The U.S. Financial Sanctions against North Korea

Abstract

In September 2005, the U.S. imposed financial restrictions on North Korea after blaming the North for illicit financial activities, including counterfeiting and money‐laundering. The U.S. financial sanctions against the North had direct and immediate impact on the ongoing six‐party negotiations on North Korea's nuclear issue. North Korea insisted on the lifting of U.S. financial sanctions as the precondition for returning to the negotiating table and consequently the six‐party talks on North Korea's nuclear issue stalled. The third session of the fifth round of six‐party talks in February 2007 produced an important accord on North Korea's nuclear question. This agreement was made possible after the U.S. and the DPRK reached a compromise on the financial sanctions issue. This article discusses the U.S. financial sanctions against North Korea and their implications for North Korea's nuclear question. It begins with an overview of the U.S. financial restrictions. This study then examines the nexus between the financial sanctions and the impasse at the six‐party talks on North Korea's nuclear issue. This is followed by a discussion of the breakthrough on the financial restrictions issue and the landmark agreement on North Korea's nuclear issue in February 2007. In this study, the authors argue that a mutually satisfactory resolution of the BDA dispute holds the key to a peaceful settlement of the second North Korean nuclear crisis. With the BDA dispute behind, the six‐party talks should gain momentum and prepare a road map for implementing the denuclearization of the Korean peninsula. Both the U.S. and North Korea should not miss this golden opportunity and make earnest efforts to build a firm foundation for peace and stability on the Korean peninsula and in Northeast Asia.