Archive for March, 2016

The UNSC sanctions and the North Korean economy

Friday, March 11th, 2016

By Benjamin Katzeff Silberstein

In the past few days, Daily NK has carried a number of interesting reports on how the latest round of UNSC sanctions have impacted the domestic economy in North Korea. Below, I’ve gathered a compendium of sorts. I’ll continue updating it as more stories surface.

Only a short while after the sanctions were announced, trucks carrying mineral exports were blocked from entering China. Some businesspeople were apparently surprised at China’s relatively forceful implementation of the sanctions, given that little impact had been seen from past sanctions:

Chinese authorities began prohibiting mineral exports from North Korea on March 1st in a move not strictly related to the passing of UN Security Council Resolution 2270, which outlines sanctions against North Korea. North Korean authorities and foreign-earning currency enterprises tied to the military did not see this move coming and expressed embarrassment and shock.

In a telephone conversation with the Daily NK on March 4, a source from North Pyongan Province said, “Beginning on March 1, mineral exports such as coal and ore have not been allowed to pass through Chinese customs into China. Trucks loaded with mineral deposits have been idly waiting in front of Chinese customs near Dandong. The foreign trading companies are simply waiting for instructions from the higher authorities.”

Full story:
Trucks loaded with mineral exports blocked from entering China
Seol Song Ah
Daily NK
2016-03-07

A few days later, Daily NK reported that “panic” had begun to set in, not just among high-level businesspeople and traders involved in the mineral extraction industry, but also among market vendors who worry that they won’t be able to buy products for import from China:

“The news that the UN resolution containing sanctions against North Korea passed unanimously is spreading like wildfire through [domestic] cell phones. People in the North had little interest in sanctions in the past, but these days they are expressing concern that ‘this time things are going to be different,’” a source in South Pyongan Province reported to Daily NK on March 7.

A source in North Hamgyong Province corroborated this news, reporting the same developments on the ground in that region.

“Sinuiju is known as the gateway to China and the ultimate symbol of friendly relations between our two nations. That’s why news of its closure to mineral exports is causing dismay,” she explained, adding that a rumor has also taken off that international customs offices in other border towns such as North Hamgyong’s Rajin and Hoeryong will be shuttered.

Further anxiety is being stoked by the fact that trusted allies such as China and Russia are participating in the sanctions and the fact that residents are getting detailed information about the resolution’s specific clauses.

“People are further concerned because things have apparently changed significantly since China helped the country to overcome the difficulties during the ‘Arduous March,’ [famine] in the mid 1990s. People from all over the country are concerned that China might shut the border down totally. If that happens, it will become difficult for everyone to make a living,” the source indicated.

“Wholesalers and market vendors are feeling the most vulnerable to the UN sanctions. Their greatest fear is that they won’t be able to buy products. Merchants who have been selling Chinese products at cheap prices are expecting a cost increase and have momentarily discontinued sales.”

Full story:
Panic sets in as sanctions specifics circulate 
Daily NK
Choi Song Min
2016-03-08

Not just mineral exports to China have taken a hit. Food products specialties like hairy crab, frequently imported to cities like Yanji in China from North Korea’s northern fishing cities like Rajin, are now being sold at domestic markets instead:

“These days items that were previously hard to find because they were earmarked for export are suddenly emerging at the markets,” a source from North Hamgyong Province told Daily NK on Thursday. “The price haven’t gone down enough yet, so you don’t see too many people actually buying them. But you do see flocks of curious people coming out to the markets to see all the delicacies for sale.”

She added, “High-end marine goods like roe, sea urchin eggs, hairy crab, and jumbo shrimp and produce like pine nuts, bracken, and salted pine mushrooms were once considered to be strictly for export, but now they’re easy to find. The number of such products, referred to as ‘sent back goods,’ at Sunam Market and other markets around Chongjin is growing by the day.”

Additional sources in both North and South Hwanghae Provinces reported the same developments in those regions.

Despite the sanctions that have already kicked in, products from China are still flowing into North Korea. however, the goods sold in bulk to China–minerals like coal, marine products, etc.– have nowhere to go and are therefore making their way back into the country.

Full story:
Would-be food exports to China popping up in jangmadang
Choi Song Min
Daily NK
2016-03-11

Politically, too, the topic of sanctions has become highly sensitive. According to reports by Daily NK, surveillance authorities have increased their focus on certain groups that they deem as more likely than others to speak out about the added pressures from the sanctions:

The boost in surveillance is interpreted as a move by the regime to nip in the bud any rumblings of political unrest engendered by members of society more likely to speak out about the pressure squeezing North Korea. Those tracing the lines of the circumstances leading to this pressure, namely a volley of sanctions lobbed at North Korea by the international community in response to its nuclear test and rocket launch, are a threat to the regime’s authoritarian grip over the population.

