US urges all nations to cut ties with North Korea: 5 questions about isolating the hermit nation

Delegates gathering for an emergency UN Security Council meeting in response to North Korea's latest ICBM test, in New York on Nov 29, 2017.
Delegates gathering for an emergency UN Security Council meeting in response to North Korea's latest ICBM test, in New York on Nov 29, 2017. PHOTO: EPA-EFE

UNITED NATIONS - At an emergency UN Security Council meeting convened after North Korea fired its most advanced intercontinental ballistic missile (ICBM), Washington called on the international community to cut all ties - diplomatic, scientific, technological, military and trade - with Pyongyang.

The US also demands that China, the North's main ally, cut off all oil exports to North Korea.

But a spokesman for the Chinese foreign ministry on Thursday (Nov 30) sidestepped questions about the US call for an oil embargo.

Mr Geng Shuang told reporters that Beijing upholds UN resolutions and backs the denuclearisation of the Korean peninsula. Beijing has backed a slew of sanctions that include bans on imports of North Korean coal, iron ore and seafood.

North Korea on Wednesday (Nov 29) tested a new missile which experts say put the entire US mainland, including New York and Washington DC, within range.

The United Nations has imposed several rounds of sanctions against the North since its first nuclear test in 2006, but sanctions have failed to deter the regime which sees its nuclear and missile programme as essential to its survival.

US Ambassador Nikki Haley said at the emergency meeting it is possible to "further isolate, diminish, and, God willing, reverse the dangerous course of the North Korean regime," and called on all nations to "cut off all ties with North Korea."

Here are five questions about tightening the noose around the isolated regime, whose gross domestic product of US$28.5 billion is less than a third of Mr Bill Gates' net worth and a tenth of Singapore's GDP.

1. What's left to sanction in North Korea?

In recent months, Washington has - with help from other nations - stepped up pressure on Pyongyang.  There are reports of  increased maritime interdictions of North Korean vessels suspected of carrying illicit weapons to and from the rogue regime; more curbs on North Korean labour exports; and more frequent missions and bomber runs involving  American aircraft carriers and fighter jets near the Korean peninsula.

 
 

US Secretary of State Rex Tillerson told reporters that a "long list" of potential US sanctions was being considered following its third ICBM test, including targeting financial institutions that do business with the country.

Analysts doubt harsher sanctions can stop Pyongyang.

Previous rounds of UN sanctions had taken aim at money transfers as well as North Korea's trade of minerals and rare earth metals. Countries such as South Korea and Japan have imposed unilateral sanctions against the North.

In September (2017), days after North Korea's sixth and most powerful nuclear test on Sept 3, the UN Security Council imposed its most extensive set of sanctions against North Korea. It imposed, among other penalties, a total ban on the country's textile exports and caps on oil imports into the impoverished regime.

It was the first time the UN had targeted the regime's oil supplies. But it stopped short of a total oil embargo.

A 32km oil pipeline that spans the border between North Korea and China and supplies 90 per cent of North Korea's crude oil was excluded from the sanctions due to resistance from China and Russia, which have veto power as permanent members of the UN Security Council.

Washington again on Thursday (Nov 30) called for Beijing to cut all oil supplies, a move which the US believes will bring North Korea to its knees as its notoriously bitter winter (when temperatures could fall to as low as minus 30 deg C) sets in.

President Donald Trump called China's President Xi Jinping "and told him that we have come to the point that China must cut off the oil from North Korea", said US Ambassador o the United Nations Nikki Haley.

"China can do this on its own, or we can take the oil situation into our own hands." she said at the emergency meeting on Thursday (Nov 30).

2. Why can't China turn off the oil taps?

Beijing fears that taking tougher actions could cause the regime to collapse, triggering a refugee crisis across its border with the North and eliminating a strategic buffer separating China from the US troops currently stationed in South Korea.

"I think Xi Jinping is moving on a much slower timeline because his priority is avoiding chaos, not avoiding a nuclear capable-ICBM," said Daniel Russel, senior fellow at the Asia Society Policy Institute.

Wang Peng, a Korea expert at China's Charhar Institute, said Beijing is wary of cutting off oil because the move would "utterly destroy ties" with its neighbour.

China was more likely to "kick the ball back to the US" rather than take immediate action as a direct response to the latest missile threat, he told AFP.

To complicate Beijing's calculus, the big brother does not seem to have as much control over North Korea these days.

Twice this year, its 33-year-old leader Kim Jong Un thumbed his nose at Beijing: Pyongyang fired a missile capable of hitting Guam at the opening of China's inaugural Belt and Road Forum in May and conducted its sixth nuclear test when President Xi Jinping was about to launch the annual Brics (Brazil, Russia, India, China and South Africa) summit in September.

Some experts have pointed out oil flow via the Dandong-Sinuiju pipeline cannot be slowed or stopped because of technical reasons, reported South China Morning Post.

"The crude oil transported via the Dandong-Sinuiju pipeline contains a high proportion of wax. If the flow of oil slows or stops, the pipeline becomes blocked, which in turn is expensive to repair. The pipeline can even be damaged beyond repair in extreme cases," said Mr Liu Ming, a North Korean affairs analyst from the Shanghai Academy of Social Sciences.

