The Sanctions Are Working

In April of 2009, I laid out a series of ten tough non-military options that I didn’t believe President Obama would have the spine to apply to North Korea. At the time, North Korea was about to test our new president by launching a Taepodong II missile in the general direction of Hawaii. I can’t fail to begin this article without conceding that Executive Order 13,551, signed on August 30th of this year, ought to count as full or partial credit for at least items 1 and 2.

At lunch with a journalist friend earlier last fall, my friend asked me if I saw any evidence that what I like to call Plan B was working at exerting useful pressure on North Korea. I answered that I saw no direct evidence of that yet, but that I expected to in the coming months. I attributed this confidence to the past success of the sanctions applied to Banco Delta Asia in 2005, no matter how much some sanctions opponents would like to deny that success. But if asked the same question today, I’d give a very different answer.

So how do you detect financial duress in a place that’s been starving for years? By looking for signs of shortages in those segments of the North Korean economy and population that have always been high economic priorities, even while everyone else was starving. Those priorities include showpiece industries, the military, the elite, and of course, Kim Jong Il’s own opulent lifestyle. There is now some evidence that each of these priorities has recently been underfunded.

First, North Korea has revived Bureau 38, which manages the personal assets of Kim Jong Il. Yonhap thinks this means the regime is under financial pressure. The Chosun Ilbo adds some context:

“It seems the North in 2009 merged Room 38 with Room 39, another special department that handles a network of business operations, but separated them again in mid-2010,” a ministry official said.

According to a North Korean source, Room 38 handles the private slush funds needed to buy luxury goods for Kim Jong-il and his family as well as gifts for officials, while Room 39 deals with executive funds to pay expenses for party events.

A source in the North said the regime merged Room 38 with Room 39 in March 2009 to simplify management of Kim Jong-il funds but apparently restored Room 38 in September last year, since it had become difficult for Room 39 alone to earn enough hard currency due to tightened international sanctions against the regime. [Chosun Ilbo]

I have already noted the evidence that the regime is having an unusually difficult time feeding its army this winter. While some soldiers have been going hungry for years — I’ve noted examples regarding North Korea’s border guards with particular interest — the recent evidence suggests that airborne and “special forces” units are also suffering. That is unprecedented, even if we can agree that “special forces” is a somewhat imprecise term, and that most of these reports are anecdotal.

Then there are the key industries. North Korea’s steel mills and coal mines are largely idled.

Finally, the regime has been forced to reduce the size of the capital and home of the elite:

North Korea has halved the size of Pyongyang in a possible bid to ease the burden of keeping the loyal residents of the capital well-fed amid deepening food shortages, sources here said Monday. According to the sources that cited 2009 and 2010 almanac maps from North Korea, the city of 3 million has relinquished most of its southern half and a portion of its west to surrounding areas.

“We believe about 500,000 people have been excluded as Pyongyang citizens since 2009,” one source said, speaking on the condition of anonymity because the maps were obtained through intelligence means. [Yonhap]

Ordinary North Koreans have been hungry since the early 1990’s, but last year was much worse because of the Great Confiscation. The markets have only partially recovered from this disastrous series of policy decisions. Evidence of rising food prices has to be put in context; food prices tend to rise every year around this time, as winter stocks are depleted. The fact that the regime has gone begging for aid means that this year may be different, and adds weight to suspicions that the elite and the military are sharing some of the pain.

To this evidence, we might as well add the Cheonan and Yeonpyeong outrages. Extortion certainly seems to have been one plausible motive for these, and much as North Korea might have wanted, some would now offer North Korea a payoff for this conduct. But despite some signs of impatience with “strategic patience,” the Obama Administration continues to tell North Korea that refusing to negotiate in good faith only means more isolation. And despite the North’s insistence that it won’t talk until we lift sanctions, the administration’s answer — for now, at least — is that it has “no intention of removing those sanctions as an enticement for dialogue.”

Let’s hope they stick with it. We’ve seen this pattern before: North Korea shows an unexpected (to some) interest in diplomacy when we apply economic pressure. This isn’t to say that talks are likely to get us anywhere in the foreseeable future, but it by backing our diplomacy with real force, it might create the conditions for diplomacy to work. Some day.

By any objective measure, the Obama policy toward North Korea is tougher than that of his predecessor. This still isn’t saying much. In any event, North Korea’s recent behavior arguably forced President Obama to impose sanctions, something his foreign policy team never intended to do when it came into office. On paper, the new executive order is a very powerful tool, but it’s still not clear how determined the administration will be about enforcing it. As it becomes increasingly clear that China is circumventing U.N. sanctions toward both Iran and North Korea, Treasury has yet to take action against any of the Chinese entities funneling funds and technology in violation of the sanctions resolutions China voted for.

At least to my eyes, the President’s policy still lacks a coherent and plausible objective. A negotiated disarmament of the Kim Dynasty isn’t that. I harbor the hope that perhaps the administration has seen the light, but isn’t ready to step out of the regime change closet. But at least give President Obama the credit he is due for finally attaching consequences to Kim Jong Il’s actions.