Latest sanctions reveal the real US plan on North Korea

Now that the horrific noise from the absurd Trump-Kim trading of nuclear threats has died down, welcome to the real U.S. policy toward North Korea. It is, as seen from this week’s U.S.-South Korea military exercises, a mix of strengthened deterrence and coercive diplomacy. It is decidedly NOT the instant gratification that Trump would like.

The coercive dimension of the policy was highlighted on Tuesday by the U.S. Treasury announcement of ”secondary sanctions” against Chinese and Russian banks and businesses helping North Korea in violation of U.N. Security Council sanctions.

{mosads}The flip side of this political strategy was evident in Secretary of State Tillerson’s hopeful comments to reporters explaining that there have been no North Korean missile or nuclear tests since the last round of U.N. Security Council sanctions “…and that perhaps we are seeing our pathway to sometime in the near future having some dialogue.”

Among those targeted by Treasury were three Chinese coal companies importing more than $500 million; Dandong Rich Earth Trading, a Chinese firm charged with importing rare metals from North Korea and Mingzheng International Trading, a China and Hong Kong-based bank that allegedly provides financial services for Foreign Trade Bank, the main North Korean foreign exchange bank.

Treasury officials also pointed out that one of the sanctioned firms, Dandong Zhicheng Metallic Metals, helped to procure nuclear and missile components for North Korea with some of its profits.

Why is this important? There are two related aspects of U.S. efforts to heighten pressure on North Korea: cutting off access to international finance and disrupting its procurement efforts. Pyongyang has a de facto cash economy, tolerating markets (as long as Kim and associates get their take) since their economic system broke down during the mass famine of the 1990s. If we can remove hard currency, Kim’s ability to placate the elite in the Worker’s Party, state bureaucracy and military could be greatly diminished.

The second aspect is that by cutting off Pyongyang from business networks in China, Malaysia and elsewhere used to obtain critical components for its ballistic missile and nuclear program, we can slow down and perhaps disrupt those programs.

Predictably, we heard howls of protest from Beijing about secondary sanctions, threatening U.S.-China ties — even as the Chinese use trade as a weapon against South Korea for deploying terminal high altitude aerial defense (THAAD) to defend themselves. But the reality is that China is the chief enabler of North Korea, and no major Chinese banks or companies have been targeted.

Instead, it is mostly small local banks and shady, opportunistic Chinese firms in Northeast China near the North Korean border that have been sanctioned. This will have no significant impact on China’s overall national economy. It is something that President Xi Jinping can live with.

Indeed, there has been a heated debate within China about whether North Korea is an asset or a liability. The combination of Beijing’s exasperation and anger at Pyongyang; it’s fear of what Foreign Minister Wang Yi called “a head-on [U.S.-North Korea] collision and Xi’s sense that working more closely with Trump can create a more stable bilateral relationship appear to be leading China to consider pressures on North Korea well beyond its limited moves to date.

In recent months, we have heard prominent Chinese/Korea specialists, such as Zhang Liangui of the Chinese Communist Party (CPC) Central Party School warn that a sixth North Korean nuclear test will bring more sanctions, and that one option would be cutting back its oil exports to North Korea. China may cut off some oil and food supplies but stop short of steps that could spark instability.

Many argue that sanctions against North Korea have failed, but this is wrong. Only very mild sanctions against a handful of North Korean firms and individuals have been applied. These new, increasingly comprehensive sanctions, ending North Korea’s access to the international financial system and cutting off sources of hard currency, as was done to Iran, have not been tried. Such actions could lead Pyongyang to rethink its nuclear program.

The irony is that while Trump has rejected Obama’s policy of “strategic patience,” it will take time, perhaps 12-15 months, for these efforts to bear fruit. Where Obama was largely waiting out Pyongyang and doing little to squeeze them, Trump’s pressure tactics could bite, but require that same strategic patience.

Robert A. Manning is a senior fellow of the Brent Scowcroft Center for International Security at the Atlantic Council and its Foresight Strategy and Risks Initiative. He served as a senior counselor to the undersecretary of state for global affairs from 2001-04, as a member of the U.S. Department of State Policy Planning Staff from 2004-08, on the National Intelligence Council (NIC) Strategic Futures Group and at the Director of National Intelligence (DNI) Counter-Proliferation Center 2008-12. Follow him on Twitter @RManning4.

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