Page:U.S Congressional Testimony of Sung-Yoon Lee, Hearing on "North Korea’s Criminal Activities- Financing the Regime" (2013).pdf/4

 not most, of North Korea’s main streams of revenue. That, in effect, would lend a potent, new meaning to the prevailing view of Pyongyang as a pariah state.

The key advantage of such measures is that they can be enforced without Chinese cooperation or even in the face of Chinese obstruction. Should President Obama reinforce these measures through the use of Executive Orders 13,382 and 13,551 and freeze the assets of Chinese and third-country entities suspected of helping North Korea’s proliferation activities, the accumulated pressure will most likely minimize Chinese obfuscation and even induce the pragmatic leadership in Beijing to cooperate with the U.S. in protecting the integrity of the international financial system. These measures, if sustained, would have the effect of deterring international banks, companies, and entities that, intentionally or not, undermine international sanctions and abet the Kim regime. International banks are especially sensitive to the behavior of other international financial institutions when assessing the risks of doing business with a particular nation. Whereas these measures may not necessarily have a devastating effect on a robust or big economy like that of the U.S. or China, in tiny North Korea, they would effectively choke off the regime’s streams of revenue. And that means a credible threat of devastating consequences for Pyongyang, should it not change its ways or continue to approach denuclearization talks with the same kind of willful deceit as it has for more than twenty years.

As to the notion that sanctions against despotic regimes are ineffective because they do not necessarily bring about a fundamental change in regime behavior or democratization in the target nation, in the case of North Korea, such concerns may be mitigated by the nature of the hereditary leadership. The North Korean dynasty is no ordinary dictatorship; it is a criminal regime with very few effective means of generating revenue that are legal. Its multifarious criminal activities, including crimes against humanity, are a lifestyle choice born of a dogged determination not to adopt international norms of statecraft and economic policy.

Admittedly, in North Korea, there are no political opposition parties or dissidents, or an identifiable anti-regime movement. And the self-isolated country already is heavily sanctioned by the U.S. and the international community. However, unlike other authoritarian regimes of the world, North Korea’s main streams of revenue are predominantly illicit. Deprived of even a portion of such streams of revenue, the Kim regime could face a potentially serious situation; that is, a steady rise in the number of malcontents among the regime elites. And the psychological threat of further financial loss from prolonged sanctions and subsequently even further diminished ability to appease the elites would be a shocking dose of reality for the top stakeholders in the system. The sheer possibility of a rise in the number of disgruntled men in the party, bureaucracy, and military would, more than any conceivable variation on artful nuclear diplomacy, give the Kim regime reasons to rethink its long-term strategy.

Furthermore, the effectiveness of sanctions should not be evaluated solely on the criterion of transforming the target country’s leadership but by the degree of gain in the sanctioning