Tag Archives: Sanctions

U.S. strongly condemns Russia’s poisoning of former spy: White House

By Jeff Mason

BERKLEY HEIGHTS, New Jersey (Reuters) – The White House said on Friday the United States strongly condemned Russia’s use of chemical weapons against a former Russian agent in Britain, two days after the U.S. State Department announced sanctions over the move.

“The attack against Sergei and Yulia Skripal in Salisbury, United Kingdom, on March 4, 2018, was a reckless display of contempt for the universally held norm against chemical weapons,” said a spokesman for the White House National Security Council in an email.

The spokesman said sanctions that the State Department said it would impose by the end of August fulfilled its legal obligations “after determining a foreign government has used chemical or biological weapons against its own nationals or in violation of international law.”

Skripal, a former colonel in Russia’s GRU military intelligence service, and his 33-year-old daughter were found slumped unconscious on a bench in the southern English city of Salisbury in March after a liquid form of the Novichok type of nerve agent was applied to his home’s front door.

President Donald Trump, who is spending the week at his golf property in New Jersey, did not comment on the recent sanctions when asked about them by a reporter on Thursday. Trump has sought to improve relations with Russia despite U.S. intelligence findings that Moscow had meddled in the 2016 U.S. presidential election.

European countries and the United States have expelled 100 Russian diplomats since that attack, in the toughest action by Trump against Russia since he came to office.

Trump and his advisers have often appeared at odds over how strongly to act against Moscow. In the run-up to a summit between Trump and Russian President Vladimir Putin in Helsinki last month, U.S. officials repeatedly called out Russia over its “malign” activities, but Trump did not use such language during a news conference with Putin.

(Reporting by Jeff Mason; Editing by Bernadette Baum)

Russia tells Washington curbs on its banks would be act of economic war

The U.S. dollar sign is seen on an electronic board next to a traffic light in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

By Andrew Osborn and Andrey Ostroukh

MOSCOW (Reuters) – Russia warned the United States on Friday it would regard any U.S. move to curb the activities of its banks as a declaration of economic war which it would retaliate against, stepping up a war of words with Washington over spiraling sanctions.

The warning, from Prime Minister Dmitry Medvedev, reflects Russian fears over the impact of new restrictions on its economy and assets, including the rouble which has lost nearly six percent of its value this week on sanctions jitters.

Economists expect the economy to grow by 1.8 percent this year. But if new sanctions proposed by Congress and the State Department are implemented in full, something that remains uncertain, some economists fear growth would be almost cut to zero in future.

In a sign of how seriously Russia is taking the threat, President Vladimir Putin discussed what the Kremlin called “possible new unfriendly steps by Washington” with his Security Council on Friday.

Moscow’s strategy of trying to improve battered U.S.-Russia ties by attempting to build bridges with President Donald Trump is backfiring after U.S. lawmakers launched a new sanctions drive last week because they fear Trump is too soft on Russia.

That, in turn, has piled pressure on Trump to show he is tough on Russia ahead of mid-term elections.

On Wednesday, the State Department announced a new round of sanctions that pushed the rouble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.

Separate legislation introduced last week in draft form by Republican and Democratic senators, dubbed “the sanctions bill from hell” by one of its backers, proposes curbs on the operations of several state-owned Russian banks in the United States and restrictions on their use of the dollar.

Medvedev said Moscow would take economic, political or other retaliatory measures against the United States if Washington targeted Russian banks.

“I would not like to comment on talks about future sanctions, but I can say one thing: If some ban on banks’ operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war,” said Medvedev.

“And it would be necessary, it would be needed to react to this war economically, politically, or, if needed, by other means. And our American friends need to understand this,” he said, speaking on a trip to the Russian Far East.

Pedestrians walk by an electronic board showing currency exchange rates of the U.S. dollar against Russian rouble in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

Pedestrians walk by an electronic board showing currency exchange rates of the U.S. dollar against Russian rouble in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

FEW GOOD RETALIATORY OPTIONS

In practice, however, there is little Russia could do to hit back at the United States without damaging its own economy or depriving its consumers of sought-after goods, and officials in Moscow have made clear they do not want to get drawn into what they describe as a mutually-damaging tit-for-tat sanctions war.

