[Photo] Loophole allows truckers to purchase Chinese oil for resale in North Korea

Seol Song Ah  |  2017-11-24 17:22
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Delivery trucks owned by North Korean trading companies have been seen repeatedly filling their tanks with fuel oil in China and returning across the border. Despite restrictions placed on oil imports in accordance with international sanctions, traders have found a way to purchase fuel in China for resale in the markets in Sinuiju, albeit on a much smaller scale.

"Formerly idle delivery trucks have recently been ordered to cross over into China on nearly empty tanks. The drivers are filling their tanks to the brim and then immediately returning to North Korea to resell the oil in the markets," a source in North Pyongan Province informed Daily NK on November 20.

"The trucks are departing in the morning, returning by early evening, and by late evening they are already selling the fuel in the markets. They usually also fill two extra portable tanks, bringing back the maximum amount of fuel possible."

Last September, the UN passed sanctions Resolution 2375, which placed additional restrictions on petroleum imports into North Korea. The newly observed behavior appears to be one way in which the country can skirt sanctions enforcement, as delivery trucks carrying relatively small amounts of fuel are much more difficult to regulate than rail cars. 

The drivers of the empty trucks initially claimed to Chinese customs that all of the fuel on board was to be used for their own vehicles, but this did not go on for long. Chinese customs began to use more discretion, recording and comparing fuel levels upon entry and exit. 

This did not deter the North Koreans, however. A new system sprung up where traders in Sinuiju could import small quantities of goods, increasing the opportunities for trucks to cross the border and fill up their tanks. The scheme appears to be working, as Chinese customs are not restricting these trucks ferrying clothing and foodstuffs. 

A source in China told Daily NK that "North Korean trading companies are working less on big operations with Chinese trading companies these days and more with merchants and market financiers connected to the markets."

He added, "The warehouses in Dandong are now filled with boxes of food and daily necessities ordered by small operations in North Korea, which are then loaded onto trucks by North Korean traders."

But while it seems to be working on a small scale, the scheme is not likely to be enough to make up for the regime's foreign currency earnings shortfall this year. The North Pyongan-based source opined that "the way the regime is sending out trucks to collect oil for resale in small amounts like this is a sure indicator of the dire situation the country is in."

"This year, North Korean trading companies were not able to export even half of their projected amounts of coal and minerals due to the sanctions. Re-issuance of export licenses for traders for the following year are based on export figures and loyalty funds paid to superiors from the previous year. This year, however, thats all moot, he said. 

As China steps up enforcement of the latest international sanctions and cuts off coal and mineral exports from North Korea, a large proportion of North Korean trading companies will be unable to carry out their business plans. While the regime will continue to pursue trade permits for its trading companies and restart wider trade with China, the companies themselves are choosing to focus on their own money-making operations instead.

*Translated by Colin Zwirko

 
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2017.11.06
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