Sanctions Are Harsh Blow to N. Korea

On October 14 (local time), U.N. Security Council unanimously adopted a resolution imposing sanctions on North Korea. This could deal a severe blow to the North Korean economy.

In particular, economic experts predict that there would be serious economic repercussions on North Korea since North Korea’s two biggest trading partners, China and South Korea, expressed their support for the resolution. The two countries account for as much as 65 percent of the North’s total trade volume.

Isolated North Korea economy-

It appears that North Korea will be economically isolated from the international community, because U.N. member countries could impose economic blockade on the North by strictly implementing the U.N. Security Council resolution.

The Korea Institute for International Economic Policy (KIEP) released an analysis that North Korean economy was very likely to post a more serious negative growth than the one in mid-1990s when it had gone through the hardship in which millions of North Korean people died due to floods.

North Korea recorded negative growth from 1995 to 1998 but had a sustained plus economic growth until 2004 since it posted a 6.2 percent of economic growth in 1999 when the inter-Korean economic cooperation project started.

Cho Myung-chul, a manager of International Cooperation for Korean Unification division of KIEP, said, “Foreign trade has a big impact on the North’s economy to the extent that a one percent rise in trade between North Korea and China increases North Korea’s economic growth rate by 0.112 percentage points,” and added that the North’s economy is very likely to suffer setbacks when economic sanctions are in full swing.

Food Shortages and Inflation Inevitable-

It seems that North Korea won’t be able to avoid a food shortage like the one it suffered in the 1990s if U.N. resolution would lead to sharp reduction in aid to North Korea.

The Samsung Economic Research Institute (SERI) forecasted that North Korea would lack 1.66 million tons of food due to the decrease of 100,000 tons in crop (food) yield caused by floods that took place two times this July.

However, there is a concern that disruption of food supply from the international community following the suspension of aid to North Korea would bring North Koreans a colder and hungrier winter than ever.

Dong Yong-seung, a manager of economic security division of SERI, noted, “Economic sanctions could cause shortage in just every commodities including food,” and predicted that North Korean residents would live in a more difficult condition, due to inflation.

Collapse?-

There is also a forecast that North Korean regime could collapse if it conducts additional nuclear tests or missile launchings.

Such further provocative acts could result in the global community slapping stronger sanctions and China and South Korea virtually propped up North Korea halting their aid.

For this reason, more people say that the government or the business circle should arrange multilateral and meticulous preparations on the North’s nuclear issues.

Park Jong-kyu, a senior researcher of Korea Institute of Finance (KIF) remarked, “Since the Kim Dae-Jung administration, the government’s policy toward Pyongyang changed to that of appeasement so Korea has not researched publicly the possibility of fall of North Korea for nearly 10 years,” and pointed out that Korea should resume the research on financial requirement regarding unification of two Koreas following the collapse of North Korea.

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