{"id":3878,"date":"2018-09-14T10:49:48","date_gmt":"2018-09-14T01:49:48","guid":{"rendered":"http:\/\/www.01.asiapress.org\/rimjin-gang\/?p=3878"},"modified":"2018-09-25T13:35:08","modified_gmt":"2018-09-25T04:35:08","slug":"20180914-un-sanctions-state-institutions","status":"publish","type":"post","link":"https:\/\/www.02.asiapress.org\/rimjin-gang\/2018\/09\/recommendations\/20180914-un-sanctions-state-institutions\/","title":{"rendered":"UN sanctions deal direct blow to state institutions and the wealthy"},"content":{"rendered":"
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There is no traffic on the border bridge in Tumen, Jilin Province, China due to the suspension of trade. Taken by ISHIMARU Jiro in October 2017<\/p><\/div>\n

\u25a0 Direct blow to the privileged class<\/h2>\n

Most trading companies are under the authority of state institutions. The most prominent and numerous are the enterprises affiliated with 'Room 39', an organization responsible for securing Kim Jong-un's governing funds. The People's Army, Party institutions, and Ministry of People\u2019s Security (police) also have many affiliates. In addition to the export of goods that mainly contribute to foreign exchange earnings, such as coal, iron ore, seafood, nonferrous metals, rare metals, and textiles commissioned to be processed in China, these institutions have been made profitable by dispatching more than 50,000 workers to China and 30,000 workers to Russia and extracting a portion of their earnings. Foreign exchange earnings make the luxurious lives of the privileged, wealthy classes and \u2018donju\u2019 (wealthy merchant class) in Pyongyang possible.<\/p>\n

China's sanctions dealt a serious blow to the wealthy class and trading companies. In March and April, my reporting team investigated the operations of several large-scale trading companies in North Korea.<\/p>\n

The Moran Corporation is an enterprise affiliated with the 'Rakwon Guidance Bureau' which is under 'Room 39'. Its headquarters is located in Pyongyang, but we visited a branch office in Chongjin City, North Hamkyung Province to investigate. Chongjin is the third largest city in North Korea and faces the East Sea (Sea of Japan). Due to its proximity to the border, it is also a base for exporting seafood and minerals to China.<\/p>\n

The Chongjin branch of the Moran Corporation has around 35 full-time employees and many subcontracting enterprises. After arriving at the office, we found out that they were unable to conduct business because of sluggish exports and were renting out their office to a donju who used the place as a warehouse. Employees were given 50 kilograms of white rice and CNY 500 (about 75.40 USD) a month before the sanctions, but the payments have ceased this year. Although the company used to deliver Chinese products such as TVs, rice cookers, water containers, beds, etc. to retailers, it is now making its own employees sell these goods. Employees are required to pay the company approximately 154.50 USD per month from their earnings and then any additional profits are theirs to keep.<\/p>\n

Kangsung Trading Company, which also has a branch office in Chongjin, is affiliated with the General Political Bureau of the Korean People\u2019s Army. Like Moran, it has leased its office to be used as a warehouse and wholesale store. The company\u2019s 40 employees, without any rations or salary, go to the inner-city and rural areas to sell household goods and blankets. They are required to make monthly payments of about 232 USD to the company and employees who fail to do so for three consecutive months are fired. The company directly operates about five restaurants in downtown Chongjin and it is said that the restaurants\u2019 profits are keeping the company afloat.<\/p>\n

North Korea's trade with China involves the production of minerals, seafood, and textiles using cheap domestic labor. These goods are sold to China by trading companies affiliated with state institutions who later distribute the revenues to the rich and powerful of Pyongyang. The profits of the trading companies in Chongjin likewise go to Pyongyang\u2019s elite. When trade halts due to sanctions, the common people become unemployed and experience reduced cash incomes, but the elite of Pyongyang are more seriously affected as the system of exploitation itself ceases to function.<\/p>\n

Next page: Pyongyang and state institutions also affected...<\/strong><\/p>\n

\u25a0 Pyongyang and state institutions also affected<\/h2>\n

At the end of April, I had a chance to talk to a trade institution executive stationed in China about the effects of the sanctions on the wealthy class of Pyongyang. The person did not mention any specifics but it seems that the consequences have been significant.<\/p>\n

\"Trade still remains paralyzed. We are unable to get authorization even if we submit the export documents to the Chinese (customs) authorities. Even renewing visas for resident employees has become difficult.\u201d<\/p>\n

--- There was word that the restrictions were lifted after the meeting between Kim Jong-un and Chinese President Xi Jinping (March 27).<\/p>\n

\"It\u2019s only a rumor. Nothing has changed. Coal and metals are not being traded at all. Chinese traders are refusing to accept proposals on dispatching (North Korean) workers or toll processing (sending raw materials to North Korea to be manufactured and returned to China as finished products).\"<\/p>\n

--- Has life for the common people become more difficult?<\/p>\n

\"No. Despite their difficulties, the lower class have always managed to survive by running their businesses and will continue to find a way to do so. The ones having the hardest time are the upper-class people. Most of their income came from trade. They are in trouble now that the money is gone. If the government cannot solve these economic problems, the wealthy will grow unhappy and there may be grave consequences.\u201d<\/p>\n

