North Korea sanctions ban coal exports, but don’t cut off crude oil supply

Posted on : 2017-08-07 16:52 KST Modified on : 2017-08-07 16:52 KST
The continuation of Chinese oil supplies into North Korea are the apparent result of a compromise between China and US
UNSC sanctions on North Korean coal exports
UNSC sanctions on North Korean coal exports

The most important aspects of Resolution No. 2371, which the UN Security Council adopted unanimously on Aug. 5, are that it completely bans North Korea’s coal exports and that it does not ban the North‘s supply of crude oil. This appears to be the compromise reached by the US and China after a lot of wrangling over whether to cut off the North’s petroleum supply.

Leading up to the adoption of this resolution, the US strongly pushed China to toughen sanctions on North Korea. Soon after the North test launched a second intercontinental ballistic missile (ICBM) on July 28, Trump expressed his frustration in a tweet: “they [China] do NOTHING for us with North Korea, just talk.” The very next day, US Ambassador to the UN Nikki Haley gave China an ultimatum, demanding that China make up its mind whether it would take serious measures.

The US also cranked up pressure on China by taking steps to sanction trade with China. There are even reports that the Trump administration is looking into using Section 301 of the Trade Act of 1974 to stop Chinese piracy of intellectual property and to force open Chinese markets.

Despite the Trump administration’s best efforts, the resolution does not include a reduction or suspension of China’s supply of crude oil to North Korea, which appears to reflect China’s pushback and the US’s desire to quickly adopt the resolution. There was also speculation that China would retaliate against US pressure, with reports leaked to the media that China might sell US treasury bonds.

The US also appears to have concluded that delaying the adoption of the resolution against North Korea too long would cause the resolution to lose momentum and water down its warning to the North. The fact is that Resolution No. 2371 was adopted with comparative speed, just 33 days after Pyongyang test launched its first ICBM on July 4.

The Trump administration has demonstrated a strong desire to shut off North Korea’s supply of crude oil. With the North depending on China for more than 90% of its oil, the US believes it could deliver a punishing blow to the North by convincing China to cut off this supply. Since President Trump and Chinese President Xi Jinping’s summit at Mar-a-Lago in Florida, the US has kept pressuring China to limit its supply of crude oil to North Korea.

But China is concerned that cutting off the oil supply could provoke considerable unrest inside the North. Aside from military purposes, crude oil is also an indispensable material for household electricity, industrial activity and fertilizer production. China is concerned that this could unleash a flood of North Korean refugees into China, creating chaos in its three northeastern provinces.

Furthermore, cutting off the supply of crude oil might well be China‘s final move against the North. If the North remained defiant even after its oil supply was cut off, China would have squandered its last bit of leverage and damaged its relationship with the North beyond repair, provoking geopolitical instability. For such reasons, experts have predicted that China is unlikely to resort to cutting off the supply of crude oil until it concludes that the North holds no further value as a strategic buffer zone.

While China has enlisted the aid of Russia in its refusal to cut off the oil supply, the fact that it did agree to stop all imports of coal can be seen as a considerable concession. North Korea’s exports to China account for 90% of its total trade, and coal represented close to 40% (around US$1.18 billion) of its total exports to China last year. At the end of last year, the Security Council passed sanctions against the North (Resolution No. 2321) that limited North Korea‘s coal exports to US$400 million and 7.5 million tons a year, but this time even that amount has been eliminated.

China’s concession seems to have been a response to criticism that former Chinese premier Wen Jiabao‘s decision to open the door to coal and iron ore exports during his visit to North Korea in Oct. 2009 enabled the North to raise money for its nuclear weapons and missile programs. The concession also seems to have been designed to limit conflict with the US leading up to the National Congress of the Communist Party of China this fall, during which Xi will seek to consolidate his power.

While the US and China reached a compromise to swap oil for coal, the US could once again pressure China to reduce or end its supply of oil if North Korea engages in additional behavior that raises tensions.

By Yi Yong-in, Washington correspondent

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