Why Coal is Strategic

Keeping DPRK Stable

Coal is like oxygen to the North Korean regime. In other words, the coal industry as utilized by the Kim Jong-eun regime is the lifeblood that keeps the whole DPRK establishment afloat. The purpose of this section is to substantiate these statements by explaining how the DPRK regime utilizes the coal trade in four innovative ways, namely (1) stockpiling, (2) offshore accounts, (3) bartering, and (4) price manipulation.

Why and how did trade between China and North Korea increase after the U.N. passed several rounds of sanctions? It is well known that the 2009 nuclear test was offensive to China’s leaders. In his official state visit to the DPRK in October of 2009, Chinese Premier Wen Jiabao questioned the rule of law and lack of investor protection mechanisms surrounding Chinese investor difficulties in the largest copper mine in North Korea. Also in that same year, North Korea’s attempt at currency reform fell flat on its face.84 Why did the combination of international sanctions and the massive failure of a sweeping currency reform not lead to the collapse of North Korean power and economy, but to tremendous increases in exports to China? The beginning of an effective sanctions regime or nuclear negotiation should be based upon a better understanding of North Korea’s state capability and economic situation. Foreign aid might be an effective incentive to denuclearization only if the economy fueling the 1% regime elites in North Korea is weak. If the regime’s elite economy is strong, sanctions and aid strategies will likely fail. The following four sub-sections will show that in spite of international sanctions, the 1% in North Korea are thriving, allowing the regime to maintain a secure grip on political power.