What to Know About Sanctions on North Korea

A woman works at a textile mill in Pyongyang, North Korea. Damir Sagolj/Reuters

World powers continue to punish North Korea with economic sanctions, but it is unclear whether the pressure will push Pyongyang toward denuclearization.

Last updated July 16, 2019

A woman works at a textile mill in Pyongyang, North Korea. Damir Sagolj/Reuters
Backgrounder
Current political and economic issues succinctly explained.

World powers have pursued economic and financial sanctions on North Korea for more than a dozen years to pressure it to denuclearize. These governments have also deployed sanctions to punish the regime for cyberattacks, money laundering, and human rights violations.

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While these measures have exacted a heavy toll on the North Korean economy, experts say their effectiveness has been undermined by the failure of some countries to enforce them and the willingness of some companies to flout them. Even if the sanctions were tightened, however, many question whether they would achieve the desired outcome.

Why does North Korea face sanctions?

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Nuclear Weapons

Nonproliferation, Arms Control, and Disarmament

The Democratic People’s Republic of Korea (DPRK) has undertaken a broad range of activities over the years that has drawn international condemnation in the form of sanctions. Chief among them are the development of nuclear weapons and ballistic missiles.

North Korea’s leadership, under successive Kims, considers nuclear weapons the sole means to guarantee its survival. Pyongyang points to U.S. military bases in the region, as well as the war games the United States regularly holds with its allies, as a threat to its existence. The DPRK ratified the Nuclear Nonproliferation Treaty in 1985 but withdrew in 2003, citing U.S. aggression. It carried out its first nuclear test three years later. “For Kim, nuclear weapons are a ‘treasured sword’ and a silver bullet capable of keeping domestic and international enemies at bay,” writes CFR’s Scott A. Snyder in Forbes.

While these measures have exacted a heavy toll on the North Korean economy, experts say their effectiveness has been undermined by the failure of some countries to enforce them.

Several rounds of bilateral and multilateral negotiations on denuclearization dating back to the 1990s have failed. After the June 2018 meeting in Singapore between U.S. President Donald J. Trump and North Korean leader Kim Jong-un—the first summit between sitting U.S. and North Korean leaders—the United States suspended a series of high-profile military exercises with South Korea, but the declaration it signed with North Korea did not produce tangible steps for denuclearization or sanctions relief. The leaders’ second summit, in February 2019, ended early after the two sides made incompatible demands.

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What are the UN sanctions?

The fifteen-member UN Security Council has passed nearly a dozen resolutions, all unanimously, condemning North Korea for its nuclear pursuits and imposing sanctions. Over time, the measures have expanded to

  • ban the trade of arms and military equipment, dual-use technologies, vehicles, industrial machinery, and metals;
  • freeze the asset of individuals involved in the country’s nuclear program;
  • ban the import of certain luxury goods;
  • ban the export of electrical equipment, coal, minerals, seafood and other food and agricultural products, wood, textiles, and stones;
  • cap North Korean labor exports;
  • cap imports of oil and refined petroleum products;
  • ban natural gas imports;
  • restrict fishing rights;
  • restrict scientific and technical cooperation with North Korea; and
  • prohibit UN members from opening North Korean bank accounts and banking offices.

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The sanctions regime does allow for humanitarian assistance.

What are the U.S. sanctions?

The United States has imposed unilateral sanctions on North Korea that restrict more economic activities and target a larger list of individuals and businesses than the UN sanctions. They are primarily designed to impede Pyongyang’s development of missile and nuclear technology, but some have come in response to North Korean cyberattacks, such as its 2014 breach of Sony’s computer systems and 2017 WannaCry ransomware attack; human rights violations; censorship; and money laundering, among other activities. Additionally, the United States has sanctioned banks, companies, and individuals outside North Korea—particularly in China and Russia—for supporting its weapons program. It has also fined companies for violating U.S. export controls.

On several occasions, the United States has partially lifted its sanctions on North Korea in exchange for a promise to freeze its nuclear program and dismantle parts of its facilities. However, Pyongyang has consistently reneged on its pledges.

