SUMMARY

Since early 1993, North Korea has refused to allow inspections of its nuclear facilities by the International Atomic Energy Agency (IAEA). This is contrary to North Korea's obligations under the Nuclear Non-Proliferation Treaty and its 1992 safeguards agreement with the Agency. Following North Korean obstruction of an inspection in March 1994, the IAEA referred the issue to the U.N. Security Council. The Clinton Administration is set to propose that the Council act against North Korea, possibly including the imposition of sanctions. However, the opposition of China to sanctions and the ambivalent attitude of Russia has resulted in a decision by the Administration to propose initial action by the Council short of sanctions. Measures short of sanctions could end up as the totality of U.N. action. If sanctions ultimately are pursued, the Security Council could decide on a variety of measures involving travel to North Korea, financial transactions with North Korea, the supply of oil, trade, and the supply of arms.

BACKGROUND

On March 21, 1994, the Board of Governors of the IAEA pas~ed a resolution stating that the Agency could not verify that North Korea had not used nuclear materials for the production of "nuclear weapons" and "nuclear explosive devices." The resolution contained wording that the IAEA would notify the United Nations Security Council of its finding. The IAEA's action came after a 13 month period during which North Korea had prevented it from conducting inspections provided for under the Nuclear Non-Proliferation Treaty (NPT), of which North Korea is a signatory, and under a 1992 IAEA-North Korea nuclear safeguards agreement. In accord with the NPT, signatory governments are to sign a safeguards agreement with the IAEA and designate nuclear facilities subject to regular inspections by the Agency. North Korea designated seven installations in the 1992 agreement. The IAEA conducted regular inspections of the seven sites six times between June 1992 and February 1993. North Korea's rejection of further inspections in March 1993 came in response to two developments. At the end of 1992, the IAEA found evidence that North Korea had produced more weapons-grade plutonium than it had claimed in information supplied to the Agency. The IAEA then invoked a provision in the safeguards agreement (standard in all safeguards agreements the IAEA enters into) allowing for "special inspections" of undisclosed nuclear facilities and demanded that it be allowed to conduct a special inspection of two concealed sites believed to contain nuclear waste materials (possibly separated from plutonium during the reprocessing process) or chemicals used to reprocess plutonium. North Korea announced on March 12, 1993 that it would withdraw from the NPT.

North Korea "suspended" its withdrawal in June 1993 after the Clinton Administration decided to enter into direct talks with it on the nuclear issue. However, North Korea claimed a special status under the NPT as a result of its suspended withdrawal, and it continued to bar both the special inspection and regular inspections under the safeguards agreement.

In November 1993, North Korea proposed to the United States that the two governments negotiate a "package solution" to all of the issues dividing them. The Clinton Administration accepted this in principle but conditioned such "comprehensive" talks on North Korea acting first to allow a resumption of IAEA inspections and to re-open negotiations with South Korea over nuclear questions (North Korea had broken off talks with South Korea in late 1992). North Korea approached the IAEA in January 1994, offering a single inspection, less comprehensive than those conducted by the IAEA in 1992. After several weeks of tough negotiations, the IAEA announced on February 16, 1994, that North Korea had accepted "the inspection activities" that the Agency had requested. In response, the Clinton Administration agreed to suspend the Team Spirit military exercise (a longstanding North Korean demand) and begin a new round of talks with North Korea--subject to North Korea allowing full implementation of the IAEA inspection and beginning high level talks with South Korea.

IAEA inspectors, who were in North Korea March 3-14, reported that North Korean officials had prevented them from conducting two types of inspection procedures (collecting samples of materials and a gamma ray scan) in North Korea's plutonium reprocessing plant at Yongbyon, the site of key nuclear installations. The IAEA's Board of Governors then convened an emergency meeting and decided to notify the U.N. Security Council.

