KEI Spotlight

KEI's Troy Stangarone was featured in the January 5, 2014 Voice of America article titled "North, South Korea React to New US Sanctions". Please click here for the entire story.

Troy Stangarone of the Washington-based Korea Economic Institute said the sanctions will accomplish two objectives. He refers to the 2007 U.S. decision to cut ties with Macau-based Banco Delta Asia (BDA) for its alleged business dealings with North Korea.

"There will probably be a small, short-term to medium-term hit to the North Koreans, which seems to be where the administration is going. I think they’re viewing a proportional response as this cost Sony a certain amount of money, [so] we’re going to try to hit North Korea in the pocketbook as well. But, in terms of long-term [implications], after BDA, the North Koreans began changing how they handled money. They kept it in smaller amounts, moving it through different channels to try to evade future financial sanctions. My guess is that, while this may impede some of their arms shipments in the short-term, they will follow the same pattern and try to re-route some things that, in the long-run, this [set of sanctions] will have minimal impact," said Stangarone.

Stangarone added that while putting North Korea back on the state sponsors of terrorism list might be the next step, further financial sanctions are also possible given President Obama”s recent assessment that the Sony attack was an act of “cybervandalism.”

On New Year’s Day, North Korean leader Kim Jong Un said he was open to expanding "dialogue and cooperation" with South Korea. The South earlier offered to hold high-level meetings with North Korea this month.

Stangarone does not believe that will be impacted by the new sanctions, and said the Obama Administration is trying to compartmentalize the situation.

"The State Department had put out a statement saying that they supported South Korean efforts to reach out to North Korea. I think anything that happens between the North and the South will take time to develop, even if we see a summit as Kim Jong Un has suggested. That, most likely, will not be until later in the year after any response to the cyberattack had taken place, and there would be an opportunity for South Korea to lay the groundwork for something like that. So, I think, in terms of inter-Korean relations, I don’t see it having much impact," said Stangarone.

Stangarone said it is unclear whether North Korea will accept the format offered by the South, which includes a new unification committee, but the fact that Kim Jong Un did not reject it during his New Year’s Day remarks is positive. Stangarone added the Koreas need to take a step-by-step approach in order to build up a consistent rapport.