The threat of more U.S. sanctions kept the rouble under pressure on Friday, sending it crashing past two-year lows at one point before it recouped some of its losses.

The Russian central bank said the rouble’s fall to multi-month lows on news of new U.S. sanctions was a “natural reaction” and that it had the necessary tools to prevent any threat to financial stability.

One tool it said it might use was limiting market volatility by adjusting how much foreign currency it buys. Central bank data showed on Friday it had started buying less foreign currency on Wednesday, the first day of the rouble’s slide.

The fate of the U.S. bill Medvedev was referring to is not certain.

The full U.S. Congress will not be back in Washington until September, and even then, congressional aides said they did not expect the measure would pass in its entirety.

While it was difficult to assess so far in advance, they said it was more likely that only some of its provisions would be included as amendments in another piece of legislation, such as a spending bill Congress must pass before Sept. 30 to prevent a government shutdown.

(Additional reporting by Tom Balmforth in Moscow and Patricia Zengerle in Washington Writing by Andrew Osborn Editing by William Maclean)

U.S., Turkey agree to try to resolve disputes after relations dive

U.S. Secretary of State Mike Pompeo arrives at Royal Malaysian Air Force base in Subang, Malaysia August 2, 2018. REUTERS/Lai Seng Sin

By David Brunnstrom

SINGAPORE (Reuters) – U.S. Secretary of State Mike Pompeo and Turkish Foreign Minister Mevlut Cavusoglu agreed on Friday to try to resolve a series of disputes, after relations between the NATO allies sank to their lowest point in decades.

Their meeting in Singapore followed Washington’s imposition on Wednesday of sanctions on two Turkish ministers over the case of Andrew Brunson, a U.S. pastor on trial in Turkey for backing terrorism.

State Department spokeswoman Heather Nauert described their conversation on the sidelines of a regional ministers’ meeting as constructive. “They agreed to continue to try to resolve the issues between our two countries,” she said.

Cavusoglu said he had repeated Turkey’s message that “the threatening language and sanctions does not achieve anything”, but added that he and Pompeo would take steps to resolve their differences when they returned home.

“Of course you can’t expect all issues to be resolved in a single meeting,” he told Turkish television channels. “But we have agreed to work together, closely cooperate and keep the dialogue in the coming period,” he added, also describing the talks as very constructive.

Washington imposed sanctions on Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu, accusing them of playing leading roles in organizations responsible for the arrest and detention of Brunson, an evangelical Christian who has lived in Turkey for more than two decades. The move sent the Turkish lira to record low.

Within hours Turkey vowed to retaliate ‘without delay’ but since then the tone of comments from Ankara has moderated and so far it has taken no such step. Finance minister Berat Albayrak, who is President Tayyip Erdogan’s son-in-law, also said relations with the United States would never break down, despite the temporary escalation.

Pompeo told reporters the United States had put Turkey on notice “that the clock had run and it was time for Pastor Brunson to be returned”.

“I hope they’ll see this for what it is, a demonstration that we’re very serious,” he said of the sanctions. “We consider this one of the many issues that we have with the Turks.”

“Brunson needs to come home. As do all the Americans being held by the Turkish government. Pretty straightforward. They’ve been holding these folks for a long time. These are innocent people,” he said. “We are going to work to see if we can find a way forward; I am hopeful that we can.”

The United States has also been seeking the release of three locally employed embassy staff detained in Turkey.

ATTEMPTED COUP

Brunson is charged with supporting a group Ankara blames for orchestrating an attempted coup in 2016. He denies the charges but faces up to 35 years in jail.

He was accused of helping supporters of Fethullah Gulen, a U.S.-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed. He was also charged with supporting outlawed Kurdish PKK militants. Gulen denies the allegations.

Turkey has been trying to have Gulen extradited from the United States for two years.

Finance Minister Albayrak said on Thursday the sanctions would have a limited impact on the Turkish economy, although investors’ deepening concern over ties with the United States, also a major trading partner, sent the lira to record lows.

On Friday, the currency fell to 5.1140 against the dollar. The sell-off also hammered Turkish stocks and debt risk profile.

