ICAS Special Contribution


Succeeding in Securing an Oil Cutoff of North Korea

Larry A. Niksch

Institute for Corean-American Studies, Inc.
965 Clover Court, Blue Bell, PA 19422
Email: icas@icasinc.org

Biographic sketch & links: Larry A. Niksch

[Editor's note: We gratefully acknowledge the special contribution of this paper, courtesy of Larry Niksch to ICAS. sjk]

Succeeding in Securing an Oil Cutoff of North Korea

Larry Niksch 1

The latest sanctions against North Korea, approved by the United Nations Security Council, drew a less than optimistic appraisal from President Trump, who doubted that this new round of sanctions would force North Korean leader, Kim Jong-un, to pull back his program to develop and produce an arsenal of inter-continental ballistic missiles (ICBMs) with nuclear warheads that can reach the United States. The President no doubt is correct. Banning textile exports and new contracts for North Korean overseas workers will not inflict significant pain on the North Korean regime going into 2018. It is within these months, going into 2018 that the North Korean regime will move the nuclear ICBM program into a final stage before fully developing this weapon and starting to produce an arsenal of them. North Korea’s string of successful missile and nuclear tests since May make credible the estimate of the U.S. Defense Intelligence Agency (as reported in the Washington Post) that North Korea will accomplish this in 2018. We likely will see this final stage unfolding in late 2017 or early 2018 with North Korea test firing two or three ICBMs over Japan far out into the Pacific Ocean, landing as close as 200-300 miles off the U.S. west coast.

The big difference in the last round of sanctions was the introduction by the United States of an initial resolution that included a U.N.-mandated cutoff of oil to North Korea. Subsequent negotiations with China and Russia resulted in the deletion of the oil cutoff provision. The initial U.S. resolution came after Japanese Prime Abe and South Korean President Moon both endorsed a cutoff of oil to North Korea. Secretary of State Tillerson spoke openly about the need for an oil cutoff.

This shows the recognition that an oil cutoff sanction would inflict the most immediate, severest pain on the North Korean regime, the North Korean elite, and the North Korean military. Scott Bray, of the U.S. Office of the Director of National Intelligence, stated on June 26 at an Institute for Corean-American Studies seminar that an oil cutoff would have “remarkable consequences” for North Korea. Justin Fendos, a Chinese scholar with the Chinese National Academy of Sciences and Fudan and Dongseo universities, wrote in the Pacific Forum’s PacNet of August 30 that “a cessation [of oil] would ruin North Korea,” especially in winter. There is no doubt that an oil cutoff would cripple North Korea’s civilian transportation system including food deliveries to Pyongyang, worsen electricity shortages even to Pyongyang, and begin to diminish the military’s gasoline and aviation fuel. In April 2017, Global Times, a leading Chinese Communist Party newspaper, editorialized that China should cut off oil to North Korea if North Korea conducted another nuclear test. China supplies North Korea with about 90 percent of its oil.

Nevertheless, the outcome of the negotiations over the latest round of U.N. sanctions shows continued Chinese and Russian resistance to an oil cutoff. This resistance comes amidst several reports of stepped up Russian shipments of oil to North Korea, sometimes through clandestine means.

Thus, with the oil cutoff issue now in the open, the challenge for the Trump Administration is to develop an effective diplomatic strategy that would increase the difficulty for China and Russia to oppose an oil cutoff. This will require the Administration to correct current flaws in its approach.

First, several reports and statements by Secretary Tillerson indicate that the Trump Administration has believed or hoped that China would volunteer to cut off oil or cut off oil secretly, without announcement. U.S. officials probably have encouraged China to cut off oil unannounced. This goes against Chinese policy since the opening of six party talks in 2003. China never has volunteered to undertake measures that would inflict severe pain on North Korea. Also, U.S. emphasis on a secret Chinese oil cutoff omits the potential importance of Russia in the oil equation.

Second, the latest U.S. proposed resolution in the Security Council placed an oil cutoff among several measures of sanctions. This followed the pattern of U.N. resolutions since the first ones in 2006. U.S. proposals for multiple sanctions give the Chinese and Russian negotiators increased bargaining power to mix acceptance of some U.S. proposed sanctions with opposition to others, usually opposition to the stronger U.S. proposals. The result consistently has been final Security Council resolutions weaker— sometimes considerably weaker—than the original U.S. version. The deletion of an oil cutoff from the latest Security Council resolution falls into the considerably weaker category, as President Trump seems to realize.

Third, and related, the Trump Administration has followed the preference of the Bush and Obama administrations for secret diplomacy in negotiating U.N. sanctions. This near total emphasis on secret negotiations has given the Chinese and Russians a greater ability to oppose stronger sanctions, including an oil cutoff. The absence of any transparency of these negotiations removes a potential source of public exposure and resultant pressure on China and Russia. Their real positions remain hidden from their own publics. This flaw is exacerbated by the habit of U.S. officials to praise the “unified front” of China and Russia with the United States and exaggerate the actual strength of approved sanctions.

