Trading with Pariahs: North Korean Sanctions and the Challenge of Weaponized Interdependence

Abstract

Abstract Why has North Korea avoided capitulating to economic sanctions pressures? We argue that economic sanctions have been ineffective and unsuccessful for three reasons: North Korea’s adeptness at evasion, other states’ unwillingness to enforce economic sanctions, and North Korea’s efforts to avoid panopticon effects via its diplomatic statecraft and policies that allow states to monitor and collect information on others. We contend that the implementation and enforcement of economic sanctions led North Korea to alter its trading network, reallocating trade to countries (or nodes) within its network willing to ignore international sanctions. As a result, these network shifts limited the ability of senders to weaponize the interdependence between them and North Korea effectively. We further highlight how North Korea conducts diplomatic statecraft in such a way that limits the impact of sanctions enforcing states from effectively monitoring it and limiting the impact of panopticon effects senders generate. To test our theory, we employ an ordinary least squares regression followed by social network analysis to understand how North Korea’s network of trade has adapted over time in the face of punishing economic sanctions. We find that states with greater diplomatic engagement enjoy better centrality than sanctions enforcing states. Also, economic sanctions at critical junctures induce changes to North Korea’s network over time with commercial imperatives to trade replaced by a North Korean near reliance on China. We further demonstrate that economic sanctions likely induce changes to the structure of the network as North Korea seeks to insulate itself from the impact of economic sanctions.