Why the World Will Have to Live with a Nuclear-Armed North Korea
Would harsher economic punishment, such as a ban on oil exports to North Korea, change Kim’s mind? Unlikely, though we may never know because there’s virtually no chance that China, Pyongyang’s principal energy supplier by far (approximately 520 metric tonnes of crude oil per year plus another 270,000 metric tonnes of oil products), and Russia (forty thousand metric tonnes of crude oil annually, although sales appear to have increased since 2016), the next most important source, would implement an embargo, or sustain it for long if did. Neither of them would allow an oil shutoff to be included in the September 11 resolution despite intense U.S. lobbying and reports in the run-up to the vote that Beijing might relent. Vladimir Putin ruled out an oil embargo days in advance, insisting that the embargo wouldn’t change North Korean government’s behavior but would hurt North Korea’s longsuffering people. Putin has his own reasons for advancing this argument, but that doesn’t mean he’s wrong, especially because North Korea can cope with an oil-export ban using various workarounds: increased reliance on coal, reducing oil consumption, turning to biomass-based synthetic fuel and coal liquefaction, or all of these combined.
If Pyongyang continues testing nuclear weapons and ballistic missiles, then the United States could put economic pressure on China and Russia in hopes of getting them to agree to a ban on oil sales. Indeed, on September 3, Trump threatened, in a tweet, naturally, to end American trade with countries that buy from and sell to North Korea; but that was an empty—even absurd—threat. North Korea’s total trade in 2016 amounted to $6.5 billion and virtually all of it (93 percent) was with China; so Trump would have to stop American trade with the Chinese to squeeze the North Korean economy further. That’s easier said than done. American exports to China totaled $169.3 billion in 2016 and two-way trade $479 billion. Because China would surely retaliate, the U.S. economy would be hit hard, major American companies with big stakes in the Chinese market even harder.
Furthermore, a trade war between the world’s two largest economies would rattle global markets, causing stocks and bond yields to plunge and interest rates to soar. China and fourteen other countries account for pretty much all of North Korea’s trade (though China aside, the dollar value is small). They include Germany, Mexico, India, the Philippines, Russia and Saudi Arabia. Who would take seriously Trump’s threat to end trade with all of these countries? Kim is betting that no one will, and he’s right.
North Korea’s defiance and threats may seems crazy (Kim is often portrayed that way in the press) considering that even China and Russia have castigated its nuclear and ballistic missile tests and voted for sanctions in the UN Security Council. Well, crazy like the fox, perhaps. Kim Jong-un, though still in his early thirties, has sized up the strategic situation very well. On the one hand, it’s obvious to him—and anyone for that matter—that the United States and its allies wield far more economic and military power than he does or ever will. On the other hand, and this is the third thing we know for sure about Pyongyang, he understands the crucial difference between possessing power and converting it into desired outcomes and excels at turning his weaknesses into strengths.