Brunson was in a Turkish prison for 21 months until he was transferred to house arrest last week. On Tuesday, a court rejected his appeal to be released altogether during his trial.

Washington and Ankara are also at odds over the Syrian war, Turkey’s plan to buy missile defenses from Russia and the U.S. conviction of a Turkish state bank executive on Iran sanctions-busting charges this year.

Brunson’s case has resonated with President Donald Trump and particularly with Vice President Mike Pence, who has close ties to evangelical Christians. Pence has been pressing behind the scenes for action, aides said.

(Additional reporting by Humeyra Pamuk in Istanbul; Editing by Nick Macfie, Paul Tait and David Stamp)

Pompeo says North Korea weapons work counter to denuclearization pledge

FILE PHOTO: North Korea's leader Kim Jong Un listens to U.S. President Donald Trump as they meet in a one-on-one bilateral session at the start of their summit at the Capella Hotel on the resort island of Sentosa, Singapore June 12, 2018. REUTERS/Jonathan Ernst/File Photo

By David Brunnstrom

SINGAPORE (Reuters) – Less than two months after a landmark U.S.-North Korea summit in Singapore, U.S. Secretary of State Mike Pompeo flew back to the city-state on Friday and said North Korea’s continued work on weapons programs was inconsistent with its leader’s commitment to denuclearize.

Pompeo was asked en route to Singapore about his statement in the U.S. Senate last month that North Korea was continuing to make bomb fuel and reports that North Korea, led by Kim Jong Un, was building new missiles.

U.S. Secretary of State Mike Pompeo attends an ASEAN-U.S. Ministerial Meeting in Singapore, August 3, 2018. REUTERS/Edgar Su

U.S. Secretary of State Mike Pompeo attends an ASEAN-U.S. Ministerial Meeting in Singapore, August 3, 2018. REUTERS/Edgar Su

“Chairman Kim made a commitment to denuclearize,” Pompeo told reporters. “The world demanded that they (North Korea) do so in the U.N. Security Council resolutions. To the extent they are behaving in a manner inconsistent with that, they are a) in violation of one or both the U.N. Security Council resolutions and b) we can see we still have a ways to go to achieve the ultimate outcome we’re looking for.”

Pompeo thanked ministers of the Association of Southeast Asian Nations (ASEAN) at a meeting in Singapore for their efforts in enforcing sanctions on North Korea.

In a landmark summit with U.S. President Donald Trump in Singapore on June 12, Kim, who is seeking relief from tough sanctions, committed in a broad statement to work toward denuclearization, but Pyongyang has offered no details as to how it might go about this.

Pompeo told a Senate committee hearing on July 25 that North Korea was continuing to produce fuel for nuclear bombs in spite of its pledge.

On Monday, a senior U.S. official said U.S. spy satellites had detected renewed activity at the North Korean factory that produced the country’s first intercontinental ballistic missiles capable of reaching the United States.

The Washington Post reported on Monday that North Korea appeared to be building one or two new liquid-fueled intercontinental ballistic missiles at the research facility, citing unidentified officials familiar with intelligence reporting.

North Korean Foreign Minister Ri Yong Ho is also in Singapore and will attend the same regional meeting as Pompeo on Saturday, but the State Department has not said whether the two will meet.

Following his talks with Ri, China’s top diplomat, State Councillor Wang Yi, said he hoped North Korea and the United States continue to move forward to implement their leaders’ agreement.

“China all along has believed that the consensus reached by U.S. and North Korea’s leaders meeting in Singapore is very precious,” Wang told reporters.

“That is, at the same time as realizing denuclearization of the Korean peninsula, to establish a peace mechanism. This direction is without a doubt correct,” he said.

China is North Korea’s most important economic and diplomatic supporter and fought for the North in the 1950-53 Korean War against the U.S.-led United Nations forces that backed South Korea.

Pompeo, who has led the U.S. negotiating effort with North Korea, visited Pyongyang from July 5-7 for inclusive talks aimed at agreeing a denuclearization roadmap. Pompeo said at the time he had made progress on key issues, only for North Korea to accuse his delegation hours later of making “gangster-like” demands.

