Treasury Official: NK Sanctions Are Leaving a Mark

Last week, we heard that Kim Jong Il was trying to wait out President Bush. This week, a new report suggests that the converse may also be true:

The U.S. Treasury Department says its ongoing financial sanctions against North Korea put “huge pressure” on the regime that could have a “snowballing … avalanche effect.” Under Secretary Stuart Levy was quoted in the latest edition of Newsweek, which analyzed the possible effect on the regime from Washington’s identification of the Banco Delta Asia in Macau as Pyongyang’s “primary money-laundering concern” and other financial sanctions last September.

“In today’s interconnected financial world, an official U.S. move to blacklist a foreign bank would be the kiss of death, since any financial institution doing business in dollars needs to hold accounts in correspondent U.S. banks in order to complete transactions,” the weekly said. “Washington has finally found a strategy that is putting real pressure on the regime — going after its sources of cash, all across the world.”

Better yet, Treasury thinks the sanctions are hurting those whose pain ought to please us:

“From what we’ve seen, this has been affecting the North Korean elite in particular,” it quoted an expert as saying. According to a U.S. government document Newsweek says it obtained, Kim is reported to have told Chinese President Hu Jintao during a visit to China in January that his regime might collapse due to the U.S. crackdown on its financial transactions.

Later, the report says that the Bush Administration began its program of economic pressure shortly after President Bush took office. I declare myself completely unconvinced about that. It sounds like the self-serving statement of an administration that’s been gridlocked for six years and couldn’t decide on a consistent policy. Now that North Korea’s complete lack of seriousness about diplomacy is beyond question, we’ve decided to cut Roh, Chung & Co. adrift, and to cut Kim Jong Il off. Better late than never, I suppose, but is it too late?

Says Levy: “We’re just starting.”

Things have indeed been accelerating, but I’m somewhat skeptical that this has already had that significant an impact, given the North Korean regime’s opacity and surprising resiliency. Signs I will look for include significant slowing in North Korea’s surviving industries, a rise in defections by members of the elite, and the adoption by North Korea of a dramatically more flexible diplomatic position (which won’t last long). Otherwise, it’s entirely possible that the statement is designed to make this administration sound tougher than it has been.