What President Obama Should (But Won’t) Do About North Korea’s Missile Test

[Update: The nations are not united. The U.N. Security Council fails to agree on the text of a very angry letter. You don’t say.]

[Afterthought: So can we conclude that the Obama Administration views even “soft power” as excessive force?]

Even for North Korea, today’s missile test was an especially flagrant, telegraphed, and premeditated provocation. Whether the missile carried a satellite or not, to launch it was a clear violation of two U.N. resolutions. That the U.N. is powerless to enforce its resolutions is already a matter of popular culture parody. Nor should it matter that the test was a technical failure, any more than erectile dysfunction should be a defense to a charge of indecent exposure. Still, we can take some comfort from the fact that two years after the first Taepodong II test failed, Kim Jong Il’s particular dysfunction hasn’t abated much.

Today, President Obama is saying what he has to say — that the North will face consequences for this test.

“This provocation underscores the need for action–not just this afternoon at the U.N. Security Council, but in our determination to prevent the spread of these weapons,” Mr. Obama said. “Rules must be binding. Violations must be punished. Words must mean something. [N.Y. Times]

Obviously, Kim Jong Il doesn’t think they do, and recent history is with him. I’d wager that in due course, Kim will be proven correct. As Andrei Lankov reminds us, extortion has worked for Kim Jong Il before.

Indeed, Obama’s only specific threat to North Korea was to bring it before the same U.N. Security Council that John Bolton persuaded to pass U.N. Security Council Resolutions 1695 and 1718 two and half years ago. Dig further, and you will see that in practice, U.N. action will amount to little more than renewed attempts to enforce these same resolutions, a travel ban, and freezing the assets of officials involved with the missile program (as if there is such a thing as independent wealth in North Korea). Even before North Korea’s test, China and Russia stated their opposition to new sanctions.

Obviously, Kim Jong Il would not have ordered this test if previous resolutions had been effective at deterring him. The resolutions themselves were not the problem; implementation was. UNSCR 1718 in particular contained some tough and potentially effective provisions. But the term “United Nations” has become an oxymoron, and several of its member states found it convenient to undermine those resolutions. As a result, they had no measurable effect on the North Korean economy, such as it is. China never made a serious effort to comply with 1718; it wants U.S. forces in the region to be distracted by North Korea; it wants Korea to stay divided; and it wants to continue its pillaging of the North’s resources. South Korea’s government invested billions of dollars in appeasing Kim Jong Il, although this aid has tapered off since the election of President Lee Myung Bak in 2008.

The great irony here is the degree to which our own State Department also undermined 1718. At the end of 2006, as John Bolton left the Bush Administration, President Bush ceded effective control over North Korea policy to Christopher Hill, President Obama’s nominee to be U.S. Ambassador to Iraq. For the sake of a disarmament agreement on which North Korea has since reneged, Hill ignored North Korea’s repeated violations of 1718 and signaled America’s own ambivalence to other nations. When North Korea violated 1718 by selling tanks to Ethiopia, State looked the other way, presumably on Hill’s urging. The most overlooked and potentially effective provision of 1718 was a requirement that U.N. member states “ensure” that any funds they sent to North Korea not be used for its WMD programs. Yet North Korea provided no such assurances when Hill returned $25 million in crime-tainted funds to North Korea, a transaction that may well have violated U.S. money laundering laws. Hill chose not to raise ongoing violations of 1695 and 1718 as North Korea built a new missile base, continued work on miniaturizing nuclear warheads, and continued to sell missiles throughout the Middle East. Hill also withheld revelations that North Korea had violated 1718 by building a nuclear reactor in Syria, and has never revealed just what mysterious cargo North Korea was recently caught shipping to Iran.

The Obama Administration now suggests that its deterrence of North Korea will begin with the enforcement or enhancement of these same resolutions. It’s difficult to invest much confidence in this strategy when President Obama and Senate Democrats are pushing to promote the very man who did so much to undermine them. Already, Obama’s new Special Envoy to the North is signaling that it will be business as usual:

Stephen W. Bosworth, Mr. Obama’s special envoy on North Korea, said that while the United States would seek to punish the North for the test, it was also prepared to resume six-nation talks with North Korea to persuade it to give up its nuclear weapons program.

“We must deal with North Korea as we find it, not as we would like it to be,” Mr. Bosworth said. “What is required is patience and perseverance. [NYT]

If U.N. action is insufficient and negotiations are a proven failure, it’s fair to ask what President Obama should do. The only available military option, aside from a more robust enforcement of the Proliferation Security Initiative, would have been the missed opportunity to shoot this missile down. (Speaking of which, I wonder why we’ve heard so little from William Perry and Ashton Carter lately. Back in 2006, they urged President Bush to destroy the last Taepodong II on the launching pad.)