Trump hailed the Singapore summit as a success and even went as far as saying that North Korea no longer posed a nuclear threat, but questions have been mounting about Pyongyang’s willingness to give up its weapons programs.

Trump has pointed to North Korea’s freeze on nuclear and missile tests and its agreement to return remains of Americans killed in the 1950-53 Korea War.

The White House said on Thursday that Trump had received a letter from Kim and had responded with a note that should be delivered shortly. But it said no second meeting was currently planned.

(Additional reporting by Christian Shepherd, John Geddie and Jack Kim in Singapore and Ben Blanchard in Beijing; Editing by Nick Macfie)

Sanctions-hit North Korea warns of natural disaster brought by heat wave

FILE PHOTO: A North Korean flag flutters on top of a 160-metre tower in North Korea's propaganda village of Gijungdong, in this picture taken from the Tae Sung freedom village near the Military Demarcation Line (MDL), inside the demilitarised zone separating the two Koreas, in Paju, South Korea, April 24, 2018. REUTERS/Kim Hong-Ji

By Hyonhee Shin

SEOUL (Reuters) – North Korea on Thursday called for an “all-out battle” against record temperatures that threaten crops in a country already grappling with tough international sanctions over its nuclear weapons program.

The resulting drought has brought an “unprecedented natural disaster”, the isolated nation said, warning against crop damage that could savage its farm-reliant economy, battered by sanctions despite recent diplomatic overtures.

“This high-temperature phenomenon is the largest, unprecedented natural disaster, but not an obstacle we cannot overcome,” the North’s Rodong Sinmun said, urging that “all capabilities” be mobilized to fight the extended dry spell.

Temperatures have topped a record 40°C (104°F) in some regions since late July, and crops such as rice and maize have begun to show signs of damage, the mouthpiece of the ruling Workers’ Party said in a front-page commentary.

“Whether the current good crop conditions, for which the whole nation has made unsparing investment and sweated until now, will lead to a bumper year in the autumn hinges on how we overcome the heat and drought,” it added.

Similar past warnings in state media have served to drum up foreign assistance and boost domestic unity.

“I think the message was a precautionary one to minimize any impact on daily life,” said Dong Yong-seung, who runs Good Farmers, a group based in Seoul, capital of neighboring South Korea, that explores farm projects with the North.

But the mention of unprecedented weather, and a series of related articles, suggest the heat wave could further strain its capacity to respond to natural disasters, said Kim Young-hee, a defector from North Korea and an expert on its economy at Korea Finance Corp in Seoul.

The warning comes after North Korean leader Kim Jong Un announced in April a shift in focus from nuclear programs to the economy, and held an unprecedented June summit with U.S. President Donald Trump in Singapore.

Since then, the young leader has toured industrial facilities and special economic zones near the North’s border with China, a move experts saw as a bid to spur economic development nationwide.

“He has been highlighting his people-loving image and priority on the economy but the reality is he doesn’t have the institutions to take a proper response to heat, other than opening underground shelters,” added Kim, the economist.

GOOD CROP CONDITIONS

Drought and floods have long been a seasonal threat in North Korea, which lacks irrigation systems and other infrastructure to ward off natural disasters.

Last year, the U.N. Food and Agriculture Organisation warned of the North’s worst drought in 16 years, but late summer rains and privately produced crops helped avert acute shortages.

There appear to be no immediate signs of major suffering in the North, with rice prices stable around 62 U.S. cents per kg through the year to Tuesday, a Reuters analysis of data compiled by the Daily NK website showed.

The website is run by defectors who gather prices through telephone calls to traders in the North, gaining a rare glimpse into the lives of ordinary citizens.

Crops are good this year because there was little flooding to disrupt the early spring planting season, said Kang Mi-jin of the Daily NK, based in Seoul.

“They say nothing remains where water flowed away, but there is something to harvest after the heat,” Kang said, citing defectors. “Market prices are mainly determined by Chinese supplies and private produce, rather than crop conditions.”

The October harvest would reveal any havoc wreaked by the weather, Kim Young-hee added.

