From the Joong Ang Daily:
Bank sees North pain if sanctions take hold
10/24/2006
Choi Hyung-kyu, Ser Myo-ja
The Bank of Korea said yesterday, in a report prepared for a legislator, that international financial sanctions on North Korea could deal a heavy blow to the North’s shaky economy.
In an assessment for Representative Yim Tae-hee of the Grand National Party, the central bank said a 30-percent reduction in foreign currency inflows to North Korea would lower economic activity by three-quarters of a percentage point. A halving of North Korea’s external trade, the paper said, would reduce economic growth by nearly 5.5 percentage points; a 70-percent falloff in trade would drop economic output by 8.25 points.
Estimates of economic activity in centrally planned economies are difficult at best, however, and North Korea’s secrecy makes such estimates even more tenuous.
“When international financial institutions join in the sanctions and cut the influx of the annual $800 million in foreign currency to the North, Pyongyang will face serious trouble,” Mr. Yim said.
He added, without citing sources, that the North earns about $300 million through legitimate activities, such as inter-Korean economic cooperation deals and remittances from North Koreans abroad, adding that counterfeiting and drug trafficking bring in about $500 million more annually.
Christopher Hill, the U.S. assistant secretary of state for Asia, arrived in Hong Kong on Saturday to meet, among others, William Ryback, the deputy chief executive of the Hong Kong Monetary Authority.
“The U.S. team asked the Hong Kong authorities to cooperate in its effort to freeze North Korean assets in Hong Kong and Macao,” a Hong Kong source said yesterday. “Hong Kong gave a positive answer.”
Another Hong Kong government source said Mr. Hill also asked the government there to help inspect suspect North Korean ships.
“A North Korean ship under a U.S. intelligence watch is on its way to Hong Kong,” the official said. “Mr. Hill asked the authorities to inspect the boat thoroughly when it enters port here.”
