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28/07/2018 | How badly are sanctions hurting North Korea’s Kim Jong Un?

The Economist Staff

Not as much as people think

 

THE increasingly severe trade and other sanctions the UN has imposed on North Korea have the aim of getting its dictator, Kim Jong Un, to give up his nuclear weapons. That the sanctions were causing pain plausibly played some part in bringing Mr Kim to suspend his nuclear and missile testing, and to extend a hand first to South Korea and then to the United States, at a summit in Singapore in June with President Donald Trump. Their continuation, say Americans negotiating with North Korea, is essential to maintain pressure on Mr Kim to disarm.

Yet even at the best of times, gauging the state of North Korea’s economy is fiendishly hard. Much of it is closed, and the secretive state publishes almost no economic data. It is up to others to try to piece a picture together. Last week South Korea’s central bank came up with a striking assessment that suggested sanctions were already biting hard last year, before the most serious ones had time to take effect.

According to the Bank of Korea (BoK), North Korea’s GDP shrank by 3.5% in 2017, the biggest contraction since 1997, when the country was in the throes of a terrible famine. The largest effects were observed in sectors that sanctions have directly targeted: mining declined by 11%, heavy industry by 10.4% and construction by 4.4%. Exports to China fell sharply.

This is all consistent with sanctions causing serious economic pain. Most of North Korea’s oil and much of its food comes through China. Kim Byong-yeon at Seoul National University says the figures are a reminder that the North’s economy is more vulnerable to external shocks than might be expected for such a reclusive country. He expects the economy to shrink even more this year, as less revenue from exports hits imports and consumption.

Yet the story may not be as straightforward as the BoK’s numbers suggest. Some indicators commonly used to gauge what is going on do not obviously tally with its assessment. On the black market the North Korean won has barely moved against the dollar since Mr Kim came to power upon his father’s death in late 2011. The unofficial price of fuel, tracked by NKPro, a research outfit, implies no great economic strain. And a stroll about Pyongyang, the capital, suggests that a building and consumption boom is under way.

Other reasons to be sceptical include the central bank’s crop estimates, which come from South Korea’s rural development agency. Its insights about North Korean farm output are little better than anyone else’s. Meanwhile, other data come from the national intelligence agency, which gets plenty of other stuff about North Korea wrong. Trade statistics are derived from data provided by China. Having signed on to UN sanctions, it has an interest in downplaying the extent of its economic relationship with North Korea. Last, official calculations make little allowance for the size of an informal economy from which ordinary North Koreans derive a vast chunk of their livelihoods.

Besides, sanctions can be circumvented, and the North is a master of subterfuge. Crabs caught in North Korean waters are sold to Chinese or Russian fishermen at sea or in mid-river. Dried seafood is smuggled out across a land border with China in the far north. To smuggle coal, North Korean ships turn off their transponders when leaving North Korean waters. They fake port calls in China or Russia, loitering outside ports to create the impression that they are loading there, before moving to another port to unload. The financial transactions associated with these sales are disguised through a welter of front companies abroad. Several thousand tonnes of North Korean coal, marked as Russian, made it to ports around Asia last year. Ship-to-ship transfers in the East China Sea or the Sea of Japan are another, albeit riskier, ploy. American and Japanese spooks report 89 transfers of refined oil products between January and May this year, evading UN-imposed caps on fuel imports.

Brotherly love, again

More important than these tactics are shifting views in China. It is the North’s biggest trading partner, and the sanctions regime has little bite without its full-hearted participation. Its diplomats at the UN continue to pay lip service to the sanctions. Yet the will to enforce them is flagging now that nuclear tensions on the Korean peninsula have eased and ties are improving. Following meetings between Mr Kim and Xi Jinping, China’s leader, Chinese officials are welcome again in Pyongyang. Beijing has reportedly approved a plan by Liaoning province, adjacent to North Korea, to spend 600m yuan ($88m) on new roads on the North Korean side of the “friendship” bridge linking the two countries at Dandong. At his press conference following the Singapore summit, Mr Trump acknowledged that China was easing pressure on North Korea. China, he said, had monitored the border “maybe a little less...over the last couple of months, but that’s OK” (putting him at odds with America’s official, harder line). People on the Chinese side say trade and smuggling are much less hampered by officials than earlier in the year. Local officials have never liked the sanctions. Now, the authorities in Beijing either deem their enforcement less of a priority, or are directing that they be flouted.

In terms of time, effort and lost trade, any sanctions regime has costs for the enforcers, says Andrea Berger at King’s College, London. Last week China and Russia rebuffed an American request at the UN to step up enforcement of sanctions. South Korea has been asking for (and receiving) sanctions exemptions for its own engagement with the North.

