Financial Sanctions Spurring NK Sophistication

The U.S.’ regime of targeted financial
sanctions against North Korea may be having undesired side effects, according
to U.S. expert John Park.

Targeted sanctions do achieve some
of their non-proliferation aims, Park, a research associate at MIT and adjunct
lecturer at the Harvard Kennedy School, predicted earlier today. However, these
successes could come at the cost of incentivizing state trading companies to
enhance the sophistication of their commercial activities.

Speaking at an event hosted by The Asan
Institute for Policy Studies, he pointed out that the only tools available to
address proliferation concerns are physical force, cyber warfare, and
sanctions. Thus,
Since our
counterproliferation toolkit is so limited, the U.S. and others adopt

Drawing parallels with the rapid
development of bacteria that show resistance to historically effective
pharmaceuticals, he went on to say that as a result,
We’re seeing overuse of sanctions, and so regimes are developing

Parks latest
research is some of the first in English to address the effectiveness of
financial sanctions through specific case studies focusing on the receiving end
of the equation. Employing interviews with a small cohort of defectors based in
South Korea who have direct experience of working in state-run trading firms,
he is looking at both the reception of sanctions by the targeted entities and
those ways in which those entities respond by amending their working practices.

Park also commented on the role played in
the context of North Korean trading entities by China and Chinese
companies. As oft noted, he agreed that China sees
the stabilization of the North Korean regime as their least worst
However, while that
choice disincentivizes Pyongyang from returning to multilateral
denuclearization dialogue, it does not mean that Beijing has adopted an
unprincipled stance.

Rather, he pointed out that the sanctions
regime does not prohibit the pursuit of economic development and humanitarian
goals, and therefore the Chinese government does not perceive itself as busting
sanctions by facilitating Chinese firms doing business across the Yalu and
Tumen rivers.

The result is that Sino-North Korean trade
volumes are now in the vicinity of $5-6bn USD per annum. The outcomes of this
rapid trade growth in the period to 2011 are, Park said,
A boom in consumption among the 1%, the
demographic that benefits most prominently from that growth, and the
decentralization and
segyehwa, or globalization, of the North Korean elite, including the rising
mobility of elites within North Korea
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