3. For how long can the North Korean economy survive on its own?

How much crude China sends through the cross-border Friendship Pipeline - which starts in Dandong, a trading hub in north-eastern China, and travels under the Yalu River into North Korea's Sinuiju - is not precisely known.

But given its recent economic growth, North Korea would be expected to import about 850,000 tonnes of crude oil this year, almost entirely from China, said Mr Peter Hayes, director of the Nautilus Institute, a think-tank specialising in North Korean energy.

Even if China did cut off crude oil supplies, North Korea would be able to operate for a while, Mr Hayes told New York Times.

The military, which he said uses about a third of the country's imported oil, has enough stockpiles for about "a year of routine, non- wartime usage".

 
 

The military could fight for a month before running out of fuel, Mr Hayes said.

He added that the brunt of a fuel cut-off would be felt by ordinary North Koreans.

The North Korean economy has defied the string of UN sanctions imposed since 2006 to morph into some analysts call a "self-generating beast".

Supplies from Russia have also helped to provide a lifeline for the Kim Jong Un regime. (When North Korean leader Kim Jong Un sent Chinese New Year greetings this year, the first card went to Russian President Vladimir Putin.)

Ms Anwita Basu, consultant analyst for North Korea at the London-based Economist Intelligence Unit, told The Straits Times: "As contrarian as this may sound, one has got to realise the possibility of existence and prosperity without depending on the West, and without being a capitalist neo-liberal economy."

Now North Korea's fragile economy has also pinned its hope on scientists, Professor Kim Sang Hak from Pyongyang's Economic Research Institute told The Straits Times during a rare trip to the country.

They are needed to conjure up substitutes for every mineral missing from this fenced-off land.

"One normally needs coke to produce steel, but we have no coke deposits," says Prof Kim. "Our scientists are helping us produce steel using anthracite." This is a hard coal containing relatively pure carbon.

The scientists are also making chemical fertilisers without crude oil, building windmills and, crucially, developing seeds to best suit farmers in a country prone to floods and famine.

4. Which countries have ties with North Korea?

About 25 nations maintain a diplomatic presence in Pyongyang, including most Asean countries.

The 10-member regional bloc ranks among North Korea's major trading partners.

Thailand was the fourth-largest trade partner, after China, Russia and India.

During a visit to Thailand in August, US Secretary of State Rex Tillerson pressed Thai leaders for more action on North Korea.

 
 

The US believes North Korean front companies are active in Thailand and is trying to encourage the Thais to shut them down, said Assistant Secretary for East Asian and Pacific Affairs Susan Thornton, adding that US also encouraged Thailand to take as many North Korean refugees as it can handle.

Singapore, which has no embassy in North Korea, and the Philippines are among those which recently announced that they have suspended trade with Pyongyang.

The Singapore Customs posted a circular on its website earlier this month (Nov) informing traders that "all commercially traded goods that are imported, exported, transshipped or brought in transit" through Singapore to and from North Korea will be prohibited from Nov 8.

It warned that first-time offenders can be fined up to S$100,000 or three times the value of the goods traded, jailed for up to two years, or both.

Singapore was the North's sixth-largest trading partner in 2015, with bilateral trade reaching US$29 million (S$39.3 million).

Sentiments began to turn against North Korea after its leader's half-brother Kim Jong Nam was killed in Malaysia in February this year. It is widely believed that Pyongyang orchestrated the assassination using the deadly VX nerve gas, although it has denied the allegations.

Malaysia, which bought RM20.6 million (S$6.7 million) worth of goods from North Korea in the first five months of the year, has since halted all imports from the regime.

With stricter sanctions imposed on North Koreas, some regional destinations have also scrapped visa-free entry for North Koreans.

5. What are North Korea's other sources of foreign currency?

The cash-strapped regime has stepped up efforts to promote tourism to earn hard currency. For instance, it held its inaugural Autumn Amateur Marathon event late last month (Oct), but the event was marred by poor levels of participation, reported website NK News.

The October marathon event was unexpectedly announced in August, just months after the better-known April race, which has been running for more than 30 years.

Only 20 foreign visitors took part in the October marathon, a tourist industry insider told NK News on condition of anonymity.

Starting from Sept 1, US citizens are barred from travelling to North Korea.

Reports say that China, too, has restricted tours into Pyongyang.

 
 

The Korea Maritime Institute, a think-tank in the South, estimates that tourism generates about US$44 million in annual revenue for North Korea. About 80 per cent of all North Korea's foreign tourists are Chinese, it says.

Visitors to the Hermit Kingdom say North Korea's national airline Air Koryo has diversified into new markets this year, including cigarettes and fizzy drinks, a taxi fleet and petrol stations in North Korea.

Pyongyang's two key sources of hard currency- North Korean restaurants and foreign workers - have also been hit badly by the sanctions.

There are more than 100 North Korean restaurants overseas, staffed and operated by workers from North Korea, most of which remit revenue back to Pyongyang. Many are in China while there are others in Indonesia, Thailand, Cambodia, Vietnam and the Middle East.

A UN report in 2015 estimated there were over 50,000 North Koreans working abroad, earning the state US$1.2 billion to US$2.3 billion annually.

While overseas, they are allowed to keep one-third of their earnings - or US$100 out of their monthly US$300 salary for the seamstresses in China - and the rest goes to the regime.

SOURCES:AFP, Washington Post, New York Times, Reuters, The Straits Times