Latest U.N. sanctions having little impact on N. Korea yet: U.S. expert

The latest U.N. Security Council sanctions on North Korea are having little impact on the country's economy, a U.S. expert said, citing trade data between the North and its biggest economic partner, China.

William Brown, an adjunct professor at Georgetown University and non-resident fellow at the Korea Economic Institute in Washington, also said in a recent report that the sanctions do not appear to be affecting the North's domestic economy.

The latest sanctions, which were adopted on March 2 in response to the North's fourth nuclear test in January and a long-range rocket launch the following month, have been billed as the harshest-ever sanctions imposed on the communist regime.

The sanctions require mandatory inspection of all cargo going in and out of the North, regardless of whether by land, sea or air, while banning its exports of coal, iron and other mineral resources, a key source of hard currency that accounts for nearly half of the country's total exports.

"The March 2 U.N. sanctions are having little impact so far on North Korea's economy although they may be making Pyongyang even more dependent on China. Trade with countries except China seems to be slipping but, because it was so low to begin with, the significance pales in comparison to the large and generally flat pace of China-North Korean trade," Brown said in the report.

China's exports to the North in the second quarter were valued at $796 million, up a slight 3 percent from last year, while China's imports from the North in the same quarter amounted to $548 million, down 14 percent from a year ago, the professor said.

The fall in exports was fully accounted for by a drop in anthracite coal shipments, which at $246 million in the second quarter, occupied half of Chinese imports, but the "decline is due mostly to a drop in prices -- the volume of coal shipped remains high," he said.

The expert said the North's domestic economy appears to show no signs of effects of the sanctions. Observed market prices of rice and other staples have been unusually stable this year as has the widely used unofficial market exchange rate of North Korea's won against the U.S. dollar, he said.

"One would think the 'toughest sanctions ever' would have caused a flight to the dollar and away from won but it hasn't, possibly because the dollar has become too intertwined in North Korea's domestic finance," Brown said.

Still, the sanctions could cause longer-term trouble for the North, he said.

"The sanctions create hurdles for Pyongyang's foreign investment elicitation. And investment in the country, aside from apartment buildings that may be funded by Chinese investors, appears to be very low. This might spell trouble for Kim's 'byong-jin' policy in the future, but not now," Brown said. (Yonhap)