A source with the Ministry of People’s Security [MPS, or North Korea’s equivalent of a police force] informed Daily NK on March 8 that internal orders came down at the beginning of March for the MPS to survey and track the recent movements of those anyone ascribed to the “wavering” cohort. Two separate sources in the same province verified this information, but Daily NK has not yet confirmed if the same orders are in effect in other provinces.

Full story:
MPS steps up surveillance to suppress potential ‘pot stirrers’
Kang Mi Jin
Daily NK
2016-03-11

(UPDATE 2016-02-18): a couple of days ago, Daily NK published another piece on this topic. They note that market prices have remained relatively stable, and that many people don’t seem to treat this sanctions round as anything out of the ordinary:

Market prices in North Korea have remained relatively stable despite stronger sanctions enforced by the international community, including China, as well as greater limitations on market operationsdue to nationwide preparation for Pyongyang’s May Party Congress.

Multiple Daily NK sources within the country have confirmed that rice prices in Pyongyang, South Pyongan Province’s Sinuiju, and Ryanggang Province’s Hyesan are trading at 5,100 KPW, 5,150 KPW, and 5,080 KPW per kilogram, respectively, similar to levels before sanctions were stepped up (5,100 KPW, 5,100 KPW, 5,260 KPW).

This is also the case on the foreign exchange front, with 1 USD trading for 8,150 KPW in Pyongyang, 8,200 KPW in Sinuiju, and 8,170 KPW in Hyesan, showing some signs of strengthening for the local currency from pre-sanction rates (Pyongyang 8,200 KPW, Sinuiju·Hyesan 8,290 KPW).

“There had been concern we would see fewer goods in the market because of UN sanctions, but in reality, there hasn’t been much difference,” a source from North Pyongan Province told Daily NK in a telephone conversation on Sunday. “The state is placing restrictions on opening hours for the market for the ‘70-day battle’ (mobilization for the Party Congress), but the markets have remained lively, and there’s not much change in terms of market prices.”

Further confirming trends previously reported by Daily NK last week, an additional source in North Hamgyong Province reported yesterday that some people had stocked up food worried about sanctions from the UN, but that this hasn’t led to a violent gyration in prices. “Actually, in some regions, we’re seeing prices of certain products drop,” he noted.

This price stability seen in the marketplace, in spite of the sanctions having kicked in earlier this month, can be attributed to the fact that most products are still trading as they would have save one of the North’s main export items: minerals.

The simple reality that people have experienced similar times before is also at play. “In the past, people who had stockpiled food during other sanctions discovered that after the political climate evened out a bit they were unable to get their money’s worth for everything they bought. This is why we’re seeing less of it,” a source from Ryanggang Province explained. “Initially there was a little bit of noise, but in general people are remaining calm.”

Full article:
Market prices so far showing resilience against sanctions
Daily NK
Kang Mi Jin
2016-03-14

Also, Marcus Noland recently launched a “Black Market Contest” at the Witness to Transformation blog, letting readers bet on what will happen with the unofficial exchange rate as a result of the sanctions:

The exchange rate issue has re-emerged with the imposition of sanctions. My colleague Steph Haggard leans toward the view that the imposition of a broader set of sanctions, particularly with respect to mining, together with enhanced Chinese enforcement will generate a balance of payments cum financial crisis with uncertain implications for political stability. I am more skeptical of both the additional coverage and the likely Chinese rigor in enforcement.

But this is an empirical issue. If the sanctions bite, then one would expect to see their effects manifested in the black market rate on the won. So we decided to offer up this conundrum to the wisdom of the crowd, or at least of our readership, in this Witness to Transformation Black Market Contest. Yes, you can ply your wits against North Korean loan sharks and black market traders. Or maybe the North Korean monetary authorities. Here’s how it works.

Steph thinks that within two months, evidence of the impact of sanctions should begin to emerge. So the object of the contest is to guess the black market won-dollar rate two months hence. Since the sanctions resolution passed 2 March, we will use the first DailyNK average rate applying to the post-2 May period as the reference. So you have the next month to analyze trade data, contact spies in Dandong, or call in favors in Switzerland to inform your estimate. Whoever guesses closest to the May black market rate wins. In the event of a tie, whoever submitted their entry first wins.

Please list your estimate in the comments section below. The entry period closes 15 April.

