The North Korea Problem: Thoughts for the year 2018

The Editorial from January 1st, 2018: What to expect from North Korea in the upcoming year.

Going into 2018, two factors stand out in determining whether the international community will succeed in nudging Pyongyang back to the negotiation table:

Tougher sanctions

The second half of 2017 brought some advances to the sanctions regime on North Korea. In the summer, the UN passed new comprehensive sanctions aimed at significantly reducing resources flowing in and out of North Korea. Moreover, last quarter, the Trump administration began cracking down on illicit banking and maritime trading activities that aim to skirt those sanctions. These measures target front-companies, banks and individuals long known to have aided the regime in earning capital under the radar. Finally, the year concluded with the U.N. passing a new resolution slashing crude oil and refined petroleum exports to North Korea. The new measures, if accompanied by a successful crackdown of illicit trading activities, will significantly drain Pyongyang and bring it closer to the edge.

Plenty of incidents reveal the shortages the regime already faces. Pressure from Pyongyang, for example, has forced North Korean fishermen to go to extremes to catch more. As a result, shipwrecks of North Korean fishing vessels along the coast of Japan has increased significantly, some with deceased fishermen still on-board.

As the sanctions squeeze harder and new ones are enforced, more voices in North Korea could lean towards re-engaging in negotiations. How fast this occurs will depend on the effectiveness of the sanctions, especially in curbing illicit activities. North Korea has decades of experience skirting sanctions and the U.S. has yet to send a strong signal to Chinese banks and front-companies to discourage engagement with Pyongyang. Therefore, it is important to closely see how the sanctions – Trump’s, in particular – are enforced this year. However, one can cautiously hope that the positive developments, especially regarding targeting underground tactics undermining the sanctions, would meaningfully help push North Korea’s leaders closer to negotiations.

The Winter Olympics

A slowdown of aggressions during the winter by North Korea is largely cyclical and inconsequential. Indeed, last month has been relatively quiet in terms of new provocations. Pyongyang usually starts displaying hostilities again during spring, when annual US-ROK joint military exercises normally begin. This year, however, the lull may be extended due to the Winter Olympics in Pyeongchang and the Paralympics shortly thereafter in March. Until both events conclude smoothly, it is unlikely that Moon’s administration will do anything that it knows would provoke the North. Such an extended respite of tensions can breed favorable conditions for talks.

It is indeed unrealistic to expect new sanctions to pressure North Korea fast enough to bring them to the negotiation table by spring. Even if the Chinese banks, for example, fully enforce embargoes on North Korea, it is still very difficult – with a long list of Chinese nationals and a maze of front companies working on North Korea’s behalf – for their compliance teams to figure out which transactions to block. As a result, it is highly unlikely that negotiations will take place before the Winter Games end in March.

Instead, the opportunity could be used to lay the groundwork for talks to begin if and when the new sanctions really start taking a serious toll on the regime. Just last month, the U.N. sent its undersecretary general for political affairs, Jeffrey Feltman, to North Korea in a diplomatic bid. China also sent a special envoy to North Korea near the end of last year. With the risk of provocations on either side relatively low, the first quarter of this year could be a good opportunity for the parties involved to establish a basic framework for talks.