Facing the Wall of Sanctions: Is There a New Path for Inter-Korean Cooperation?
Jisun Yi
Research Fellow, Institute for National Security Strategy
Recent signs of closer alignment between Pyongyang and Beijing, underscored by Chairman Kim Jong-un’s participation in China’s Victory Day celebrations, have reignited concerns of “Korea passing.” Against this backdrop, Seoul urgently needs a strategy that can reinvigorate both U.S.–North Korea dialogue and inter-Korean engagement.
Within the enduring constraint of international sanctions, innovative approaches that leverage international development cooperation may prove to be an indispensable task for the new administration.
Sanctions: The Paradox of Inter-Korean Cooperation
Sanctions against North Korea represent the international community’s legitimate response to Pyongyang’s nuclear and missile provocations. Yet over time, the sanctions regime has evolved from a deterrent mechanism into a structural paradox—an obstacle to rebuilding inter-Korean trust and establishing a sustainable framework for cooperation.
The Moon Jae-in administration advanced ambitious proposals for inter-Korean development cooperation under the vision of a “Korean Peninsula Peace Process.” These initiatives, however, were effectively stalled by sanctions.
While UN measures presented a structural barrier, U.S. financial sanctions—particularly secondary boycotts—shifted risk directly onto firms and financial institutions, leaving proposed projects either unrealized or reduced to symbolic gestures. The result was deepened mistrust in Pyongyang toward Seoul’s capacity to deliver.
Sanctions Shift: An Inflection Point for Regional Balance and Peace
Sanctions remain the principal constraint on inter-Korean engagement, yet the international sanctions landscape is showing signs of strain and potential change. Recent developments suggest that the legitimacy and sustainability of comprehensive sanctions regimes are under growing scrutiny.
The partial lifting of sanctions on Syria after more than a decade, combined with the U.S. decision to temporarily ease specific financial sanctions against Russia in advance of the 2025 U.S.–Russia summit, highlight a broader recalibration toward diplomacy-centered strategies. Should these approaches yield tangible outcomes—such as normalization with Syria or progress on Ukraine—they could weaken the normative foundation of the global sanctions architecture.
Equally significant is the growing reluctance of Global South countries to implement sanctions, coupled with the rise of sanctions evasion and anti-sanctions discourse.
These trends indicate that sanctions are no longer the unifying mechanism of international consensus they once were. In Northeast Asia, while intensifying U.S.–China strategic rivalry heightens tensions, both powers also seek to manage risks and avoid outright confrontation. The growing competition over reconstruction assistance and economic partnerships in the developing world illustrates that even amid rivalry, selective cooperation remains possible.
A Dual Strategy for Advancing Inter-Korean Cooperation
Under these evolving conditions, Seoul should adopt a dual-track strategy: exploiting loopholes within existing sanctions while pursuing broader bypass strategies through international frameworks.
First, humanitarian carve-outs and exemptions within UN and U.S. sanctions frameworks provide practical entry points. UN Security Council Resolution 2664 (2022), for example, is expected to accelerate approvals for health, food, climate, and child-focused cooperation. Indirect modalities—through international organizations or NGOs—offer safer and more credible channels than direct government-to-government engagement.
Second, while exemptions remain narrow and one-off, lessons from past failures—such as the 2018 inter-Korean railway survey—point to the importance of scaling projects appropriately.
Rather than large infrastructure ventures with low exemption prospects, “small deal” approaches focused on humanitarian or development cooperation are more realistic. Crucially, projects aligned with U.S. strategic objectives (e.g., food security, public health, supply chain resilience) are more likely to secure licensing and reduce financial risks.
Beyond exemptions, South Korea should expand multilateral avenues of cooperation. Linking with UN platforms such as the SDGs, UPR, and VNRs—where North Korea already has partial participation—could help normalize Pyongyang’s engagement.
In parallel, triangular cooperation with Global South countries, including Mongolia, Southeast Asia, and Africa, offers opportunities to diffuse political sensitivities, increase exemption likelihood, and cultivate practical niches for experimentation.
From Sanctions Response to Diplomatic Experimentation
Since the failure of the Hanoi summit, Pyongyang has institutionalized distrust toward Seoul under the banners of “self-reliance” and “frontal breakthrough.”
Its embrace of a two-state framework in late 2023 underscored this estrangement. In this context, the critical question is how Seoul can transform the sanctions framework from a static constraint into a flexible instrument of diplomacy.
Rather than avoiding the political sensitivities of sanctions, South Korea should harness their institutional flexibility and deploy creative diplomacy to reopen channels for dialogue. This requires recalibrating its aid strategy to reduce rigid preconditions, avoid narrow humanitarian framing, and advance mutually beneficial development agendas. The key lies not in achieving sanctions relief per se, but in widening the space for cooperation and embedding flexibility within the sanctions regime.
Now is the moment for diplomatic experimentation. The new administration faces a decisive juncture: to seek opportunities for peace within the interstices of sanctions rather than be confined by them. This is both a practical necessity for crisis management on the Korean Peninsula and the potential key to unlocking a renewed path for inter-Korean dialogue through the strategic use of international development cooperation.