North Korea sanctions 'hit aid'

At the same time, some restrictions are meant to sting the country’s elite by crippling the import of luxury goods, such as yachts and expensive cars. But they do not appear to be stopping the well-heeled from living large in the capital Pyongyang.

Much of the aid group difficulties are linked to the state-run Bank of China’s decision earlier this month to follow Washington’s lead and sever ties with the North’s Foreign Trade Bank, the main money transfer route for most foreign organisations, UN agencies and embassies in Pyongyang.

With that line cut, aid workers in North Korea say they are left with few other options to receive foreign currency for expenses including rent, bills and salaries for local staff.

The sanctions are not supposed to affect humanitarian aid, but six Pyongyang-based aid organisations headquartered in Europe have issued a document spelling out their frustrations and calling the difficulties in transferring money to North Korea a “big problem”.

They warned they may be forced to suspend their operations if they cannot find ways to access cash.

Gerhard Uhrmacher of German humanitarian aid organisation Welthungerhilfe, said when recent bank transfers failed, he managed to keep projects running by routing 500,000 euro (£425,264) to Chinese or North Korean accounts in China to pay for building supplies and other goods.

He said Welthungerhilfe, which signed the document and works on agriculture and rural development projects in North Korea, has some reserves in Pyongyang but must also resort to carrying cash into the country by hand.

“It doesn’t give a good impression. We’re trying to be transparent, to be open to all sides and now we’re more or less forced to do something that doesn’t really look very proper because people who carry a lot of cash are somehow suspect,” said Mr Uhrmacher who has worked in North Korea for the past 10 years.

Some analysts said aid groups were simply “collateral damage” and that they will find a way to work around the sanctions as they have been forced to do in other countries.

Others said the poorest North Koreans would be hurt if some humanitarian groups have to pull out of the country. The aid groups work on a range of issues from food security to improving health and assisting with disabilities.

The US State Department said it was aware of the concerns of humanitarian groups and was exploring ways to address them.

But spokeswoman Jen Psaki said the onus was on North Korea to provide for its people and make alternative financial services available to international organisations.

Sanctions and trade embargoes have long been used by the international community to put an economic squeeze on troublesome regimes from Iraq and Burma to Cuba.

But they are a blunt tool that can unintentionally add to the suffering of people living under oppressive rule by hindering development and the delivery of aid.

In North Korea’s case, the sanctions are meant to stop financing and the smuggling of cash that could help its nuclear and missile programmes. They also aim to send a message to the country’s elite by crushing the import of luxury goods.

Yet last week at the newly opened six-story Haedanghwa Service Complex in Pyongyang, well-dressed North Koreans chatted on mobile phones and browsed in a high-end boutique that sold everything from fine Italian suits and Dior makeup to glass showcases glittering with diamonds and gold.

The US Treasury Department hit the North Korean bank with sanctions in March, effectively cutting it off from the US financial system after accusing the country’s main foreign exchange institution of funding Pyongyang’s missile and nuclear programmes.

Washington pressured Beijing to also impose restrictions on the bank a month after new leader Kim Jong Un angered his biggest economic supporter by conducting an underground nuclear test.