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Did China play smart with the UN-North Korea Sanctions?

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An oil pipeline that supplies 90 per cent of North Korea’s crude has been excluded from the latest United Nations sanctions against Pyongyang in part for one very practical reason: once China turns it off, it can’t be easily turned back on again.

The Dandong-Sinuiju pipeline delivers more than half a million tonnes of crude oil to North Korea a year yet the supplies were explicitly excluded from the resolution passed by the UN Security Council on Monday in response to Pyongyang’s sixth nuclear test.

Described by Washington as the strongest yet, the resolution included cutting off more than 55 per cent of refined petroleum products going to North Korea, capping imports of refined petroleum products at 2 million barrels per year, and freezing the existing amount of crude oil delivered to the hermit state.

But it also stated that the crude oil going through the Dandong-Sinuiju pipeline was exempted, prompting criticism that the resolution was a half measure.

Analysts said the exemption reflected Beijing’s unwillingness to drive Pyongyang to even greater desperation.

But Liu Ming, a North Korean affairs analyst from the Shanghai Academy of Social Sciences, said technical factors with the pipeline were real and “could not be ignored”.

“The crude oil transported via the Dandong-Sinuiju pipeline contains a high proportion of wax. If the flow of oil slows or stops, the pipeline becomes blocked, which in turn is expensive to repair. The pipeline can even be damaged beyond repair in extreme cases,” Liu said.

The pipeline’s crude supplies are from the Daqing oilfield in Heilongjiang province and are typically

low in sulphur and high in wax. The mix solidifies easily in cold weather or when the flow slows to a certain point, according to a PetroChina Pipeline Research and Development Centre report.

China would have to go to great expense to clear any solid wax inside the pipeline, and the infrastructure could be irreparably damaged if the wax content exceeded a threshold, the report said.

The pipeline, also called the Friendship Oil Pipeline, runs for more than 30km from storage facilities in the Chinese border city of Dandong to an oil depot in Sinuiju in North Korea.

It was completed in December 1975, and supplies 520,000 tonnes (3.64 million barrels) of heavy crude oil each year, according to its operator, China National Petroleum Corporation.

Chinese customs authorities have not publicly reported the total volume of crude exports to North Korea since January 2014, but in 2013, 590,000 tonnes went from China to its neighbour.

Once across the border, the crude is processed at North Korea’s sole working refinery, the Ponghwa Chemical Factory, a facility built with Chinese support in the 1970s.

The refinery turns the oil into refined products for North Korea’s government, military, transport, agricultural and fishing sectors, according to 38 North, a website run by the US-Korea Institute at Johns Hopkins School of Advanced International Studies.

Reports leading up to Monday’s UN Security Council vote said the United States was pressing for a total oil embargo against North Korea, but China and Russia resisted the blanket ban and a “watered down” resolution was adopted instead.

Justin Hastings, an international relations specialist in Sino-North Korean trade at the University of Sydney, said Beijing did not want to generate more ill will from Pyongyang by cutting its lifeline, given that China’s endorsement of previous UN sanctions had already triggered resentment from North Korea.

“China’s policy is to force North Korea to the negotiating table, not to its knees, so it builds in exemptions like this to give it the ability to keep the regime alive,” Hastings said.

“Perhaps more importantly, banning all crude oil imports except what China provides through one pipeline gives China a lot of leverage over North Korea, assuming other countries adhere to the ban. This may be just as important as the ban itself.”

David von Hippel, from the California-based Nautilus Institute for Security and Sustainability, said Beijing did not want to see a humanitarian crisis in the hermit state.

“China probably excluded this pipeline for the same reason that it has insisted on humanitarian or normal economic trade clauses in previous resolutions – both to protect Chinese business interests and to keep the North Korea oil supplies at levels sufficient to ensure that [North Korea’s] society will not break down,” von Hippel said. “The Chinese fear [this] will result in a flood of refugees coming across its border, as well as … geopolitical chaos.”

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