Moreover, the sanctions have also affected the military. Due to the shortage of foreign currencies and surge in fuel prices, there are increasingly more military units that cannot operate vehicles to transport soldiers and materials and instead utilize coal-fueled cars or ox carts. Also, the treatment of officers is getting worse and it is common for their wives to start businesses.<\/p>\n

Next page: Will Kim Jong-un give up his nuclear weapons?...<\/strong><\/p>\n

\u25a0 Will Kim Jong-un give up his nuclear weapons?<\/h2>\n

It is clear that the North Korean economy has been hit hard by the sanctions of the international community. The decrease in foreign exchange earnings has also hindered the import of necessary goods and manufacturing materials. Compared to last year, imports from China in February, March, and April have decreased by 32%, 56%, and 44% respectively.\u00a0(Table 1)<\/a><\/strong><\/span><\/p>\n

As mentioned before, oil imports have already been limited and imports of industrial machinery and transport vehicles have been banned entirely. If the Kim Jong-un regime conducts additional nuclear and missile tests, the next sanctions are likely to be an oil embargo and a U.S.-led maritime blockade. This would render the North Korean economy unsustainable. It would be the end of the Kim Jong-un regime.<\/p>\n

What is noteworthy is whether economic sanctions have the power to make North Korea stop developing and completely abandon nuclear weapons and missiles or if they will simply create a difficult situation that the Kim Jong-un regime will be able to endure for a while.<\/p>\n

Thae Yong-ho, North Korea\u2019s former ambassador to the U.K. who defected to South Korea in July 2016, made the following remarks at a 2016 year-end press conference. This was before the economic sanctions were strengthened.<\/p>\n

\"Kim Jong-un created a timeline for the completion of nuclear weapons. North Korea\u2019s overseas diplomatic offices received notice that the nuclear weapons and missiles will be completed by the end of 2017, and North Korea will then engage in dialogue as a nuclear power.\u201d<\/p>\n

Thae\u2019s explanation was surprisingly accurate in many areas. North Korea diverted all efforts into developing nuclear weapons and ballistic missiles. In 2017, it carried out 17 large- and small-scale missile launch tests and its sixth nuclear test in September. At the end of November, North Korea declared itself as a nuclear power. Since then, starting with its participation in the Pyeongchang Winter Olympics, North Korea turned to dialogue and peace and, with the support of the Moon Jae-in administration, held a summit with the United States.<\/p>\n

It should be noted that North Korea\u2019s change in attitude this year was not due to Kim Jong-un\u2019s sudden change of heart, but was part of a pre-established strategy to move away from a phase of tension and transition to a state of dialogue.<\/p>\n

Next page: However, it is highly unlikely that Kim Jong-un's strategy...<\/strong><\/p>\n

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Administrative areas and major cities of North Korea<\/p><\/div>\n

However, it is highly unlikely that Kim Jong-un's strategy was directed at denuclearization and the abandonment of nuclear weapons from the outset. He would have aimed for recognition by the United States as a nuclear power and for nuclear disarmament negotiations on an equal footing. North Korea has now probably given up on recognition as a nuclear power. It would appear that North Korea has decided that it had no choice but to move toward denuclearization in order to engage in dialogue.<\/p>\n

So, will North Korea eventually give up its nuclear weapons? I would like to briefly share my thoughts on the matter.<\/p>\n

I think the Kim Jong-un regime is likely to make substantial moves toward the abandonment of nuclear weapons and missiles. It will not be possible to fully meet the criteria of \"complete, irrevocable, and verifiable\" denuclearization, as it would be impossible to delete the blueprints and experiment data or to find the nuclear materials if they were to be hidden. However, it is highly possible that Kim Jong-un will accept the level of nuclear weapons abandonment proposed by China and the U.S.<\/p>\n

The first piece of evidence is the impact of the economic sanctions that have been mentioned so far.<\/p>\n

The ultimate goal of North Korea is to perpetuate the rule of the Kim family. This is stated below in the Ten Principles for the Establishment of the Party\u2019s One Ideology System, which is the highest doctrine in North Korea that supersedes both the Constitution and the Labor Party Code.<\/p>\n

\"We must preserve the traditions of the Party and of revolution through the Baekdu bloodline, and adhere to and forever succeed and develop the glorious revolutionary tradition of Juche.\u201d<\/p>\n

The reason Kim Jong-il launched the development of nuclear weapons and missiles in full swing in the 1990s was to solidify such perpetuation of the Kim family rule. With the end of the Cold War, North Korea lost military protection from the USSR and China. Meanwhile, South Korea underwent rapid development, whereas the North experienced deepened social unrest, and so with a sense of urgency, North Korea began the development of nuclear weapons as a mid- to long-term survival strategy. Kim Jong-un hurried to complete the weapons. However, the result was an unprecedented level of sanctions. It was evident that nuclear development and economic growth could not be achieved simultaneously.<\/p>\n

If North Korea clings to its nuclear program and China and the U.S continue to apply strong pressure, the existence of the North Korean regime may be jeopardized. I believe North Korea chose to give up its nuclear weapons \u2014 the justification being the denuclearization of the Korean peninsula \u2014 and head in a direction where the security of the Kim dynasty and economic benefits could both be guaranteed. I also think the Moon Jae-in administration skillfully guided Kim Jong-un in that direction. It is hard to make predictions at this point, but it can be said that the progress we have seen so far has been the result of 'dialogue and pressure'.\u00a0<\/span>Part 1 >>><\/span><\/strong><\/a><\/p>\n

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