The tightening of U.S. sanctions against the DPRK can significantly complicate the work of the operators of the far Eastern ports. Thus the alleged U.S. sanctions will not practically affect the operation of the port itself, as individual enterprises. This opinion was expressed by TASS, one of the leading Korean studies, associate Professor, international relations Department, Oriental Institute – school of regional and international studies, far Eastern Federal University (FEFU) Artyom Lukin.
Fear is operators of ports
Developed U.S. sanctions primarily affect the major operators of ports. “If this bill is passed, it’s likely that you will choose one or two revealing the victim, to deter others,” – said Lukin.
Among those who may suffer financial and economic harm, according to experts, could be port operators such as the group of “Sum” (Vladivostok commercial sea port), “Mechel” (port Vanino), KRU (port East), Evraz (Nahodkinsky commercial sea port).
“These are large companies with significant foreign operations and assets in the West. They are strongly tied to the dollar banking system. Us sanctions can tremendously complicate their business and bring them serious losses,” – said Lukin. According to the expert, these companies can be faced with a choice: either save the contacts of its ports with North Korea or lose access to the U.S. financial system.
Russian ports will protect a minor trade with the United States
The expert believes that the sanctions will not significantly affect the operation of the ports, individual companies and their economic performance. “Sanctions initiatives of Congress in the first place poses risks for those international ports that serve trade with the DPRK, but have a significant amount of freight traffic with the United States. The bill actually puts such ports before a choice: to do business with North Korea or with the United States,” – said Lukin.
Today for the major ports of the Far East, including those specifically mentioned in the bill of Vanino, Vladivostok and Nakhodka, the United States are not a priority route. “For far Eastern ports, the main counterparties are the countries of East Asia, primarily China, Japan and South Korea. This is because the trade volumes of Russia and the Russian Far East from US is pretty negligible. Therefore, the damage will be done, but it is unlikely to be critical,” – said the expert.
Do not Express fear until representatives of companies doing business with the DPRK. Thus, the representative of the company “Investstroytrest”, opening may 18 regular Maritime passenger service between the North Korean port of Rajin and Vladivostok, believes that the sanctions will not affect the business of transportation between Russia and DPRK. “In the carriage of goods, we strictly follow all the requirements imposed by UN resolutions. We carry only food. Therefore, the new sanctions are unlikely to affect our work,” – said TASS Deputy CEO Mikhail Hops.
The trade turnover of the regions of DFO and the DPRK
According to the far Eastern customs administration of the FCS in 2016, the trade turnover of the region with North Korea amounted to only 8.2 million dollars. In the nomenclature of goods the majority is on food and coal. Artyom Lukin stresses that a significant proportion of trade between Russia and the DPRK is using Chinese intermediaries and are not reflected in official customs statistics. “However, even with this in mind, trade relations with North Korea do not play a significant role for the economy of the far Eastern regions both exports and imports. Therefore, from the point of view of foreign trade activities, potential U.S. sanctions can cause considerable damage to Russia and its Far East,” – says the expert.
Sanctions initiatives in the United States against the DPRK
In early may, the House of representatives of the United States Congress passed a bill to toughen sanctions against North Korea (Korean Interdiction and Modernization of Sanctions Act). If this bill is supported by the Senate and signed by the President of the United States, the sanctions regime against North Korea will be significantly tightened. The main objective of the proposed legislation is to discourage trade and economic relations of North Korea with other countries.
As previously reported, the bill actually authorizes the Minister of national security to enter the territory of the US mandatory inspection of goods carried by ships or transport aircraft, which used to be in ports or airports, which regularly violated resolutions of the UN Security Council.
Under suspicion are all the court that for the past 365 days came in the national Maritime or air space of North Korea, and is also registered in countries with weak customs control.
The law on ports and the security of sea communications in the United States, in turn, is amended, according to which cargo ships under the flag of Korea or any other state, in violation of UN security Council resolutions, the sunset in the waters and ports of the United States is prohibited.
In this case, the bill enshrines the requirement that within 180 days after entry into force and then every year for five years the President of the United States is obliged to provide the relevant congressional committees a list of operators of ports and airports, which contributed to the import or export from the DPRK, in violation of the UN imposed sanctions.
Separately, the White house will have to perform the activities of a number of ports in China, Iran, ports of Latakia and Tartus in Syria, and the Russian port of Nakhodka, Vanino and Vladivostok sea port on the compliance with the restrictions against the DPRK.