ISSUES IN SECURITY COUNCIL ACTION

The most important requirement for any Security Council action regarding North Korea will be to secure a consensus among the Permanent Five members of the Council (China, France, Russia, the United Kingdom, and the United States). If a total consensus cannot be secured, the next task is to influence any dissenting governments among the Permanent Five to abstain instead of vetoing any resolution on North Korea. Adoption of a Security Council resolution requires affirmative votes by 9 of 15 members and no negative votes from a permanent member.

ROLES OF CHINA AND RUSSIA

China is the government most likely to dissent. The Chinese Government states that it opposes the development of nuclear weapons on the Korean peninsula, but it repeatedly declares that it opposes the employment of pressure against North Korea, including economic and military sanctions. The Chinese Government argues that the United States and other governments should rely exclusively on dialogue with North Korea to resolve the nuclear issue.(1) It has reemphasized its position with regard to Security Council consideration of the North Korean case. Chen Jian, China's deputy Ambassador to the United Nations, stated on March 29, 1994, that: "We think it was counterproductive for the Security Council to exert pressures on the parties because this will complicate the issue and put the parties into the corner..."(2) However, the Chinese Government has not said whether it would veto any proposed resolutions on North Korea, including any resolutions that stipulated sanctions. If China does not veto a particular resolution, it could be expected to abstain.

The position of Russia also is uncertain. In contrast to China, the Russian Government has been overtly critical of North Korea on the nuclear weapons issue and has called for North Korea to accede to IAEA inspections. However, Russian officials have stated that methods other than sanctions should be used to resolve the problem. On March 24, 1994, the Russian Government proposed a six party conference in Moscow on the Korean nuclear question.(3) Russia, the United States, North Korea, South Korea, China, and Japan would participate. Coming just as the members of the Security Council began discussing North Korea, this proposal may indicate that Russia would seek to link certain actions by the Security Council to realization of a six party conference.

U.S. STRATEGY

Secretary of State Warren Christopher and Secretary of Defense William Perry have stated that the Clinton Administration would adopt a cautious, step by step strategy at the Security Council that would take a number of weeks. U.S. officials have emphasized that this strategy would provide time for possible new diplomatic interaction with North Korea. They also stress that a step by step approach is necessary to secure the minimum necessary cooperation from China.(4) The South Korean Government also advocates this approach, and Japan reportedly supports it.

The Clinton Administration offered an initial resolution to the Security Council that reportedly calls on North Korea to allow IAEA inspectors to complete the aborted inspection of March 1994. The draft resolution reportedly stated that the Security Council will consider further action if necessary. The U.S. draft resolution was limited in its objective: securing a completion of the March 1994 inspection rather than securing North Korean compliance with all of its obligations under the NPT and the 1992 safeguards agreement. The draft resolution implied a threat of sanctions but did not refer specifically to sanctions. It referred to a five-week period but does not set a specific deadline.

The Clinton Administration had to negotiate with the other Permanent Five governments over the draft resolution, especially as China reportedly has objected to it and has proposed a more modest step: a statement issued by the President of the Security Council on behalf of the Council.(5) A compromise was negotiated under which the Security Council issued a general statement (on March 31, 1994) without a vote appealing to North Korea to allow the completion of the inspection and calling on the IAEA to report in six weeks on whether it has finished the inspection. The restrained nature of the measure makes likely that the Council would have to adopt one or perhaps two additional resolutions before it would impose sanctions. Any additional measures probably would set a deadline before sanctions were considered or became effective.

It also is possible that the Security Council will stop short of considering sanctions. China's apparent resistance to even an initial resolution that does not mention sanctions suggests that China will veto a resolution that contains sanctions. The Clinton Administration might be unwilling to propose sanctions if it expects a Chinese veto. Administration officials may fear that a Chinese veto would harm further the already strained U.S.-China relationship. China, Russia, and other Council members might propose alternative resolutions, calling for new attempts at negotiations between the United States and North Korea, North Korea and the IAEA, or within a new forum. Such an alternative could include a provision for the Security Council to review the progress of such negotiations at a later date.

