In a bid to pressure the country to give up its nuclear ambitions, the United States and its allies have ratcheted up sanctions against North Korea. However, some analysts are of the opinion that it might prove a losing strategy.
In fact, as firms develop better methods of evading trade restrictions, the economic sanctions could actually be bolstering Pyongyang's business competitiveness. And arguably by enabling the rogue nation to continue with its roundly-condemned weapons program, that, in turn, could boost the nation's economy.
"In the category of unintended negative consequences, the application of sanctions has led the North Korean regime to find new, better, innovative ways to do business" inside of China’s marketplace, John Park, adjunct lecturer at the Harvard Kennedy School, said.
Park said in a July testimony before a U.S. House committee that North Korean businesses directly engage local Chinese middlemen who in turn charge a fee to their clients as the Korean business seek to procure technologies, along with other permitted and prohibited items.
The Chinese middlemen, instead of being "scared off," attempt to monetize the increased risk by charging higher fees, with the imposition of more extensive sanctions against Pyongyang. Therefore, according to Park, driven by the prospect of greater incentives, sanctions ultimately attract more capable middlemen.
"You're creating more efficient markets for the North Korean regime to do its activity in the Chinese marketplace," he said.
"And we're likely to see some version of this continuing with the application of new sanctions."
Reuters reported that the North Korea’s economy grew at its highest rate in 17 years in 2016 despite having been faced with continuous United Nations sanctions since 2006 over its nuclear weapons program.
Because of North Korea's ability to elude them with "evasion techniques that are increasing in scale, scope and sophistication", economic sanctions were proving ineffective on the country, the UN reported earlier in February.
"Designated entities and banks have continued to operate in the sanctioned environment by using agents who are highly experienced and well trained in moving money, people and goods, including arms and related material, across borders," the report said.
However, some blame China in particular for failing to curb North Korea's economy and have said that the sanctions are not robust enough. Exports rose by nearly 20 per cent in the first half of the current year even though Beijing has restricted imports from Pyongyang. There was a rise of 10 percent in the overall trade flows between the two countries to touch $2.65 billion in the same period.
The country has conducted its sixth and largest ever nuclear test on Sunday despite the latest round of UN sanctions imposed on North Korea in August. And in an act that the UN Security Council condemned as "outrageous", it also launched a ballistic missile over Japan in the same month that the sanctions were passed.
In the wake of Pyongyang's latest nuclear trial, the UN is said to be considering tougher economic sanctions against North Korea.
(Source:www.cnbc.com)
In fact, as firms develop better methods of evading trade restrictions, the economic sanctions could actually be bolstering Pyongyang's business competitiveness. And arguably by enabling the rogue nation to continue with its roundly-condemned weapons program, that, in turn, could boost the nation's economy.
"In the category of unintended negative consequences, the application of sanctions has led the North Korean regime to find new, better, innovative ways to do business" inside of China’s marketplace, John Park, adjunct lecturer at the Harvard Kennedy School, said.
Park said in a July testimony before a U.S. House committee that North Korean businesses directly engage local Chinese middlemen who in turn charge a fee to their clients as the Korean business seek to procure technologies, along with other permitted and prohibited items.
The Chinese middlemen, instead of being "scared off," attempt to monetize the increased risk by charging higher fees, with the imposition of more extensive sanctions against Pyongyang. Therefore, according to Park, driven by the prospect of greater incentives, sanctions ultimately attract more capable middlemen.
"You're creating more efficient markets for the North Korean regime to do its activity in the Chinese marketplace," he said.
"And we're likely to see some version of this continuing with the application of new sanctions."
Reuters reported that the North Korea’s economy grew at its highest rate in 17 years in 2016 despite having been faced with continuous United Nations sanctions since 2006 over its nuclear weapons program.
Because of North Korea's ability to elude them with "evasion techniques that are increasing in scale, scope and sophistication", economic sanctions were proving ineffective on the country, the UN reported earlier in February.
"Designated entities and banks have continued to operate in the sanctioned environment by using agents who are highly experienced and well trained in moving money, people and goods, including arms and related material, across borders," the report said.
However, some blame China in particular for failing to curb North Korea's economy and have said that the sanctions are not robust enough. Exports rose by nearly 20 per cent in the first half of the current year even though Beijing has restricted imports from Pyongyang. There was a rise of 10 percent in the overall trade flows between the two countries to touch $2.65 billion in the same period.
The country has conducted its sixth and largest ever nuclear test on Sunday despite the latest round of UN sanctions imposed on North Korea in August. And in an act that the UN Security Council condemned as "outrageous", it also launched a ballistic missile over Japan in the same month that the sanctions were passed.
In the wake of Pyongyang's latest nuclear trial, the UN is said to be considering tougher economic sanctions against North Korea.
(Source:www.cnbc.com)
