U.S. President Donald Trump holds up the document that he and North Korea leader Kim Jong Un just signed at the Capella resort on Sentosa Island in Singapore. (Source: PTI)

Why Trump Holds the Cards on North Korea Sanctions

(Bloomberg) -- In October, President Donald Trump slapped down South Korean efforts to ease sanctions on North Korea, saying it couldn’t be done “without our approval.” He’s not far off. The U.S.’s veto on the United Nations Security Council and its status as Seoul’s security guarantor give it the power to keep the harshest sanctions in place for as long as Trump wants. Still, he’s facing growing calls from China, Russia and South Korea to ease pressure on Kim Jong Un, as they seek to advance their own interests in Pyongyang.

1. What sanctions does Kim face?

The Security Council has passed 10 rounds of sanctions since 2006, including a flurry of measures that Trump secured with China’s support last year. Today, about 90 percent of North Korea’s exports are banned, including coal, iron ore, seafood and textiles. Its purchases of crude oil and refined petroleum products have been capped. The U.S. and its allies have piled on their own unilateral sanctions, including travel bans and asset freezes on North Korean officials. South Korea’s are among the most stinging, banning tourism and cultural exchanges and North Korean ships from its waters.

2. What are sanctions doing?

Reports from visitors, diplomats and outside analysts suggest North Korea’s economy is suffering but far from collapse. Estimates from South Korea’s central bank show its gross domestic product contracted 3.5 percent last year. Seoul National University Professor Kim Byung-Yeon told Japan’s Nikkei newspaper on Oct. 25 that he expected output to shrink by at least another 5 percent this year. Moreover, the embargo keeps Kim from attracting the outside investment necessary to support his modernization plans, prompting him to lash out at “hostile forces” who are “foolishly keen on vicious sanctions.”

3. Who wants sanctions lifted?

While the Trump administration wants to preserve “maximum pressure” until Kim shows a greater commitment to denuclearize, China and Russia -- both veto-wielding Security Council members -- have called for easing sanctions to reward moves he’s already made. South Korean President Moon Jae-in joined the chorus as he and Kim push relations between the two rivals to historic highs. Trump’s rebuke forced Moon to walk back a suggestion that South Korea could unilaterally repeal a sweeping sanctions package from 2010.

4. What would it take to ease sanctions?

The UN resolutions demand that North Korea “immediately abandon all nuclear weapons and existing nuclear programs in a complete, verifiable and irreversible manner,” a standard few non-proliferation analysts believe Kim would ever accept. Although the Trump administration has signaled that it might settle for “final, fully verified denuclearization,” it hasn’t explained what that means. And Trump holds the cards, since the U.S. can veto any resolution it doesn’t like. Moon could still repeal South Korea’s penalties, but many of those measures have been superseded, and the rebuke from Trump shows Moon doesn’t think the payoff is worth the damage to their alliance.

5. What can China do?

Chinese President Xi Jinping’s support was crucial to helping Trump secure the UN sanctions, and now that they’re warring over trade, the U.S. president has accused Beijing of relaxing the pressure. While there have been reports of easier inspections at the North Korean border, China denies the claims and vows to uphold the UN penalties. Evading sanctions could carry serious risks for Xi, undercutting his efforts to promote the UN as the best venue to settle international disputes. He might also prompt retaliatory measures from Trump, such as U.S. sanctions on Chinese state-owned banks.

6. What options does Kim have?

With the U.S. wielding procedural power, Kim has exploited his political and diplomatic levers to build pressure for sanctions relief without degrading his arsenal. Chief among those is Trump’s desire to recreate his peacemaking headlines with a second summit. North Korea has warned the Trump administration that its “gangster-like” disarmament demands could jeopardize the relationship, with one state media commentary published Oct. 20 accusing the U.S. of “duplicity and two-faced behavior.” North Korea has put similar pressure on Moon, who wants to preserve a detente with Kim that has seen their names floated for the Nobel Peace Prize.

7. What are Moon’s options?

Facing a recalcitrant U.S., Moon has taken his case for sanctions relief to the capitals of Europe. He’s also initiated a series of projects with North Korea that required waivers from a UN committee that polices sanctions, such as hosting Olympic athletes, sending materials to reopen a cross-border military hotline and organizing reunions between Korean families separated by war. He secured a similar waiver from the U.S. to let two top North Korean officials -- Kim’s sister, Kim Yo Jong, and No. 2 Kim Yong Chol -- attend the Winter Olympics in February in South Korea.

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