

Done right, sanctions – financial sanctions in particular – will raise merry hell with the Kim regime and also discomfort China. But they would have been more effective ten years ago.

North Korea and China were more vulnerable to economic and military pressure back then – and now have less reason to cave in to the Americans. Both countries see themselves as stronger, and in fact they are: the PRC with its improved military capabilities and a bigger global economic footprint, and North Korea with nuclear weapons and missiles that are just about “there.”

But “timing” also matters to the country imposing sanctions. On the US side the North Korea threat is such that even some earlier advocates of “strategic patience” or negotiations now realize a reckoning can’t be postponed much longer.

America’s nerve?

One wonders if the US has the stomach to see sanctions through. There’s a tendency to think – recall McNamara and North Vietnam – that by ratcheting up pressure by degrees you can modify the other side’s behavior just as you wish. Thus, slap on the right sanctions, wait awhile, problem solved – or so the thinking goes.

But to shape behavior, sanctions need to be broadly applied and punitive. They need to be cold-blooded, and not eased up until you’ve achieved what you want. This includes being willing to force the collapse of the Kim regime and being willing to fight if it lashes out. The US also needs to be ready to up-end its relationship with the PRC. No small thing.

What about American willingness to do this – especially once North Korea and the Chinese “bite back”? Until a few months ago, the US government wasn’t even willing to publicly call China an adversary There will be an American chorus calling for going easy on China – citing economic ties and the need to avoid war at all costs.

As for North Korea, over the last 25 years Republican and Democratic administrations alike have preferred talks and bribes while waiting for a Chinese deus ex machina to rein in North Korea.

But, one often hears, “sanctions have failed.” No. Real sanctions have never been tried.

The US government never even cracked down on North Korea’s easy-to-uncover global moneymaking operations. For example, the US said nothing as Japan – its main Asian ally – allowed tens of millions of dollars to flow from Korean-Japanese residents to North Korea annually for many years – until PM Abe squeezed the pipeline.

The North Koreans and Chinese might be forgiven for thinking that – despite their tough talk – the Americans will always go wobbly, and give in.

Regime staying in power?

Sanctions that might work on a country such as Canada work differently on dictatorships. Regimes like the Kim family’s have a certain staying power built on thoroughgoing repression and willingness to brutalize their subjects.

However, such regimes can be surprisingly brittle – as in the case of Romania’s Ceausescu, Hoxha in Albania, and even the East Germans – when finances are choked or they lose the support of a powerful foreign benefactor. And terrorizing one’s citizens makes enemies – who reappear (or at least the surviving kin do) when opportunity permits.

Secondary sanctions

Given that 90% of North Korea’s trade involves the PRC in some fashion – not to mention China’s historic assistance to the North’s missile and nuclear programs – so-called “secondary sanctions” targeting the PRC in order to get at North Korea are commonsensical.

The Trump administration’s recent sanctioning of the Chinese bank and other entities means little by itself, however – unless it’s the first step towards something harsher. Time will tell. If the US government applies serious penalties on the Peoples’ Bank of China instead of on the little known Dandong Bank, we will know things are getting serious.

How feasible is pressuring China?

A Washington DC think-tank, C4ADS, recently identified a small number of Chinese companies responsible for a disproportionate amount of trade with North Korea.

With some imagination and effort it is possible to give China’s leadership a choice between earning millions from business with North Korea or making tens of billions from business with the United States.

But will this be enough to finally convince China to crack down on Korea? Nobody knows – though it’s worth finding out given what’s at stake.

Recent and past history suggests China can absorb a near-infinite amount of misery. But while China can probably absorb sanctions, the CCP leadership cannot.

Thus, besides targeting Chinese financial and trade institutions, the US should consider “personal” sanctions on select Chinese leaders who have assets and relatives in the United States or within reach. That will get their attention.

The US Treasury’s intelligence capabilities are good, and it probably has all the evidence it needs to go after the PRC (and other countries). The Bush administration’s unwisely aborted effort against Banco Delta Asia in 2006 offered a taste of what’s possible.

Only one piece of the puzzle

Sanctions, even tough ones, are ultimately just one piece of the puzzle. They are best applied as part of a broader strategy involving military force (actual or threatened) and diplomatic efforts to isolate a regime.

Most importantly, sanctions need to make life miserable for the ruling class – there can be no half measures, the pain of which tyrants easily shift onto their citizens.

We will know soon enough if the Trump administration, unlike its predecessors, will play rough with North Korea – and China. A broad, coherent strategy, including real sanctions – and ensuring those sanctions hurt – is essential.

Grant Newsham is a Senior Research Fellow at the Japan Forum for Strategic Studies in Tokyo