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Russia Increases Economic Support For North Korea As China Backs Away

Courtesy of ZeroHedge. View original post here.

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.

Though Moscow wants to try to improve battered U.S.-Russia relations in the increasingly slim hope of relief from Western sanctions over Ukraine, it remains strongly opposed to what it sees as Washington’s meddling in other countries’ affairs, according to Russian diplomats and analysts familiar with the Kremlin’s thinking.

Russia is already angry about a build-up of U.S.-led NATO forces on its western borders in Europe and does not want any replication on its Asian flank, the sources added.

Yet while Russia has an interest in protecting North Korea, which started life as a Soviet satellite state, it is not giving Pyongyang a free pass: it backed tougher United Nations sanctions against North Korea over its nuclear tests last month.

A Russian company began routing North Korean internet traffic this month, giving Pyongyang a second connection with the outside world besides China, according to Reuters. Trade between Russia and North Korea doubled to $31.4 million in the first quarter of 2017 thanks to what Moscow said were higher oil product exports, according to Russia’s ministry for the development of the Far East.

The US suspects that Russia is undermining UN sanctions by allowing North Korean ships to sail home with large loads of fuel, despite officially declaring another destination. Russia has also resisted pressure to repatriate tens of thousands of North Korean laborers whose remittances help support the Kim regime.

“The Kremlin really believes the North Korean leadership should get additional assurances and confidence that the United States is not in the regime change business,” Andrey Kortunov, head of the Russian International Affairs Council, a think-tank close to the Russian Foreign Ministry, told Reuters.

“The prospect of regime change is a serious concern. The Kremlin understands that (U.S. President Donald) Trump is unpredictable. They felt more secure with Barack Obama that he would not take any action that would explode the situation, but with Trump they don’t know.”

Presumably, Russia has chafed at President Donald Trump’s aggressive rhetoric, taking umbrage at his reckless threats to “totally destroy” North Korea, and that the regime “won’t be around much longer.”

As Reuters noted, any talk of unseating any leader of a former Soviet satellite state for whatever reason is politically toxic in Moscow.

To be sure, Beijing’s economic ties to Pyongyang still dwarf Moscow’s and China remains a more powerful player in the unfolding nuclear crisis. But while Beijing is cutting back trade as it toughens its line on its neighbor’s ballistic missile and nuclear program, Russia is increasing its support.

Last month, Russia stoked the US’s ire by hosting the "Zapad-2017" military drills, the latest iteration of military drills that began during the Soviet Union in the 1970s. While Russia placed the number of soldiers participating in the exercise, which also involved neighboring Belarus, at around 10,000, NATO estimates that the real number could’ve been closer to 100,000. Land, sea and air units took part in the games across a huge area encompassing western Russia, Belarus, the Baltic Sea and the Russian exclave of Kaliningrad. Now, the US is accusing Russia and Belarus of breaking up the war games into smaller segments to avoid being observed by international monitors.

Russian President Vladimir Putin told a forum last month in Vladivostok – an eastern port city 60 miles from Russia’ border with North Korea – that he understood the country’s security concerns about the US and South Korea.

To be sure, Russia and China continue to advocate for a peaceful dialogue between the US and the North. The two countries have proposed a peace plan that would ask the US and South Korea to end their military exercises in exchange for the North ending its nuclear tests. However, after President Donald Trump poisoned the well by saying Secretary of State Rex Tillerson was “wasting his time” trying to talk to the North, this eventuality appears increasingly remote. But as the drumbeat of war intensifies in the US, the two countries are taking steps to ensure that their mutually-agreeable buffer against US "missile defense" systems in South Korea remains intact.


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