By Kang Hyun-kyung
Staff reporter
Seoul hit Pyongyang with a series of trade bans Monday, while announcing the suspension of 6 billion won in government-sponsored assistance programs.
The retaliatory measures came after a multinational investigation team concluded last Thursday that North Korea torpedoed the South Korean frigate Cheonan on March 26.
Experts forecast that there is no doubt that North Korea will feel mounting pressure under the measures that also include taking the attack to the U.N. Security Council.
Some experts, including senior analyst Hong Soon-jick of the Hyundai Research Institute, warned of the unintended negative fallout of the sanction-oriented policy mix ― North Korea and China may become even closer.
Under this scenario, the North will try to compensate its trade loss from the South by relying more on its closest ally.
China, which thinks a divided Korea is the best-case scenario on the peninsula, will continue to lend a helping hand to the North as this will increase its influence.
The speculation comes after the Ministry of Unification announced a set of sanctions on North Korea, Monday, after the North was found to be responsible for the sinking of the ship near the maritime border in the West Sea.
The naval disaster killed 46 South Korean sailors. Scores of survivors have reportedly been suffering from the symptoms of post traumatic stress disorder such as amnesia, a sense of guilt and depression.
According to the unification ministry, the shipping of raw materials or finished products from South to North Korea and vice versa for consignment processing will be prohibited.
No South Koreans, except Gaeseong workers or those working at the Mt. Geumgang resort will be allowed to visit the North.
Companies are forbidden from seeking new business opportunities in the North, while firms operating in the Gaeseong Industrial Complex will not be allowed to expand their investment or facilities.
Only current business operations at the joint complex will remain intact.
Plus, all government-sponsored assistance programs for the North will be suspended, except humanitarian assistance for children.
"South Korea has made sincere efforts to resolve all issues related to inter-Korean relations through dialogue since President Lee Myung-bak took office, despite the renewed threats and provocative acts from the North," said Minister of Unification Hyun In-taek.
Hyun said the North repaid South Korea's patience and bona fide efforts to move inter-Korean relations forward with the maritime attack.
North Korea experts projected the annual total net trade income of the North to be approximately $5 billion.
According to them, the net income from inter-Korean trade accounts for about 8 percent.
"It appears to be certain that sanctions imposed by South Korea will deal a blow to the North Korean economy," Hong told The Korea Times over the phone.
"Although the unification ministry said the Gaeseong site will remain intact, I think 120 South Korean businesses operating there will suffer from the consequences. In addition the demand for made-in-Gaeseong products will be negatively affected by the pessimistic prospects of inter-Korean relations," he said.
The expert also predicted further fallout ― North Korea's growing dependency on China in the future.
"Despite the gloomy future of the North Korean economy in the wake of the South-led sanctions, the North will want to believe that China has its back," he said.
China has a "border burden" and it will want to avoid the worst-case scenario of an influx of North Korean refugees rushing for freedom by way of mainland China, he added.