Full article:
Witness to Transformation Black Market Contest
Witness to Transformation blog
Marcus Noland
2016-03-16

(UPDATE 2016-05-02): DailyNK continues to cover domestic prices in the context of the sanctions. In late April, vegetable prices rose, but rice prices remain notably stabile:

Despite these high prices, movements on the rice and foreign currency front have remained relatively stable, leading people to believe the spike in vegetables will be short lived.

“Vegetables are not export items and therefore their prices are determined by domestic supply and demand,” the Pyongyang-based source noted. “However strong the sanctions may be, rice prices have nonetheless remained the same and, under these conditions, not many will choose to eat expensive cabbages over rice,” the source added, suggesting that prices are likely to return to normal as the markets readjust for supply and demand.

Full article here:
Vegetable prices spikes, rice remains stabile 
Daily NK
Kang Mi Jin
2016-04-28

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North Korea emphasizes economic independence amid pending international sanctions

Thursday, March 10th, 2016

Institute for Far Eastern Studies (IFES)

With the soon-to-be announced UN Security Council’s sanctions against the DPRK in response to the country’s recent provocations, North Korea is urging economic independence through its ‘speed battle’ to confront the resolution.

On February 29, the state-sponsored Rodong Sinmun newspaper emphasized that “against the sanctions, building an independent national economy based on today’s modern technology is the utmost important mission for us . . . as without strong self-reliant economy, we cannot move towards autonomy.”

The newspaper also defined the building of the independent national economy as “a historical mission that is challenging but needs to be achieved for a bright future.”

Such claims by the DPRK can be interpreted as a means to unite the country behind the Party and prepare the people for the upcoming sanctions, as the UN Security Council is about to pass the most impactful sanctions against the country ever.

North Korea is also urging its people to join the ‘70-day campaign’ to greet the upcoming Seventh Congress of the Workers’ Party of Korea, which is to be held in May. The 70-day campaign is a ‘speed battle’ (as it is traditionally known), which is a socialist mobilization technique employed to increase people’s performance in order to meet economic production or construction targets in the building of a strong country. This technique was first introduced in North Korea’s economic planning back in the early 1970s. The newspaper emphasized that the goal of this year’s 70 day-long campaign is to overcome the struggle in solidifying the Party under the monolithic leadership based on the philosophies of Kim Il Sung and Kim Jong Il – i.e., Kimilsungism-Kimjongilism.

The 70-day speed battle will be a good opportunity to observe the leadership capabilities of Kim Jong Un following the era of his late father Kim Jong Il. With the international community gearing towards announcing sanctions against North Korea due to the country’s latest nuclear test (of possibly a hydrogen bomb) and launch of a long range missile, economic stabilization of the country through robust policy can be regarded as a ‘battle’ related to Kim’s leadership. That is, the 70-day speed battle is not just an ordinary economic mobilization campaign, but 70 days of establishing Kim Jong Un as ‘leader’ as the Party Congress approaches.

On the same day (February 29), the Choson Sinbo (the pro-North Korean newspaper published in Japan) emphasized in a column that “the initial bill on sanctioning the DPRK has been drafted for the fifth time. . . . which shows that no sanctions can compromise Choson [DPRK] from building an autonomous strong nation.”

The newspaper criticized the United States saying “the United States has shown the most savage and brutal side of imperialism by asking China to join the sanctions against the DPRK with such terms that completely isolates the DPRK from the world, aiming for the country to be unable to exist and ultimately collapse as a state.”

The newspaper also said that the claim that the UN sanctions will not affect the North Korean people’s livelihoods is completely hypocritical and cunning, and expressed disappointment with China’s agreement to the sanctions.

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Anniversary of State Planning and statistic organs observed

Saturday, March 5th, 2016

State-plannin-commission-2015-8-6

Pictured Above (Google Earth): State Planning Commission

KCNA reports on the anniversary of the State planning Commission:

A national meeting was held at the Central Youth Hall Saturday to mark the 70th anniversary of the founding of state planning and statistic organs.

President Kim Il Sung was very busy building new democratic Korea after its liberation but founded the first central planning and statistic organ on March 6, Juche 35 (1946) on the basis of feats and experience gained in the flames of the anti-Japanese revolutionary struggle.

The establishment of the central planning and statistic organ helped start a new history of planned economy, a new history of popular statistics which could put overall economic development of the country under control in a uniform way and develop it at a rapid tempo.

Under the wise leadership of the President, the socialist system of planning and statistic work was established, ranks of officials were built and the material and technical foundation was consolidated. As a result, the socialist planning and statistics have performed their mission and role as a powerful weapon for the revolution and construction.

