Hmm: China’s national oil firm cuts off North Korea
Has North Korea run out of credit with China, or has Beijing finally run out of patience with Pyongyang? China’s state-run petroleum operation has cut off fuel sales to rogue nation, Reuters reports, ostensibly due to a lack of payment. However, it’s no secret that the Trump administration has put a lot of pressure on Beijing to get tougher with the Kim regime, and a fuel cutoff will hit Kim Jong-un where he’s most vulnerable:
China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won’t get paid, as pressure mounts on Pyongyang to rein in its nuclear and missile programmes, three sources told Reuters.
It’s unclear how long the suspension will last. A prolonged cut would threaten critical supplies of fuel and force North Korea to find alternatives to its main supplier of diesel and gasoline, as scrutiny of China’s close commercial ties with its increasingly isolated neighbour intensifies.
North Korea needs the fuel not just for its farmers and shipping, but also for its military. That presents a particularly difficult problem for Pyongyang’s leaders, who already operate in a crisis-shortage environment. Kim can’t afford to cut back on military supplies, not with all of the saber rattling taking place at the moment, which means he’ll have to starve the rest of the country of fuel resources, which will hamper food production and distribution even further. It will ratchet up internal tension, and it might get worse if military needs can’t be satisfied.
CNPC won’t sell the fuel on credit, Reuters’ Chen Aizhu notes, which means that Pyongyang is having trouble coming up with hard currency. Aizhu’s source says the issue came up over “the last month or two,” and that timing is intriguing. Four months ago, Kim ordered a bizarre assassination of his older brother Kim Jong-nam, using VX nerve agent in the airport of Malaysia’s capital of Kuala Lumpur. The target and especially the weapon made it clear who ordered the hit, and Malaysia — one of the few nations willing to do business with North Korea — cut off diplomatic and economic ties to Pyongyang, which set off a round of hostage-taking by the Kim regime. Malaysia had been a key partner in avoiding international sanctions and a vital link to hard currency for Pyongyang until the assassination. If North Korea has had trouble paying for diesel and gasoline over the last couple of months, it might signal that Pyongyang has no more options for avoiding sanctions and that its economic back is against the wall, so to speak.
Aizhu’s sources say that this was a “commercial decision,” but nothing’s that simple in China. Beijing had already cut off coal imports from North Korea, depriving Kim of income that could have been used to pay for the fuel. It looks like a squeeze, one that may be picking up in intensity, and one that sends a direct message to North Korea’s military leaders, who will understand only too well what a fuel embargo will do to their readiness posture. It won’t take much more for the situation to reach critical mass on the Korean peninsula.