North Korea has increased its illegal smuggling of coal, suggests new satellite imagery, as Kim Jong Un faces the country’s worst economic downturn on record.
Evidence of a rise in coal exports last month at Nampo, a port in the country’s south-west, can be seen in images published by 38 North, a Washington-based think-tank programme, and reviewed by the Financial Times.
“A mix of vessels, large coastal barges and a bulk carrier were observed here on multiple occasions, with an increasing number of these vessels in July . . . The recent upsurge in activity at the coal port and the plentiful coal stocks in open storage areas, suggest that illicit trade may have resumed,” 38 North analysts Peter Makowsky and Jack Liu wrote in a report.
The indication of sanctions-busting shipments marks a striking change from much of the first half of the year when few cargo ships, freighters and carriers were observed at the port. That followed Pyongyang’s sweeping closure in January of most land, air and sea routes as officials sought to isolate the country from the rapidly deteriorating health crisis unfolding in China.
According to the UN committee monitoring sanctions, there is evidence that cash generated from Pyongyang’s illicit coal shipments is funnelled towards its nuclear weapons programme.
The resumption of coal exports — most of which is believed to be destined for China — is the latest sign of economic hardship facing North Korea’s 25m people, who have seen already-low levels of foreign trade dissipate amid the global pandemic.
North Korea is heading for an 8.5 per cent contraction in annual gross domestic product this year, which would be the worst economic downturn on record, according to Fitch Solutions.
South Korea’s central bank says North Korea experienced growth of 0.4 per cent in 2019, its first expansion since sanctions were strengthened in 2017 in response to Mr Kim’s nuclear weapons programme.
Anwita Basu, head of country risk at Fitch Solutions, said this year’s contraction would be worse than the downturn suffered in the early 1990s after the fall of the Soviet bloc. Moscow had long provided financial support to Pyongyang.
“It’s safe to assume that the contraction this year will be the deepest in history,” she said.
Underpinning Fitch’s estimates are expectations that growth in China, Pyongyang’s most important trading partner and ally, will slow to a 30-year low of 2.2. per cent this year.
“We believe that the North’s external sector will face the largest hit this year and this will further weigh on the fortunes of the mining and manufacturing sector. The North Korean authorities could push up construction activities to prop up growth, but with severe uncertainty persisting around the coronavirus and the likely disruptions to raw material supply chains, we believe that this sector too will suffer,” Fitch analysts said.
While North Korean authorities have not confirmed a single case of coronavirus, internal travel restrictions have been tightened in recent weeks and there is scepticism among international experts over the veracity of the claims.
Fitch added that “North Korea’s economic conditions could worsen if a large-scale Covid-19 outbreak emerges domestically”.
International experts urge caution when assessing statistics surrounding North Korea because of a lack of trust in figures released by Pyongyang and Beijing and a dearth of foreigners in the country.
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