Echoing recent remarks by Secretary of State Tillerson, Acting Treasury Secretary Adam Szubin told a Senate subcommittee this morning that the United States need not shy away from pressuring Chinese banks over their conduct with North Korea.
“To the opposite, we need to hold their feet to the fire,” said Szubin, who previously served as the Treasury Department’s acting under secretary for terrorism and financial crimes.
Tillerson has been vocal on this point: questioning the worth of United Nations resolutions against North Korean leader Kim Jong Un, and calling for the United States to aim instead at North Korea’s economic and banking activities.
Szubin said taking aim at China works here because North Korea is an unusual target.
“North Korea does not conduct banking like a country anymore but conducts its financial business overseas like a criminal cartel, frankly,” Szubin told members of the National Security and International Trade and Finance subcommittee.
Contrasting the plan for North Korea against economic sanctions in Iran, Szubin noted that
“Iran conducted and still conducts its banking business like a country.”
“You have an easily identifiable set of access points [in Iran], and we were able to go around the world and tell [countries] to turn those access points off,” he added.
To ferret out which companies still do business with North Korea, on the other hand, Szubin said the United States needs a “full-court press” of criminal and intelligence forensic gathering.
“We shut them down and continue to turn the screw,” Szubin said. “North Korea won’t sit still to watch its access points cut. It will look for other access points. We need to somehow enlist China’s cooperation and that might involve some arm twisting. We need China to care about this as much as we do.”
Juan Zarate, the former deputy assistant to President Barack Obama, gave similar testimony.
“I think we have to have a constant and consistent pressure campaign,” Zarate said. “Part of the reason why these tools are effective is that it conditions the environment. You have to condition the environment. You have to weed the garden and up the pressure at all times.”
Zarate said the United States needs to get both tough and creative when it comes to “changing the calculus” of those that partner with Pyongyang.
“It’s not a matter of getting them to want to advance U.S. interests,” Zarate said. “It’s a matter of effecting fundamental Chinese interests: their health care, their banking and economy … the human-rights blowback. That’s a connection to the North Koreans they don’t like, and they worry about it. They worry about corruption and the taint of being tied to them. That’s leverage to use.”
China would not be the only target of secondary sanctions, but rough estimates show that the country accounts for between 35 percent and 90 percent of North Korea’s import-export trade.
Sen. Joe Donnelly, D-Ind., questioned what evidence the United States has that tougher sanctions will sway North Korea’s Kim.
“You hear that he would rather have his people eat grass than give up any part of their nuclear-weapons program,” said Donnelly. “Is there a push point for North Korea when they say, ‘Now we have to come to the table.’ Or do they say ‘we just don’t care’?”
Szubin agreed that Kim “may be immovable” on the issue of nuclear weapons, but said that’s not the whole story.
“He believes that [nuclear weapons] are the guarantor of his survival, and if he gives up the program, he’ll be done away with,” Szubin said. “But the truth is, its his reliance on international export earnings that keep him in power.”
Zarate called for Congress to begin a “leadership-asset hunt,” a technique not usually undertaken before a regime’s collapse.
“Let’s use it before the fact, and find where they’re stealing assets from people, and try to capture and preserve it,” Zarate said.
“If we continue to wait,” Zarate added, “we will end up with a North Korean regime with nuclear capabilities, potentially intercontinental ballistic missiles and multiple missile platforms to attack major interests. Not just in Guam or Hawaii, but in places like San Francisco and New York. And that’s an unacceptable position to be in.”
This morning’s hearing of the Subcommittee on National Security and International Trade and Finance comes a week after the House voted in new sanctions against North Korea 419-1.