North Korea: Trade, Opportunity And Russia

Rajin Port, North Korea, 2011. Photo credit: Laika ac. Licenced under Creative Commons.

EVEN WITH UN trade sanctions against North Korea in place, China’s trade with North Korea rose 15% in the first five months of this year to just over $2 billion, according to customs data.

China is certainly buying less from North Korea, principally because it suspended coal purchases in February in response to North Korea’s fifth nuclear test in defiance of UN demands. However, it is still importing iron ore.

In the other direction, more Chinese oil (up 18% year-on-year) and goods, notably telephone equipment, textiles, soybean oil and vehicles, are flowing into North Korea.

The first-quarter data, which show a 37.4% rise in total trade, has drawn the predictable irascible tweet from US President Donald Trump, whose administration is showing signs of increasing frustration with Beijing’s attempts to be cooperative in reining in Pyongyang’s nuclear weapons ambitions.

The debate is intensifying in Washington over how honest an ‘honest broker’ Beijing is over North Korea. Is it, too, as frustrated with Pyongyang as its public statements suggest? Or is it less than neutral, still supporting Kim Jong-un’s regime to greater or lesser extent.

The darker conspiracists in Washington believe Beijing is ‘running’ North Korea with the end of keeping the peninsula on the brink of instability to keep US regional allies diverted from China issues while making China, as North Korea’s only ally and main aid donor, the essential partner in any brokered solution that never comes.

This Bystander thinks that a conspiracy theory too far, not least because subcontracting the maintenance of managed instability to the agency of the Kim dynasty seems such a high risk.

More likely, to our mind, China is protecting its red-line position. Beijing does not want the Pyongyang regime to collapse for fear of the outcome being a US-aligned unified Korea on its border, over which an influx of North Korean refugees, possibly starving, will already have poured.

Thus it will lean on Kim, but not heavily enough to topple him. This leaves the United States squeezed between taking direct action — which is everyone’s last resort, though one that Trump may resort to more readily than others — and imposing further sanctions, most likely next targeted at more banks and companies, including Chinese companies, thought to be financing North Korean trade, especially illicit trade.

Remittances by North Koreans working abroad are another potential target. A UN report in 2015 estimated that there were more than 50,000 North Koreans working abroad in mining, logging, textile and construction industries around the world, generating  $2.3 billion a year for the regime.

Which is one of the points where Russia enters the picture. Along with China, Russia is the main employer of North Korean workers. Thirty thousand North Koreans are estimated to work there.

Earlier this month, the Russian ambassador to the UN rejected the United States’ call for new sanctions against North Korea following its latest missile test. Instead, though it supported previous UN sanctions, it repeated China’s calls for restraint on all sides, similarly worried about the risk of instability that could be triggered by a strict sanctions regime.

Washington views the Russian position on North Korea, which is suspects to be opportunistic, sceptically, and as a sanctions busting. Last month, it imposed sanctions on two Russian companies, one for allegedly supplying a North Korean firm involved in the nuclear programme, the other for shipping petroleum products to North Korea.

Russia’s trade with North Korea is minimal: total trade last year was worth $77 million. That is a deceptive figure because much of the trade goes via China. Up to $500 million would be more realistic.

Still relatively tiny (and nothing compared to what it was in Soviet days). However, it jumped in the first quarter of this year, by 85% year-on-year, according to Russia’s customs service. The bulk of this consisted of Russian exports of coal ($26.7 million-worth) and oil ($1.2 million-worth).

Often forgotten, there is a railway that runs from the Russian side of the short Russia-North Korea border across the Tumen river to Rajin (seen above in a 2011 photograph), a North Korean port from which Siberian coal is shipped. New port facilities had been built in a joint venture with the South Koreans until they pulled out last year.

Sanctions-busting fuel deliveries to compensate for those lost from China also get through to North Korea clandestinely via this route. North Korean coal reportedly goes in the opposite direction. The line has four rails to accommodate both Russian and Korean gauge rolling stock.

However, the recent spike in Russian exports goes against the trend of falling exports over the previous three years, a trend mirrored by China, as it happens.

Last week, during President Xi Jinping’s visit to Moscow, he and his Russian counterpart President Vladimir Putin said the two countries would co-operate to defuse the North Korean crisis. Russia will not undercut Beijing’s leadership on the issue, but it is steadily inserting itself into the equation and is likely to be opportunistic, adding a further layer of complexity and uncertainty to an already seemingly intractable situation.

Advertisements

Leave a comment

Filed under China-Koreas, China-Russia, Trade

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s