The U.S. Congress passed its first statute [PDF] imposing sanctions on North Korea in 2016, adding to those that had already been levied by successive presidents. The law requires the president to sanction anyone involved in activities such as the proliferation of weapons of mass destruction. An additional piece of legislation, the Countering America’s Adversaries Through Sanctions Act, passed in 2017, imposes further sanctions on North Korea (as well as on Iran and Russia). It prohibits certain types of U.S. assistance to foreign governments that aid North Korea.

During his first year in office, President Trump authorized the Treasury Department to block from the U.S. financial system any foreign business or individual that facilitates trade with North Korea as part of the administration’s “maximum pressure” campaign. “Foreign financial institutions are now on notice that, going forward, they can choose to do business with the United States or with North Korea, but not both,” said Treasury Secretary Steven Mnuchin. Analysts say the heightened measures are designed to counteract sanctions-evasion tactics and push Kim back to the negotiating table. In 2018, Kim agreed to a flurry of summitry with South Korea and the United States.

From 1988 to 2008, the United States labeled North Korea a state sponsor of terrorism, an official designation that placed another layer of sanctions on the regime. President George W. Bush removed North Korea from the list as part of denuclearization negotiations, but in November 2017 President Trump announced he would return North Korea to the list. The move followed the assassination of Kim Jong-un’s half-brother in Malaysia and the death of Otto Warmbier, an American student who had been detained in North Korea. The others on the list are Iran, Sudan, and Syria.

What other bodies impose sanctions on North Korea?

U.S. allies Japan and South Korea, as well as the European Union, have also sanctioned North Korea beyond the measures imposed by the UN Security Council.

South Korea. Some South Korean leaders have kept up a hard line against North Korea, while others, including the current president, Moon Jae-in, have opted for a more conciliatory approach, attempting to expand bilateral exchanges as a path toward peaceful coexistence. Seoul provided Pyongyang $7 billion in aid between 1991 and 2015, often as food and medical assistance. In 2019, South Korea pledged another $8 million in aid and fifty thousand tons of rice—its first donation since 2015—to help with severe food shortages. Some experts argue that such policies have diluted the effects of sanctions.

Moon, while supporting international sanctions and enhanced defense cooperation with the United States, has worked to improve North-South ties, meeting with Kim four times. Moon has approved humanitarian aid disbursements, reopened a hotline between the two Koreas, restored family reunions, opened a joint liaison office, and received a UN sanctions exemption to conduct a joint survey for a potential inter-Korean railway.

Japan. Tokyo has also restricted commercial and diplomatic exchanges with North Korea, imposing sanctions starting in 2006. It lifted some of them in 2014 to induce Pyongyang to investigate the disappearances of Japanese nationals in the 1970s and 1980s.

Japan imposed new sanctions in February 2016, and again in August and December 2017, in response to North Korean nuclear and missile tests. The sanctions were extended by two years in 2019, a few days before they were set to expire. These measures freeze certain North Korean and Chinese assets, ban bilateral trade with North Korea, restrict the entry of North Korean citizens and ships into Japanese territory, and prohibit remittances worth more than $880. North Korea has refused to cooperate in the probe regarding the abducted Japanese nationals until these sanctions are lifted. Japan has also played a sanctions monitoring role, tracking North Korean cargo transfers in regional waters.

European Union. The EU first introduced sanctions against North Korea in 2006. Its supplemental economic restrictions ban the admission and residency of people who have facilitated the DPRK’s weapons program, deny North Koreans access to specialized training, prohibit the export of oil and luxury products, ban EU investment across North Korean economic sectors, and cap remittances to North Korea.

Australia. Like Japan and the EU, Australia has imposed sanctions since 2006. These sanctions prohibit commercial dealings with the North Korean national airline, Air Koryo; limit business with industries involved in extracting raw materials; ban eighteen sanctioned ships from Australian ports and waterways; and prevent North Koreans from traveling to Australia. They also include targeted sanctions on specific North Korean individuals and companies.

What are the challenges associated with sanctions?

Sanctions evasion. The biggest challenge is enforcement, which is the responsibility of individual states. National authorities often have insufficient resources to inspect shipments at ports of entry, carry out complex investigations, and perform other enforcement activities. Some individuals and entities, motivated by financial gain, do business with North Korea outside the law, and smugglers take advantage of lax inspections at ports in parts of Africa, the Middle East, and Southeast Asia. Black market activities often go undetected as shipments elude customs scrutiny and official reporting.

