North Korea’s decision to shut the border with China to avoid the coronavirus will set back its nascent economic recovery, renewing pressure on Kim Jong-un to return to nuclear negotiations with Donald Trump.
A jump in fuel prices, a dip in port activity and the suspension of train and air links show the early impact as reports emerge of the first virus case in North Korea. In recent days, Seoul-based NK News reported a 36% jump in diesel prices and diminished activity at the port of Nampho, along with new quarantine procedures.
The closed borders will cut off foreign tourism that provides the cash-starved state with hard currency and further limit the trickle of trade it has with the outside world. The economic blow — if sustained — might make it tougher for Kim to keep pushing back against Trump’s demands.
Before the virus complicated matters, things had been looking up: Reforms, a bumper harvest and sanctions-dodging were helping North Korea claw back some of the lost growth triggered by tougher United Nations trade restrictions and a drought.
The UN Conference on Trade and Development estimated that the economy expanded by 1.8% last year, following its biggest slump in decades in 2018. That view tallied with a surge in China’s imports that suggested an increase in economic activity and trade.
Global sanctions piled on North Korea in 2017 for its nuclear and missiles tests have slammed its trade and access to vital resources such as oil. That hasn’t stopped Kim from building his nuclear arsenal and finding ways to evade the economic restrictions, such as illegal trading of commodities via high-seas transfers between ships, the US and others have said.
North Korea stepped up its illegal exports of coal last year, with most of those deliveries headed for China, according to
a confidential UN report reviewed by Bloomberg News.
Pyongyang raked in $370 million of shipments from January through August alone, a panel monitoring the enforcement of sanctions on North Korea said in the report to the Security Council, citing evidence provided by an unidentified member state.
The Kim regime also managed to import luxury vehicles and other sanctioned items including robotic machinery, the report showed.
While these activities could be affected by the border closure, other illicit activity highlighted in the report won’t, such as the country’s acquisition of virtual currencies and cyber-attacks against global banks to evade financial sanctions.
Prior to the virus lockdown, Kim had been pushing back against Trump’s pressure. In a speech to ruling party leaders on December 31 — the same day reports of the new virus first emerged in China — Kim denounced the US’s “gangster-like acts” and said he was no longer bound by a two-year freeze on tests of nuclear weapons and long-range missiles.
A resumption of major tests would undercut Trump’s claim that his unprecedented decision to meet with Kim in June 2018 made the US safer, just as he gears up for a tough re-election fight. Still, Kim has so far refrained from provocations that could blow up his relationship with Trump.
North Korean foreign ministry adviser Kim Kye Gwan said last month that Pyongyang would never propose trading a key nuclear facility in exchange for UN sanctions relief.