{"id":3814,"date":"2018-08-20T15:05:09","date_gmt":"2018-08-20T06:05:09","guid":{"rendered":"http:\/\/www.01.asiapress.org\/rimjin-gang\/?p=3814"},"modified":"2021-07-02T14:13:32","modified_gmt":"2021-07-02T05:13:32","slug":"20180820-un-sanctions-nk-exports-drop","status":"publish","type":"post","link":"https:\/\/www.02.asiapress.org\/rimjin-gang\/2018\/08\/society-economy\/20180820-un-sanctions-nk-exports-drop\/","title":{"rendered":"UN Sanctions Lead to a 90% Drop in North Korean Exports (ISHIMARU Jiro)"},"content":{"rendered":"
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A North Korean woman washing clothes along the Yalu River, at the border with China. Photographed July, 2017 ISHIMARU Jiro<\/p><\/div>\n

 <\/p>\n

\u25a0 Exports Drop by 90%<\/h2>\n

Last year, the Kim Jong-un regime focused on nuclear and missile upgrades, carrying out a total of 17 ballistic missile firing tests and detonating a nuclear bomb 10 times more powerful than the one dropped on Hiroshima. In response, the UN Security Council strengthened sanctions by three steps, further restricting North Korean trade. Since then, we have worked with our partners in North Korea to investigate the effects of the sanctions and observe their emerging effects.<\/p>\n

This past February, reports of the sanctions\u2019 effects became increasingly severe. We received information that coal mines had stopped operations, trading companies had closed their business, electricity had been shut off, distribution had been cut, and that goods were no longer being sold in the markets.<\/p>\n

The culprit behind the domestic market\u2019s failure was China. Responsible for a whopping 90% of North Korea\u2019s international trade, China\u2019s decision to institute full-scale sanctions was a crippling blow to North Korea\u2019s economy. To demonstrate this point, let us look at the following trade statistics from before and after the sanctions.<\/p>\n

According to monthly trade statistics released by the Customs Authority of China, exports from North Korea to China totaled $94.26 million in February of 2018, down 94.6% from February the year before. In March, North Korea's exports totaled $ 12,378,000, down 89.2% from the year previous. The following month, exports fell even further, to $ 11,767,000, down 88.1%. To put this massive decrease in perspective, North Korea's total exports to China in 2016 equaled approximately $2.55 billion.<\/p>\n

The economic sanctions targeted North Korea\u2019s most productive industries. First, exports of textiles, seafood, coal, iron, silver, copper and nickel were all banned. Secondly, the sanctions prohibited all UN member countries from granting working permits to North Korean laborers. Additionally, any North Koreans already working abroad were, in principle, to return to their country within two years.<\/p>\n

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Values inside parentheses are percentage changes compared to the previous year \/ Unit: millions of USD \/ Source: Trade statistics of the General Administration of Customs of the People\u2019s Republic of China<\/p><\/div>\n

 <\/p>\n

\u25b2January-June China-NK trade statistics. Trade was severely hit by sanctions.<\/p>\n

Exports to North Korea were also significantly restricted. As a result, exports of petroleum products such as kerosene and gasoline fell by nearly 90 percent from 4.5 million barrels in 2017 to less than 500,000 barrels since January of this year. Furthermore, exports of industrial machinery and transport vehicles were also banned entirely.<\/p>\n

When the United Nations initially imposed the sanctions there was a strong concern that China and Russia would, once again, refuse to fully implement the sanctions. To evaluate the credibility of the sanctions myself, I visited North Korea\u2019s Chinese border for a total of four weeks, from July to October last year. There, I found that the \"authenticity\" of China's sanctions went well beyond expectations. On the road to the North Korean border, Chinese guards conducted a heavy check for smuggled goods. All customs procedures were strict and there was no solicitation for bribes.<\/p>\n

