Over the past two months, China, North Korea’s economic benefactor and formally the source of 90% of its foreign trade, has been withdrawing financial support, ostensibly under the auspices of US sanctions, as Communist Party leaders try to rein in the North’s nuclear program to appease the US and prevent a potentially destabilizing conflict on its border – a development that would be particularly unwelcome during the Communist Party’s upcoming national congress.
As we reported earlier this week, North Korea’s thriving black-market economy (the county earns hundreds of millions of dollars a year from illegal weapons sales, along with other illicit activities rumored to include counterfeiting of US dollars and the manufacture of methamphetamine) has helped blunt the economic impact of UN sanctions meant to reduce the country’s legitimate exports by 90%.
Last month, China ordered North Korean businesses operating in the country to close, and asked its banks to stop doing business with North Korean businesses and individuals in accordance with the latest round of UN Security Council sanctions.
But as China withdraws, Reuters reports that Russia, which shares a small border with North Korea along the country’s eastern flank, is quietly stepping in to offer economic support for its restive neighbor, even after declining to use its veto power to kill UN sanctions against the rogue state.
Russia’s reasoning is simple: If the North Korean regime falls, more US troops could deploy near Russia’s eastern border – an eventuality that Moscow would like to avoid, given the NATO buildup in Europe.
This post was published at Zero Hedge on Oct 5, 2017.