US hits North Korea with new sanctions

Financial Times Financial Times

Obama administration prohibits companies from trading with groups linked to weapons programme

Barack Obama has imposed new sanctions on North Korea’s economy after January’s test of a nuclear bomb, in a step that raises the pressure on China to follow suit.

The measures, the result of an executive order by the US president, target Pyongyang’s sources of external earnings from industries such as coal, which generates $1bn a year in revenues, in addition to transportation, financial services, energy and mining.

The US Treasury said in a separate announcement that US companies would be prohibited from trading with a range of North Korean companies it said were connected to North Korea’s weapons programmes. It named 17 North Korean entities and individuals and 20 ships that it believes are engaged in illicit weapons procurement, saying US companies would be prohibited from doing business with them.

This month China joined fellow UN Security Council members in passing tough new sanctions after North Korea’s test of a nuclear bomb in January and its launch of a satellite using ballistic missile technology in February. North Korean leader Kim Jong Un said this week the country was planning a fifth nuclear weapon test.

US officials say China’s support is critical to the goal of isolating Pyongyang.

“We will work closely with our international partners to continue in a strong and unambiguous way to pressure North Korea to abandon its illicit nuclear and ballistic missile programs,” said Adam Szubin, a senior US Treasury official who oversees sanctions programmes, and who was in Beijing on Wednesday to meet Zhu Guangyao, China’s deputy minister of Finance.

However, the wording of the Security Council resolution, which specifically targets only entities related to weapons proliferation, is likely to be interpreted differently in Beijing, which has historically favoured a softer approach towards Pyongyang.

While the US has said it wants to see sanctions that hit North Korea where it hurts, China has said it is uncomfortable with any sanctions that might affect precariously low living standards in North Korea and provoke instability on China’s border.

“I think one concern is that it targets the export by North Korea of minerals. That certainly can limit funding of the nuclear programme but can also impact the daily life of the North Korean people” said Tong Zhao of the Tsinghua Carnegie Centre in Beijing.

“On the ground in Korea we are not seeing signs that a tighter economic environment is making the North Korean people unhappy about the nuclear programme. Instead we are seeing a ‘rally around the flag effect’. In that sense sanctions are counterproductive.”

China is North Korea’s largest trading partner by far in the economic sectors targeted by the sanctions, and legislation passed by Congress last month may be partly designed to stiffen China’s spine in dealing with Pyongyang, experts say. It would compel the White House to impose sanctions on foreign companies trading with North Korean entities targeted by sanctions, including Chinese companies.

Experts in South Korea expressed scepticism that the new sanctions would be effective in realising their goals.

Cheong Seong-jang of the Sejong Institute in Seoul said they could even be counterproductive, as they would “trigger strong resistance and hostility from North Korea, which could actually accelerate its nuclear development”.

Meanwhile, Chung Sung-yoon, researcher at the Korea Institute for National Unification said the move did “not seem to take into account possible resistance from Russia and China against some of the measures”.

The new sanctions came the same day North Korea sentenced Otto Warmbier, a 21-year-old US student, to 15 years of hard labour after he was convicted of subversion for allegedly stealing a political poster in January.