Cause for optimism? Financial sanctions and the rise of the Sino-North Korean border economy

Lee, Jong-Woon and Gray, Kevin (2017) Cause for optimism? Financial sanctions and the rise of the Sino-North Korean border economy. Review of International Political Economy, 24 (3). pp. 424-453. ISSN 0969-2290

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This article critically engages with recent arguments that financial sanctions are capable of overcoming the shortcomings of traditional trade sanctions as well as more targeted ‘smart sanctions.’ Much of the existing analysis of financial sanctions cites as evidence of their success the case of the US Treasury's 2005 accusations against Macao's Banco Delta Asia of facilitating North Korean money laundering. We argue, however, that analysis of the broader impact of financial sanctions on North Korea's principle bilateral economic relationship, namely the Sino-North Korean border economy, reveals that such measures have merely served to increase the scope of evasive economic activity. In particular, financial sanctions have meant that methods of trade settlement in the border economy are based primarily on cash and barter, with minimal recourse to the official banking system. This raises questions not only regarding the effectiveness of financial sanctions but also the degree to which they serve to provoke counter-responses that actively undermine the broader objectives pursued by sender states. Through examining the case of Sino-North Korean border economy, this article contributes to a more comprehensive understanding of the shortcomings of financial sanctions as a tool of foreign policy.

Item Type: Article
Schools and Departments: School of Global Studies > International Relations
Depositing User: Sharon Krummel
Date Deposited: 01 Mar 2017 15:53
Last Modified: 02 Jul 2019 14:30

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