It would be nice to know how busy these guys still are.

The DPRK ceased publishing economic performance statistics (Net Material Product-NMP tables) in 1965, and the last state budget  was announced for FY 2001 (21,570,800,000 won), but no budget numbers have been reported since, only percentage increases in relevant areas. Today, the DPRK releases economic data only on rare occasions, but aside from the lack of availability, there are numerous other problems with using the DPRK’s economic data to obtain credible insight into the North Korean economy.

I post DPRK economic statistics sources here.

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Over 500 types of high-quality mineral reserves in North Korea

Thursday, March 3rd, 2016

Institute for Far Eastern Studies (IFES)

North Korean website DPRK Today recently lauded the copious amounts of over 500 types of quality mineral reserves in North Korea including iron ore, anthracite, bituminous coal, gold, silver, and copper. This news appeared amidst the discussions about expanding international sanctions on North Korea’s mineral exports after the fourth nuclear test.

An article titled “Choson from the Geological Perspective,” written by Dr. Choe Won Jong, researcher at the Institute of Geology of the National Academy of Sciences, was posted on the DPRK Today website on February 18.

According to Dr. Choe, North Korea has rich mineral reserves with over 500 types of minerals including billions of tons of iron ore, coal, bituminous coal, silver, copper, lead, zinc, tungsten, magnesite, graphite, and limestone. Reportedly six rare minerals including holdongsok, suansok, and sangpaldongsok were first detected in North Korea and aptly named after the regions where the discoveries were made.

Dr. Choe commented, “The reason that the Republic [DPRK] has a wealth of natural resources is likely to be influenced by the long history and diversity of crustal movement over time. . . . the earth of our country has a long history of more than 3.6 billion years.”

It was said that most of the graphite deposits were formed about 2.5 billion years ago and Ryongyang and Taehung magnesite deposits, Komdok lead-zinc deposits, and Tanchon-Hochon region non-ferrous metal deposits were formed 2 billion years ago. It reported that there are high quality diatomite deposits in Taehongdan County, formed when the pumice of Mount Paektu erupted about 1,000 years ago.

According to Choe, in geological terms, these underground resources were formed as the crust structure of the Korean peninsula is positioned in the eastern outskirts of the Eurasian continental crust as it abuts against the Pacific oceanic crust in the west.

He further explained that there were at least ten big crustal movements surrounding the Korean peninsula, and over 16 periods of magmatism that occurred in North Korea which led to massive granite formation over the years and at this occurrence, non-ferrous metals such as gold, copper, tungsten, and molybdenum, as well as rare metals and rare earth metal deposits were formed.

Non-metallic deposits and copper, iron metal deposits such as graphite, muscovite, feldspar were formed during over seven periods of metamorphism, which reportedly also improved the quality of already existing iron ore and magnesite deposits. From the northeast region that stretches from Mount Paektu to Kilju-gun, all the way to Pukchong-gun to Samsu-gun in the northwest of Machonryong Range, a famous deposit formation region can be found that is said to be rich in magnesite, lead, zinc, copper, gold, iron, and other minerals.

Dr. Choe boasted, “Truly, Machonryong Range can be seen as a great treasure chest in the Korean peninsula . . . . our country has become more and more abundant in underground resources as we are surrounded by the sea on three sides. However, gems must be polished to shine,” and thus he emphasized the need for the development and utilization of these resources.

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UNSC adopts new DPRK sanctions: UNSC Resolution 2270

Wednesday, March 2nd, 2016

UPDATE 7 (2016-3-24): The Daily NK reports that DPRK coal shipments are sitting in limbo outside of Chinese ports.

UPDATE 6 (2016-3-18): NPR discusses China’s interest in enforcing new sanctions:

Beijing has begun instructing Chinese banks, ports and shipping and trading companies doing business with North Korea to implement the U.N. resolution to the letter.

Adam Szubin, the Treasury Department’s acting undersecretary for terrorism and financial intelligence, tells NPR that China is taking this very seriously.

“I know from my meetings here in Beijing that my counterparts have very much taken the resolution to heart,” he says.

Szubin, who visited Beijing this week, says the new sanctions will hit hard enough to change Pyongyang’s “decision-making calculus.”

The new U.N. resolution is not just “adding a few new companies to a sanctions list or a few new North Korean officials,” Szubin says. Instead, it targets “every major aspect of North Korea’s access to international shipping, international banking [and] international trade to develop revenues for its missile and illicit nuclear programs.”

