International sanctions have yet to deter North Korea from developing and testing nuclear weapons and ballistic missiles, but the regime’s overseas trade networks are “ripe for disruption,” according to a Washington-based research foundation.
The North Korean overseas financing and procurement system, through which the country obtains funds and supplies for its nuclear weapons and ballistic missile programs, is centralized, limited, and vulnerable, the Center for Advanced Defense Studies concludes in a report released Monday. Disrupting these systems “should greatly increase the pressure on the Kim regime to return to the negotiating table,” the new report explains.
North Korea has been testing a variety of missiles at an unprecedented pace in recent weeks. Last year, the North conducted around two dozen missile tests and two nuclear weapons tests.
There is evidence that North Korea will soon test an intercontinental ballistic missile. The regime’s testing has continued largely uninterrupted despite “swift and tough” sanctions in 2006, “unprecedented” sanctions that had “teeth that will bite” in 2009, strong sanctions signaling the “screws are beginning to turn” in 2013, and the “toughest and most comprehensive sanctions regime ever imposed” in 2016, researchers note.
“Although economic coercion has been ineffective in persuading North Korea to abandon its pursuit of nuclear weapons, this does not mean it cannot work,” the research report argues, “Targeted enforcement actions against key nodes within the system can have the effect of impacting multiple networks across multiple countries simultaneously, removing key functions, such as individuals or entities specialized in illicit finance and procurement, who cannot be easily replaced.”
In the simplest of terms, hitting the supports will bring down the larger structure, putting real pressure on the North Korean regime.
Several misconceptions concerning sanctions persist. For instance, many observers, including former and current officials, wrongly believe North Korea is “the most sanctioned country in the world.”
“When Obama said that North Korea is the most heavily sanctioned, the most cut off nation on Earth, he was flat out wrong,” Bruce Klingner, an expert in Korean and Japanese affairs as the senior research fellow for Northeast Asia at the Heritage Foundation, told The Daily Caller News Foundation. “The U.S., E.U., and U.N. did a lot of things to Iran that we haven’t done to North Korea.”
“I would argue that in fact there are many countries that are more heavily sanctioned than North Korea,” Kurt Campbell, former deputy assistant secretary of state for East Asian and Pacific Affairs said last August. “There are a number of steps we could take that would send a much clearer message about their activities to gain hard currency.”
Another myth, according to the new report, is that the overseas trading network is invisible and almost impossible to expose.
“By being centralized, limited and ultimately vulnerable North Korean overseas networks are, by their nature, ripe for disruption,” the research team argues.
North Korea’s overseas trade networks are centralized around a limited number of tactical controllers/commercial facilitators and strategic chokepoints, where licit and illicit activities converge.
The Center for Advanced Defense Studies gave the example of Fan Mintian, a middleman in China who has played a major role in multiple overseas networks and has been linked to several high-profile weapons seizures, and Dandong Hongxiang Industrial Development Co., Ltd., an intermediary in China busted last year for illegal trade with North Korea.
China accounts for almost 90 percent of all North Korean trade, but the entire bilateral trading systems consists of only about 5,000 companies. Top firms by revenue tend to play a disproportionately large role, “limiting the number of avenues in which North Korea can nest its illicit activity,” the new report asserts.
The nature of the overseas trading network makes it particularly weak.
“Centralized illicit networks nested within a limited number of firms means that targeting specific key nodes can have a disproportionate impact,” researchers argue, adding that because “these nodes requiring the licit systems of trade, transportation, and finance to conduct core business operations, they are also visible and vulnerable to law enforcement action.”
Tearing apart the overseas financing and procurement system may force North Korea to the negotiating table. The Center for Advanced Defense Studies asserts “the time for action is now.”
The big question though is whether sanctions bodies will target the entities that can cripple the regime’s networks abroad.
“We’ve been pulling our punches,” Klingner told TheDCNF, arguing that the U.S. has information on North Korean and Chinese entities in violation of international sanctions but chooses to target them in small batches in the wake of various provocations.
The Trump administration is pursuing tougher sanctions against the North Korean regime and working with China to put diplomatic pressure on Pyongyang, but military force remains on the table.
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