Price of resuming talks with North Korea

By Troy Stangarone

One challenge that negotiators face is determining under what conditions are they willing to resume negotiations with North Korea on its nuclear weapons and missile programs.

At times in the past, the United States and South Korea have insisted that North Korea demonstrate a commitment to dismantling its nuclear weapons. In an effort to advance talks, the Biden administration, however, has taken a more flexible approach and offered to meet with North Korea unconditionally.

In contrast to the United States' flexibility, North Korea is reported to have demanded that specified sanctions be lifted in advance of talks.

If reports based on a National Intelligence Service briefing to the National Assembly are correct, North Korea is conditioning talks on the lifting of sanctions in three areas ― its ability to export metals, loosening restrictions on its importation of refined petroleum products, and an easing of a ban on imports of luxury goods.

Each of these sanctions impacts North Korea in a different way. A series of U.N. sanctions since 2016 have prohibited North Korea from exporting metals such as iron, lead, zinc, copper, nickel and silver. These and other sanctions have severely constrained the regime's ability to earn the hard currency it needs to fund its weapons programs and make other international purchases. Exports of metals were worth around $220 million for North Korea prior to the U.N. sanctions that have been in place since 2016.

Sanctions on North Korea's ability to import refined petroleum products, however, constrain the domestic economy and agriculture by limiting Pyongyang's access to refined fuels. Since 2017, U.N. sanctions have limited North Korea's imports of refined petroleum to 500,000 barrels per year. North Korea has sought to evade these restrictions through smuggling, and the U.N. Panel of Experts suggests that these efforts have allowed the regime to obtain levels of refined petroleum that exceed the amount that it is legally allowed to be imported under U.N. sanctions.

U.N. sanctions also include restrictions on the sale of luxury goods to North Korea. These predate the U.N. sanctions that have been in place since 2016, but have been viewed by the international community as a means to ensure that the elite in North Korea pay a price for the regime's pursuit of nuclear weapons.

North Korea's demand for sanctions relief in exchange for talks likely reveals that its position on negotiations remains unchanged since the Trump administration. After working-level talks in Stockholm, North Korea suggested that negotiations would not continue unless the United States made significant concessions. While those concessions were not spelled out at the time, they likely included some of the sanctions relief that Pyongyang sought during the breakdown of talks in Hanoi.

After U.N. sanctions were strengthened beginning in 2016, the Bank of Korea estimated that North Korea's economy contracted by 3.5 percent in 2017 and an additional 4.1 percent in 2018. Those economic challenges have only grown due to North Korea's decision to severely constrain trade due to COVID-19, and the economy is estimated to have declined by an additional 4.5 percent. Under these circumstances, it is not surprising that Pyongyang might be reluctant to resume talks with the United States unless economic benefits are provided in advance of any negotiations.

With the Trump administration having turned down a previous offer from North Korea in Hanoi to dismantle parts of its nuclear program in exchange for more robust sanctions relief, it is unlikely that the Biden administration would agree to provide a lesser level of relief in exchange for merely the resumption of talks.

Recent remarks by U.S. Ambassador to the United Nations Linda Thomas-Greenfield would seem to suggest as much. While noting that the United States supported finding ways to ease humanitarian assistance to North Korea, Ambassador Thomas-Greenfield also said it is "important to remember that sanctions did not create the humanitarian crisis."

While sanctions relief may not be on the table, the inclusion of an easing on the importation of luxury goods in North Korea's demands may be revealing. It suggests that while the large-scale smuggling of items such as coal or petroleum documented by the U.N. Panel of Experts is something that the regime has been able to maintain, it has faced more significant challenges in acquiring the luxury goods that are needed to maintain the loyalty of the elite. It also suggests the potential for growing discontentment among the elite at the current situation.

While the Biden administration is unlikely agree to talks conditioned on sanctions relief, North Korea's demands in themselves give us insight into how the pandemic has impacted the regime. The challenge for negotiators knowing that is finding a solution that would entice North Korea back to the negotiating table short of providing sanctions relief.

Troy Stangarone (ts@keia.org) is the senior director of congressional affairs and trade at the Korea Economic Institute.