Although China appears committed, the sanctions put it in a tough spot.

First, says People’s University international relations expert Cheng Xiaohe, some Chinese companies are going to take a hit to their bottom line. China-North Korea trade was worth $6.86 billion in 2014.

“At the same time as we protect our national security interests, we must be prepared to sacrifice some of our own economic interests in order to accurately target North Korea with sanctions,” he says.

Cheng says the U.S. has its work cut out for it, collecting intelligence on the hundreds of Chinese firms doing business with North Korea, and on North Korean firms adept at concealing their business dealings behind fronts and shells.

And if Chinese firms are found to be violating the U.N. resolution, Cheng points out, they could themselves face sanctions.

“This could create new frictions between the U.S. and China,” he warns. “I hope that the U.S. will think carefully before it uses this big stick to crack down on Chinese firms.”

Cheng notes that China continues to supply North Korea with crude oil as humanitarian assistance. The sanctions allow this, even if North Korea may be able to refine some of the oil for military uses.

China says neither a humanitarian crisis nor regime collapse are acceptable outcomes for North Korea. But Zhang Liangui, a veteran North Korea watcher at China’s Central Party School in Beijing, says that at the end of the day, China cannot save North Korea from its fate.

“If North Korea is going to collapse,” he says, “no external force can prop it up. Frankly speaking, whether it collapses or continues to develop will mainly depend on its own domestic and foreign policies.”

UPDATE 5 (2016-3-15): According to UPI, the Philippines has searched a second DPRK ship.

UPDATE 4 (2016 3-10): Sanctioned North Korean ship, Gold Star 3, was turned away from Hong Kong port. According to Yonhap (via Korea Times):

Hong Kong has banned a North Korean freighter, which is blacklisted by new U.N. sanctions over the North’s latest nuclear test and rocket launch, from berthing at its port, a source with knowledge of the matter said Thursday.

The North Korean freighter Gold Star 3 arrived at the Hong Kong port on Wednesday to get fuel and supplies for its crew, but Hong Kong authorities did not allow the ship to dock at the port, the source said on the condition of anonymity.

The ship is among 31 vessels operated by a North Korean shipping company, Ocean Maritime Management, which is hit by the new U.N. sanctions.

For now, the ship is said to be staying in international waters, according to the source.

Media reports have said the Chinese port of Rizhao in the eastern Shandong province also barred another North Korean ship from docking at the port.

China has said it will “earnestly” implement the new U.N. sanctions, but the sanctions should not affect the well-being and humanitarian needs of North Korean people.

Still, China is unlikely to put crippling sanctions on North Korea because a sudden collapse of the regime could spark a refugee crisis at its border and lead to a pro-U.S., democratic Korea on its doorstep, analysts say.

UPDATE 3 (2016-3-6): North Korea ship impounded in Philippines. According to Yonhap:

A North Korean ship impounded in the Philippines last week was registered as being from Sierra Leone via a practice called flag of convenience, South Korea said Sunday.

Flag of convenience is a business practice of registering a merchant ship to a country other than its origin for the purposes of avoiding taxes and other regulations.

The Philippines seized the North Korean ship Jin Teng on Saturday, becoming the first country to enforce sanctions on the reclusive country since the United Nations Security Council passed a more comprehensive resolution last week.

Resolution 2270 subjects 31 ships belonging to North Korea’s Wonyang Shipping Corp. to an asset freeze and sanctions.

Despite being Sierra Leone-flagged, the Jin Teng was seized because the sanctions are imposed via the ship’s International Maritime Organization (IMO) number, not its country of origin, a South Korean official said.

Nine other ships on the list are registered as being from countries other than North Korea, including Tanzania and Cambodia, the official added.

Here is coverage in Xinhua.

UPDATE 2 (2016-3-4): Analysis of the sanctions by the European Council on Foreign Relations:

The case of sanctions against North Korea – where earlier resolutions were already adopted in 2006, 2009 and 2013 – provides a useful window into their efficiency and limits. All the more so because the debate on this latest round of sanctions has been long and hard (it has been nearly two months since the DPRK’s nuclear test of 6 January). As noted by ECFR’s Mathieu Duchâtel earlier this week, China and Russia have taken a big step towards tightening the noose around Pyongyang – by accepting to place limits on its external revenue, in areas that go much beyond the illicit activities directly targeted by the resolution. They have agreed to a ban on the export of coal, iron ore, rare earth and other minerals, as well as gold, and also to inspection of North Korean cargoes in other ports. The sanctions include North Korean diplomatic offices that harbour entities otherwise targeted by sanctions. All of these developments have the potential to be game changers. The fact that China – which received 90 percent of North Korea’s foreign trade given earlier sanctions – has agreed to the sanctions, certainly gives some indication of how vast the chasm between the Chinese and North Korean leadership is growing.

