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The Security Council unanimously adopts resolution 2375 (2017)

The UN Security Council unanimously adopted Resolution 2375 on the afternoon of Sept. 11, imposing sanctions on North Korea in response to its recent sixth nuclear test. The new resolution includes a ban on textile and garment exports and a cap on crude and refined oil exports to the North.

While the resolution’s content is milder than the full-scale crude oil embargo demanded by the US, it does appear to have laid the foundation for stiffer sanctions if North Korea engages in additional strategic tension-raising actions going ahead. The final resolution also does not include a ban on the overseas dispatching of North Korean workers or list leader Kim Jong-un as being subject to sanctions. The results suggest the content was toned down substantially from the “ultra-hardline” sanctions called for by the US under pressure from China and Russia for a “peaceful resolution.”

The main focus of attention with the new sanctions was how far China would go along with the US’s calls for a full-scale crude oil embargo. The final version kept crude oil exports to the North at their current level, while imposing a full-scale ban on exports of liquefied natural gas (LNG) and condensate (unrefined ultra-light oil). Refine oils, including gasoline and kerosene, were subjected to a 2 million barrel annual cap. The number restricts exports to North Korea to around half their current level – a similar approach to the cap on coal exports in UNSC Resolution 2321, which was adopted in Nov. 2016 in response to the North’s fifth nuclear test. Member countries were also required to report their monthly volumes of crude oil and other exports to North Korea to the UN sanctions committee.

While the content was notably softened from the full-scale embargo initially demanded by the US, it is to be the first UNSC resolution with sanctions affecting North Korea’s oil imports if passed. South Korean government observers predicted the resolution would prove effective in blocking around 30% of North Korean imports of crude and refined oil. The content could be seen as offering Beijing a rationale and the US a foothold for lowering the oil import cap in the event of additional provocations from the North.

The key provision most likely to squeeze North Korea financially is the ban on exports of textiles and garments. Textile products are North Korea’s second-largest export category after coal and other mineral resources. According to KOTRA figures, textile products accounted for 26.67% of North Korea’s exports for 2016, or US$752 million. The North’s garment export structure is one of toll processing through a subcontracting relationship with China, which reportedly imports around 80% of the finished products.

“The crude oil supply ban that was initially suggested did not make it in, but the restrictions on garment toll processing are severe,” a Ministry of Foreign Affairs official said of the effects on North Korea.

Also attracting attention was the omission of leader Kim Jong-un for the list of targets for sanctions. While the draft proposed by the US included Kim as of five targets alongside younger sister and Propaganda and Agitation Department vice director Kim Yo-jong and Minister of People’s Armed Forces Pak Yong-sik, the final resolution listed only Pak.

A provision originally pushed by the US for a full-scale ban on the overseas hiring of North Korean workers was also revised to require UNSC approval for new hiring. Countries are already required to provide the UNSC notification by Dec. 14 on the number of overseas North Korea workers there with established employment contracts and the contracts’ anticipated expiration dates. An estimated 50,000 North Korean workers are employed overseas in around 40 countries. The combined effects of the hiring restrictions on overseas workers and the textile export sanctions are predicted to cause as much as US$1 billion in losses for the North Korean economy.

Unlike the draft, the resolution did not designate Air Koryo as being subject to sanctions. An attempt to remove provisions granting exceptions for Russia coal transported by way of North Korea’s Rajin port was also thwarted by Russia’s adamant objections. Provisions for the blocking and searching of vessels suspected of carrying weapons of mass destruction in international waters were softened to “requested” rather than mandatory status.

“It looks like the US, after attempting to apply heavy pressure on the North at first with its independent sanctions, has changed course in the face of objections from China and Russia and is now trying to maintain ‘international cooperation’ on sanctions,” said a South Korean government official.

Another official with the Ministry of Foreign Affairs called the resolutions’ content “the result of a political compromise with China and Russia strenuously objecting and the US reflecting the reality.”

Meanwhile, the People’s Bank of China, China’s central bank, notified financial institutions and some non-financial institutions on Sept. 11 of domestic measures regarding “implementation of relevant UN Security Council resolutions.” The announcement states that institutions are to check their systems for individuals and companies included on the sanctions list and report any relevant information to the People’s Bank. They were also ordered to block the opening of new accounts by related individuals or companies and restrict their access to various financial services. Some analysts suggested the measure was intended to emphasize China’s independent efforts ahead of the vote on a new UNSC resolution.

By Kim Ji-eun and Noh Ji-won, staff reporters, Yi Yong-in, Washington correspondent, and Kim Oi-hyun, Beijing correspondent

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