So the effectiveness of economic pressure may continue to wane. As it is, on July 22nd the Washington Post reported Mr Trump’s frustration that little had come of a summit with Mr Kim that he did so much to hype. In follow-up meetings with their North Korean counterparts, administration officials have encountered no end of obfuscation and delay. Predictably, in a tweet this week, the president denied the report. And on July 23rd a North Korea-watching website, 38 North, published satellite images suggesting that North Korea had begun to dismantle a key intercontinental missile launch site. If true, Mr Trump will surely boast that sanctions and his brilliant diplomacy are working. Even as Mr Kim maintains other sites and their missiles—and enjoys the benefits of a loosening sanctions regime.

The Economist (Reino Unido)

 



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16/01/2010|
15/01/2010|
15/01/2010|
11/01/2010|
11/01/2010|
10/01/2010|
07/01/2010|
03/01/2010|
03/01/2010|
03/01/2010|
17/12/2009|
15/12/2009|
15/12/2009|
13/12/2009|
13/12/2009|
28/11/2009|
28/11/2009|
28/11/2009|
28/11/2009|
27/11/2009|
27/11/2009|
27/11/2009|
27/11/2009|
27/11/2009|
27/11/2009|
21/11/2009|
21/11/2009|
18/11/2009|
18/11/2009|
16/11/2009|
16/11/2009|
30/10/2009|
30/10/2009|
11/10/2009|
10/10/2009|
10/10/2009|
07/10/2009|
07/10/2009|
04/10/2009|
30/09/2009|
30/09/2009|
27/09/2009|
27/09/2009|
27/09/2009|
22/09/2009|
20/09/2009|
18/09/2009|
18/09/2009|
18/09/2009|
16/09/2009|
16/09/2009|
16/09/2009|
08/09/2009|
07/09/2009|
06/09/2009|
06/09/2009|
05/09/2009|
05/09/2009|
26/08/2009|
21/08/2009|
19/08/2009|
19/08/2009|
15/08/2009|
15/08/2009|
15/08/2009|
11/08/2009|
11/08/2009|
11/08/2009|
11/08/2009|
19/07/2009|
19/07/2009|
18/07/2009|
18/07/2009|
27/03/2009|
22/03/2009|
22/03/2009|
27/01/2009|
27/01/2009|
27/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
17/01/2009|
11/01/2009|
06/12/2008|
06/12/2008|
06/12/2008|
06/12/2008|
23/11/2008|
23/11/2008|
16/11/2008|
16/11/2008|
04/11/2008|
04/11/2008|
03/11/2008|
03/11/2008|
24/10/2008|
24/10/2008|
24/10/2008|
24/10/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
15/09/2008|
06/09/2008|
06/09/2008|
05/09/2008|
05/09/2008|
05/09/2008|
05/09/2008|
01/09/2008|
01/09/2008|
01/09/2008|
01/09/2008|
22/08/2008|
22/08/2008|
17/08/2008|
17/08/2008|
16/08/2008|
16/08/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
28/07/2008|
19/07/2008|
19/07/2008|
24/05/2008|
24/05/2008|
03/05/2008|
03/05/2008|
29/04/2008|
11/02/2008|
05/01/2008|
09/12/2007|
18/11/2007|
10/11/2007|
10/11/2007|
06/11/2007|
06/11/2007|
06/09/2007|
26/08/2007|
25/08/2007|
11/07/2007|
16/06/2007|
16/06/2007|
10/06/2007|
10/06/2007|
19/05/2007|
19/05/2007|
19/05/2007|
19/05/2007|
24/04/2007|
24/04/2007|
14/04/2007|
14/04/2007|
05/04/2007|
05/04/2007|
05/04/2007|
28/02/2007|
28/02/2007|
05/02/2007|
05/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
04/02/2007|
29/01/2007|
29/01/2007|
29/01/2007|
29/01/2007|
11/01/2007|
11/01/2007|
11/01/2007|
11/01/2007|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
27/12/2006|
20/12/2006|
20/12/2006|
17/11/2006|
30/09/2006|
28/07/2006|
12/04/2006|
12/04/2006|
12/04/2006|
06/03/2006|
21/02/2006|
17/02/2006|
31/01/2006|
10/01/2006|
28/12/2005|
31/10/2005|
26/09/2005|
29/08/2005|
11/08/2005|
08/08/2005|
24/06/2005|
24/06/2005|
24/06/2005|
03/04/2005|
03/04/2005|
03/04/2005|
03/04/2005|

ver + notas
 
Center for the Study of the Presidency
Freedom House