During the transition between the Obama administration and the Trump administration, President Barack Obama warned then President-elect Donald Trump that North Korea would be the most pressing international issue that he would face. The leadership in North Korea has not disappointed by pushing itself to the top of the U.S. foreign policy agenda with its continued pursuit of a nuclear-armed ICBM.
Despite two new UN sanctions resolutions in 2016, North Korea has continued to push forward its development of multiple delivery systems for its nuclear weapons to give it both the capability of attacking the United States and a second strike capability should a conflict break out. It is this dogged pursuit of multiple nuclear weapons capabilities that has brought the current level of instability to the Korean peninsula.
While the Trump administration may have declared the era of strategic patience over, America's approach to denuclearizing North Korea remains centered on working with China to pressure the regime in Pyongyang. And for good reason: China represents roughly 90 percent of North Korea's licit trade in goods. This is the one area where the international community is able to impose a real cost to North Korea's actions. The recent war of words between North Korea and the United States does little to change that calculation, but it does emphasize that both Washington and Beijing have shrinking room to maneuver as each missile test draws North Korea closer to its goal of obtaining a nuclear-armed ICBM. This is something both China and the United States have said that they want to avoid.
Building on the cooperation the two countries have developed over the last two years on UN sanctions will be key. The most recent round of sanctions in response to North Korea's two ICBM tests closed key loopholes that North Korea had exploited in prior resolutions to continue to increase its trade. In prior sanctions North Korea had exploited “livelihood” exceptions and market fluctuations to increase its earnings on coal exports. Once a cap was placed on its earnings from coal and the volume it could export, Pyongyang turned to exports of minerals like iron ore to make up for the lost coal earnings. Beijing's willingness to close these loopholes in UN Sanctions Resolution 2371 and early indications that it will strictly enforce those sanctions demonstrate seriousness on Beijing's part in trying to coax North Korea back to talks.
However, the current sanctions also include loopholes China may need to work with the United States to close should North Korea conduct another nuclear or missile test. While UNSCR 2371 banned the export of coal and other minerals by North Korea, it only capped the export of overseas laborers by North Korea. While North Korea's earnings from the overseas labor are far less than the $2 billion a year that some have speculated, North Korea could still increase its earnings from overseas labor should their wages increase. Additionally, the resolution seems to indicate a cap on the number of overseas laborers that would allow for individual laborers to be replaced by new North Korean workers as those currently overseas return home. Closing these loopholes will require working with Russia as well, who along with China, hosts the largest number of North Korean workers.
At the same time, the United States and China would benefit from cooperation on North Korea beyond the sanctions dialogue. In recent years North Korea has sought to develop robust cyber capabilities. It is believed to be behind offensive attacks such as the Sony Pictures attack and bank thefts such as the hack on the Bank of Bangladesh. Many of North Korea's cyber agents are believed to be based in China and its internet access runs through China. Implementing an agreement reached with the Obama administration not to host hostile cyber powers would help to limit North Korea's ability to evade sanctions by hacking into banks or taking offensive actions.
Both Washington and Beijing have strong incentives for pressure and dialogue to work. Should cooperation between the United States and China over North Korea fail, the Trump administration would find itself with less appealing options to address North Korea's nuclear program. While the recent comments about “fire and fury” suggest that a military option is a possible solution, the United States would find a preventative attack to eliminate North Korea's nuclear program unacceptably costly. South Korea is strongly against any such action without its consent. Some 200,000 U.S. civilians in South Korea and Japan, let alone those living in Guam, would find themselves at risk from North Korean retaliation. Since North Korea can already reach targets in South Korea and Japan with its nuclear weapons, there would be no guarantee that North Korea would not attack one or the other with nuclear weapons. As General Joseph Dunford, Chairman of the Joint Chiefs of Staff, has noted, a war with North Korea could be horrific, even if China was not drawn into the conflict.
If military options beyond preemption in the event of an imminent North Korean attack are unappealing, the United States could move towards increased secondary sanctions or a broader trade war with China. While secondary sanctions help to cut off North Korea's earnings of hard currency and signal the United States resolve to China, their utility might wane if cooperation between China and the U.S. broke down. Should the United States choose to engage in broader sanctions on China to try and compel cooperation and U.S. exports to China only dropped by one percent as a result, the U.S. would risk running a policy that cost it $6.5 billion with no certainty of success.
For Beijing the prospect of a breakdown in cooperation is risky as well. Setting aside any potential economic costs from U.S. usage of secondary sanctions or broader sanctions, if North Korea completes the development of its weapons programs, China runs the risk that Pyongyang might precipitate the type of military crisis it is looking to avoid.
The surest path to resolving the North Korean nuclear issue remains U.S.-China cooperation. The potential costs of a breakdown in cooperation are significantly higher than the potential costs of working together. However, cooperation also means that the United States and China will need to prioritize cooperating on North Korea over other contentious issues in the relationship. So far there are encouraging signs that they actually may be doing this.