North Korea suffered a crippling famine in the 1990s when a combination of bad weather, economic mismanagement and the demise of fuel subsidies from the Soviet Union all but destroyed its state rationing system.

However, rationing has slowly been overtaken by an increase in foreign products, mainly from China, and privately produced food sold in North Korean markets, a factor experts say U.N. reports overlook.

The neighbors are in talks to help the North modernize its economy, step up disaster response measures and expand forests in a follow-up to April’s historic summit between Kim and South Korea’s President Moon Jae-in.

Across the border, temperatures hit 39.6°C (103.28°F) in Seoul on Wednesday, their highest since weather authorities began monitoring in 1907. The heat has caused 29 deaths and injuries to more than 2,350 people, health officials have said.

(Reporting by Hyonhee Shin, Editing by Soyoung Kim and Clarence Fernandez)

U.S. pastor appeals for release, lifting of travel ban: lawyer

FILE PHOTO: U.S. pastor Andrew Brunson reacts as he arrives at his home after being released from the prison in Izmir, Turkey July 25, 2018. Demiroren News Agency, DHA via REUTERS

ISTANBUL (Reuters) – A Christian American pastor standing trial in Turkey on terrorism charges has appealed to a Turkish court to release him from house arrest and lift his travel ban, his lawyer told Reuters on Monday.

Relations between Turkey and the United States have spiraled into a full-blown crisis over the trial of pastor Andrew Brunson, who was in custody for 21 months in a Turkish prison until he was transferred to house arrest last week.

President Donald Trump last week threatened to impose “large sanctions” on Turkey unless it frees Brunson, who is accused of helping the group Ankara says was behind a failed military coup in 2016. Brunson faces up to 35 years in jail if found guilty of the charges, which he denies.

FILE PHOTO: Ismail Cem Halavurt, lawyer of pastor Andrew Brunson, arrives at Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan/File Photo

FILE PHOTO: Ismail Cem Halavurt, lawyer of pastor Andrew Brunson, arrives at Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan/File Photo

The appeal document seen by Reuters said although Brunson was freed from jail, the pastor was still deprived of his freedom and was unable to return to his normal life and carry out his religious duties.

Brunson’s lawyer Ismail Cem Halavurt said it would take the Turkish court in Aegean province of Izmir, where Brunson stood trial, three to seven days to make a decision on the appeal request.

His next hearing as part of the trial is scheduled for October.

Brunson was accused of helping supporters of Fethullah Gulen, the U.S.-based cleric who Turkish authorities say masterminded the coup attempt against President Tayyip Erdogan in which 250 people were killed. He was also charged with supporting outlawed PKK Kurdish militants.

Gulen denies any involvement in the coup attempt.

Speaking to reporters during his trip to South Africa, Erdogan said Turkey would stand its ground in the face of Trump’s sanctions threat.

It was not clear what would be the nature of sanctions threatened by Trump but Washington was already working on bills related to Turkey.

The U.S. Senate has demanded a block on sales of F-35 jets to Turkey unless Trump certifies that Turkey is not threatening NATO, purchasing defense equipment from Russia or detaining U.S. citizens.

(Reporting by Ezgi Erkoyun; Writing by Humeyra Pamuk; Editing by Dominic Evans and Alison Williams)

Exclusive: North Korean fuel prices drop, suggesting U.N. sanctions being undermined

FILE PHOTO: North Koreans take a truck through a path amongst the fields, along the Yalu River, in Sakchu county, North Phyongan Province, North Korea, June 20, 2015. REUTERS/Jacky Chen/File Photo

By Hyonhee Shin

SEOUL (Reuters) – Gasoline prices in North Korea have nearly halved since late March, market data analyzed by Reuters shows, adding weight to suspicions that fuel is finding its way into the isolated economy from China and elsewhere despite U.N. sanctions.

The United Nations Security Council passed a resolution in December to ban nearly 90 percent of refined petroleum exports to North Korea over its nuclear and missile programs.

But as North Korean leader Kim Jong Un has moved to improve relations with the United States, China and South Korea, concerns have grown that the policy of “maximum pressure” through sanctions and isolation, is losing steam.

