Kyodo News is claiming that recently enacted UN restrictions on trade in luxury goods to the DPRK are having little effect on shops in Pyongyang (with the exception of Japanese cigarettes). I suspect there are several reasons for this:
1. Sanctions never completely cut off the supply of goods. Where there is a willing buyer, there will almost always be a willing seller (particularly if the buyers is a well-connected party finctionary). Quantity falls a little, price rises a lot. A few more people get into the smuggling business.
2. Most goods are imported from China. China is not as tough on its “little brother” as the Japanese and US.
3. This will raise the value of North Koreans that have legitimate foreign connections (I dont want to name names but you know who you are! 🙂
4. There are several places in Pyongyang worth checking out to learn more aobut the impact of sanctions in Pyongyang. The DHL office in the Foreign ministry building, the shops on changwang street, and the Ragwan department store near the ice skating rink. Ragwan was set up to sell to Koreans who returned from Japan and have yen to spare.
Story below:
Kyodo News (Hat tip DPRK Studies)
12/8/2006
Impact of sanctions not yet felt in Pyongyang stores
While countries have begun drawing up lists of luxury items they will deny North Korea as part of sanctions in response to the country’s nuclear test, the impact of the measure has yet to be felt in the handful of stores that sell imported goods in Pyongyang.
During a recent visit, shelves at a store inside the Koryo Hotel in central Pyongyang were stocked with French perfume, Russian vodka and Japanese “sake” rice wine, and restaurants in the North Korean capital still offered foreign beer.
Nor were changes visible in exchange rates for Japanese yen, the euro and Chinese yuan, which remained at around the level of previous months in several hotels that cater to non-Korean visitors and tourists.
“I would have thought that there would be a run on foreign goods by expatriates here, but so far there has been no major change,” a diplomat living in Pyongyang said. “The stores visited by the foreign community here still have, for example, chocolate and wine.”
After North Korea carried out its first nuclear test in October, the U.N. Security Council passed Resolution 1718, which condemns the nuclear experiment and denies the nation military hardware, nuclear technology and luxury items.
The idea behind the ban on luxury goods is to pressure North Korea’s elite, not the ordinary public, in a country that faces chronic food shortage.
While the U.N. Security Council resolution detailed the military and nuclear items the U.N. member countries will deny North Korea, it left the decision on luxury goods up to each country.
Japan’s list of 24 items, for example, includes high-quality beef, fatty tuna, caviar, fur products and jewelry. Many other countries have yet to complete their lists.
Another Pyongyang resident, meanwhile, said he has noticed one change — a dramatic rise in the price of Japanese cigarettes.
There has been a three-fold increase in the price over the past few months, said the international aid worker.
While cigarettes are among the luxury items Japan denies North Korea under the U.N. resolution, there could be another reason for the price hike — a Japanese ban on port calls by the ferry Mangyongbong-92 which has been in place since North Korea test-fired missiles in July.
The ferry, the only passenger link between the two countries, has also been used to ship Japanese goods into North Korea.
“The impact of the denial of luxury goods would not be very visible” in the streets of Pyongyang as they target the country’s elite, said Noriyuki Suzuki, a senior analyst at Radiopress, which monitors North Korean media in Tokyo.
But the impact of Japanese sanctions that include a halt in all imports from North Korea “would probably result in a gradual decrease in not just luxury items but all Japanese goods in the country,” he said.
