President Trump has signed a new executive order attempting to impose yet more sanctions against North Korea. Since the US has no economic ties with North Kora in the first place, this increasingly means targeting third party entities, and other countries.
This appears to be taking two major forms. The first is sanctions against nations that are continuing to trade with North Korea, though the exact scope of this is unclear. The second, and potentially far more serious, is a wholesale sanction on banks with ties to North Korea.
According to Treasury Secretary Steve Mnuchin, the US will be formally requiring all banks around the world to choose whether to do business with the US or with North Korea, and that will cut all banks that in any way facilitate North Korean trade from US business.
This has been something advocated for awhile by the Trump Administration, but is potentially dangerous. That’s because banks broadly have internal transactions with one another, and trying to excise a certain segment of the banking community for having some involvement with facilitating trade risks cutting broad swathes of the world’s largest banks off from one another, particularly in big countries like China, where such transactions are not unusual.
The US tried similar banking sanctions with Iran, but the situation was different, as those sanctions came before the international digital banking systems were in place. Iran’s banks weren’t integrated into the world’s system as heavily at the time, whereas North Korea’s banking partners, overwhelmingly in China, are.
The key point here is: why is US not
implementing UN SC resolution just passed, after it put all kinds of pressure on ither members to go along and approve? It is because US does not want to comply. Compliance requires US to directly engage in diplomacy, puting its demands on the table and in writing. US does not want Iranian scenario, where once involved in process monitored by multiple nations and organizations — eventually all excuses were exhausted, and deal signed. So now — as soon as the Resolution is passed, US immediatelly continues with unilateral sanctions. These sanctions are really not sanctions. Nobody in international forum “sanctioned” them. Internationally, nobody sanctioned banking system. It is hard to predict the implications, and even harder to figure out WHO the heck is running US foreign policy. Lately, a fellow called Mnuchin seems to make decisions in the level of an Emperor. He came out roaring furiously, threatening to cut China off the dollar system, if it dies not comply with somethingnyet to be specified. UN SB resolutions? China voted for them, and there is no reason for getting twisted in his panties. So, now that the Money King has roared, Trump is meekly complying by “only” punishing the banks that do business with North Korea. And why exactly they would not do business with North Korea? Anything that us not sanctioned by UN — is legal in international law. Did not the ever allert Nikki know this when voting?
Now, naturally only banks that have not a smidgeon of international business can take on processing of payments from/to North Korea. But this is simply churlish– and at some point boring. Mnuchin can roar all he wants, but cutting China off dollar system will hurt US more, with unknown consequences. China may be a step ahead of this game. The yuan-gold payment system introduced for Chinese purchases of energy — will not be helpful to US. China will buy oil and gas for yuans, and the seller has an option to either immediatelly cinvert it to gold, or keep yuan for the payment of trade with China. This system is new, but will catch on fastervshould US make strange threats endangering the value of the dollar.
That would be some third world nations, Russia and the BIG C-word. Some of those sanctions will have blow-back.