Luxuries Flow Into North Korea Despite Sanctions

PYONGYANG, North Korea -- The North Korean leadership's appetite for imported luxuries, highlighted by three Lincoln limousines at Kim Jong Il's funeral, has spread to growing numbers of the country's elite, despite UN sanctions designed to force Pyongyang to abandon its nuclear weapons program.

An examination of UN and Chinese trade data reveals that exports to North Korea of products including cars, tobacco, laptops, cell phones and domestic electrical appliances all increased significantly over the last five years. Most items crossed the border from China.

The data reveal glaring loopholes in the sanctions regime, demonstrating how China has stepped in as the main supplier of goods considered luxuries in North Korea as other countries have clamped down on such exports.

But the figures also hint at the emergence of a new entrepreneurial class in North Korea rich enough to buy imported goods. Some analysts say this group could represent the strongest impetus for economic reform, and potentially undermine the totalitarian grip of the Kim family dynasty.

Since 2007, North Korea's imports of cars, laptops and air conditioners have each more than quadrupled, while imports of cell phones have risen by more than 4,200 percent, with the vast majority of items coming from China, according to the UN data. Chinese customs data show those trends continuing in 2011.

Critics accuse China of not doing enough to rein in its unpredictable ally. They say China exploits its position as Pyongyang's only military ally and main aid donor as a bargaining chip. Beijing has indicated frustration with North Korea's refusal to abandon its nuclear program, but opposes the sanctions in principle, favoring closer trade ties as the best way to promote economic reform and influence its neighbor.

The trade figures illustrate a dilemma facing the US and its allies as Kurt Campbell, the US assistant secretary of state for East Asian and Pacific affairs, wraps up a visit to China, South Korea and Japan this week to discuss how to persuade the new North Korean leadership under Kim's son, Kim Jong Eun, to give up nuclear arms.

The sanctions, imposed after North Korea conducted a nuclear test in 2006 and strengthened after its second test in 2009, were designed to put direct pressure on the leadership, which has long sought to maintain the loyalty of the elite with imported luxury items. A key target was the secretive agency called Office 39 of the ruling Workers' Party, which US officials believe is involved in selling drugs and weapons to drum up hard currency. It also buys luxury goods including items like iPads and laptops for the elite, according to some accounts.

But many analysts and diplomats believe the sanctions are ineffective, largely because the UN allowed member states to decide which products they consider luxury items. China agreed to comply, but permits exports of many products widely considered luxuries by the US, the European Union, Japan and others, which have halted or restricted exports of them. Other items reach North Korea through smuggling, especially over the Chinese border.

Hong Lei, a spokesman for China's Foreign Ministry, told a regular news briefing Thursday that China's trade with North Korea did not violate the sanctions regime.