Economic Sanctions against North Korea: The Wrong Way to Achieve the Wrong Goal?

The Democratic People's Republic of Korea (DPRK) has been subject to sanctions nearly continuously since its foundation in 1948. First, it was sanctioned as a part of the Soviet bloc, a situation that was amplified by the Korean War. Later, North Korea suffered from de facto sanctions as a result of its refusal to side with either of the two contenders in the Sino-Soviet struggle for leadership in the socialist camp. Since 1993, and in particular since its first nuclear test in 2006, the country has been sanctioned both by the United Nations and by individual countries such as the United States because of its nuclear weapons program. This essay will focus on events in the last decade and address the following questions: What have been the domestic political and economic impacts of the current sanctions on North Korea? What has the Kim regime done to evade or mitigate their impact? Can sanctions be effective and compelling?

The Domestic Political and Economic Impacts of the Current Sanctions on North Korea

When considering the effectiveness of sanctions against North Korea, it is important to understand the long history of such measures. The most influential study on the topic argues that sanctions have the greatest chance to achieve their goals if they are imposed quickly and decisively.¹ In the North Korean case, however, they have been imposed slowly and gradually. This is exemplified by a brief look at the sanctions passed by the UN Security Council after the first nuclear test, spanning a total of eight resolutions over eleven years: 1718 (2006), 1874 (2009), 2087 and 2094 (2013), 2270 and 2321 (2016), and 2371 and 2375 (2017).²

In addition to limitations on the travel of certain individuals, we can identify three target areas of the sanctions imposed since 2006: (1) the import of key military hardware and technology, such as aluminum tubes, with the aim of directly curtailing the nuclear weapons program, (2) the import of luxury goods, such as French cognac, based on the questionable assumption that the North Korean leader needs to hand out expensive presents to his followers to ensure their loyalty, and (3) the export of key products of the domestic economy, such as anthracite coal, seafood, and textiles, as well as labor, to minimize the inflow of hard currency into North Korea.³

The underlying logic of Western sanctions against North Korea has changed substantially over time. While the first objective, as described above, directly targets military goods, the other two focus on influencing the mood of the people in North Korea, in the hope that this will create sufficient domestic pressure for policy change. The sanctions on the import of luxury goods try to hurt the elite, while limitations on exports attempt to minimize North Korea's access to hard currency, which leads to a number of consequences, including the reduced capacity to import food and consumer goods.

Measuring the effects of a given policy is methodologically tricky. While it is possible to show a correlation between sanctions and various social and economic developments in the target country, it is very difficult, if not impossible, to prove actual causation. The evidence presented below thus needs to be taken with a substantial grain of salt—both when it points at effects and when it suggests that they are either weak or lacking.

Sanctions and Economic Growth

One area to look for the economic effects of sanctions is in economic growth. In the case of North Korea, sanctions aim to change the behavior of the government in a field that it regards as a key priority, so to be effective, sanctions must have a noticeable impact.⁴ North Korea does not publish its GDP figures or growth rates, but the report on the state budget from the annual parliamentary sessions can be used as a proxy.⁵ Considering that the North Korean economy is almost completely state-owned, the budget—despite omissions for strategic reasons—reflects the conditions of the overall economy.

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