February 4, 2020 / 5:39 AM / 24 days ago

Burdened by sanctions, North Korea sees coronavirus threaten economic lifelines

SEOUL (Reuters) - North Korea’s already tenuous economic lifelines to the outside world are now nearly severed as it seals its borders with China and Russia to prevent the spread of the new coronavirus.

FILE PHOTO: Trucks wait for border inspection at the Chinese end of the Friendship Bridge that connects Sinuiju, North Korea with Dandong, Liaoning province, China over the Yalu river May 24, 2018. REUTERS/Jacky Chen

Already one of the most closed-off countries in the world, North Korea has stopped airline flights and train service with its neighbours, established weeks-long mandatory quarantines for recently arrived foreigners, suspended international tourism, and imposed a near-complete lockdown on cross-border travel.

The shutdowns could hurt leader Kim Jong Un’s efforts to make good on his promise to jumpstart North Korea’s economy. Those efforts have been undermined by a lack of progress in denuclearisation talks with the United States, which has led the way in imposing international sanctions on North Korea.

“They’re keeping the cargo out and they’re keeping the Chinese out; nobody can go in or out,” said one source with firsthand knowledge of the situation at the China-North Korea border.

Kang Mi-jin, a North Korean defector in Seoul who reports for the Daily NK website, also confirmed that the border appears to have been almost entirely shut down since at least Jan. 30.

“The Ministry of People’s Armed Forces ordered all guard posts to bar smuggling as well,” she said. “People, freight, nothing can come in or go out.”

Pyongyang has reportedly asked Beijing not to repatriate North Korean defectors detained in China, according to one South Korean pastor who works with refugees.

According to the source with knowledge of the situation at the border, North Koreans who work in restaurants and elsewhere in China, violating United Nations sanctions, are in “virtual captivity” in their homes under instructions from authorities back in North Korea.

North Korea is typically adept at implementing public health interventions and acted “swiftly and decisively” to try to stop the disease from entering the country, but sanctions restrictions could make it difficult for them to get medical supplies, said Harvard Medical School’s Kee Park, who has worked on health care projects in North Korea.

“Their actions, very costly in terms of revenue from tourists and trade as well as administratively for quarantining people, reflect their concerns regarding their health system’s capacity to handle an outbreak,” Park said.

CHINA LIFELINE

The efforts - which appear to have been successful in preventing any cases in North Korea so far - mean North Korea has severed or drastically restricted the economic ties it relies on.

“There could be a huge impact not just on the North’s market economy, but also on the entire economy of the country,” Kang said. “North Korea promotes localisation, but even for products – candies, crackers, or clothing – manufactured in the country, the raw materials come from China.”

Upcoming North Korean political holidays, which usually include gifts of sweets and crackers for children, may be more less festive than usual if the country’s supplies of sugar, flour, and other ingredients are scarce, she said.

There are already signs that prevention measures could lead to the cancellation of military parades and other mass celebrations at least through February, which includes a commemoration of the North Korean army and former leader Kim Jong Il’s birthday.

The extent of the economic risk to North Korea largely depends on the duration of the lockdown and how sweeping the restrictions are, said Artyom Lukin, a professor at Far Eastern Federal University in Vladivostok.

“If the lockdown continues for several months and longer, this will certainly have a considerable negative impact on North Korea,” he said.

There are no official numbers on the size of North Korea’s economy, but South Korea’s Bank of Korea estimated that in 2018 the country’s economy shrank for a second straight year, while its international trade fell 48.4 per cent in value.

Since then, China and Russia have more publicly called for sanctions to be lifted, border trade picked up, and there were signs that North Korea’s economy may have been on a relative rebound.

A recent report by a South Korean trade association found China’s proportion of the North’s overall external trade rose to 91.8 percent last year, compared with 17.3 percent in 2001. Thousands of Chinese tourists provided an additional economic lifeline.

The crisis could weaken North Korea’s position in its standoff with the United States over denuclearisation talks, and could lead Pyongyang to try to offset its greater economic vulnerability by making provocative moves such as resuming long-range missile launches or nuclear tests, Lukin said.

“If the coronavirus situation is not resolved quickly, it is going to make life much more difficult for North Korea in 2020,” Lukin said.

Reporting by Josh Smith. Additional reporting by Sangmi Cha and Joyce Lee. Editing by Gerry Doyle

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