'South's sanctions against NK could work'
North Korean soldiers at the DMZ are seen from a South Korean post in Paju, Gyeonggi Province, Wednesday. / Yonhap
By Kim Hyo-jin
Prof. Kim Byung-yeon
Additional economic sanctions imposed against North Korea are more likely to have a substantial impact on the country’s economy than previous ones, according to an expert observer of the isolated state.
Kim Byung-yeon, an economics professor and vice director of the Institute for Peace and Unification Studies at Seoul National University, said that beginning last year, the repressive nation has experienced greater economic challenges, which has left it more vulnerable to external factors.
“I think additional sanctions will have a big impact on North Korea because the country has already struggled with decreasing trade with China and falling hard currency revenue,” Kim said during a seminar hosted by the East Asia Foundation, Tuesday.
Its production of coal and iron, which accounts for 67 percent of the North’s exports to China, decreased by 12.6 percent in 2015 due to sluggish demand and falling prices. Funds flowing into the regime by workers dispatched to Russia and China have also decreased due to depreciation of the ruble and the yuan, he noted.
“Things have changed compared to between 2010 and 2014, when the soaring prices of natural resources absorbed the impact of previous sanctions by South Korea,” he said, describing the period as a good time for Pyongyang’s finances.
The sanctions are a set of trade and economic restrictions put in place against North Korea by the South Korean government following the sinking of its frigate Cheonan on March 26, 2010. The only exception allowed under these sanctions was the continuation of business operations at the inter-Korean Gaeseong Industrial Complex (GIC). But this was shut down on Feb. 10 in the wake of the North’s long-range rocket launch, widely regarded as a ballistic missile test.
Kim claimed that the shutdown of the industrial park could become an additional burden to the regime but added that China’s cooperation is essential to ensure that the North’s economy suffers maximum impact.
“There’s a demand for skilled and cheap North Korean labor in the Chinese textile industry. If the GIC workers just switch from working in the complex to working in China, then the hard currency inflow will hardly change,” he said.
Citing that Chinese firms normally hire North Koreans without work permits, Kim said Beijing could provide additional support by ending such employment.
North Korea’s trade with China is estimated to comprise 70 to 80 percent of its entire trade and account for 50 percent of its annual growth rate, according to Kim.
The volume increased from $1.19 billion in 2010 to $2.84 billion in 2014, he said, stressing the figure indicates that the repressive country is now more heavily dependent on its major ally than before.
“Beijing’s tough hand on Pyongyang is highly likely to change the situation ― either through independent or U. N. sanctions,” he said.
Kim Byung-yeon, one of a small number of academics here who study the North Korean economy in South Korea, is a former member of the national economic advisory council and is also a member of the policy advisory committee for the unification ministry and the evaluation committee for the foreign ministry.