A HOLE IN NORTH KOREAN SANCTIONS BIG ENOUGH FOR COAL, OIL AND USED PIANOS

[When the United Nations adopted tougher sanctions against North Korea this month to punish it for its nuclear weapons program, it was understood that they would have little effect without strong cooperation from China, North Korea’s largest trading partner.]

By Jane Perlez  and Yufan Huang

Sinuiju, in North Korea, lies across the Yalu River from the Chinese

border town of Dandong. Sanctions approved in March against North

Korea appear to have had little impact on its trade with China.

CreditJohannes Eisele/Agence France-Presse — Getty Images

DANDONG, China — Before he drives the beat-up taxi into North Korea, Mr. Qin does two things. He packs a bribe, often something as simple as fresh apples or bananas, or sometimes as much as $200. And he snips the car’s radio wires.

“They always want the wires to the car radio cut so the North Koreans can’t listen to the Chinese programs,” he said.

Then, as he does on many mornings, he drives the car over a single-lane iron bridge across the border, where there is steady demand for secondhand taxis.

When the United Nations adopted tougher sanctions against North Korea this month to punish it for its nuclear weapons program, it was understood that they would have little effect without strong cooperation from China, North Korea’s largest trading partner.

If recent trade here is any indication, that cooperation has been spotty at best.

Cross-border trade, legal and illegal, flows pretty much as usual, and seems to be largely unhindered by the new rules, traders and local officials said.

One of the toughest components, a requirement that countries inspect all cargo entering or leaving North Korea for banned goods, is not enforced here.

On many days, Mr. Qin’s secondhand taxis cross the bridge in a convoy of more than 100 vehicles, including trucks loaded with containers draped in shabby tarpaulins and secondhand minibuses for North Korea’s rickety transportation system. Few are ever inspected by the Chinese authorities.

China accounts for about 90 percent of North Korea’s trade. Half of that business is estimated to flow through Dandong, a boom-and-bust city whose fortunes are tied to trade with North Korea.

Virtually everything that keeps the North Korean economy afloat passes through here: Coal and iron ore come in, violating the sanctions, and crude oil flows out, exempted from them.

Smuggling is rampant. The export of North Korean rare earth minerals and gold, banned under the new rule, is one of the more lucrative revenue sources for the North Korean government, traders said. That business continues on privately owned 200-ton ships belonging to Chinese smugglers based here, they said.

The United Nations rules put the onus on customs inspectors here to judge which goods may help the nuclear program or the military, which are banned, and which are intended for civilians, which are allowed.

On a recent day, the customs checkpoint, a large outdoor parking area adjacent to the bridge, held a collection of China’s castoffs: cheap four-wheel-drive Haval passenger vehicles, discount medicines for hepatitis and tuberculosis, old solar panels to brighten dark houses.

But the customs office here lacks the staff to open all the containers, a local government official said. Like most people interviewed for this article, he spoke on condition of anonymity since there are risks to speaking candidly to foreign media about trade with North Korea.

At peak times, up to 200 trucks a day cross the Yalu River to Sinuiju, North Korea. Before departing, only about 5 percent of the containers they carry are inspected, the official said.

China and the United States worked closely on the new sanctions, and both countries said ridding North Korea of nuclear weapons was a shared concern. When President Obama and the Chinese leader, Xi Jinping, meet in Washington on Thursday, Mr. Obama is likely to press China to enforce the new measures.

But if China is exasperated with the North Korean leader, Kim Jong-un, it is even more worried about political instability, and the possibility that economic deprivation could send millions of North Koreans fleeing into China.

So China insisted on an exemption stipulating that the “livelihood” of ordinary North Koreans must not suffer, a loophole that sanctions experts say is big enough to drive an 18-wheeler through.

That exemption left the oil pipeline from Dandong to North Korea open, but seems to have been applied to a wide variety of merchandise.

One salesroom here boasted a brisk business in secondhand Japanese pianos, selling for $1,500 to $8,000 for fastidious, well-off North Koreans who sneer at the sound of Chinese instruments. North Koreans like Yamaha pianos, a salesman said.

Smuggling along the nearly 900-mile border, perfected through methods ranging from tucking wads of cash into truck drivers’ seats to operating small boats in the dead of night, is winked at for the same reason.

“We don’t want the North Korean regime to collapse,” explained Mr. Wang, a government official.

Demand has fallen for some items, traders said, but that was more a function of North Korea’s increasingly feeble economy and a lack of cash, than the sanctions.

There is, however, evidence of some enforcement in one important area: North Korea’s sale of coal and iron ore, two of its most important exports.

Port authorities here have been fairly vigilant in enforcing the new ban on North Korea’s ragged fleet of more than two dozen cargo ships, two local officials said. The coal they carry earns North Korea as much as $1 billion a year, according to the United States Treasury.

But that ban has been circumvented by smuggling ships and by the transfer of 12 North Korean ships to Chinese ownership, allowing them to dock at Chinese and other ports, a longtime trader, Mr. Yu, said.

A few traders interviewed here said the new rules had crimped their business.

Mr. Zhang, a trader who does tens of millions of dollars a year in business with North Korea, said customs officials had just impounded a big secondhand excavator he had bought from a coal mine in Shanxi Province and sold to a North Korean coal mine for more than $60,000.

Customs inspectors asked how he knew the equipment would not be transferred to the North Korean military. “We didn’t know how to answer,” he said.

But traders and officials expect that after some initial minor squeezing, whatever enforcement there is will be relaxed. Liaoning Province, where Dandong is a prominent city, ranked at the bottom of China’s 31 provinces for economic growth last year, and there was political pressure not to weaken the economy further.

“Whenever there are provocations, the traders say that the higher-ups call for enforcement, and then a few months later there is no systematic implementation,” said Andrea Berger, a proliferation expert at the Royal United Services Institute in London.

For many of the Chinese businessmen here, deals with North Korea still offer a chance to make good money, both quickly and quietly. Their offices are tucked away in a grubby complex of two-story buildings near the waterfront.

On the street, North Korean men are ubiquitous, walking in pairs or in groups — never alone — and wearing severe black jackets and pants, the signature uniform of government officials. They are North Korean trade officials who were sent to Dandong as purchasing agents, and whose jobs were largely untouched by the new United Nations restrictions.

Their presence has created tensions with the Chinese, many of whom regard their needy neighbors with contempt.

Just as the new sanctions were imposed, a new North Korean trader came to work at Mr. Zhang’s company, where he would earn kickbacks on each purchase and then pay some of that money to his government, Mr. Zhang said.

The trader expected to be treated to a plush apartment for him and his family, schooling for his son, an imported car, and a loan of more than $50,000, Mr. Zhang complained. “How they spend money is way too extravagant,” he said.

Follow Jane Perlez on Twitter @JanePerlez.

@ The New York Times