North Korean trade network adaptation strategies under sanctions: Implications for denuclearization

Abstract

North Korean trade networks have adapted to international sanctions through a variety of strategies to solve the problem of operating in a hostile environment at both the global level, and at the local level. At the global level, they have engaged in obfuscation of the nature of trade and actors, use of state prerogatives and resource, and arbitraging the countries in which they operate. At the local cross-border level, North Korean trade networks maintain relationships with brokers that obfuscate their true nature, and engage in smuggling across the Chinese border by land, river, and sea. How North Korean trade networks have adapted to sanctions has implications for denuclearization. First, the sanctions-evading strategies used by North Korea in many respects originated in the changes wrought in the North Korean economy since the 1990s, and as such, they are likely to continue even if sanctions are loosened. Second, while North Korean trade networks have adapted to sanctions, this is not necessarily their optimal scenario for economic development, which has implications for Kim Jong-un's denuclearization strategy. Finally, the trade networks themselves can continue to be used as part of a hedging strategy by North Korea even if denuclearization is continuing apace, but this strategy requires the cooperation of non-North Korean businesses.