Will 2023 be the End of International Sanctions?

The UN Security Council’s sanctions role has been neutered; new sanctions coalitions must ensure this key tool of international security remains effective.

By all accounts, 2022 was a banner year for North Korea’s ballistic missile tests, with the country launching nearly 70, most recently showcasing its Hwasong-17 in November – an intercontinental ballistic missile capable of delivering a nuclear payload to much of the contiguous US – and ringing in the New Year with yet another series of launches. Even more alarmingly, some analysts predict the country is preparing for its seventh nuclear test, to take place sometime in early 2023. Yet despite North Korea’s continued provocations, the prospects of any meaningful action by the UN Security Council are practically nil.

With the international sanctions regime up against the ropes, the West will need to not only rely on its own autonomous sanctions regimes but also find ways to harmonise and coordinate with regional partners and allies to maximise impact.

Missing in Action

North Korea conducted its previous, and largest, nuclear test in September 2017. Although exact figures are unknown, most analyses place the weapon’s yield somewhere between 100 and 250 kilotons – enough to flatten a city the size of London. In response, the UN Security Council imposed additional sanctions on North Korea, further restricting the country’s access to refined petroleum, banning several categories of imports and exports, and banning all North Korean nationals from working abroad.

In the years since, North Korea has continued to advance its nuclear weapons and ballistic missile programmes. This past year, the country is believed to have tested a hypersonic missile – a missile system capable of manoeuvring in ways that make detection more difficult. In 2022 alone, the country conducted five ICBM tests after a four-year hiatus.

While Pyongyang has been busy advancing its WMD programme, the UN Security Council has been missing in action. Up until North Korea’s last nuclear test in 2017, the Security Council took decisive action to impose fresh rounds of sanctions after the country’s successive nuclear and significant ballistic missile activity. Since then, however, the Security Council has been unable to find a consensus to impose additional sanctions. Indeed, the Security Council can barely muster a unified statement to condemn North Korea’s provocations.

At a Security Council meeting this past November, Rosemary DiCarlo, US Under-Secretary-General for Political and Peacebuilding Affairs, noted that ‘This is the tenth time the Council has met to discuss the Democratic People’s Republic of Korea in 2022, yet the situation on the Korean Peninsula continues to head in the wrong direction’. The US Ambassador to the UN, Linda Thomas-Greenfield, added that ‘…for too long Pyongyang has acted with impunity, without fear of response or reprisal, emboldened by two veto-wielding members of the Council whose blatant obstructionism puts the region and the entire world at risk’ – referring to China and Russia’s efforts to undermine and neutralise the international sanctions regime.

Why Does This Matter?

Given North Korea’s continued investments in its WMD programme and its unwillingness to come to the negotiating table, it is becoming more common to argue that the international sanctions regime – despite its comprehensive nature – has failed. At the November Security Council meeting, Brazil’s representative noted that none of the sanctions had ‘prevented the prodigious quantity and qualitative expansion of North Korea’s arsenal for the past five years’. But this ignores several important points.

International sanctions against North Korea have two core objects: to deprive the regime of the revenue it needs to support its WMD programmes, as well as to signal non-proliferation norms to the international community – that is, that nuclear weapons and ballistic missile tests are not to be tolerated. Depriving North Korea of the revenue needed to build out its WMD programme requires, first and foremost, member states to fully implement their obligations. This is clearly not happening, and thus despite being ‘comprehensive’ in nature, a failure to fully implement the regimes reduces their efficacy.

Both Russia and China have effectively given up on their obligations to implement international sanctions which both countries originally voted for. Worse still, year after year, the UN Panel of Experts’ reports continue to highlight China and Russia as key hubs in North Korea’s sanctions evasion activities.

In what appears to be an egregious and blatant violation of international sanctions, Russia is alleged to have been seeking to purchase conventional arms from North Korea to use in its war against Ukraine. Such actions not only undermine the international sanctions regime, but also send the wrong signal to member states, who are often struggling to implement their own obligations with limited resources. At the very least, Russia’s actions lack the seriousness that the threat necessitates.

What’s Next?

While the failure of the UN Security Council process is regrettable, allied countries have shown in their united sanctions response to Russia’s full-scale invasion of Ukraine that coordination and cooperation between regional and likeminded allies can prove increasingly effective in reducing the ability of adversaries to finance actions that threaten global security.

Thus, in the absence of any meaningful response to North Korea by the Security Council, it is likely that regional partners and allies will increasingly lean on autonomous and coordinated sanctions. In December, for example, the US, Japan and South Korea agreed to coordinate sanctions against North Korea, which included new designations against individuals connected to the country’s nuclear weapons and ballistic missile programmes. Although the sanctions are largely symbolic – that is, they are unlikely to have a significant effect on Pyongyang-based individuals – the coordinated nature of the sanctions is nonetheless an important step in establishing new collaborative approaches to designations with allies across the globe.

The lack of sanctions harmonisation between the US, UK and EU is leading to a fractious regime, which can complicate implementation efforts and overall efficacy. In January 2022, for example, the US Treasury Department added Mr O Yong Ho to its sanctions list – a North Korean operative based in Moscow who is alleged to have worked with a Russian company to procure parts for North Korea’s ballistic missile programme. Although the case was detailed in a UN Panel of Experts report, Mr O has yet to make an appearance on UK or EU sanctions lists.

Similarly, in April 2022, the EU added eight individuals and four companies to its autonomous sanctions list. Most of the names and companies are part of a sanctions-evasion and illicit labour network operating in West and Sub-Saharan Africa – a case also highlighted by the UN Panel of Experts. Korea Paekho Trading Corporation, which was one of the companies designated, is a North Korean art company responsible for constructing overseas statues, exporting artwork, and facilitating illicit labour and access to the international financial system. Despite ample evidence of the company’s activities, the US and UK have yet to add this network to their respective sanctions lists.

Together, the respective US, UK and EU currencies make up nearly 85% of global foreign currency reserves. This offers significant leverage for matters of economic statecraft. While the EU and UK need not have an ‘American-style’ system of financial and economic sanctions (such as secondary sanctions), harmonisation can nonetheless be a powerful tool.

The UK, for example, should put into place mechanisms to coordinate sanctions designations more effectively with its allies and partners. Apart from periodic updates relating to name and other identification-related changes, the UK has made no use of its post-Brexit North Korea sanctions regime. Further, more efforts are needed to coordinate asset freezing and forfeiture, such as leveraging the centrality of the UK’s company registry (Companies House) to identify and freeze assets (such as vessels) connected to North Korea.

If the international community is to have any realistic hope of blunting Pyongyang’s continued nuclear ambitions, despite the distraction of Russia sanctions, a coordinated and consistent focus must be applied to restricting North Korea’s access to financial resources.

This commentary was first published on RUSI’s website by Tom Keatinge, Director of RUSI’s Centre for Financial Crime and Security Studies, and Aaron Arnold, a Senior Associate Fellow for the Centre.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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