New North Korean sanctions tighten the screws with utmost precision

New North Korean sanctions tighten the screws with utmost precision
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The sanctions against North Korea announced on Friday were an important series of measures that reflect a serious, professional approach to sanctions implementation that will pay dividends in confronting what is probably the Trump administration’s chief national security and foreign policy threat.

Although these sanctions were immediately overbilled by the president as the “heaviest ever” — that’s accurate only purely by numbers of designees — the strength isn’t in the sweeping nature or massive impact to an economy that was already nearly totally isolated from the rest of the world.

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Instead, the reason this action ought to frighten Kim Jong Un and his cronies is the precision and degree of technocratic competence being used to choke off the loopholes his regime uses to fuel its illicit nuclear ambitions. 

 

Dismantling a sanctions target’s access to the global financial and trade infrastructure is a careful and painstaking task. The Trump administration has been successful at the U.N. Security Council in laying the groundwork for a broad, crippling sanctions targeting the DPRK.

Friday’s sanctions targeting the North’s shipping and procurement networks were a precise strike that put real teeth behind the more sweeping sanctions framework already in place.

The financial isolation of Iran and al-Qaida didn’t happen overnight. Rather, it was the result of years of effort following the money and key intermediaries to find those hidden routes to the international financial system that are so critical to sustaining rogue actors and shut them down.

Perhaps just as important is that the action signals a level of patience that many may have assumed the Trump administration did not have. Sanctions are powerful, but can take time to work, especially when they’re targeted at a state like North Korea that has been a pariah for decades and was already largely cut off from the global financial and economic system.

Who knows what tomorrow may bring, but U.S. partners and allies may take heart that despite the president’s bombastic rhetoric, the administration’s action appears thoughtful and deliberate. Senior administration officials were quick to point out on Friday that sanctions are having an effect on the North, and that they believed this action would tighten those screws. 

Some DPRK watchers out there may complain that no Chinese banks were among the targets being touted as part of this heaviest-ever package. Many believe that the only sure-fire way to cutting off the North is to go after China’s banks that are used as an outlet.

While sanctions against large Chinese institutions may be necessary at some point to fully sever the DPRK’s financial outlets, the administration needs to be careful not to cut off its nose to spite its face.

The whole point of sanctions is to hurt the target more than yourself or your allies and partners.

If Washington were to move against a large Chinese bank — especially without significant evidence of complicity at the bank’s highest levels and demonstrable impact to Pyongyang’s bottom line — it could undermine hundreds of billions of dollars worth of trade with China, send global markets into turmoil, and, given Chinese banks massive holdings, undermine the U.S. dollar.

Sanctioning Russia’s largest companies in 2014 required novel new tools because of the size and interconnectedness of the Russian economy; those challenges are orders of magnitude larger with China.

This potentially massive impact to the United States and China necessitates that any such action be carefully designed and implemented, and even then, only with the strongest evidence to support the case.

Moving forward, the administration should build on this success. It is smartly seeking to sanction these entities at the U.N., and it should continue to use this model of strict implementation of globally adopted sanctions to cut off the DPRK’s financial and procurement nodes.

It should also pursue other nonconventional options similar to the shipping advisory issued by Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Coast Guard. While not expressly a new set of sanctions, the advisory will cause international shippers, and more critically, their insurers, to pay closer attention to North Korea’s evasion methods.

Since the vast majority of the insurance and reinsurance market that keeps ships floating at sea runs through London and New York City, the advisory may well have an outsized impact. 

Congress should focus on supporting the administration’s efforts here and can begin by expediting Susan Thornton’s confirmation as assistant secretary of State for East Asia. Confronting this threat requires having a firmly entrenched top diplomat for the region.

Congress should also move quickly to approve supplemental funding to the agencies prominently involved. Treasury, State and the intelligence community need those funds — some included in the president’s budget — to meet this challenge. 

The Trump administration’s maximum pressure campaign may be a policy dictated from on high, but Friday’s action reeks of the competence and significant impact that experienced civil servants bring to bear against the threats that face our nation.

Those same professionals have the framework and the expertise to execute that pressure campaign. Add the resources to that equation and give them space to operate, and more results will follow.

Brian O’Toole is a nonresident senior fellow at the Atlantic Council. He is the former senior advisor to the director of the Treasury Department’s Office of Foreign Assets Control (OFAC) and a former intelligence officer at Treasury and CIA.