Following the release of UN Security Council Resolution 2375 in September of last year, China\u2019s ministry of commerce issued an order giving North Korean businesses and individuals located in China, as well as joint ventures between North Korean and Chinese companies outside of its borders, 120 days to close. The ministry\u2019s order was strictly enforced, as all North Korean restaurants in China were given until January 9 to shut down. China\u2019s operations in North Korea were also affected, with Chinese companies withdrawing from North Korean mines and commercial fisheries. To counter the government measures, however, the joint ventures moved to transfer ownership to Chinese partners and, following the recent summit meetings, the North Korean restaurants in China were allowed to reopen.<\/p>\n

Following the release of UN Security Council Resolution 2375 in September of last year, China\u2019s ministry of commerce issued an order giving North Korean businesses and individuals located in China, as well as joint ventures between North Korean and Chinese companies outside of its borders, 120 days to close. The ministry\u2019s order was strictly enforced, as all North Korean restaurants in China were given until January 9 to shut down. China\u2019s operations in North Korea were also affected, with Chinese companies withdrawing from North Korean mines and commercial fisheries. To counter the government measures, however, the joint ventures moved to transfer ownership to Chinese partners and reopened. Smugglings through the loopholes in the border are hard to stop. But the scale of all these is not big enough to hinder the sanction so much.<\/p>\n

Russia also seemed to implement more stringent sanctions than expected. According to an April 2018 study conducted by Dr. Iriya of Waseda University, an estimated 30,000 North Korean workers in Russia\u2019s Far East region were returning to North Korea. Although the North Korean workers were allowed to see out the length of their contracts, under UN sanctions, further authorizations were illegal.<\/p>\n

Russia also seemed to implement more stringent sanctions than expected. According to an April 2018 study conducted in the area of Primorsky Krai including Vladivostok and Sakhalin by Iriya, a visiting scholar of Waseda University, an estimated 30,000 North Korean workers in Russia\u2019s Far East region were returning to North Korea one after another, it was hard to see them in person.<\/p>\n

Thanks to its overseas laborers, the North Korean government takes in an estimated $180-280 million each year. Due to sanctions, however, this will have been greatly reduced.
\nI estimate that the importation of foreign currency due to the dispatch of overseas workers is about 178 billion to 268million dollars for the year, mainly for the rest of the world. This would have been greatly reduced by sanctions.<\/p>\n

Thanks to its overseas laborers, the North Korean government takes in an estimated $180-280 million each year from Russia and China. Due to sanctions, however, this will have been greatly reduced.<\/p>\n

Next Page : \"I cannot eat and live\"- Abandonment of Duty...<\/strong><\/p>\n

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A picture of Musan, taken from the Chinese side of the border. An iron mine is located in a mountain to the left. November, 2012 ISHIMARU Jiro<\/p><\/div>\n

 <\/p>\n

\u25a0\"I cannot eat and live\"- Abandonment of Duty<\/h2>\n

Trade statistics and local evidence in China and Russia clearly demonstrate that North Korea's foreign currency imports have sharply decreased. What is important though is what kind of influence this is actually having in North Korea. Is the North Korean regime capable of enduring the sanctions? Or is Kim Jong-un\u2019s regime being hit hard enough to be put under real pressure? Over the last year, our North Korean partners visited mines, trading companies, fisheries and markets to investigate.<\/p>\n

From our partners\u2019 observations, we can conclude that North Korean cities specializing in export-related industries are being hit the hardest. Meanwhile, the situation is rapidly deteriorating in other areas as well. In addition, the sanctions are also being felt strongly by those in Pyongyang and the military primarily responsible for maintaining the North Korean system. Lastly, the affluent elites of Pyongyang are also being hit.<\/p>\n

Musan-gun, North Hamkyung, is a medium sized city facing the Tumen River with an estimated population of 100,000. During the Japanese colonial era, this city developed alongside the trade of iron ore.As trade with China expanded, iron ore became the country\u2019s second highest export, bringing in $ 219.9 million in 2014 and $ 74.41 million in 2016. (Source: Global Trade Atlas 2017 edition).<\/p>\n

As several Chinese companies had entered into joint ventures to mine in North Korea, the Chinese government expressed interest in 2013 in building a railway to cross the Tumen River. This interest has dropped, however, since iron ore exports have been completely cut off since the end of last year. Our partner living in Musan-gun gave us the following description of the local situation.<\/p>\n

