Current US efforts to push North Korea to the nuclear bargaining table aim to implement financial sanctions of the kind that helped to bring Iran around to negotiations over its nuclear program – initially by freezing companies that sell into North Korea’s nuclear and missile sectors out of the US banking system, just as the US initially did with Iran. But sanctions on Iran didn’t really bite until the Belgium-based Society for Worldwide Interbank Financial Telecommunication system, known as SWIFT, banned Iran from participation in SWIFT’s secure messaging system for interbank transfers.
In September of 2013, The New York Times reported on how such sanctions affected Iran by effectively closing Iranian merchants out of the international banking system.
That approach worked, however, because Iran’s mature economy depended on interconnections with the world economy. But North Korea’s economy, such as it is, depends almost entirely on connections to the Chinese economy – including banks that primarily front for North Korea. This means that the transactions North Korea needs to keep developing its nuclear and aerospace sectors don’t need to use the international banking infrastructure, and even banning its front-banks from SWIFT – which hasn’t happened yet – wouldn’t have much effect.
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