Although U.N. sanctions alone will be insufficient to put real pressure on Kim Jong Il, our own Treasury Department has had proven success at targeting the North Korean regime’s finances and putting the regime under severe economic strain. North Korea’s hungry and underprivileged would probably escape most of the impact of sanctions. They benefit very little from the regime’s income anyway, and increasingly depend on the black market for their survival.

A parade of Democratic foreign policy experts will soon be trotted out to explain why America has no options for attaching a cost to North Korea’s behavior, but this is false. In addition to stricter enforcement of existing U.N. resolutions, the United States could:

– Designate the North Korean government to be an “entity of special concern” for money laundering, under Section 311 of the PATRIOT Act.

– Expand the use of Executive Order 13,382, a tool that the President could use to sanction and freeze the assets of persons or companies that aid WMD proliferation. Ideally, a more aggressive interpretation of 13,382 would also reach companies, including banks, that provide funds used for North Korea’s WMD programs.

– Welcome South Korea’s offer to join the Proliferation Security Initiative, and expand the use of the PSI to intercept North Korean shipments in violation of U.N. resolutions.

– Restore North Korea to the list of state sponsors of terrorism, from which it was stricken as a reward for a series of broken promises to disarm.

– Reimpose the trade sanctions that President Clinton relaxed to reward North Korea for its original missile moratorium.

– Divest U.S. pension funds from companies doing business in, or with, North Korea.

– Expand U.N. sanctions to ban the sale of North Korean gold — some of it likely mined in concentration camps — on the international markets.

– Ask a court to indict the notorious Bureau 39 of the North Korean Workers’ Party for financial crimes, including money laundering. I’ve been told on good authority that that indictment was complete and ready to go to a grand jury until political pressure got it pulled back.

Unlike U.N. action alone, recent experience tells us that these measures could work. Consider what happened in the 17-month period between September 2005 and February 2007, when the Treasury Department took decisive action against North Korea’s counterfeiting of our currency. Treasury applied Section 311 of the PATRIOT Act against Macau’s Banco Delta Asia (BDA), a small bank that was laundering the currency and the proceeds of North Korea’s counterfeiting operation. Treasury called BDA a “willing accomplice” to North Korea’s criminal activities, including counterfeiting and drug trafficking, and labeled it as an entity of “special concern” for money laundering. That single measure cut off BDA’s access to the international banking system and blocked one of the North Korean regime’s most important conduits for recouping the profits from its illegal activities and weapons sales abroad. Depositors rushed BDA, which only stayed afloat because Macanese authorities stepped in and blocked $25 million in North Korean assets. North Korean front companies’ income stream had been dammed. They sought new banks elsewhere, but Treasury followed them. Treasury’s action soon brought Kim Jong Il’s opulent palace economy to the brink of the same catastrophe that the rest of the North Korean economy reached 15 years ago.

Stuart Levey, Treasury’s Undersecretary for Terrorism and Financial Intelligence, soon expanded this campaign with visits to other nations, where he persuaded other states and banks to close questionable North Korean accounts. In January 2006, according to Japan’s Kyodo News Service, Kim Jong Il told Chinese President Hu Jintao that he feared that the sanctions would cause the collapse of his government. The following month, the Asian Wall Street Journal reported that Treasury’s action had “dealt a severe blow” to North Korea, “dried up its financial system,” and “brought foreign trade virtually to an end. In April, Levey predicted that the sanctions could have a “snowballing “¦ avalanche effect” on North Korea as other banks sought to cut their ties, creating “huge pressure” on the regime, and noted that sanctions had hit the North Korean elite especially hard. Soon, Kim Jong Il started selling off his nation’s gold reserves. Even a leader of North Korea’s small group of European investors conceded that “[t]he impact is severe.” Marcus Noland and Stephan Haggard, two of America’s foremost experts on the North Korean economy, later wrote that the sanctions “hit harder than most people realize,” and caused the black-market rate for North Korea’s current to plummet. They estimated that before the sanctions, North Korea’s criminal activity and arms sales accounted for as much as half of North Korea’s exports. After Treasury imposed sanctions, that share had fallen to just 15 percent.

In retrospect, it is probable that Kim Jong Il saved his regime by signing the February 13, 2007 agreement with Chris Hill and using Hill to get the sanctions lifted despite Treasury’s reservations. Not only did this breathtaking policy reversal extend the life of the world’s most odious regime, it also removed Kim Jong Il’s greatest incentive to disarm and assured that the U.S. diplomatic initiative would fail. Today, the architect of Kim Jong Il’s salvation and the saboteur of Obama’s last reserves of leverage is the same man Obama would now put in charge of our most important diplomatic mission.

There is one faintly optimistic glint in this bleak picture. President Obama recently renominated Stuart Levey, to continue serving in his administration. Obama ought to know that China won’t allow tough U.N. sanctions to pass, but if he is serious about attaching a cost to North Korea’s provocations, he doesn’t have to look far.