New sanctions imposed on North Korea

by United Nations (UN) Security Council

North Korea has been slapped with new sanctions after the detonation of a hydrogen bomb, an even more powerful nuclear weapon than the atomic bomb. The new resolutions widely adopted by the international community show the urgency of restricting North Korea’s ability to funds its weapons programs. Sanctions were imposed in the past but these fresh sanctions are much harsher.
The US submitted 2 drafts of sanctions whereby they proposed a complete ban on oil in the first draft. After a few negotiations and backing from China and Russia, the second draft was less drastic but unanimously adopted by the UN members. It includes the following new resolutions:
 

 
China, being the main ally for supplying North Korea with oil for military purposes, has agreed to put a cap on crude oil and refined petroleum products after rejecting a full embargo proposal. A complete textile ban which accounts around $760 million of North Korea’s exports revenue was maintained and combined with the previous sanctions on their exports such as iron, coal, seafood, and other minerals. The United States strongly believe that the combined measures will account for 90% of their exports reported in 2016. The new sanctions also prohibit countries from recruiting North Koreans and approving new and existing joint ventures.
 

Warning from North Korea following new sanctions

 
North Korea immediately condemned the act and warned the United States of the “greatest pain and suffering” following the toughest-ever sanctions. Kim Jong-un’s foreign ministry also mentioned that they

“will make absolutely sure that the United States pays due price if measures restricting its oil supply and textiles exports were passed”.

North Korea accused the United States of manipulating the UN members and persuading them into adopting illegal and unlawful sanctions against them.
The following days will be crucial. Markets might revert to safer asset classes with these new escalated tensions.
 

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By: Deepta Bolaky
GO Markets