As North Korea returns to self-reliance to maintain its faltering state-run economy, experts said sanctioning the financial lifelines of regime leaders might put added pressure on Pyongyang to give up its nuclear weapons program.”Washington and its allies should be calibrating sanctions that target the regime/party elites’ financial lifeline,” said Matthew Ha, a research analyst at the Foundation for Defense of Democracies (FDD). “The critical entity that would affect change amongst North Korea’s leadership are banks and financial institutions.”Ever since leader Kim Jong Un said at a party meeting in December that North Korea must cope with sanctions with self-reliance, Pyongyang has been mobilizing to reinforce self-sufficiency.”There is no need to hesitate with any expectation of the U.S. lifting of sanctions,” said Kim. He urged the nation to make a “frontal breakthrough to foil the enemies’ sanctions and blockade by dint of self-reliance.”Self-reliance, or FILE – North Korean leader Kim Jong Un attends the 5th Plenary Meeting of the 7th Central Committee of the Workers’ Party of Korea (WPK) in this undated photo released Dec. 31, 2019, by North Korean Central News Agency (KCNA).North Korea’s official newspaper FILE – A cargo ship is loaded with coal at the North Korean port of Rajin, July 18, 2014.”When we talk about sanctions pressure, we really need to be targeting where strategic decisions can be made to really adjust the calculus of [the regime’s] leaders,” said Ha. “In a dictatorship, it’s the elites that are going to be more likely to make a change in decision.” Ha said sanctions should target North Korea’s overseas bank accounts that its regime leaders maintain to run overseas operations to bring in foreign revenue.”There are [local overseas] middlemen that are literally pushing the money through for a lot of [North Korean] individuals and the companies that they run to help provide financial revenue for the regime,” said Ha. Joshua Stanton, a Washington-based attorney who helped draft the North Korea Sanctions Enforcement and Policy Enforcement Act in 2016, said, “Maximum pressure will really be maximum pressure when there are nine-digit penalties against Chinese banks that’s laundering North Korean money.” Targeting financial lifelines of the regime’s elites, comprised of government and military officials, would likely pressure Kim, because he needs their loyalty to stay in power, according to Ha.”He must keep his people happy, especially the elites,” said Ha. “He needs to be able to gain the loyalty of elites. I think if they see their situation compromised, it’ll be a problem.” On Jan. 14, the FILE – U.S. President Donald Trump and North Korea’s leader Kim Jong Un meet during the second U.S.-North Korea summit at the Sofitel Legend Metropole hotel in Hanoi, Feb. 28, 2019.He added, “So their effort to substitute for imported oil with gasification of coal which they have in abundance [has] been one of the responses” to deal with sanctions. As if to emphasize his regime’s utilization of coal, Kim visited several North Korean factories, including a Experts said even though North Korea tries to sustain its economy through self-reliance, there is little prospect that its efforts will succeed.Troy Stangarone, senior director of the Korea Economic Institute, said a new mountain resort North Korea opened in Samjiyon County in December has been “a showpiece” to stress that “the regime can be self-reliant domestically.”However, he continued, “Even North Korea has hinted that the human cost has been enormous to complete the project, suggesting that it is far from a sign of success.”Babson said, “The senior leadership has come to understand that without trade and investment, you can’t do that all on your own.”Unenthusiastic publicAnother complication comes from the North Korean people who are unenthusiastic about the return to Juche when many have been earning money in private markets after losing jobs at state-run factories.”People don’t really particularly like being told they have to go back into forced labor, type of a mobilized labor, to get the economy moving, when they’d rather make money on their own,” he said. In this sense, Babson thinks what the 18th-century Scottish philosopher Adam Smith called “the invisible hand,” an unfettered market force and self-interest that help a country reach an optimum level of economic prosperity, has been at play in North Korea. Smith is often called the father of modern economics.”The incentive to create private wealth through private initiative has been growing in North Korea and in that sense, ‘the invisible hand’ is at work,” said Babson. Babson added that the growth of the market and the desire of people to seek their own economic interest have undermined the old concept of self-reliance.”That concept really has been undermined by the growth of the market economy,” said Babson. “People feel that they’re able to pursue individual interest on [seeking] economic benefit even if it doesn’t benefit the whole. So there’s a breakdown in the understanding of what it means to be self-reliant.” However, with recent resurgence toward self-reliance, the regime is seemingly trying to reverse the course of its economy.Stanton said, “With North Korea, the argument is two steps forward and one step backward, or one step forward and two steps back.” Pyongyang is also apparently facing how to reposition self-reliance in a modernized economy.”There is a real dilemma for the government and for public policy about how [to] integrate the concept of self-reliance in the modern and the way the economy and society have developed since the famine [of 1990s] and the breakdown of the old model,” Babson said.This report originated with VOA’s Korean Service.
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