Fourth, successive U.S. administrations have over-emphasized the goal of cutting off financial inflows to North Korea, which I believe has delayed a concentration on securing an oil cutoff sanction. The failure of sanctions since 2006 has resulted from the inability of numerous financial sanctions to inhibit substantially North Korea’s ability to operate secretly through financial institutions in China and other countries to conclude transactions and move money from these to North Korea. The failure also is the result of sanctions having no effect on the flow of Iranian money to North Korea that finances the nuclear and missile collaboration between Tehran and Pyongyang. The Washington Post reported on September 1 “a forthcoming report from the U.N. panel of experts on North Korea,” asserting that North Korea “continues to flout the arms embargo and robust financial and sectoral sanctions, showing that as the sanctions regime expands, so does the scope of evasion.”

Fifth, in finally proposing an oil cutoff, the Trump Administration appears not to be considering negotiating with China and Russia on the sole U.S. proposal of an oil cutoff but linked, not to other sanctions proposals, but instead to measures on North Korea that China and Russia have proposed that the United States conceivably accept without jeopardizing fundamental U.S. security interests.

Suggestions for a Revised Trump Strategy

A revised Trump Administration strategy would need to do two things: correct the above cited flaws and produce an oil cutoff by early 2018 to have any chance of forcing Kim Jong-un to pull back his nuclear ICBM program. The following are measures that, it seems to me, could be more effective for the United States.
  1. Set an early internal deadline for China to adopt an unannounced oil cutoff, probably in October or November.
  2. If China does cut off oil unannounced, insist to Russia that it must follow China’s lead.
  3. If China does not act, submit a resolution to the U.N. Security Council that contains solely a mandated oil cutoff, no other sanctions. Notify Security Council members that the United States wants a formal vote on its resolution.
  4. Offer China and Russia two measures that they say they want, in return for their agreement to an oil cutoff. The two measures would be a U.S. return to six party talks without conditions and a suspension of operation of the THAAD missile defense system in South Korea for at least one year. The Trump Administration could propose to China that it call a six party meeting in Beijing. A reopening of six party talks in the context of an oil cutoff would put the United States, South Korea, and Japan in a position of strength to propose and pressure North Korea for concessions on its nuclear and missile programs, including its existing Nodong missiles with nuclear warheads. A suspension of operation of the THAAD system for one year would run only a low risk of a North Korean attack on South Korea. The THAAD batteries would remain in place and could be started immediately if signs of an attack arose. Moreover, it is doubtful that Kim Jong-un would risk an attack on South Korea before he had a full arsenal of nuclear warheaded ICBMs capable of reaching the United States. Assuming that he could begin to produce an arsenal in late 2018, he likely would need a year or longer before he would have an arsenal that he would consider adequate. That gives the Trump Administration time space to make such a proposal to China and Russia.
  5. Publicize highly the proposed U.S. oil cutoff resolution and the U.S. quid pro quo offers to China and Russia. In short, abandon the emphasis on secret negotiations. Concentrate publicity on the informed public in China where there is growing criticism of North Korea. This could bring about a real debate in China and within the Chinese Government over how China should respond to the U.S. proposal of a compromise deal. High publicity could have a similar impact in Russia. It is doubtful that Russia would continue to oppose an oil cutoff if China agreed to a cutoff.
  6. Warn the Chinese and Russian governments, first privately, that if they reject an oil cutoff, despite the U.S. offer of a quid pro quo deal, that the U.S. Treasury Department will begin to impose financial sanctions against Chinese and Russian enterprises which, the U.S. Government knows, are doing business with North Korea; and that the first enterprise to be sanctioned will be China’s National Petroleum Corporation, which supplies North Korea with most of its oil.
If China and Russia still opposed an oil cutoff despite this U.S. strategy, the Trump Administration at least would know thoroughly that China and Russia (especially China) will not cooperate diplomatically through sanctions to force Kim Jong-un to pull back his nuclear missile program. The Trump Administration then could move to develop an alternative strategy toward North Korea in 2018 and beyond that relied less on Chinese input and would be less influenced by Chinese diplomatic opposition.

An Oil Cutoff Within the Countdown to a North Korean Arsenal of ICBMs

The countdown to a fully developed North Korean ICBM in 2018 makes urgent this kind of diplomatic strategy. An oil cutoff is the only sanction that would inflict immediate severe pain on the North Korean regime and thus would have a chance to force Kim Jong-un to pull back his ICBM program. Admittedly, there is only a chance of success; but without an oil cutoff, there is no chance. If there is no oil cutoff going into 2018, this chance will decrease each day that North Korea nears its supreme strategic goal of fully developing a nuclear warheaded ICBM. If North Korea crosses this threshold, everything about the Korean situation will change, including the policies of involved governments.

1 The author is a former (retired) Specialist in Asian Affairs with the Congressional Research Service. He recently has taught East Asian history and security courses at George Washington University. He currently is a Fellow with the Institute for Corean-American Studies and a Senior Associate with the Center for Strategic and International Studies.

This page last updated September 21, 2017 jdb