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Sanctions on north korea
Working Paper

Series

WP 09-4

July 2009

Sanctioning North Korea: The Political Economy of
Denuclearization and Proliferation
Stephan Haggard and Marcus Noland
Abstract
As a small country dependent on foreign trade and investment, North Korea should be highly vulnerable to external economic pressure. In June 2009, following North Korea’s second nuclear test, the UN Security Council passed
Resolution 1874, broadening existing economic sanctions and tightening their enforcement. However, an unintended consequence of the nuclear crisis has been to push North Korea into closer economic relations with China and other trading partners that show little interest in cooperating with international efforts to pressure North Korea, let alone in supporting sanctions. North Korea appears to have rearranged its external economic relations to reduce any impact that traditional sanctions could have.
Given the extremely high priority the North Korean regime places on its military capacity, it is unlikely that the pressure the world can bring to bear on North Korea will be sufficient to induce the country to surrender its nuclear weapons.
The promise of lifting existing sanctions may provide one incentive for a successor government to reassess the country’s military and diplomatic positions, but sanctions alone are unlikely to have a strong effect in the short run. Yet the United
States and other countries can still exercise some leverage if they aggressively pursue North Korea’s international financial intermediaries as they have done at times in the past.
Keywords: sanctions, North Korea, nuclear weapons
JEL Codes: F51, P33, P30
Stephan Haggard is the Lawrence and Sallye Krause Professor at the University of California, San Diego Graduate School of International Relations and Pacific Studies. He is the author of The Political Economy of the Asian Financial Crisis (2000) and coauthor of The Political Economy of Democratic Transitions (1995) and Famine


References: Bechtol, Bruce. 2009. Creating Instability in Dangerous Global Regions: North Korean Proliferation and Support to Terrorism in the Middle East and South Asia Carlin, Robert L., and Joel S. Wit. 2006. North Korean Reform: Politics, Economics, and Security. Adelphi Paper No Cho, Myung-chul, et al. 2005. The Increase of North Korea’s Dependence on China and Its Implications of South Korea Haggard, Stephan, and Marcus Noland. 2007a. Famine in North Korea: Markets, Aid, and Reform. New York: Columbia University Press. Haggard, Stephan, and Marcus Noland. 2007b. North Korea’s External Economic Relations. Peterson Institute for International Economics Working Paper 07-7 Economics. Available at www.piie.com (accessed on July 13, 2009). Haggard, Stephan, and Marcus Noland. 2009. The North Korean Food Situation: Too Early to Break Out the Champagne Hufbauer, Gary Clyde, Jeffrey J. Schott, Kimberly Ann Elliott, and Barbara Oegg. 2007. Economic Sanctions Reconsidered, Third Edition Marumoto, Mika. 2008. Draft Final Report: DPRK Economic Statistics Project. Washington: US-Korea Institute, Nitze School of Advanced International Studies 11. For a more detailed analysis of the 2008 harvest, see Haggard and Noland (2009). Available at http://opencrs.com (accessed on July 13, 2009). Noland, Marcus. 2000. Avoiding the Apocalypse: The Future of the Two Koreas. Washington: Institute for International Economics. Noland, Marcus. 2009a. The (Non) Impact of UN Sanctions on North Korea. Asia Policy 7 (January): 61–88. Noland, Marcus. 2009b. Telecoms in North Korea: Has Orascom Made the Connection? North Korea Review 5, no Noland, Marcus, and L. Gordon Flake. 1997. Opening Attempt: North Korea and the Rajin-Sonbong Free Economic and Trade Zone Toloraya, Georgy. 2008. North Korea Now: Will the Clock Be Turned Back? Washington: Brookings Institution United Nations Security Council (UNSC). 2006. Resolution 1718 (2006). New York: United Nations. Available at www.un.org (accessed on July 13, 2009). United Nations Security Council (UNSC). 2009. Resolution 1874 (2009). New York: United Nations. Available at www.un.org (accessed on July 13, 2009). North Korea’s direction of trade: top ten trading partners, 2004–07 North Korean imports
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