INTERVIEW US advised to sanction Chinese banks

This is the fourth in a series of interviews with international experts on North Korea to see how its nuclear issues will unfold down the road and seek ways to secure stability on the Korean Peninsula. — ED.

North Korea’s fear-based control system is showing cracks

By Kim Jae-kyoung

To make North Korea behave, the United States and allies should target Kim Jong-un’s “critical vulnerabilities,” said Tara O, an adjunct fellow at the Pacific Forum CSIS (Center for Strategic and International Studies).

She said that Kim’s regime is losing its legitimacy and becoming more vulnerable because its control system, based on fear and information control, is cracking as a result of economic difficulties and the inflow of outside information.

“We can make far more aggressive effort in drying up the regime’s financial support, which includes secondary sanctions against Chinese banks and front companies,” O said in an interview.

O, the author of “Collapse of North Korea: Challenges, Planning and Geopolitics of Korean Unification,” said the sanctions against North Korea are weaker than those against Iran and Syria, and there is room to tighten the screws further.

“Certain Chinese individuals, companies and banks help sanctioned North Korean entities conduct dollar transactions, and they are ripe for secondary sanctions,” she said.

Based on her expertise on the Korean contingency and unification, she explained how the U.S. can block or penalize the involved banks through secondary sanctions without China’s help.

“If China is unwilling to crack down on North Korean access within the Chinese financial system, then the U.S. Treasury can disrupt the correspondent relations of these Chinese banks and companies that work on behalf of or support North Korean entities linked to weapons of mass destruction (WMD) and proliferation,” she said.

In September 2016, the U.S. Justice Department charged Chinese nationals who used front companies to open Chinese bank accounts, which then conducted dollar transactions through the U.S. financial system on behalf of a North Korean bank under sanctions.

“The Chinese banks must use correspondent banks in the U.S. to clear dollar transactions, thus they fall under U.S. jurisdiction,” she said.

“Without the ability to transact in dollars, these banks and related firms could go bankrupt, and if large enough in scale, significantly affect the Chinese economy, and that is a big stick,” she said.

According to her, the previous U.S. administration took a slower approach to secondary sanctions, because it did not want to strain its relations with China.

The former editor-in-chief of the International Journal of Korean Studies said the Trump administration may use more powerful and effective financial and enforcement measures available.

“I believe President Trump is far more willing,” she said. “With the current administration, I think there’s the political will to devote more resources internally toward tracking and finding the illicit funding sources that support North Korea’s WMD program.”

“Congress has also been more active in passing laws to strengthen sanctions. So solving ‘the problem without them’ does not necessarily mean a military attack.”

Another effective option available is more efforts to get information into North Korea.

“Kim Jong-un fears outside information, because it would challenge the official narrative that deifies the Kim regime and demands utmost loyalty,” she said.

“There are already defector-run organizations that are pursuing these options and both the U.S. and South Korea could support them.”

Trump won’t meet Kim

The retired U.S. Air Force officer, who worked on numerous assignments in Asia, Europe, and the U.S., including the Pentagon and U.S.-South Korea Combined Forces Command, said Trump will not meet with Kim Jong-un for talks.

“I don’t think there will be talks just to talk. North Korea dealing directly with the U.S. without South Korea has been Pyongyang’s longstanding objective,” she said.

“Pyongyang wants to portray Seoul as a U.S. puppet, so it would claim it is the only legitimate government of the peninsula, not Seoul, so having direct talks with Kim would be a boost for him, an award in itself, which is not likely forthcoming.”

O called for South Koreans to take the North Korean nuclear issue more seriously and remain alert over the rising threat from the North, noting that outside of the military in South Korea, the public at large seems unaware of the threat.

“As a democracy, it is the public perception that drives policy, and as long as the public does not see North Korea as a threat, there’s no action that South Korea would want to take, in which case it would take a backseat,” she said.

“North Korea has not changed its goal of unifying the Korean Peninsula under its own totalitarian system. So I think there needs to be a robust debate about the nature of the North Korean threat among the public.”

Regarding diplomacy with China, she said South Korea should understand China’s interests and goals in the Korean Peninsula.

She pointed out that although China comprises 90 percent of North Korea’s trade it has been reluctant to use this leverage, because China places higher priority on having a buffer state over preventing a nuclear armed North Korea.

“China has been an important economic trading partner, but as China’s economic retaliation against South Korea for its THAAD deployment decision showed, China will only do so much that serves South Korea’s interest and China does not hesitate to take aggressive action when their interests diverge,” she said.

Is NK collapsing from within?

O, who serves on the board of directors of the International Council on Korean Studies, said the Kim Jong-un regime is on course toward collapse.

“Any regime, even an authoritarian one, needs legitimacy. The Kim regime bolsters its legitimacy through fear and information control,” she said.

“North Korea uses multiple and overlapping security apparatuses to watch and control its population. With the emergence of markets and rampant bribery, the fear and control system is showing cracks. The greater scale and frequency of purging of the elites is also weakening this control.”

Because the state cannot reform fundamentally toward private ownership of the means of production, she said, “The state can only do so much, and the fissure between the state’s need for control and market tendencies will become greater over time.”

On the information front, more outside information is getting into North Korea, putting a dent on its control system.

“Despite harsh punishment, North Koreans watch South Korean dramas, hear foreign broadcasts and obtain external news,” she said.

“The outside information competes with the official narrative, weakening its legitimacy. I think this is one area where we need to place a lot more emphasis.”