Weak measures. Some foreign policy experts say UN sanctions against North Korea tend to be watered down in order to garner the backing of China and Russia, which, as permanent members of the UN Security Council, have veto power. Both countries fear the possible outcomes of regime change in Pyongyang.

Emboldening Kim. Tougher sanctions could have the opposite of their intended effect, spurring North Korea to pursue nuclear advancement with greater insurgency. Kim Jong-un has already conducted more missile and nuclear tests since he took power in 2012 than his father and grandfather combined. Kim could interpret more sanctions as a threat to his regime’s survival, motivating him to take more belligerent actions, such as attacking U.S. or South Korean targets. The economic squeeze of sanctions did not stop Kim from declaring in his 2018 new year’s address that the country has “completed” its nuclear force.

Graph shows North Korean missile launches overtime with a significant increase in launches under Kim Jong-un between 2012 and 2019.

Futile pursuit. Some foreign policy experts believe that sanctions alone will do little to deter Pyongyang from advancing its nuclear weapons program. “No amount of sanctions is going to bring about the goal of denuclearizing or de-missiling North Korea,” writes CFR President Richard N. Haass. North Korea has vowed to maintain its arsenal until it no longer perceives a threat from the United States. Although Pyongyang destroyed tunnels at its nuclear test site and pledged to permanently dismantle its nuclear facilities, the country also appears to have also expanded missile operating sites. These conflicting moves reflect the challenge of assessing North Korea’s intentions.

Human costs. Sanctions are often felt most by ordinary families, not the elites who are their intended targets. “When the economy overall hurts they don’t cut the military first, they cut it last. They are very used to suffering economically and the regime is very good at it,” John Delury, a professor at Seoul’s Yonsei University, told CNN. Sanctions and extended periods of drought have left many of North Korea’s twenty-five million people malnourished and impoverished. Rural areas in particular lack medicine and clean water.

Are more sanctions the answer?

Many policy analysts see only a variety of poor options; none guarantee the denuclearization of North Korea, and some, if unsuccessful, could make matters worse. Many experts say that before new sanctions are considered, the existing ones should be better enforced.

Various countries and businesses have been found evading military and financial restrictions. Shipping and trading companies; fuel, mineral, and other national resource exporters; overseas employers of North Korean nationals; and financial services companies have been accused of circumventing sanctions. While some entities purposefully shirk sanctions, others may do so inadvertently, according to a report by the Institute for Science and International Security that found fifty-six countries have violated [PDF] UN measures in 2018. In recent years, the U.S. Treasury has designated Chinese and Russian banks and information technology companies, as well as Singaporean commodities companies, for facilitating finances for North Korea.

Disagreements remain over how to move forward. Some argue that there is room for far tougher sanctions against North Korea and those who profit from transacting with it. Others fear that expanding sanctions against Chinese entities could jeopardize the U.S.-China relationship and undermine bilateral cooperation on issues such as terrorism and climate change.

Still others argue that sanctions will take years to have a meaningful impact, and that any approach to North Korea will require incremental increases in pressure. Experts including CFR’s Snyder say that sanctions must be implemented in conjunction with other measures, such as diplomacy with Pyongyang and assurances by Washington to its allies in the region.

Washington should prioritize developing a roadmap with Pyongyang.
Eric Brewer, Center for a New American Security

Meanwhile, enforcement can be improved with enhanced training for authorities inspecting ships in international ports. Filling in the cracks in enforcement could force Pyongyang to change how it allocates its budget. As the United States couples sanctions with diplomatic efforts, “Washington should prioritize developing a roadmap with Pyongyang that lays out a step-by-step approach that provides rewards along the way commensurate with North Korean actions,” writes former National Security Council official Eric Brewer in Foreign Affairs.

Amber Duan contributed to this Backgrounder.

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Resources

U.S. Special Representative for North Korea Stephen Biegun speaks on U.S. policy at Stanford University.

This CFR Backgrounder details North Korea’s military might.

The Carnegie Endowment for International Peace tracks sanctions measures against North Korea.

The Arms Control Association outlines UN Security Council resolutions regarding North Korea.

The U.S. Treasury Department details sanctions against North Korea and provides guidelines for their legal interpretation.

Stephan Haggard and Marcus Noland explore the role of economic incentives in their book, Hard Targets: Sanctions, Inducements, and the Case of North Korea.

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