Science, Technology, and Public Policy

Last week, President Trump signed a new executive order that paves the way to impose sanctions against any foreign bank that conducts business with North Korea, going well beyond current UN financial sanctions. These so-called secondary sanctions, which are penalties applied to third-party foreign banks (i.e., not directly against North Korean entities), are particularly focused on Chinese banks.

"Although this phased-approach to sanctions relief under the JCPOA ensures that Iran does not receive benefits without first implementing its nuclear commitments, uncertainties remain. The agreement does not affect U.S. and EU non-nuclear sanctions, such as those that target human rights abuses, support for terrorism, and money laundering. One question is whether or not relief from nuclear-related sanctions will affect the usefulness of non-nuclear sanctions."

"For US regulators, 2014 was a banner year for collecting fines against sanctions violators, according to The Economist. In June, BNP Paribas—France’s largest bank, and one of the largest in the world—agreed to shell out $9 billion to the US Department of Justice for violating sanctions against Cuba, Iran, and Sudan. This past month, US regulators slapped Germany’s Commerzbank—the country’s second-largest bank, with a similar global presence—with a $1 billion fine, after launching an investigation into its dealings with sanctioned countries. The increases in fines have signaled an aggressive, zero-tolerance policy toward violators, as well as a willingness to use the extraterritorial provisions of sanctions, which allow regulators to punish foreign-based banks..."

A nuclear North Korea makes it crucial that all countries in Northeast Asia work hard at maintaining a stable security environment that avoids the dangers of a crisis while encouraging North Korea to adopt a nuclear strategy that retains its "no first use" pledge, a strong command and control system, and a stable nuclear weapons posture. Given its relationship with North Korea, China is best positioned to encourage DPRK leaders in these directions.

"A military strike against North Korean nuclear facilities would be very dangerous, possibly setting off a chain of events that could wreck the peninsula. South Korea has made absolutely clear that it will retaliate if North Korea initiates some type of provocation but a direct military strike to eliminate its nuclear program is unlikely. Finally, despite some indications of unhappiness with Pyongyang's actions, there are limits to what China is willing to do to exert pressure on North Korea."

"President Barack Obama and Kim Jong-eun could end up confronting each other 'eyeball to eyeball', each with nuclear weapons on hair trigger, as president John F Kennedy and Nikita Khruschev did over five decades ago during the Cuban missile crisis in 1962. However, the younger and less-experienced Kim of the smaller and isolated Kingdom might not behave as rationally as Khruschev."