OPTIONS FOR U.N. SANCTIONS

In the last 20 years, the U.N. Security Council has voted sanctions against a number of countries, such as South Africa, Iraq, Yugoslavia, Libya, and Haiti. The sanctions cover a range of activities: a suspension of air service, a cutoff of trade, an embargo on the supply of oil, a freeze of assets in other countries, and an embargo on the supply of arms. The South Korean Government advocates that any sanctions begin with modest measures. The step-by-step approach of the Clinton Administration probably would correspond with the South Korean view.

The potential severity of sanctions relates to several distinct features of North Korea's external economic relations:

(1) A heavy dependence on trade--60 percent of total trade--with China, Japan, and Russia.

(2) A total dependence on foreign oil, mainly from China, Iran, and Libya.(6)

(3) An extensive flow of money from Japan through the Chosen Soren, an organization of ethnic Koreans in Japan. The amount of money is estimated at $700 million annually.(7)

One relatively modest type of sanction would be a prohibition of travel to North Korea. It would affect few countries, extensively, but it would have an impact on Japan. Every year, about 7,000 ethnic Koreans travel from Japan to North Korea. They are believed to carry with them large sums of Japanese currency, an invaluable source of foreign exchange to North Korea. These visits are organized by the Chosen Soren.(8) There also is regular travel between China and North Korea.

A sharper type of sanction would prohibit investment in and transfers of money to North Korea and freeze of North Korean assets in other countries. This would cover most of Chosen Soren's operations to transfer money to North Korea. Several other governments probably would be required to seize the assets of North Korean-affiliated banks in their countries. This kind of sanction probably would cover North Korean labor camps inside Russia run by North Korea's Ministry of Public Security. These camps engage in logging and other money-making activities for North Korea.(9) This kind of sanction probably would cover, too, several kinds of economic projects in North Korea financed by Chinese institutions.

The most severe types of sanctions would involve: (1) A prohibition on supplying oil to North Korea.

(2) A total trade embargo with the exception of food and medicine.

(3) A total trade embargo including food. North Korea has purchased more food since 1989 as grain production at home has dropped.

(4) A prohibition of the supply of arms. This would affect Russia and China, primarily; although their shipments of weapons to North Korea reportedly has declined in recent years. The Security Council often has employed this kind of sanction against target countries.

EFFECTIVENESS OF SANCTIONS

Security Council sanctions, whether limited or comprehensive, are usually viewed as requiring a long period of time before they may change a country's position on an issue. Imposition of sanctions may actually drive an errant country to become more self-sufficient. U.N. member nations are required, by article 25 of the U.N. Charter, to implement Council sanctions, imposed under Chapter VII of the Charter, and the Council normally creates a committee of the whole to monitor implementation of the sanctions resolution. Member nations are normally requested to report to the Council on the actions being taken to implement the sanctions. Sanctions, however, are very likely to be loosely applied, especially if neighboring countries have traditional cross border relations. See CRS Report 93-964F, Serbia and Montenegro: U.S. Economic Sanctions, for a discussion of the effectiveness of U.N. sanctions applied relative to the former Yugoslav republics.

1. Greenhouse, Steven. Christopher Says U.S. Stays Firm on Korea But Pledges Diplomacy. New York Times, March 23, 1994. p. A2.

2. Xinhua News Service (Beijing), March 30, 1994.

3. Hiatt, Fred. Moscow Proposed Conference to Deal with North Korea. Washington Post, March 25, 1994. p. A25.

4. Smith, R. Jeffrey. North Korea's Neighbors Would Back Punishment. Washington Post, February 12, 1994. p. A8.

5. Gordon, Michael. U.S. to Bolster Forces in Korea. New York Times, March 27, 1994. p. 9.

6. Research Institute for National Unification (Seoul). Economic Problems of National Unification, 1993. p. 54-57.

7. Smith, Charles. Koreans in Japan Subsidize Pyongyang. Far Eastern Economic Review, September 9, 1993. p. 23. 8. Ibid.

9. Lilley, Jeff. Great Leader's Gulag. Far Eastern Economic Review, September 9, 1993. p. 21-22.