But more questions arise as a result of these sanctions, and on three different levels. Firstly, what are the limits of the resolution, secondly, how will it be implemented, and thirdly, what has been conceded or left out in order to secure this result at the United Nations Security Council.

The limits of these sanctions can be uncovered in the wording of the resolution itself. Almost all new sanctions can be overridden if the trade is being made for “humanitarian” or “livelihood purposes”. These exceptions only apply if they do not generate “revenue”, which would seem to reserve the provision of bona fide food or medical assistance. Alas, the resolution’s language appears to be contradictory in places. Point b of article 28 exempts trades which are “exclusively for livelihood purposes and unrelated to generating revenue for the DPRK’s nuclear or ballistic programs or other activities prohibited”. This clearly leaves the door open to other revenue streams. It is not clear whether the resolution will target North Korea’s export of indentured labour – not only in Russia, but in Poland and reportedly in Lithuania and Slovakia too. In these places there are North Korean workers remitting over 70 percent of their wages to the state – which leaves them with just $120 a month for living.

This loophole, along with the exclusion of oil imports from sanctions, has all the hallmarks of being imposed by China. There are many others too, such as the exclusion of coal re-exported from the port of Rason – a transit center for Mongolian coal towards Russia. Aviation fuel cannot be sold to North Korea but its planes can be fueled elsewhere on a return journey. North Korean financial institutions and firms elsewhere are subject to sanctions, with trade banned, but foreign firms already present in North Korea are not.

More important than these concerns is the undefined nature of “inspections” in foreign ports. In this respect, the US sanctions go much further by imposing checks on third parties. It will be interesting to see if the European Union, a champion of the “smart power” of sanctions, follows suit. Some, for example the French, who still suffer from the heavy fines imposed by the US on BNP Paribas because of its actions in Sudan, may beg to differ. In any case, the practical difficulties of checking, for example, on China’s immense export and re-export volume preclude an efficient implementation. What happens in Dandong, China’s notoriously opaque harbor that processes North Korea’s trade, is key. US sanctions will create moral hazard for traders, which is altogether a desirable but insufficient goal.

Which leads us to a third observation. The resolution has left a wide gamut of sanctions open to interpretation. In practice, these interpretations will be dictated by China, North Korea’s chief intermediary with the outside world. In some aspects, the resolution hands the key to North Korea’s economic fate to China, even if one might believe that North Korean diplomats are experts at circumventing restrictions, and creatively exploiting loopholes in “easy” third countries. After all, who will be checking the “humanitarian” nature of its relations with Namibia?

UPDATE 1 (2016-3-2):  Chinese banks halt transfer of yuan currency to N. Korean banks. According to Yonhap:

Chinese banks in the northern border city of Dandong have suspended the transfer of the yuan currency to North Korean banks, Chinese financial sector officials told Yonhap News Agency on Wednesday.

The move comes as the U.N. Security Council is set to vote on new sanctions against North Korea’s fourth nuclear test and rocket launch this year.

Employees of the Dandong branch offices of China’s top four state-owned banks, including Agricultural Bank of China and Industrial and Commercial Bank of China, as well as six commercial banks such as China Merchants Bank, told Yonhap that the suspension came after “orders” from their headquarters.

Since North Korea’s third nuclear test in 2013, the Dandong branches of the Chinese banks have halted the transfer of U.S. dollars to North Korean banks.

An employee of the Dandong branch of the Agricultural Bank of China said the order came down after North Korea’s fourth nuclear test in January.

Dandong is a border city between North Korea and China and a main conduit of bilateral trade between the two neighboring countries.

ORIGINAL POST (2016-3-2): According to the Washington Post:

The U.N. Security Council unanimously adopted harsh sanctions Wednesday against North Korea, imposing some of the strongest measures ever used to pressure Pyongyang to abandon its nuclear weapons program.

The new sanctions come two months after North Korea tested what it claimed was a hydrogen bomb and a month after it conducted what was widely described as a banned missile test under the guise of launching a satellite into space. But U.S. officials began drafting the measures three years ago, soon after North Korea conducted a previous nuclear test, in order to move swiftly the next time it happened. Negotiations to win China’s support began two days after North Korea’s January nuclear test, its fourth in a decade.

The resolution is far more sweeping than existing sanctions requiring a link to proliferation activities. That precondition has been removed, in effect erasing the presumption of innocence.

