Why Targeted Financial Measures Should Be Taken Against North Korea

Via One Free Korea comes this article from a ROK Drop favorite Bruce Klingner

Unilateral US actions against Iran, combined with diplomatic pressure, led other nations to impose their own financial and regulatory measures against Tehran. Collectively, the international sanctions have isolated Iran from the international banking system, targeted critical Iranian economic sectors, and forced countries to restrict purchases of Iranian oil and gas, Tehran’s largest export.

Just as strong measures induced Iran back to the negotiating table, more robust measures are needed to leverage North Korea. The United States should use its action against Iran as a model for imposing the same severity of targeted financial measures against North Korea.

Targeted financial measures are directed against entities that violate U.S. laws by exploiting their need to access the global financial network. Even the most isolated regime is vulnerable given the centrality of the U.S. financial system. The U.S. dollar is the global currency of choice for international trade, and the requirement that any dollar-denominated transaction anywhere in the world must go through a U.S. Treasury Department-regulated bank give Treasury the power to exclude North Korea and its third country enablers from the U.S. financial system.

Compared with trade sanctions, targeted financial measures are precision guided munitions against violators, rather than economic carpet bombing against a population. For banks, wire services, and insurance companies, there are catastrophic risks to facilitating – even unknowingly — illicit transactions. [Korea Economic Institute]

I highly recommend reading the whole thing at the link, but I agree with One Free Korea’s opinion that the old ideas in regards to North Korea have failed.  The targeted financial measures that Klingner mentions were proven to change North Korean behavior when one looks back at the 2005 freezing of North Korean money in the Macau bank Banco Delta Asia.  The bank was hit with targeted financial measures because it was being used to launder counterfeit US dollars.  After the money was frozen there was a noticeable change in the short term in North Korean behavior until the ill-gotten money was returned.  Since then North Korea has found new ways to launder and move money around.  Imagine the affect on Kim regime behavior if they continually faced Banco Delta Asia type of crisis from targeted financial measures.  Unlike Banco Delta Asia I would hope the US would not give North Korea their ill-gotten money back either.