On September 11, 2017, the UN Security Council unanimously imposed new sanctions on North Korea. The move came only days after Pyongyang launched an underground nuclear test that may have been the detonation of a hydrogen bomb. The American Ambassador to the UN, Nikki Haley, announced the new sanctions by declaring that “today, we are saying the world will never accept a nuclear armed North Korea.”

The UN resolution imposing the sanctions was written by the United States, but only after the initial draft was withdrawn in the face of objections from Russia and China. Both countries reportedly agreed to vote in favor of the resolution only after provisions were removed that would have imposed a total embargo on oil, a total freeze on North Korean assets, and a travel ban for North Korean leader Kim Jong In.

According to initial reports, the resulting sanctions contain the following changes:

  • Imposes a 55% reduction in imports of refined petroleum products to North Korea
  • Bans all textile exports (which accounts for $760 million in income to the country annually)
  • Prohibits North Korean workers overseas from earning wages that finance the regime

Some anecdotal reports indicate that the new sanctions are already causing some internal economic pain to the country, including rising prices and depressed supplies. But the new North Korea sanctions face three main challenges:

Ambivalent partners. The new provisions rely heavily on implementation by China and Russia, which are North Korea’s largest trading partners. And both countries showed in the UN negotiations leading up to the new Security Council resolution that they value their trading relationships with North Korea. Overcoming their reluctance to cut off valuable trade may continue to prove difficult, which would continue to blunt the effectiveness of sanctions.

Opportunistic adversary. Even if the sanctions do cause pain in North Korea, Kim has proven adept at protecting himself (as have his predecessors) by concentrating the pain on the general population while protecting the power and privilege of the regime. Relatedly, as with the Cuban sanctions and other programs, the dictatorship uses the hardships to further entrench the local narrative of a powerful leadership protecting a vulnerable population from a cruel outside world. This narrative helps entrench the dictatorship and consolidate its power.

Need an end game. There must be a coordinated strategy, and there must be a coherent plan for the end game. The stated goal of sanctions is to end Pyongyang’s nuclear weapons program. As demonstrated in the case of Iran (on which we have reported here), nuclear agreements are difficult. Here an end-game depends heavily on President Trump’s deal-making ability, of which he makes much. But there has been some justifiable skepticism about the applicability of his particular skill set to the world of policy and politics.

Your Sheppard Mullin sanctions team will continue to keep a close eye on these developments, and keep you posted.