Mary Beth Nikitin, Coordinator
Analyst in Nonproliferation
Mark E. Manyin, Coordinator
Specialist in Asian Affairs
Specialist in Asian Affairs
Dick K. Nanto
Specialist in Industry and Trade
The United Nations Security Council unanimously passed Res. 1874 on June 12, 2009, in response to North Korea's second nuclear test. The resolution puts in place a series of sanctions on North Korea's arms sales, luxury goods, and financial transactions related to its weapons programs, and calls upon states to inspect North Korean vessels suspected of carrying such shipments. The resolution does allow for shipments of food and nonmilitary goods. As was the case with an earlier U.N. resolution, 1718, that was passed in October 2006 after North Korea's first nuclear test, Resolution 1874 seeks to curb financial benefits that go to North Korea's regime and its weapons program. This report summarizes and analyzes Resolution 1874. In summary, the economic effect of Resolution 1874 is not likely to be great unless China cooperates extensively and goes beyond the requirements of the resolution and/or the specific financial sanctions cause a ripple effect that causes financial institutions to avoid being "tainted" by handling any DPRK transaction.
On the surface, sanctions aimed solely at the Democratic People's Republic of Korea (DPRK, the official name of North Korea) and its prohibited activities are not likely to have a large monetary effect. Governments will have to interpret the financial sanctions ban of the resolution liberally in order to apply sanctions to the bank accounts of North Korean trading corporations. A key to its success will be the extent to which China, North Korea's most important economic partner, implements the resolution. A ban on luxury goods will only be effective if China begins to deny North Korea lucrative trade credits.
Provisions for inspection of banned cargo on aircraft and sea vessels rely on the acquiescence of the shipping state. In the case of North Korean vessels, it is highly unlikely that they would submit to searches. Resolution 1874 is vague about how its air cargo provisions are to be implemented, in contrast to the specific procedures set forth regarding inspecting sea-borne cargo. While procedures are specified for sea interdictions, the authority given is ambiguous and optional. Further, DPRK trade in small arms and ammunition is relatively insignificant, and therefore the ban on those exports is unlikely to have a great impact.
Other CRS Reports may be useful in conducting research on this issue: CRS Report RL30613, North Korea: Terrorism List Removal, by Larry A. Niksch; CRS Report RL33590, North Korea's Nuclear Weapons Development and Diplomacy, by Larry A. Niksch; CRS Report R40095, Foreign Assistance to North Korea, by Mark E. Manyin and Mary Beth NikitinCRS Report RL32493, North Korea: Economic Leverage and Policy Analysis, by Dick K. Nanto and Emma Chanlett-Avery; CRS Report RL33324, North Korean Counterfeiting of U.S. Currency, by Dick K. Nanto; CRS Report RL34256, North Korea's Nuclear Weapons: Technical Issues, by Mary Beth Nikitin; and CRS Report RL32097, Weapons of Mass Destruction Counterproliferation: Legal Issues for Ships and Aircraft, by Jennifer K. Elsea.
Date of Report: April 15, 2010
Number of Pages: 27
Order Number: R40684
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