Last month, I wrote about one slightly surprising consequence of sanctions against North Korea — sanctions have prevented Kim Jong-un from selling off and exporting resources needed by the North Korean people, which has flooded North Korean markets with cheap coal and seafood.
Now, we’re starting to see something like the converse of this, in which restrictions on what North Korea’s donju and purchasing agents can import is forcing them to find other ways to kick up steep “loyalty payments” to their overlords in Pyongyang. What’s a donju to do? Find something to send back to North Korea that isn’t covered by sanctions — like apples. The result has been to flood North Korean markets with cheap apples during North Korea’s lean season — called the “barley hump” — when winter food stocks have run out and home-grown crops haven’t been harvested yet.
For this reason, many trading companies have increased their import of daily goods and food products, neither of which are subject to the harsh round of unilateral and multilateral sanctions imposed on North Korea in early March in response to its fourth nuclear test and rocket launch. In particular, fruit such as apples are not included on the list of sanctioned items, so these trading companies can reliably earn foreign currency by buying and selling them. [Daily NK]
Making more food available during the lean season could also have a secondary and beneficial effect, by reducing the incidence of “pre-harvesting” of North Korean crops, which reduces the aggregate food supply.
“Right now the market is so flooded with Chinese apples that vendors are even selling one apiece to customers who don’t have a lot of money,” he said. “It seems like imported fruits are going to dominate the markets until North Korea’s first fruits of the year become available around July.” [Daily NK]
Radio Free Asia even publishes this image of apple boxes stacked up at the customs checkpoint at Dandong.
It also informs us that there might be more than apples in some of those boxes.
“It has become impossible to send so-called ‘apple rice’ to North Korea now,” said a trader in Dandong, a border town in northeastern China, in a reference to rice that China sends to North Korea packed in apple boxes rather than regular rice sacks.
But in this instance the source used “apple rice” to describe goods shipped between China and North Korea that are falsely identified on their outer packaging to conceal their true contents, such as materials used to manufacture narcotics in North Korea.
The fact that Chinese traders are no longer able to send “apple rice” to North Korea means that Chinese customs authorities are performing more thorough inspections at the border, the source said.
If such goods are discovered during the inspections, the traders will be fined, and all their freight will be confiscated, he said.
“The trading companies whose ‘apple rice’ is found through random inspections will be in big trouble and have to pay a large fine,” said the source, adding that the customs inspections process has become stricter for goods entering China from North Korea. [RFA]
Why do traders hide rice in apple boxes? Beats me, but it’s not because of sanctions; maybe China has a rule against exporting rice. Either way, increased cargo inspections at the land borders compared to last month are good news, because Pyongyang has taken advantage of lax inspections to smuggle bulk cash and other contraband across the border. They’re also bad news, because smuggling brings food and information into North Korea.
Overall, however, it’s good news that the trade in food and consumer trade continues, because it means that sanctions’ impact on the North Korean people is being minimized, even if it can’t be eliminated completely. The critics who were (and still are) eager to complain that sanctions would starve poor North Koreans won’t find much evidence to support support their arguments. Despite this being the lean season, food prices have remained stable since sanctions were imposed. Motor fuel prices have risen in Pyongyang, although the reasons for this aren’t clear. U.N. sanctions ban the export of jet fuel to North Korea, but they don’t impose an oil embargo. It may be that North Koreans are hoarding, and it may be that the regime itself is, perhaps for political parades or military needs. Fuel prices do have the potential to affect food prices indirectly, so this bears close watching.
The only report I’ve seen of food shortages caused by sanctions is this report, unconfirmed by any others, that a member of the state security forces had begged a defector for money because he’d stopped receiving wages. That’s hardly a tear-jerking tale of woe, if true. Reports that China had cut flour exports to North Korea were likely a measure to alleviate flour shortages in China, and had no evident impact on food prices in North Korea.
But this is not to deny that sanctions have had some adverse impact on workers in state industries targeted by sanctions:
Signs of anxiety have been observed in certain areas near iron and steel mills as well as coal mines following strong international sanctions implemented against North Korea. These come as mine workers seek to secure their finances by moving to smaller and more affordable housing in anticipation of a prolonged period of stalled wages and tighter budgets at home.
“I haven’t seen any panic buying in response to the sanctions, but an increasing number of people living in coal mining areas like Hyesan and Musan are trying to sell their homes,” a source from North Hamgyong Province told Daily NK on Monday. “In one particular neighborhood, there was news that ten households are making efforts to sell their homes.” [Daily NK]
That’s unfortunate, but not that different from what we might see in other countries, including this one, where industries take sudden downturns. Indeed, China had already slowed its imports of North Korean coal a year and a half ago, and the effect of sanctions has been to impose an “abrupt halt on what had already been intermittent” wage payments. There are no reports of malnutrition or starvation among the miners, just reports that they’re retrenching their finances, cutting back on consumer purchases, and hoarding foreign currency. There is also the question of causation. There’s little question that sanctions have indeed hit the North Korean coal and steel industries hard, but it’s also possible that sectoral sanctions on the North Korean coal industry have only accelerated a decline in an industry that had already begun, and was likely to deepen for unrelated structural reasons. Recent reports tell us that China is cutting its own miners’ working hours because of a coal glut, which is probably a function of China’s own economic slowdown.
On the other side of this, critics who don’t understand what sanctions do or are intended to do, like CNN’s Will Ripley, see all evidence of cross-border trade as proof that sanctions aren’t working. But sanctions do not impose a blanket trade embargo on North Korea, for the very reason that the drafters of sanctions want food and other necessities to keep flowing into North Korea. If hunger in North Korea was a deterrent to Kim Jong-un, he wouldn’t be doing so much to enforce it.
The case of the Chinese apples suggests one way in which sanctions can be targeted and enforced to increase North Korea’s aggregate food supply, by shifting state resources back into the markets. Banning North Korea’s food exports might be another way. But those who depend on state industries and wages will invariably continue to lose their paychecks, and will become increasingly dependent on the markets.
The issue of the sanctions’ impact on the people bears close watching over the next year, as nations continue to implement them. On one hand, I think Sokeel Park is right that the (quasi-legal) privatization of agriculture and the food supply means that another famine in North Korea is unlikely. On the other hand, it’s unrealistic to believe that sanctions won’t affect the wrong people at all, in part because the regime will do everything in can to transfer their effects, and already is. This report did a particularly good job of covering this moral dilemma in an honest and balanced way.
But there is no question that times are much harder for North Koreans today than they were a year ago, and it’s not because of sanctions imposed by the U.N. or the U.S., but because of sanctions imposed by the North Korean government on its own people. Specifically, the North Korean government — with substantial help from China — continues to crack down on cross-border trade, smuggling, communications, and remittances, which are essential to the livelihoods of millions of poor North Koreans. It is cracking down on market trading and mobilizing people for exhausting make-work forced labor, denying them the time and the energy to pursue their livelihoods. Those are stories that bear careful watching, too, and which some sanctions critics consistently choose to overlook.