It mandates cargo inspections for all goods going in and out of North Korea by land, sea or air, chokes off supplies of most aviation fuel for its armed forces, and bans the sale of all small arms and conventional weapons to Pyongyang. It also prohibits transactions that raise hard cash for North Korea through sales of its natural resources.

The resolution doubles the blacklist of people and institutions already sanctioned and requires countries to expel North Korean diplomats involved in any sanctioned activities.

One provision was designed to prevent Pyongyang from sending taekwondo instructors to train foreign police forces. Another bars North Koreans from specialized training at any school or research center in the world if the learning can advance Pyongyang’s nuclear and ballistic missile programs.

President Obama welcomed the sanctions as a firm and appropriate response to North Korea’s attempts to develop weapons of mass destruction.

“Today, the international community, speaking with one voice, has sent Pyongyang a simple message: North Korea must abandon these dangerous programs and choose a better path for its people,” he said.

As soon as the sanctions were released, the Treasury Department and the State Department updated their blacklists of people and entities tied to the Democratic People’s Republic of Korea, the official name for North Korea, and its proliferation programs. The designation freezes their U.S. assets and bars Americans from doing business with them.

The U.N. sanctions, which target the country’s elites and avoid “adverse humanitarian consequences” for civilians, aim to accomplish what worked with less onerous sanctions on Iran by pushing the impoverished nation to quit pumping money into its nuclear program.

“The chronic suffering of the people of North Korea is the direct result of the choices made by the DPRK government, a government that has consistently prioritized its nuclear weapons and ballistic missile programs over providing for the most basic needs of its own people,” said Samantha Power, the U.S. ambassador to the United Nations.

“The North Korean government would rather grow its nuclear weapons program than grow its own children,” she added.

The resolution was presented by the United States with the support of China, a sharp reversal, given Beijing’s longtime support of its neighbor. Although the United States has long had an embargo on trade with North Korea, China has provided food and fuel and has been a key trading partner. In recent years, living conditions in North Korea have improved, thanks in large part to China.

In the past, China has been unwilling to tighten the screws on Pyongyang, in part out of concern for what an imploding, unstable North Korea might mean for China’s own border. But recently North Korea has continued testing new weapons and missiles, disregarding China’s warnings and personal envoys.

After North Korea on Jan. 6 detonated a new device — calling it a hydrogen bomb, although most experts say it was a smaller nuclear device — China’s ambassador to six-party talks, Wu Dawei, went to Pyongyang to urge restraint. Instead, North Korea announced while he was there that it would test a missile.

China’s about-face suggests it has started to realize that doing nothing would impose growing political costs internationally — the possibility of a greater U.S. presence in the region and weaker relations with South Korea, which Beijing has been cultivating.

“I expect there’s been a delayed recognition in China to the political price China was paying, with South Korea in particular, for its equivocation or outright silence about how to respond to North Korea and North Korea actions,” said Jonathan Pollack, a specialist on East Asian politics and security at the Brookings Institution.

During a visit to Washington last month, Chinese Foreign Minister Wang Yi hinted at the strains in policy toward North Korea.

“On the one hand, we’re saying to the international community . . . that the normal exchanges, especially those affecting the livelihoods of the North Korean people, should not be adversely affected,” he said at the Center for Strategic and International Studies. “On the other hand, in order to uphold the international nuclear nonproliferation regime for the sake of denuclearization, our exchanges will be affected to some extent.”

But some analysts question the depth of China’s commitment to the latest round of sanctions.

“The real question going forward is whether China will enforce the new measures,” said Victor Cha, a professor at Georgetown University. “My guess is that China will squeeze for a little bit, but not too hard, while the U.S. will want China to squeeze harder and for a longer period of time.”

Sung-Yoon Lee, a Korean studies professor at Tufts University, said the U.N. sanctions, even if violated in the future, will become increasingly meaningful if ordinary citizens in North Korea are adversely affected.

“The fact the U.N. is involved will lend greater legitimacy to the effort to sanction North Korea and enable others, like Japan and Europe, to shoulder some of the blame if there are negative repercussions from sanctions, so the blame doesn’t just fall on the shoulders of the United States,” he said.

Preparatory work on the sanctions began in early 2013, immediately after the Security Council passed a sanctions resolution in response to North Korea’s third nuclear test, according to a State Department official who spoke about the sensitive negotiations on the condition of anonymity. U.S. officials concluded that incrementally ratcheting up sanctions was insufficient and that more restrictive measures were needed, the official said.

