How does North Korea stay afloat?

There are two related reports in The Financial Times:

  • First, it says, “The UN has unanimously adopted its strongest sanctions yet on North Korea, aimed at depriving Pyongyang of more than $1.3bn in annual revenues and boosting pressure on Kim Jong Un’s regime following its recent nuclear test … [and] … The measures, which include an embargo on textile exports, a halt to employing additional North Korean workers overseas and a cap on refined petroleum trading that will reduce oil imports by 30 per cent, won support from China and Russia, but only after stronger proposals circulated by the US were watered down … [even so] …   “Combined with the previous Security Council resolutions, over 90 per cent of North Korea’s publicly reported 2016 exports of $2.7bn are now banned,” said a statement from the US mission to the UN, adding they were “the strongest sanctions ever imposed on North Korea”; and
  • Second, the FP reports that even as “The UN Security Council on Monday passed its toughest measures yet against North Korea and reiterated an agreement to identify and inspect vessels suspected of transporting proscribed goods from the country … [there is a] …  web of ships, people and businesses perpetuating such trade flows [which] suggests the international community faces a huge challenge if its clampdown is to succeed … [because] … Hundreds of the vessels involved are owned and managed by companies based in Hong Kong, where it is not illegal to do business with North Korea. Some of the companies are operated by North Koreans, corporate records show, although most are backed by Chinese nationals … [and] … “These networks have to be important to North Korea because the North Korean economy has been able to do something no Soviet economy was ever able to do before, and that’s stabilise the balance of trade and the currency,” says Nicholas Eberstadt of the American Enterprise Institute, a conservative think-tank.

Put simply, no matter what they may say and do (vote) in the UN, the Chinese will not let the DPRK fail … yet.

Right now North Korea’s antics keep America and Japan off balance and that serves China’s short and mid-term interests. There are proposals for Japan to rearm in order to better face the North Korean threat ~ but resources spent on defence cannot be used to solve other Japanese socio-economic problems, including a weak labour force ~ opportunity costs and all that. Some observers speculate that South Korea is, also, looking for and should have its own nuclear weapons. Both notions suggest that the East Decline_of_the_West_1922Asians are not confident that America will or even can defend them. The former is much more frightening than the latter … if America just lacked the means to defend East Asia then the East Asians could, very reasonably, be expected to sun-tzu-quotestep up and add their (considerable) economic muscle to the task, but if America is unwilling, if it no longer cares about the safety and security of its “empire,” then the Decline of the West is real and imminent and those who are heirs to Sun Tzu will have won … without even having to fight at all.

The sanctions are, relatively, useless. The big question remains, as I have said before: WHY is the DPRK doing this? If the answer is that it wants to reunite the Korean peninsula under North Korean rule then no one’s interests are being served and China should bring North Korea to heel by killing Kim Jong-un and replacing him with a more compliant Chinese puppet. If, on the other hand, the answer is that it fears the US and believes, as many countries do, that the USA only respects brute (nuclear) force, then China will want to let things play out longer and longer.

North Korea is a problem, but it is rooted in China’s view of East Asia and of its and America’s places in it.


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