Editor’s note: This article originally stated that the report recommended against re-designating the North a state sponsor of terror. While the report notes several complications with the re-designation, no actual recommendation is offered. NK News regrets the error.

A report by a Washington public policy research institute has noted challenges against returning North Korea to the state sponsors of terrorism list, saying diplomatic opportunities would be lost and little would be gained.

“Redesignating the DPRK as a terrorism sponsor appears unlikely to inflict significant direct economic punishment on North Korea, particularly in the short term,” the report, issued by Congressional Research Service, said.

“The Kim regime could perceive redesignation as a threat to its two-track policy of nuclear development and economic development, with the latter goal partially dependent upon influxes of foreign investment.”

The report also said it may prevent future opportunities for dialogue by convincing Pyongyang, as well as Beijing, that Washington is not interested in negotiations.

A designation on the state sponsors of terrorism lists – the report notes that countries can be designated under more than one U.S. law, hence there is technically more than one list – carries several consequences, including a ban on arms-related trade, control of exports of “dual-use” items with both military and peaceful applications, plus prohibitions on economic assistance.

North Korea was designated a state sponsor of terrorism by the United States government starting in 1988, when the Ronald Reagan administration listed them in response to the bombing of Korean Air Flight 858 the previous November. The George W. Bush administration removed them from the list in 2008 in return for steps taken toward disabling their nuclear program.

The report cites a U.S. Department of State claim that the North has not been linked conclusively to a terrorist act since 1987. This is disputed, the report notes, by those who cite Pyongyang’s past support for Hamas and Hezbollah, as well as past cooperation with nations still on the list, namely Iran, Cuba and Syria.

However, incidents cited fall outside the State Department’s six-month window used for determining listings.

One event that does not fall outside this window is the hacking of Sony Pictures Entertainment in late 2014, which the U.S. government officially blames on the North – though some cyber security specialists dispute this – and has announced sanctions. Even if the North Korean government’s role in the incident can be proven, though, the report said this would not qualify for redesignation.

“As of January 2015, a cyber-related incident directed at the United States has never been used as justification for inclusion on the state sponsors of terrorism lists,” the report said. It also cited the precedent of five Chinese military hackers who, in May 2014, were indicted for “computer hacking and economic espionage” against six American citizens employed in the fields of nuclear power, metals and solar products.

“A suggestion to add the government of China to the state sponsors of terrorism lists does not appear to have been voiced after this incident,” the report said.

Joshua Stanton, a sanctions expert, disputed the report’s findings, regarding both the effects of redesignation and the justification for doing so.

“A key point whose significance they missed is that an SSOT listing would close an important loophole in our weak sanctions against North Korea,” he said. “Finally, the fact that the State Department continues to claim that North Korea hasn’t sponsored an act of terrorism since 1987 is – there is no other word for this – a lie, one that smacks of unaccountability and bureaucratic arrogance.

“South Korean courts have repeatedly convicted North Korean agents of international kidnappings, assassinations, and assassination attempts. A U.N. Panel of Experts has offered voluminous evidence of North Korea’s arms exports intercepted en route to Iran – arms that intelligence sources tell reporters were bound for Hamas and Hezbollah.”

Balazs Szalontai of Kookmin University also noted that removing North Korea from the list in 2008 did not prevent a deterioration of relations after this, though he said they would surely react negatively to a re-listing.

“Using the issue of cyberterrorism as a justification is a somewhat risky course of action, since Russia was also repeatedly suspected of such acts but the U.S. government would hardly declare the Russian government a state sponsor of terrorism on such grounds,” he said. “North Korean involvement in Middle Eastern violence would be a stronger argument, but it may also have some disadvantages in the sense that the current Middle Eastern conflict with the Islamic State potentially weakened North Korea’s alliance with Iran and Syria, whereas the act of re-listing might reinforce it again.”

Ultimately, Szalontai said the chances of a diplomatic breakthrough are low, but said re-listing would create “additional complications.”

“It may adversely affect inter-Korean relations, too,” he said. “Some sort of sanction specifically limited to cybercrime might be more practical. ”

Picture: KP Tripathy, Flickr Creative Commons