Sanctions Would Cost U.S. Almost Nothing

The U.S.’s attempt to make North Korea a normal country, compliant with generally-accepted rules of the game, by erasing its name from the list of State Sponsors of Terrorism was once again shattered with a North Korean nuclear test. North Korea also used up a bargaining chip, effectively reducing America’s cost of taking tough measures on North Korea.

On June 7, U.S. Secretary of State Hillary Clinton said that given North Korea’s nuclear test and missile launch, the United States is considering the re-inclusion of North Korea into the State Sponsors of Terrorism list.

This agrees with the speech that President Obama made to commemorate the 65th anniversary of the Normandy landings the day before. He said, “We do not intend to continue a policy of rewarding provocation.”

Several facts indicate that America is taking tough countermeasures against nuclear tests. First, the U.S. is seeking multilateral sanctions. Currently, the U.S. is discussing with council members of the United Nations Security Council (UNSC) all possible punishments for North Korea, including large-scale financial sanctions. It’s expected that these measures will face much less resistance than they did at the time of the first North Korean nuclear test. The second is the implementation of unilateral punishment, possibly even including putting North Korea back on Terrorism Sponsors list. The chance that this will happen is increasing.

The so-called list of State Sponsors of Terrorism is a blacklist created by the U.S. Department of State in December 1979, which claims that the countries on this list are directly or indirectly supporting terrorist organizations and terrorist acts in various forms.

According to U.S. “trading-with-the-enemy” policy and relevant statutory requirements, America has placed a range of sanctions on the countries on this list, including: the prohibition of the exportation of any weapons, restraining exports of dual-use goods or services, especially for those which could significantly improve the listed countries’ military power or support terrorist organizations’ capabilities, a requirement that the exporter must give Congress 30 days’ pre-export notification and the prohibition of any financial support.

In addition, there are financial and other various sanctions: The U.S. will organize an objection against the World Bank and other international financial institutions’ loans to the listed countries; in a civil case put forward in U.S. courts by the victims of terrorist attacks, America will abolish the listed countries’ diplomatic personnel’s diplomatic immunity, and they must give evidence at the trial; income made in listed countries by U.S. companies and individuals will not be allowed any deductions; goods from listed countries cannot enjoy duty-free treatment in the United States; the U.S. government is entitled to forbid financial dealings between American citizens and the listed countries without approval of the Federal Finance Department; prohibition of contracts between the Department of Defense and companies from listed countries of a value over 100,000 dollars.

As shown, once added into this list of State Sponsors of Terrorism, these countries are isolated from the United States and even most of the world in economical and financial terms. The only thing they can rely on is self-dependence or a “through thick and thin” attitude with a small number of countries in similar situations. In short, inclusion in this list means large-scale comprehensive sanctions by the United States.

North Korea was included in this list by the United States in 1988 when America accused North Korea of allowing a South Korean airliner to crash over the Indian Ocean on the eve of the Seoul Olympics, causing 120 deaths, and of harboring Japanese Red Army sky-hijackers when they fled to North Korea.

On June 26, 2008, in accordance with a joint document from the Six-Party Talks, North Korea submitted a declaration of its nuclear program and the United States started the procedure to erase DPRK from the list. North Korea was officially removed from the list on October 11, 2008.

The U.S. Office of the Coordinator for Counterterrorism annually submits Country Reports on Terrorism to Congress, listing terrorist organizations and terrorist activities of the previous year, including the list of State Sponsors of Terrorism. In this year’s report on April 30, this list consisted of four countries: Cuba, Iran, Sudan and Syria. It is the first time that North Korea has not appeared in 20 years. However, will this remain the case next year?

It should be noted that the focus of U.S. policy with North Korea is making sure the Korean Peninsula is nuclear-free through a multilateral framework (the Six-Party Talks) instead of through a bilateral framework (U.S.-DPRK negotiations). America will never agree to a nuclear-armed North Korea, but also doesn’t want to face DPRK alone because it wants the surrounding countries to shoulder the same responsibility.

Whatever North Korea’s motive behind their second nuclear test – it could be to build nuclear weapons or a desire to direct U.S.-North Korea talks (and obtain safety guarantee from the United States and the normalization of the U.S.-North Korea relationship) – it is of no concern to America.

What the U.S. cares about is the second nuke test itself. America expects North Korea to act within America’s rules. Since North Korea agreed to declare its nuclear program according to U.S. rules, the United States provided rewards. The second North Korean nuke test undermined America’s guidelines; therefore, America will deliver punishment, including changing the list of State Sponsors of Terrorism.

Before North Korea’s second nuke test, because of the extreme reaction North Korea might have, South Korea hadn’t been very clear about joining the Proliferation Security Initiative. North Korea’s second nuclear test, however, is the most extreme action South Korea could imagine. Thus, for South Korea, their northern neighbors have now run out of bargaining chips, which reduced South Korea’s cost of joining the Proliferation Security Initiative.

It is likely that America’s exception of North Korea from the list of State Sponsors of Terrorism was voided by the second nuke test. From an American standpoint, North Korea has no chips left, effectively reducing the cost of tough U.S. sanctions (including the re-inclusion onto the terrorist state list and large-scale comprehensive sanctions) on North Korea.

At the moment, South Korea’s entry into the Proliferation Security Initiative has been confirmed. What will happen next?