House Probes N Korea Sanctions as Nuclear Threat Intensifies

WASHINGTON (CN) - New findings about the strength of North Korea’s Sept. 3 nuclear test raised tensions Wednesday as experts called on Congress to ramp up sanctions.

Relying on updated seismic readings, the 38 North project out of the U.S.-Korea Institute at the Johns Hopkins School of Advanced International Studies reported Tuesday that Pyongyang yielded about 250 kilotons of energy with its sixth and largest nuclear test to date.

For perspective, the nuclear bomb detonated over Hiroshima in 1945 yielded roughly 15 kilotons of energy.

Initial estimates — which still ranked the blast at 100 times stronger than North Korea’s first nuclear test in 2006 — relied on the lowest seismic readings, putting the yield at about 120 kilotons.

While the exact capabilities of North Korea's nuclear and ballistic missile programs remain uncertain, four experts who testified Wednesday before the House Subcommittee on Monetary Policy and Trade agreed that more needs to be done to tighten sanctions.

Citing the rejection of United Nations Security Council resolutions, the experts noted that North Korea is still using the international financial system to fund its missile programs, manipulating a web of front companies and foreign bank accounts maintained by non-North Koreans.

A new bill that the House is considering would attempt to close some of those loopholes, imposing civil and criminal penalties on individuals and institutions that knowingly facilitate transactions or financial services for sanctioned individuals and entities.

David Albright, president of the Institute for Science and International Security, testified this morning that the denuclearization of North Korea can still be done peacefully, but it won't happen under the existing sanctions regime.

To further isolate North Korea from regional and international financial systems, Alrbright said, America must exert "enormous pressure" in the form of harsher sanctions, as well as trade cutoffs.

Albright also called for punitive measures to win the cooperation of countries that are either disregarding the sanctions or not fully enforcing them.

"Additional U.S. legislation that supports that goal would be useful," Albright said, but he cautioned the Trump administration to make clear that a regime change is not America’s goal.

Anthony Ruggiero with the Foundation for Defense of Democracies said U.S. policy is trapped in a "provocation-response cycle" where its provocations are met with tough talk and a "token increase in sanctions.”

"These scattershot responses have not, to date, added up to a serious and effective sanctions policy because they are driven by the momentary need to look tough, rather than by a clear strategy for denuclearizing the Korean peninsula," Ruggiero said.

According to his analysis of U.S. sanctions on North Korea, they have failed to reach deeply into international business networks, particularly in China, which North Korea relies upon to evade the sanctions.

Ruggiero said U.S. banks get tricked into processing transactions facilitated by the front companies and Chinese banks.

To remedy that shortfall, he suggested that the U.S. approach to North Korea sanctions should mimic the Iran sanctions, which forced banks to make a choice: "Stop doing business with Iran, or lose access to the U.S. dollar and risk the U.S. freezing their assets and labeling them as doing business with a state sponsor of terrorism intent on developing a nuclear weapon."

The banks, Ruggiero said, would not risk their business with Washington to keep working with Pyongyang, which represents only a small portion of their overall business.

"A successful financial sanctions approach will focus on increasing the efforts of U.S. and foreign financial institutions to search for North Korea’s illicit financial activities," he said, adding that it is possible to uncover its illicit activities.

The subcommittee also debated how the U.S. should approach China. Elizabeth Rosenberg with the Center for a New American Security called this issue key because China bears responsibility for more than 90 percent of North Korea's trade.

She warned that secondary sanctions require delicacy in their application.

"They may be counterproductive if application of secondary sanctions is so aggressive or politically incendiary so as to make U.S. partners utterly defiant, uncooperative, and move rapidly to create officially-backed evasion schemes and impose retaliatory sanctions and economic punishment on U.S. firms operating abroad," Rosenberg said.

Rosenberg noted that the targets of ramped-up sanctions must also be allowed to comply with them in a way that is palatable to their domestic constituencies.

"China, for example, is highly unlikely to sever its economic activity with North Korea if the only way to do it appears to its population and the global community to be capitulation to U.S. sanctions," she said.

On the diplomatic front, Bruce Klingner with the Heritage Foundation told the subcommittee that negotiations are futile as long as North Korea rejects the premise of denuclearization.

North Korea has made clear, Klingner said, that denuclearization is off the table, and nothing the U.S. or South Korea offers will change that.

“The most effective way to engage in negotiations would be after a comprehensive, rigorous, and sustained international pressure campaign,” he said.

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