Kim and U.S. President Donald Trump agreed to work toward denuclearization at their summit in Singapore on June 12. Experts say any fuel aid in breach of sanctions could erode the diplomatic progress.

China said on Tuesday it strictly abided by U.N. sanctions, but indicated it may have resumed some fuel shipments to North Korea in the second quarter of this year.

Gasoline was sold by private dealers in the North Korean capital Pyongyang at about $1.24 per kg as of Tuesday, down 33 percent from $1.86 per kg on June 5 and 44 percent from this year’s peak of $2.22 per kg on March 27, according to Reuters analysis of data compiled by the Daily NK website. Diesel prices are at $0.85 per kg, down about 17 percent from March.

The website is run by North Korean defectors who collect prices via phone calls with multiple traders in the North after cross-checks to corroborate their information, offering a rare glimpse into the livelihoods of ordinary North Koreans.

In North Korea, gas is sold via informal channels such as street stalls and informal markets and by weight rather than by volume, as it is in South Korea, the United States and elsewhere, so North Koreans prefer to quote “per kg” rates, said Kang Mi-jin, who works at Daily NK. A 200 liter barrel of petrol holds around 180 kg.

U.S. prices stand at around 75 cents per liter or $2.839 per gallon.

“My assessment is that there was a greater inflow (of fuel supplies) from abroad, especially China since Kim’s trips there,” said Kang, who speaks regularly to sources inside North Korea.

Kim first visited China to meet President Xi Jinping in March, and they held two more summits, in May and June.

SANCTIONS

The latest fuel data comes amid mounting suspicion in Washington that North Korea may be using the recent diplomatic thaw to get a lifeline from China.

North Korea gets most of its fuel from China, its biggest trading partner, and some from Russia. Washington and Seoul officials have said the North imports some 4.5 million barrels of refined petroleum products and 2 million barrels of crude oil each year.

Last year’s U.N. resolution capped refined imports at 500,000 barrels a year.

Chinese Foreign Ministry spokesman Geng Shuang told reporters on Tuesday that China has consistently and strictly abided by U.N. Security Council resolutions on North Korea.

China had exported 7,432 tonnes of refined oil products to North Korea in the first six months of this year, out of a total of 60,000 tonnes a year stipulated by the U.N. sanctions.

China had reported its exports to the Security Council’s sanctions committee in a timely manner, Geng added.

“The relevant situation is totally open and transparent,” he said, without elaborating.

Since official Chinese customs data showed no gasoline and diesel exports to North Korea from January to March, Geng’s comments suggested China resumed some shipments some time after Kim and Xi’s first meeting.

Overall, China’s trade with North Korea in the first half of this year tumbled 56 percent on the back of the tightening sanctions, customs data showed on Monday.

Last week, U.S. Secretary of State Mike Pompeo accused North Korea of “illegally smuggling petroleum products into the country at a level that far exceeds quotas” established by the UN.

“Illegal ship-to-ship transfers are the most prominent means by which this is happening. Every UN member state must step up enforcement,” he wrote on Twitter, without naming any country.

China and Russia delayed a U.S. push last week for a UN Security Council panel to order a halt to refined petroleum exports to North Korea, asking for more detail on a U.S. accusation that Pyongyang breached sanctions, diplomats said.

The United States provided a list to the committee earlier this month of 89 illicit North Korean transactions and a few select photos, seen by Reuters.

Seoul’s foreign ministry said last week that the authorities were investigating two ships with Panama and Sierra Leone flags suspected to have illegally transferred North Korean coal into South Korea via Russia.

NO MAJOR SUFFERING

North Korean rice prices have also been stable since a spike last September, when the UN Security Council imposed new sanctions. Rice has hovered around $0.62 per kg throughout this year.

Stable fuel and rice prices suggest no immediate signs of major suffering in North Korea despite South Korea’s recent estimates the impoverished state’s economy contracted at its sharpest rate in two decades last year.

South Korea’s central bank said North Korea’s gross domestic product shrank 3.5 percent last year, marking the biggest decline since 1997, citing international sanctions and drought.

While other defectors reported some suffering in remote rural regions, Daily NK’s Kang said fuel demand has been steady in North Korea, and overall living conditions have improved in line with a booming unofficial market economy.

