Sanctions disrupt aid agencies in North Korea

Pyongyang: Ramped-up international sanctions on North Korea have inadvertently disrupted the already challenging work of aid agencies there, those in the field say, with risk-averse banks refusing to transfer funds needed to keep operations running.

Aid shipments have also been held up or blocked indefinitely at Chinese customs in confusion over what is covered by the significantly upgraded UN sanctions imposed in March following Pyongyang`s fourth nuclear test earlier in the year.

"Importing goods -- medicines, humanitarian supplies, materials for water and sanitation infrastructure -- has become very difficult," said an official from an international humanitarian group with an office in Pyongyang.

"What would happen if there were major floods tomorrow?" said the official, who declined to be identified because of the political sensitivity of the issue.

"We have some supplies in-country, but we wouldn`t be able to get emergency goods into the country within a short period of time."

Specific examples of delays include a large shipment of water-purification tablets impounded by Chinese customs because their high chlorine content flagged up a "dual use" concern.

And solar panels needed to provide a stable energy supply to a new TB diagnostic laboratory in Pyongyang were stopped after being designated "military grade".The sanctions on North Korea carry clear exemptions for aid work in a country where an estimated 18 million people need some sort of humanitarian assistance.

But the international condemnation heaped on the North`s nuclear programme in recent years has badly shaken the agencies` support network, and a renewed sanctions enforcement drive that accompanied the March measures has scared even more partners off.

"Despite the humanitarian exemption, private sector companies such as banks, shippers and other suppliers are increasingly declining or hesitating to provide services, which is affecting the ability of humanitarian agencies to operate," an aid agency working in the North told AFP.

"As time passes, and a solution is not found, the operational difficulties will increase," the agency said.

Five UN agencies -- FAO, UNFPA, UNICEF, WFP and WHO -- and four international NGOs including Save the Children have humanitarian programmes in North Korea. The International Federation of the Red Cross and the Swiss Agency for Development and Cooperation are among others present.The effort to find a stable conduit for cash to cover transport, salaries, monitoring and other in-country costs has been taken up at the highest level at the UN headquarters in New York.

"We are working on this issue," said Farhan Haq, deputy spokesman for the UN Secretary General.

Haq declined to give details, but a source with knowledge of the discussions said they were currently focused on a Russian bank that might be willing to handle UN transfers to North Korea, but only after receiving a green light from the UN sanctions committee.

From the banks` perspective, there is a little upside, as the transfer sums are small, the red tape voluminous and the potential PR pitfalls of dealing with North Korea all too apparent.

In June, the US Treasury Department designated North Korea a "prime money laundering concern" -- meaning any bank with links to the US financial system could face sanctions if they do business with the North.

This came on top of a US presidential executive order in March that significantly increased sanctions and effectively served warning on Chinese and Russian banks providing services to their North Korean equivalents.

The executive order was accompanied by a written exception for humanitarian assistance, but most foreign banks concluded that avoiding North Korea altogether was preferable to tip-toeing alone through the sanctions minefield with an exemption detector.Aware of the problem, the US Treasury sent a letter to the United Nations in June seeking to clarify the situation.

"We are deeply concerned about... the recent challenges faced by the UN and its specialised agencies trying to transfer funds in support of their humanitarian assistance programs," a Treasury official told AFP.

According to the UN`s latest country report, 70 percent of North Korea`s 24.9 million people are vulnerable to shortages in food production, with 10.5 million classified as "undernourished."

Funding for aid programmes has plunged in the past decade, partly due to donor fatigue and frustration with Pyongyang`s obstinacy in implementing the programmes, as well as its foreign policy provocation.

And now the banking issues have "added an additional layer of complication to our operations," acknowledged Christopher de Bono, UNICEF`s spokesman for East Asia and the Pacific.

"But we have managed to ensure that our urgent humanitarian work for children has not been significantly compromised," De Bono said.