As technical experts from many government agencies met to share ideas, a contingency draft of sanctions was repeatedly updated to be ready for a fourth nuclear test by North Korea.

On Jan. 8, two days after North Korea announced the fourth test, diplomats from the U.S. mission to the United Nations presented a draft to the Chinese mission. There was little response during January as China studied the proposed sanctions, which dropped requirements to prove proliferation links, as China had insisted on previously.

China did not change its position during a Jan. 27 visit to Beijing by Secretary of State John F. Kerry or during a Feb. 5 phone call that Obama placed to Chinese President Xi Jinping.

But after the Feb. 7 missile test, the State Department official said, the Chinese came around to the U.S. point of view. Throughout much of February, U.S. and Chinese diplomats met several times a day to discuss provisions that had to be approved by Beijing, the official said.

“At 8 or 9 at night, diplomats at the U.S. mission would schlep to the Chinese mission,” the State Department official said. Then they would meet again the next day after Beijing had worked through the provisions overnight.

After a tentative agreement was reached early last week, U.S. officials had hoped for a quick adoption by the Security Council. But there were delays while Russia studied the sanctions to gauge their impact. Russia transports coal over a short stretch of railroad in North Korea to a port, and Moscow wanted reassurances it would not be banned, the official said.

In recent days, North Korea has boasted that more sanctions would not hurt. Now China, South Korea, Japan and the United States are awaiting its reaction. Early Thursday, hours after the sanctions were approved, the North fired short-range projectiles into the sea, South Korea’s Defense Ministry said.

“We’ve seen its reckless and unpredictable acts for years,” Power said. “We’ve seen threats directed at the continental United States and the Republic of Korea. We’ve seen cyberattacks on American companies costing hundreds of millions of dollars. We do not expect a change of behavior overnight.”

Read the full story here:
U.N. adopts sweeping new sanctions on North Korea
Washington Post
Carol Morello and Steven Mufson
2016-3-2

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Rason imposes entry fee at Chinese border

Tuesday, March 1st, 2016

Rason imposed a RMB10 fee for individuals (more for vehicles) to enter the economic and trade zone in December last year.

Rason-border-charge-2015-12

I have translated the notice and posted here as a PDF.

 

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Russian food donation to North Korea

Tuesday, March 1st, 2016

By Benjamin Katzeff Silberstein

The World Food Program (WFP) has announced that Russia has donated 4 million dollars worth of wheat to feed particularly vulnerable populations in North Korea. According to the WFP, the amount will contribute to feeding about 620,000 people for four months. I’ve pasted the WFP press statement below, but interested readers should also check out the Facebook post of the Russian Embassy in Pyongyang, which has pictures of the delivery ceremony. WFP’s statement:

PYONGYANG – A ship carrying wheat donated by the Russian Federation successfully delivered its cargo in the port of Nampo today. The wheat will help the United Nations World Food Programme (WFP) to meet the nutritional needs of more than 620,000 children and women for a period of four months.

“Russia takes an active part in WFP’s operations in general, and in particular in its activities in DPRK. We highly appreciate WFP’s efforts aimed at providing aid to the most vulnerable strata of the country’s population, including children and pregnant and nursing women. We know that the Koreans feel deep gratitude because of this timely and valuable help. We consider it important that Russian flour and wheat are used to produce nutritious cereals and biscuits in local factories,” said Alexander Matsegora, Russian Ambassador to the Democratic People’s Republic of Korea (DPRK).

The wheat will be used in locally-produced fortified biscuits and “cereal milk blend” – a specially designed flour fortified with essential micronutrients, which is used to make pancakes or bread.

“I would like to thank the Russian Government for this generous donation and its continued commitment. The Russian contribution is timely following a poor harvest after last year’s drought and comes at the end of the cold and harsh winter. WFP’s assistance is crucial to ensure young children grow into healthy adults by giving them the nutritious food they need,” said Darlene Tymo, WFP’s Representative and Country Director in DPRK.

The wheat was procured by WFP thanks to a contribution of USD 4 million from the Russian Federation. In the last five years, Russia has donated a total of USD 22 million to WFP in DPRK.

Almost a third of children under five in DPRK do not have enough diversity in their diet and are short for their age – a condition known as stunting. If children miss out on crucial vitamins and minerals in the first few years of their lives, it can affect long-term development and growth. WFP’s nutrition assistance helps to provide vital nutrients to children, as well as to pregnant and nursing mothers.

Full statement here:
Russian Contribution Support WFP Nutrition Assistance In DPRK
World Food Program
03-01-2016

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