- The Washington Times - Sunday, July 1, 2018

The Trump administration has insisted repeatedly that tough international sanctions will remain in place until North Korean leader Kim Jong-un honors his commitment to permanently give up his nuclear arsenal. But with President Trump proclaiming via Twitter that the Korean Peninsula nuclear crisis is “over,” there are growing signs other countries looking to do business with Pyongyang aren’t willing to wait that long.

North and South Korea are talking of re-establishing rail links and improving the North’s road networks, with an eye on facilitating further deals.

Russia is considering energy opportunities, including a gas pipeline, with the Kim regime.

Chinese traders say the crackdown on illicit trade along the North Korean border has eased in the days since Mr. Trump and Mr. Kim held their June 12 summit in Singapore.

India, the North’s second-biggest trading partner after China, has quietly maintained diplomatic links throughout the nuclear crisis and recently sent its highest-ranked diplomat in two decades to Pyongyang to meet with senior North Korean officials.

Secretary of State Mike Pompeo has repeatedly said that U.S. and allied sanctions should not be lifted until “complete denuclearization” is achieved, but even Mr. Trump has hinted that the deadline for doing business may be flexible.

“At a certain point, I look forward to taking [sanctions] off, and they will come off when we know we are down the road,” the president told reporters last week without specifying when “down the road” would be.

The president sees business and investment opportunities for North Korea, one of the most isolated economies in the world, should the nuclear question be resolved.

He told reporters covering the Singapore summit that he outlined for Mr. Kim possible condominium developments and beach resort projects that the North could pursue on beaches currently occupied by the military.

“There will be a point at which, when you’re 20 percent through [the denuclearization process], that you can’t go back,” Mr. Trump said in Singapore. “When you hit a certain point, you can’t go back.”

Chinese and Russian officials have openly hinted that some of the sanctions designed to drive North Korea to the bargaining table can be reconsidered now that Washington and Pyongyang are talking once again.

Radio Free Asia, in a report last month, reported numerous instances of China easing its enforcement of border controls on North Korean commerce, including less-rigorous inspections of trucks crossing the border and increased shipments by North Korean commodity firms selling to Chinese customers.

Russian Foreign Minister Sergey Lavrov, in a visit to Pyongyang in May, embraced the North Korean preferred model of phased concessions by both sides to end the nuclear crisis. Despite U.S. demands, the Russian diplomat said some sanctions could be eased before complete denuclearization is achieved.

“As for sanctions, it is absolutely obvious that, as we start discussions on how to resolve the nuclear problem on the Korean Peninsula, it is understood that the solution cannot be comprehensive without the lifting of sanctions …,” Mr. Lavrov told reporters in North Korea. “There can be no immediate denuclearization. This should be done step by step, and all sides should go halfway during every single phase of this process.”

Backsliding

Mr. Pompeo acknowledged at a Senate budget hearing last week that U.S. officials have already observed some “modest” backsliding by China in enforcing strict sanctions on the North.

“We have observed China not enforcing control over their cross-border areas as vigorously as they were six or 12 months ago,” Mr. Pompeo said.

The State Department said Thursday that Mr. Pompeo talked directly with Chinese Foreign Minister Wang Yi on the importance of ensuring a complete and permanent end to the North’s nuclear and missile programs before pressure can be eased on the North’s economy.

But that hasn’t stopped speculation surrounding a sudden or a gradual opening of the North Korean market.

Financial firm Samsung Securities has produced a 200-page survey of the business and investment opportunities on tap in North Korea. The North is hungry for foreign capital for infrastructure, for mining and for distribution facilities to take advantage of its pivotal geographic location close to some of the world’s most dynamic economies in East Asia.

Some private analysts say the Trump administration faces a tall order to keep its “maximum pressure” campaign in place as the diplomatic process develops.

“China was always going to let down its guard once tensions de-escalated,” said Benjamin Katzeff Silberstein, writing in the newsletter North Korean Economic Watch. “Pressure could certainly get back on if things go back to the way they were earlier in the years, but to count on it as a matter of policy — as if it could be done easily or somehow automatically — is unwise or even naive.”

Michael Green, a top Asia policy adviser in the George W. Bush administration now with the Center for Strategic and International Studies, said the North’s Mr. Kim has already made progress in easing the economic full-court press that Mr. Trump tries to impose.

“Kim has succeeded in blunting and diluting the U.S. campaign of ‘maximum pressure’ — at least in terms of China, which accounts for 90 percent of North Korean trade and has visibly backed away from full implementation of sanctions since the summit was announced,” Mr. Green said at a June 20 hearing of the House Foreign Affairs Committee.

South Korean President Moon Jae-in has long been a proponent of rapprochement with the North, but analysts in Seoul said Mr. Moon is unlikely to get too far ahead of the U.S. when it comes to sanctions policy — even while busily preparing for the day when cross-border economic opportunities open up.

Closely echoing Mr. Pompeo’s line, South Korean Foreign Minister Kang Kyung-wha affirmed Wednesday that “sanctions will remain in place until we are assured that complete denuclearization has been achieved.”

Some say efforts to ease or evade the sanctions could backfire if Mr. Trump reverses course or concludes that the diplomatic route has not borne fruit.

Jonathan Schanzer, vice president of research at the Foundation for Defense of Democracies, said that if North Korea fails to denuclearize, the U.S. could again rally an international coalition to apply more pressure on the regime.

“There really is room for ‘Maximum Pressure 2.0,’” he said. “Should the Kim regime balk at the process of denuclearization, the Trump administration does have new sanctions that it can implement.”

He added, “I think the administration would be wise to have that game plan ready that would deal with Chinese banks, ship-to-ship transfers, foreign workers [and] all of those income-generators North Korea still has — licit and otherwise. We should be prepared to attack in the event of a collapse in these talks.”


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