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June 5 (Reuters) - U.S. officials visiting Seoul told South Korean officials Washington is looking at ways to punish North Korea financially for its nuclear test last week, a South Korean newspaper reported on Friday.
But they may find they have few options because the impoverished North’s meagre international finances have already been curtailed by sanctions.
Here is a look at the international finances of North Korea, whose yearly GDP is about $20 billion, according to estimates by the South’s Bank of Korea.
The U.S. Treasury brought North Korea’s international finances to a virtual halt in 2005 by cracking down on a Macau bank suspected of aiding the North’s illicit financial activities. Other banks, worried about being snared by U.S. financial authorities, steered clear of the North’s money.
North Korea’s two biggest trade partners are China, with $2 billion in annual trade, and South Korea, with about $1.8 billion. The neighbours are worried about instability in the North spilling over borders and will not push for measures designed to topple Pyongyang’s leaders. Studies indicate their trade with North Korea did not decline after U.N. sanctions were placed on North Korea in 2006 following a missile test and Pyongyang’s first nuclear test.
Beijing, the closest thing that Pyongyang can claim as a major ally, is reluctant to accept any new sanctions that would significantly undercut its economic ties to North Korea.
South Korea is worried about a sudden collapse in North Korea and an estimated bill of $1 trillion to absorb its destitute neighbour, which could wreck its own economy.
The North relies on global food handouts to feed its people and energy aid from China to power the country.
LEGITIMATE EXPORT ECONOMY
North Korea has vast mineral deposits and its exports to China include items such as lead, zinc ore and coal. Its exports to South Korea are largely generated by a joint industrial park located in the North’s city of Kaesong.
Estimates say the North’s yearly exports are valued at about $920 million to $1.7 billion. They also include textiles, food stuffs and fisheries products.
The North, considered in the global business community as a risky and unreliable partner, has a few small joint ventures including a mobile telephone deal with Egypt’s Orascom Telecom. Its SEK animation studio helps makes cartoons with ventures in France and other places.
The United States and others have said they suspect North Korea of selling arms, missile parts and proliferating nuclear know-how in violation of U.N. measures.
They have also said they suspect North Korea of sales of illegal drugs including methamphetamines, counterfeiting U.S. currency and producing counterfeit cigarettes. (Reporting by Jon Herskovitz and Kim Junghyun in Seoul and Lucy Hornby in Beijing; Editing by Alex Richardson)