Is Seventh time’s the charm the magic number for North Korean sanctions?05/10/17
QUTEFS’ new Publication Director, Alex Conroy, revisits the issue of North Korea’s economy and what the latest round of sanctions means for this undisputed member of the nuclear club in this edition of The Take:
Since our last article new sanctions have been levied against the Democratic People’s Republic from both the United Nations and the United States, so we have decided to look at how these sanctions stack up against their predecessors to see if the latest round will finally accomplish what so many other sanctions have failed to do in the past.
While there are many different avenues that this topic could, and might yet be discussed, such as, what exactly is the point of all this escalation, assuming that the two main parties don’t just want a war? Why now after all this time? This issue of The Take will aim to check if the main growth areas of the North Korean economy as outlined in the previous article will continue to prosper as the North Korean regime needs them to.
As stated previously, many of the sanctions placed on North Korea were meant to disrupt the elites of the regime and suppress military expansion. Unfortunately, given that most of these sanctions have occurred after a nuclear test or missile firing they have failed to accomplish at least the latter. The two latest rounds of sanctions are now taking direct aim at many of the practices that regime have in place to continue financing their military programs despite the sanctions.
The UN sanctions aim to accomplish this by banning coal, iron, lead & seafood exports, limiting crude oil imports, while banning textile and natural gas imports. Finally, the UN has banned North Korean workers from working abroad. The US has taken this a step further with President Trump among other things has issued an executive order banning foreign financial institutes from dealing with both the United States and North Korea, expanding the US’s powers to freeze the assets of any company, business, organisation or individual that trades in goods, services or technology with North Korea, this also includes a 180-day ban on any aircraft or vessel that enters North Korea from entering the US, including any vessel that deals in ship-to-ship transfers with any North Korean vessel. To remove any doubt or traces of subtlety from this move Treasury Secretary Steven Mnuchin stated: “Foreign financial institutes are now on notice going forward they can choose to do business with the United States or North Korea, but not both”.
From an Australia perspective, this is where life could get difficult. If China continues to push back from the sanctions, it may cause a breakdown in China/American relations. The nightmare scenario for our largest economic partner and our largest military ally.
So, how will this potentially affect the black, white, and grey of the North Korean economy?
The White economy: North Korea’s official export is coal, which is now on the UN ban list and foreign financing through China which would freeze China from dealing with the US. These sanctions significantly impact the white economy, providing that China enforces them.
The Grey & Black economies: With the grey economy being an overgrown marketplace for citizens to trade goods with one another to supplement their insufficient food supplies, it is unlikely that this will be directly affected by the new sanctions. However, there is all the potential for the already limited food available in the country will become even more scarce.
This leads to the final two major points of the last article, illicit drug manufacturing and exporting of labour. While North Korea shouldn’t find it too hard to continue manufacturing these drugs, they may find it slightly more difficult to export them under the new restrictions. However, any criminal syndicate worth its salt will continue to operate so no one shouldn’t expect the reported several billion dollars to go away anytime soon.
The real blow from these sanctions comes from the complete ban on the export of labour from North Korea, this action will be felt on every level of North Korean society.
To summarise the latest sanctions placed on North Korea will most likely have a real effect on the economy and the people of the Democratic People’s Republic, if for nothing else than these ones have been designed in a way that China is finally having to enforce them.
Ultimately only time will tell if these sanctions will have a definitive effect on the North Korean economy. However, I would never underestimate the craftiness of a country where getting methamphetamine is as easy as getting a cup of tea. I am sure they will be up all night working on their economic issues. I only hope that we will have the luxury of time when it comes to North Korea.
Alex is the Publications Director at QUTEFS. If you are interested in writing an article for The Take, contact firstname.lastname@example.org