Tag Archives: sanctions

China Walks The Line On North Korea

THE LIKELY PRICE of China’s support for the tough new sanctions on trade and investment that the United Nations has voted to impose on North Korea is that they do not include oil. That will mitigate the risk of economic collapse in North Korea that Beijing so fears will trigger a tidal wave of refugees into its north-east provinces and the breakdown of internal order in the northern half of the peninsular that could leave US or US-allied troops hard against its border.

Beijing is having to play a difficult game in keeping the Trump administration in Washington from reverting to unilateral military action to stop Pyongyang’s nuclear programme, with all the uncertain consequences that might bring. Our man at the UN sends word that Russia, presumably with China’s support, tried but failed to get the United States to avow military action.

At the same time, Beijing’s erstwhile ally in Pyongyang continues to see the benefits of being a nuclear-armed regime as far outweighing any economic pain it has to endure to get there. Regime survival rather than national well-being is its underlying priority.

In the end, as this Bystander has previously suggested, the rest of the world may have to accept a nuclear-armed North Korea and bring it into the arrangements the nuclear powers use to ensure such weapons are not deployed but remain deterrents.

However, Pyongyang still has a way to go in its nuclear arsenal before it can feels secure with deterrence. It may have an intercontinental ballistic missile that it can lob on the United States, but not yet the capability for that missile to deliver a targeted nuclear strike.

The United States is determined that Pyongyang’s nuclear programme be rolled back, so it does not reach that point. That does not seem something that Pyongyang will accept, as its still inflammatory rhetoric implies. Threats of engulfing the US in “an unimaginable sea of fire” will do little to mollify US President Donald Trump.

China has called on Pyongyang to halt its tests (in exchange for the suspension of large-scale U.S.-South Korean military drills), in a bid to lower the temperature and get the six-party talks going again. Much of the being-the-scenes activity at the ASEAN meeting now underway in Manila and where all the actors including North Korea will be present, will be to that end.

Footnote: The latest UN sanctions ban North Korean exports of coal, iron, iron ore, lead, lead ore and seafood. In November, the Security Council capped the North’s coal exports at $400 million annually. China, the largest buyer, suspended imports in February.

Reuters news agency quotes a U.N. diplomat as saying that the expected value of North Korea’s exports of iron and iron ore in 2017 was $251 million, with $113 million coming from lead and lead ore, and $295 million from seafood.

The latest available full year figures from trade data, for 2015, show North Korea’s exports of minerals and metals at $1.4 billion, accounting for 49.9% of exports. Seafood exports totalled $115 million.

The new sanctions also prohibit countries from hiring additional North Korean labourers working abroad, bans new joint ventures with North Korea and any new investment in current joint ventures.

In 2015, a UN human rights investigator estimated that Pyongyang had sent more than 50,000 people to work abroad, mainly in Russia and China, earning between $1.2 billion and $2.3 billion a year for the government.

Enforcement of the sanctions falls heavily on China, which buys 83% of North Korea’s exports.

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China, Myitsone And The Company It Keeps

There are three partners in the controversial Myitsone Dan project that Myanmar has just suspended. One is China Power Investment Corp., one of the five biggest state-owned power companies, producing 10% of China’s electricity. Its subsidiary, Sinohydro, one of the world’s largest dam contractors and now doing an IPO on the Shanghai exchange, is the primary subcontractor on Myitsone, along with another Chinese state-owned dam builder, China Gezhouba, the main contractor for the Three Gorges Dam and which gets half its business outside China.

The Ministry of Electric Power-1 is Myanmar’s partner along with Asia World Co., part of a politically well-connected Myanmar conglomerate founded in 1992 by Lo Hsing Han, a storied Chinese militia leader from the Golden Triangle who has been described by the U.S. Treasury as “one of the world’s key heroin traffickers” since the 1970s. Asia World is managed by one of Lo’s four sons, Law, also known as Steven Law and Tun Myint Naing, who was denied a visa to visit the U.S. in the mid-1990s because, we understand, of his suspected connections to drug trafficking.

The Asia World group of companies is currently subject to U.S. sanctions imposed by the Bush administration against supporters of the military junta that ran Myanmar before the current military-backed civilian government. Lo and Law, were described as “two key financial operatives of the Burmese regime”. Included in the sanctions were 10 Singapore-based companies owned by Law’s wife, Cecilia Ng, who is Singaporean.

Law, now in his mid-50s, is said to be one of the wealthiest individuals in Myanmar in part on the back of a series of lucrative government contracts Asia World won for the construction of ports, highways and government facilities in the country. The group also has interests in trading, manufacturing, real estate and transport. It has done well out of China’s estimated $8 billion of investments in Myanmar, being involved in the oil and gas pipeline being built to connect southern China with the Indian Ocean, the construction of a deep-water port at Kyauk Phyu, which is also the terminus for the pipeline, and the Tasang hydroelectric dam as well as the one at Myitsone. Law was included in the delegation President Thein Sein led to Beijing in May.

When Xinhua reported on the sanctions imposed by the U.S. in 2008 against Asia World, it made no mention of its founder being an illicit drugs kingpin. There is no credible evidence that the Asia World companies are directly involved in drug trafficking but there can be little doubt that it wouldn’t have got off the ground in the same way without it’s founder’s money and contacts.

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