In Pyongyang, the calm before the sanctions storm? – Washington Post

6 months ago Comments Off on In Pyongyang, the calm before the sanctions storm? – Washington Post

Pyongyang is either a city bracing for the full force of international sanctions or a city blissfully immune to outside pressure. On the ground in the North Korean capital, it’s hard to tell which is true.

Ask a North Korean businessman, and he’ll brush off any suggestion that international restrictions imposed after North Korea’s nuclear and missile tests are hurting even a pinch.

“Sanctions don’t work on our country,” said Kim Sok Nam, the manager of the Pyongyang Electric Cable factory, which makes wiring used for televisions and computers, but also in the construction of the new high-rises that have sprouted all around the capital. Machines in the factory poured out molten aluminum and wound huge spools of copper wire behind him.

“Past, present, future, it’s the same situation for us,” Kim said, shrugging.

Inside the factory there sat dozens of huge boxes labeled as being Axeleron, a compound used for insulating cables, made by Dow Chemical in Calgary, Alberta. The boxes bore the production date of August 2014, before the current rounds of sanctions went into place, although earlier measures banned the trade of “dual use goods,” or products that have both civilian and military uses.

The United Nations — together with the United States, Japan, South Korea and even China — is hoping that the punishments meted out to North Korea will hurt so much that they will change the regime’s calculus. That tough restrictions on financing, shipping and exporting minerals will make Kim Jong Un and his cronies think that the price of pursuing nuclear weapons is too high.

So far, there is no reason to think that Kim is doubting his priorities.

Amid much fanfare, the 33-year-old leader called the first congress of the Workers’ Party — North Korea’s one and only party — and over the weekend declared that he would continue his “simultaneous pursuit” of economic growth and nuclear weapons.

“We will consistently take hold on the strategic line of simultaneously pushing forward the economic construction and the building of nuclear force and boost self-defensive nuclear force both in quality and quantity as long as the imperialists persist in their nuclear threat and arbitrary practices,” the congress, led by Kim, said in a decision Sunday.

In some senses, life in Pyongyang continues as normal. In the Kwangbok supermarket in the capital, North Koreans peruse the shelves of Japanese mayonnaise and Ukrainian candy.

In Pyongyang’s shiny new marble-filled airport, completed last year, there was certainly no evidence that North Korea was having difficulties in getting high-tech equipment. All visitors’ luggage was put through large, brand new X-ray machines and airport scanning equipment made by Thales, a French company. The duty-free shops were well stocked with Chivas Regal and Mumms champagne, Marlboros and Lucky Strikes.

Food is not sanctioned, but the existence of foreign products on the shelves is evidence that North Korea has ways to bring cargo into the country, whether it be legal or illegal.

But in other senses, there is a palpable apprehension that the sanctions could really hurt.

The banking sanctions were having a noticeable impact, foreign residents in Pyongyang said. Although embassies can continue to receive money, aid agencies that do not enjoy diplomatic privileges are having a much harder time.

The correspondent banks — financial intermediaries in China or Russia that transfer money from Western bank accounts to North Korean ones — have taken fright since the latest rounds of sanctions and have been refusing to handle any money destined for North Korea, no matter the reason.

While the number of international aid agencies working in North Korea has dropped sharply in recent years, there are still scores of foreigners living in Pyongyang who need to pay rent and bills locally, and agencies that need to pay local staff. While the U.N. agencies that operate here have the clout of big institutions, small aid agencies that run on cash are finding the sanctions particularly debilitating.

“Now we’re stuck,” said one aid worker, describing a so-far futile quest to find a bank willing to act as a correspondent.

U.S. companies that deal with North Korea, such as tourism agencies, ask clients paying bills not to make any mention of North Korea on their payment forms.

Shipping companies have also begged off.

“There’s been no direct impact on shippers, but we’ve seen shippers anticipating problems and refusing to accept cargo,” said one aid worker. Even with letters from the U.N. sanctions committee describing the exception for humanitarian aid, shippers don’t want to touch it, the worker said.

The foreign residents in Pyongyang spoke on the condition of anonymity, saying that speaking publicly about such sensitive matters could jeopardize their operations in North Korea.

“The humanitarian community is experiencing trouble getting things in from China,” another expatriate in Pyongyang said. “Because of the commercial risk, companies are practicing self-censorship. They feel that there is a risk in doing any business with North Korea, even if it’s for agricultural goods or hospital equipment.”

Tourism, a growing source of revenue for the regime, has also been hurt.

The Yanggakdo hotel, which has a casino in the basement, is usually teeming with Chinese tourists. This month, there were only three or four Chinese people in the hotel, excluding Chinese journalists invited to cover the congress.

Because there has been such a sharp drop in Chinese tourists, many of the scheduled Air China flights to Pyongyang are being canceled.

Air Koryo flights are seldom packed, according to frequent fliers.

But the North Koreans who were on a recent flight all took large quantities of luggage. Many had large boxes wrapped in red and blue striped plastic, while one checked a large wooden crate marked “fragile,” and another took a 65-inch Sony Bravia television to check in as oversize luggage.

With aviation fuel now coming under sanctions, Air Koryo has reportedly been having trouble keeping its planes in service. It has canceled flights to Bangkok, afraid of not being able to refuel there, according to people who monitor the flights.

And while trade in gasoline is not prohibited under sanctions, the North Korean authorities seem to be anticipating a shortage. They have ordered cars off the road on alternate days to ration fuel, and a North Korean minder allocated to accompany foreign journalists visiting Pyongyang said that the vans they were using would not be available on Sunday because of fuel shortages.

The general consensus here seems to be that it’s too early to tell whether the sanctions will hurt and how severe the pain will be.

“There’s no reason to think sanctions are not working,” said one frequent visitor to Pyongyang, “but there’s also no reason to think they are.”

North Koreans will insist it’s the latter.

In Pyongyang, the calm before the sanctions storm? – Washington Post