The unofficial markets, known as jangmadang, have grown to account for about 60 percent of the economy, according to the Institute for Korean Integration of Society.

“I’ve seen signs the economy was slowly improving over the past five years, and in last year things are still developing but perhaps not as fast as before,” a Western consultant who makes regular trips to North Korea told Reuters.

Kim, who vowed not to let the people “tighten their belt again” in his first-ever public speech in 2012, announced in April a shift in focus from nuclear programs to the economy. Analysts say that will be difficult while sanctions remain in place.

“I don’t think there is an outcry in the markets now, but there could be one toward the end of this year,” said Kim Byeong-yeon, a North Korea economy specialist at the Seoul National University.

(Reporting by Hyonhee Shin. Additional reporting by Josh Smith and Cynthia Kim in SEOUL and Ben Blanchard in BEIJING. Editing by Lincoln Feast.)

Trump tells Iran ‘never, ever threaten’ U.S. or suffer consequences

FILE PHOTO: U.S. President Donald Trump speaks about his summit meeting with Russian President Vladimir Putin as he begins a meeting with members of the U.S. Congress at the White House in Washington, July 17, 2018. REUTERS/Leah Millis/File Photo

By Warren Strobel and Parisa Hafezi

WASHINGTON/ANKARA (Reuters) – U.S. President Donald Trump told Iran it risked dire consequences “the like of which few throughout history have suffered before” if the Islamic Republic made more threats against the United States.

His words, spelled out in capital letters in a late night Twitter message, came hours after Iranian President Hassan Rouhani told Trump that hostile policies toward Tehran could lead to “the mother of all wars.”

Despite the heightened rhetoric, both sides have reasons to want to avoid starting a conflict that could easily escalate.

Trump’s comments come in the context of a barrage of speeches and online communications meant to foment unrest and pressure Iran to end its nuclear program and its support of militant groups, according to U.S. officials.

Iran has faced increased U.S. pressure and possible sanctions since Trump’s decision in May to withdraw the United States from a 2015 international agreement over Iran’s nuclear program.

In his message directed at Rouhani, Trump wrote: “Never, ever threaten the United States again or you will suffer consequences the likes of which few throughout history have ever suffered before. We are no longer a country that will stand for your demented words of violence and death. Be cautious!”.

Earlier on Sunday, Rouhani had told a gathering of Iranian diplomats: “Mr Trump, don’t play with the lion’s tail, this would only lead to regret.”

“America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars,” said Rouhani, quoted by the state news agency IRNA.

Rouhani left open the possibility of peace between the two countries, at odds since the 1979 Islamic Revolution. But Iran’s most powerful authority Supreme Leader Ayatollah Ali Khamenei said on Saturday negotiations with the United States would be an “obvious mistake”.

Rouhani also scoffed at Trump’s threat to halt Iranian oil exports and said Iran has a dominant position in the Gulf and the Strait of Hormuz, a major oil shipping waterway.

A senior commander of Iran’s elite Revolutionary Guards reacted angrily to Trump’s threats by saying Tehran would continue to resist its enemies, Iran’s Students news Agency ISNA reported.

“We will never abandon our revolutionary beliefs … we will resist pressure from enemies … America wants nothing less than (to) destroy Iran … (but) Trump cannot do a damn thing against Iran,” Brigadier General Gholamhossein Gheybparvar said.

“WAR OF WORDS”

Trump’s warning to Iran came hours after a speech by U.S. Secretary of State Mike Pompeo who denounced Iran’s clerical leadership as a “mafia” and promised unspecified backing for Iranians unhappy with their government.

Tehran reacted to Pompeo’s speech as an interference in Tehran’s affairs, the semi-official Tasnim news agency reported.

“Such policies will unite Iranians who will overcome plots against their country,” Iranian Foreign Ministry spokesman Bahram Qasemi said.

Israeli Prime Minister Benjamin Netanyahu praised Trump’s “strong stance” on Iran.

At the same time, Germany said threats of war were “never helpful”.

There is limited appetite in Washington for a conflict with Iran, not least because of the difficulties the U.S. military faced in Iraq after its 2003 invasion but also because of the impact on the global economy if conflict raised oil prices.

