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]
