Trade With China Aids N. Korea's Military, May Offset Sanctions

By Blaine Harden
Washington Post Foreign Service
Saturday, June 27, 2009

SEOUL -- Behaving badly hasn't hurt the bottom line in North Korea.

Thanks to China, foreign trade has soared since Kim Jong Il's government began detonating nuclear bombs nearly three years ago.

As U.N. sanctions mount and business between the two Koreas fizzles, North Korea's trade with China is setting new records. It rose 41 percent last year, while China's share of the North's overseas trade mushroomed to 73 percent.

In recent months, exceptional eruptions of North Korean belligerence have been attributed to the murky logic of hereditary succession as Kim, ailing since he had a stroke last year, positions his third son to take command of the communist country.

Kim Jong Un is just 26, and many analysts have explained the North's missile launches, a second nuclear test in May and repeated threats of "merciless war" as a way of cementing the young man's credibility as a fearsome and deserving heir.

While that may be true -- and few outsiders really know what's up in Pyongyang -- there is another way to understand the North's willingness to antagonize much of the world: Chinese buyers of North Korean minerals don't seem to mind.

Increasingly, revenue from these buyers is going directly to the North Korean military, which has taken control of exports of coal, metals and other key economic sectors, according to the Seoul-based Institute for Far Eastern Studies.

By funneling hard currency to the military, Chinese enterprises seem to be insulating the confrontational core of Kim's government from the international consequences of its behavior. "To the extent that these transactions are increasingly controlled by government entities, particularly the military, North Korea's response to sanctions and diplomatic concerns are almost surely diminished," said Marcus Noland, a North Korea expert at the Washington-based Peterson Institute for International Economics.

Japan, South Korea and the United States, the most outspoken champions of using sanctions to change North Korean behavior, are painfully aware of China's growing trade. "If China continues business as usual with the North Koreans, they won't feel any pain," said a senior official in Japan's Foreign Ministry.

U.S. leverage with China is complicated by its own money problems. While China is North Korea's main patron, it is also the U.S. government's largest creditor, holding as much as $800 billion in U.S. Treasury bonds.

In Pyongyang, meanwhile, the metals industry has become "the mainstay of our independent socialist economy," Kim's government declared in a New Year's Day statement, which also emphasized the "military first" priority of all government actions.

According to the U.S. Geological Survey, North Korea's primary mineral exports to China are coal for smelting, iron ore, zinc, lead and magnesite, which is essential for making lightweight metals for electronics.

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