It's impossible to talk about North Korea without talking about China, its closest ally... isn't it in China's interest to promote the development of an economically robust trading partner on its border?
They are trying to do that, but it's important to get into the nature of their relationship. There is a lot going on.
It's a very complicated relationship. It is grounded still in many respects to a 1961 mutual defense and mutual prosperity deal between the two. But since roughly around [former Chinese President] Hu Jintao's period, we've seen signaling from the Chinese side that the mutual defense component has really lapsed. And that was a way to signal to the North Koreans, then under Kim Jong-il, that if there was military adventurism and that triggered an American military response, the Chinese aren't obligated by this 1961 agreement to come to North Korea's aid as a way to dissuade North Korea from triggering this kind of escalation.
But on the mutual prosperity side there's been a lot of progress. And there's an interesting parallel development in another sense: The Communist Party of China really building up the institution of the Workers Party of Korea inside of North Korea. This is an institution that has atrophied over the years. Under the 17 years of Kim Jong-il's rule, he ran the country through the National Defense Commission, and the military really was the only nation-wide, functioning bureaucracy and organization at that particular point in time. But with the growth of the party, we're seeing increasing development on both sides of the border through the coal trade.
So this is an important element when you look at the three Chinese provinces near the border with North Korea: Liaoning, Heilongjiang, and Jilin. You're looking at very underdeveloped regions of the larger Chinese economic miracle. So the priority internally in China has been to help develop these provinces, and they really started to get off the ground with the influx of coal and mineral resources from the North Korean side. So that is an important element of this border-area, symbiotic trading and commercial relationship that largely doesn't get into the analysis now.
Donald Trump has repeatedly spoken about China's responsibility to rein in its neighbor. Some of that happened recently. Sanctions were approved that took away something on the scale of a third of North Korea's trade. Why is it so hard for China to actually make these changes?
There are two groups of thinking about the Chinese when it comes to sanctions implementation. One is the view that even if the senior Chinese leadership makes the decision to implement sanctions inside of China, you're looking at implementation challenges at the local level where there is corruption - very difficult relationships with local business partners on the North Korean and Chinese side that are hard to break up and hard to overcome in terms of these implementation measures.
A second view is that the Chinese leadership is saying the right things to try to placate different countries that are seeking to have a harder line against North Korea. And so you see a debate between these two groups playing out even now. One thing that is interesting is that when we do see efforts to implement some of these measures in the recent past, there has been an uptick of smuggling in the area. So you've got to think that if the quantity is reduced as a result of some aspect of implementation, you're going to see the incentivization of smugglers. And that's another area that we have to factor in. It's not just a function of a binary where you implement sanctions, and that's it.
One possibility that has been raised is putting some kind of secondary sanction on Chinese businesses that do have relationships with North Korea. Would that be a productive step?
Well the hope is that secondary sanctions will be a piece of the policy approaches dealing with China that will unleash the full cooperation of the Chinese side and apply pressure and economic and political pressure on the North Korean regime to come back to denuclearization. But if you look at some of the notions of the power politics involved, colleagues who focus very closely on China basically view secondary sanctions as an effort to apply foreign laws inside of Chinese jurisdictions. The Chinese interpretation of that is a violation of their sovereignty.
So as much as you're targeting the problem that is North Korea's nuclear weapons development, you're triggering other issues. So if we do go down this path of full application of secondary sanctions on large Chinese banks that have international dealings, where it will have an impact, the repercussions and what could come after that is another area that we have to look at closely. If it is in fact the targeting of the large Chinese banks and companies, we should anticipate reaction from the Chinese side and preparations in terms of not being caught off guard.