September 13, 2017 4:05 am JST

Latest UN sanctions go after North Korea's oil supply

Compromise gives US room to push for full embargo later

SOICHI INAI, Nikkei staff writer

Nikki Haley, U.S. ambassador to the U.N., votes Sept. 11 for new sanctions on North Korea. © Reuters

NEW YORK -- The United Nations imposed the first-ever cap on petroleum shipments to North Korea as part of the latest batch of sanctions, laying the groundwork for a full embargo if Pyongyang's provocations continue.

The U.S.-led sanctions approved Monday by the U.N. Security Council mark the Donald Trump administration's "[b]iggest diplomatic win ... to date," Ian Bremmer, president of the Eurasia Group, wrote on Twitter following the resolution's passage.

Though the measures have been bashed as toothless by some because they fall short of a total oil embargo, the resolution nevertheless includes sweeping new restrictions on key resources and industries for Pyongyang. It also won unanimous approval on the council, including from China and Russia -- an achievement in itself.

Stemming the flow

The limits on petroleum shipments to the North -- a first after eight previous rounds of sanctions -- are perhaps the most significant outcome. "Oil is the lifeblood of North Korea's effort to build and fund a nuclear weapon," Nikki Haley, U.S. ambassador to the U.N., said at the Security Council on Monday.

Pyongyang is said to import some 4.5 million barrels of refined petroleum products such as gasoline each year, primarily from China. The latest sanctions limit U.N. members to providing just 2 million barrels per year. Annual crude oil shipments are capped at 4 million barrels, their level over the past 12 months.

In all, these measures impose a 30% reduction in petroleum shipments -- a figure arrived at after negotiation among Security Council members, according to an American source. Uncertainty about exactly how much refined petroleum North Korea's military uses likely helped the U.S. and its allies win support from nations such as China, which is leery about imposing overly harsh sanctions.

Whether this reduction will meaningfully restrain provocations such as missile and nuclear tests is unclear. But slashing shipments of refined petroleum by more than half likely will impose some restriction on North Korea's military activity, if the limits are strictly enforced. Though domestic refineries produce some gasoline and other products from imported crude, output can be pushed only so far.

Countries also can tighten restrictions down the road, now that oil is finally on the table. For example, the U.S. could call once again for a full oil embargo if Pyongyang holds another nuclear test or launches an intercontinental ballistic missile.

Cut off

The sanctions also sever Pyongyang's access to key sources of foreign currency. U.N. members now are barred from importing any textiles from the North. South Korea estimates this trade is worth $760 million annually. That prohibition, along with bans on commodities such as iron, iron ore and seafood introduced in August, could slash North Korea's total exports by more than 90%, a Security Council source says.

Countries also are blocked from issuing new work permits to North Korean laborers or renewing expired credentials, though an order to expel current workers was dropped from the final resolution.

The North has as many as 147,600 workers in various foreign countries, according to estimates from the Korea Institute for National Unification, a think tank affiliated with the South Korean government. Workers pay a portion of their wages to Pyongyang, likely feeding Kim Jong Un's government more than $1 billion per year.

If U.N. members strictly follow these sanctions, funding for the North's nuclear and missile programs will steadily decline. The U.N. appears ready to toughen oversight on this front, cutting off Pyongyang from the cash and energy it needs to carry on with its military provocations.

(Nikkei)

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