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Understanding North Korea’s Fifth Nuclear Test and Sanctions

By Troy Stangarone

North Korea has conducted its fifth nuclear test, the second test in less than a year. In combination with its efforts to advance its ballistic missile programs and develop second strike capabilities, Pyongyang has demonstrated that it is committed to developing a usable nuclear warhead in spite of international pressure to halt its programs and return to talks. In light of this, the question remains how the international community should respond.

Initial indications are that the latest test was in the range of 10 kilotons, roughly twice the explosive yield of North Korea’s fourth test in January and 5 kilotons less than the bomb that was dropped on Hiroshima. Unlike the January test where North Korea claimed to have successfully tested a hydrogen bomb, this test does initially seem to indicate a significant step forward in Pyongyang’s development of nuclear weapons.

Is THAAD Responsible for North Korea’s Latest Nuclear Test?

While China has condemned North Korea’s latest, it also suggested that South Korea’s decision to deploy the Thermal High Altitude Area Defense (THAAD) had contributed to North Korea’s decision to conduct a nuclear test. Given that THAAD is a defensive system and that North Korea’s missile and nuclear programs predate the decision to deploy THAAD by decades, this is clearly not the case.

As with prior nuclear and missile tests, the most significant driving factor for North Korea was likely the fact that it had reached a point where its technical research required a test to determine if a real breakthrough had been made in its weapons development process.  North Korea’s test has demonstrated that the regime has not been significantly affected by sanctions to date, has made the strategic decision that the cost of sanctions does not outweigh the strategic benefits of a verifiably workable nuclear weapon.

The Challenge for China

From China’s perspective handling the North Korean nuclear issue is complex because it has different objectives at play. In the current case, perhaps the only positive side to North Korea’s fifth nuclear test is that Pyongyang refrained from conducting the test during the G-20. While North Korea test-fired three ballistic missiles during the G-20, a nuclear test while China hosted world leaders during a major summit would have been seen as a more direct slight to China.

Moving forward, China will face pressure to do more to convince North Korea to return to talks and increase its enforcement of sanctions.    China will find it difficult to manage its twin goals of joining the international community to rein in North Korea while at the same time thwarting sanctions that could threaten the regime’s stability.  This could become increasingly difficult if North Korea has made the strategic decision to develop its nuclear program despite the costs. At the same time, with each additional test North Korea backs China further into a corner in which more of its policy options become unpalatable.

One policy challenge for China may now be how to gracefully back down on its demands on THAAD. With this most recent nuclear test, in combination with the most recent missile tests, South Korea is likely to push forward with THAAD as soon as possible in light of the clear strategic need to respond to North Korea’s growing threat.  China will want to avoid the appearance that its inability to stop South Korea from deploying THAAD constitutes a rupture between Beijing and Seoul.

What About Sanctions?

The international community has largely responded to North Korea’s nuclear tests with a combination of sanctions and efforts to return to talks. After the January nuclear test, the United Nations, the United States, and other countries imposed a series of new sanctions on North Korea. The goal of these sanctions was to increase pressure on Pyongyang to convince the regime to halt its tests and return to negotiations over its nuclear and missile programs. While it is too early to determine if UN Resolution 2270 and other sanctions will be effective in the long-run, there are some clear loopholes that the international community could look to tighten as it considers how to shape any new sanctions resolution in response to the latest nuclear test.

Since 2270 was implemented, there has been little change in North Korea’s trade with China. North Korean exports to China in the second quarter of this year were only down 4 percent compared to the first quarter (not seasonally adjusted) and 14 percent year-on-year. This likely reflects a decline in the export price of coal rather than the effect of sanctions, however, because of an exception placed in the sanctions allowing for the continuation of “livelihood” trade. Whether China is taking an overly broad definition of livelihood trade or they need to see a direct tie between trade and the weapons program before cracking down, the fact is trade has continued largely uninhibited. Tightening up or removing the “livelihood” exception would be one step that the international community could take to increase the pressure on North Korea.

Two other areas where the sanctions could be improved relate to the Rason free trade zone and to luxury goods. During the last round of negotiations, Russia specifically sought to have Rason exempted from the sanctions so it could build its trade of resources, such as coal, from its Far East to South Korea and Japan. However, South Korean sanctions prohibit ships that have traveled to North Korea in the last 180 days from entering South Korean ports. With this in mind, closing this loophole to preclude future trade would be significant.

If sanctions are going to convince North Korea to back away from its weapons programs, they need to filter through the political system in a manner that will place pressure on the regime to reconsider its course. In a democratic state, this mechanism would largely be the political process, whereby groups impacted by the sanctions would lobby the government for changes and potentially elect a government more willing to seek accommodation with the international community. As North Korea does not allow either free speech or democracy, sanctions need to be able to impact the wellbeing of those in the decision-making process.

One mechanism to achieve this would be to limit the importation of luxury goods that maintain the lifestyle of the elite members of the regime. UN sanctions to date have largely allowed states to provide their own interpretations of what luxury goods are. That has largely failed to stem the flow of luxury items into North Korea. Developing a comprehensive list of prohibited items would be a significant step forward, though any list must be accompanied by strict inspections of all cargo to North Korea as required by 2270. Otherwise, a luxury goods ban could have the unintended effect of strengthening the regime by increasing its control over the flow of luxury items.

Another area that could face scrutiny is North Korea’s use of overseas laborers to generate income for the regime. While there have been reports that North Korea generates significant income from the laborers, the figures are likely significantly smaller than the $2.3 billion figure that has been reported. Additionally, banning the export of North Korean labor may not be the best way to approach this issue. Instead, approaching the issue of North Korean workers abroad from a human rights perspective and requiring states hosting workers from North Korea to respect their rights may be more effective in pressuring the regime. At the same time, the UN should require quarterly reporting of the number of North Koreans working in each member state.

Finally, the international community should reconsider putting a ban on aviation fuel for North Korean flights. This was originally on the table during the discussions over 2270, but was removed due to Russian objections. Not only would this put a dent in North Korean revenue from its state airline, Air Koryo, it could also help cut down on any smuggling that passengers who may be carrying illicit or luxury goods back into the DPRK.

While there are other potential areas for sanctions, the experience with the livelihood provisions of 2270 demonstrates that the process of implementation is the key to building pressure on North Korea to get them to return to talks. At the same time, the process of increasing pressure on Pyongyang is also likely to be lengthy. In addition to closing loopholes on existing sanctions, much of the work needed to close off North Korea’s illicit activities will require the painstaking work of finding the types of front companies exposed by the Panama Papers. Unfortunately, this means that even if sanctions eventually work, we are likely to see more tests before they do.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own. Photo from the U.S. Geological Survey.

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