\"We are mining a small amount to supply the domestic steel mills but they too are almost shut down. Cars aren\u2019t being driven because there is no one has the money for gasoline. Workers' food rations have been suspended since March. Some of the workers have had no choice but to look for other jobs and to abandon their posts. 30 to 40 percent of workers just register their attendance before leaving work early.<\/p>\n

The rising abandonment of duty is a major problem for the Kim Jong-un regime. In North Korea, adult males are assigned employment by the government. During the famine of the 1990s, when most workers at factories and companies lost their salaries and food rations, they were still required to go to work for political gatherings or service work. One of the most important instruments of the North Korean government\u2019s control is organization through the workplace. To safeguard this mechanism of control, the security office checks workplace attendance sheets each morning. Those who are caught with many unauthorized absences are sent to the training camp, a short-term forced labor camp.<\/p>\n

 <\/strong><\/p>\n

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Administrative Districts and Major Cities of North Korea<\/p><\/div>\n

 <\/p>\n

Musan mine was one of the few large, state-owned enterprises that has somehow managed to maintain food rations and salaries for its estimated 10,000 workers. However, recently it is where many have abandoned their duties.<\/p>\n

\"Attendance suddenly dropped after pay and distribution was cut off. The workers had no way to eat or live. The security officers originally intended to look for the workers and force them to go to work but they saw the poverty of the workers and chose not to. There are many people who simply lack the strength to work properly if they go to the workplace. Workers who are absent and leave early in the day to go to the mountains and collect herbs and wild plants for sale are the ones who manage to survive.\"<\/p>\n

Musan is a city that survives off its iron mines. Because the exports were completely stopped, life became suddenly hard for the people. In mid-May, each worker was provided with 3 meals of dried Chinese noodles in lieu of a salary.<\/p>\n

In late March, our contacts visited copper mines in Hyesan, Yanggang province, where workers are facing a similar situation. The copper mines were operated in cooperation with Chinese companies but, due to the sanctions, the contracts were dissolved at the end of August last year.<\/p>\n

\"Up until now, around 800 workers at the Hyesan mines were paid 14 kilograms of rice and 20-50 kilograms of cooking oil each month. Cooking oil used to be distributed in lieu of proper payment by the Chinese partner company but, since February, this practice has come to an end. Workers are forced to go to work while their family members are left to run business and support the family. However, the lives of the workers and their families have become tremendously difficult.\"<\/p>\n

Mines producing high quality coal are concentrated in South Pyongan Province. Coal is the most important source of foreign currency for North Korea. In 2017, before the sanctions became strictly enforced, about $ 1.18 billion of coal was exported to China. When the sanctions blocked coal exports, North Korea lost roughly 48% of its total exports to China.<\/p>\n

The coal industry is massive in North Korea. Millions of people are employed in this industry which includes such selecting coal(\uc120\ud0c4), machine repair, electric power, and transportation. No field survey has been conducted but it is easy to imagine that as exports have ceased, cash income has declined. Regular markets located near coal mines will have suffered deeply after the flow of goods and currency was blocked. Part 2 >>><\/strong><\/span><\/a><\/p>\n

<\/span><\/a><\/strong><\/p>\n

\"\"<\/a>Editor\u2019s notes on North Korean reporters<\/a><\/span><\/a> <\/strong>
\nARCHIVE(pdf) >><\/a>
\nDPRK MAP >><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

  \u25a0 Exports Drop by 90% Last year, the Kim Jong-un regime focused on nuclear and missile upgrades, carrying out a t\u2026<\/p>\n","protected":false},"author":1,"featured_media":3817,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0},"categories":[12],"tags":[],"_links":{"self":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts\/3814"}],"collection":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/comments?post=3814"}],"version-history":[{"count":0,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/posts\/3814\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/media\/3817"}],"wp:attachment":[{"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/media?parent=3814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/categories?post=3814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.02.asiapress.org\/rimjin-gang\/wp-json\/wp\/v2\/tags?post=3814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}