Many ordinary Iranians are worried that the war of words might lead to a military confrontation but insiders in Tehran told Reuters that the U.S. administration would not drag the country into another quagmire in the Middle East.

With popular discontent over Iran’s faltering economy and sliding currency, and the prospect of tough new U.S. sanctions, Iran’s leaders have called for unity.

Many ordinary Iranians are largely skeptical of the Trump administration’s support for Iranian citizens because of the harsh U.S. sanctions on the country and a visa ban imposed on Iranians barring them from entering the United States.

Iran’s faction-ridden religious and political elites have closed ranks against Trump’s hawkish approach to Tehran.

However, growing strains with the U.S. will eventually boost Rouhani’s anti-Western hardline rivals who fear losing power if the nuclear deal, championed by Rouhani, ended the country’s political and economic isolation.

Rouhani’s apparent threat earlier this month to disrupt oil shipments from neighboring countries came in reaction to efforts by Washington to force all countries to stop buying Iranian oil.

Washington initially planned to shut Iran out of global oil markets completely after Trump abandoned the deal that limited Iran’s nuclear ambitions, demanding all other countries stop buying Iranian crude by November.

But the United States has somewhat eased its stance, saying it may grant sanction waivers to some allies that are particularly reliant on Iranian supplies.

(Additional reporting by Brendan O’Brien in Washington, Dubai newsroom, Dan Williams in Jerusalem; Writing by Daniel Wallis and Parisa Hafezi; Editing by Matthew Mpoke Bigg)

Pompeo says North Korea must take ‘concrete actions’ before sanctions eased: U.N. envoy

UNITED NATIONS (Reuters) – U.S. Secretary of State Mike Pompeo told United Nations Security Council envoys on Friday that there needs to be “concrete actions” by North Korea before an easing of sanctions on Pyongyang can be discussed, said Dutch U.N. Ambassador Karel van Oosterom.

“The secretary made very clear we need concrete deeds, concrete actions and only then we can start the discussion,” van Oosterom told reporters after Pompeo informally briefed envoys from the 15-member council, Japan and South Korea behind closed doors at the South Korea U.N. mission.

It was not immediately clear if Pompeo elaborated on what “concrete actions.” Van Oosterom chairs the Security Council’s North Korea sanctions committee.

(Reporting by Michelle Nichols; Editing by Chizu Nomiyama)

South Korea says sanctions shrank North Korean economy at sharpest rate in 20 years

FILE PHOTO: A North Korean man is photographed from the Chinese side of the border near the town of Changbai, China as he rides a bicycle along the Yalu River in the North Korean town of Hyesan, November 23, 2017. REUTERS/Damir Sagolj/File Photo

By Cynthia Kim and Hayoung Choi

SEOUL (Reuters) – North Korea’s economy contracted at the sharpest rate in two decades in 2017, South Korea’s central bank estimated on Friday, as international sanctions and drought hit growth hard, with signs living conditions were beginning to deteriorate.

Gross domestic product (GDP) in North Korea last year shrank 3.5 percent from the previous year, marking the biggest decline since a 6.5 percent drop in 1997 when the isolated nation was hit by a devastating famine, the Bank of Korea said.

North Korea does not publish economic data, and comprehensive public figures on social conditions are nonexistent.

However, analysts believe wider sanctions last year are likely to make the economic deterioration in 2018 worse than 2017, which could add to humanitarian need in the politically isolated state.

“The sanctions were stronger in 2017 than they were in 2016,” Shin Seung-cheol, head of the BOK’s National Accounts Coordination Team said.

“External trade volume fell significantly with the exports ban on coal, steel, fisheries and textile products. It’s difficult to put exact numbers on those but (export bans) crashed industrial production,” Shin said.

Both Seoul and Washington argue that increasingly strict international sanctions imposed over North Korea’s nuclear weapon and ballistic missile program have been instrumental in leader Kim Jong Un’s decision to impose a ban on weapons testing and to negotiate with international leaders.

North Korea has called the sanctions “vicious” but rejects suggestions that the pressure led them to pursue diplomatic talks.

The situation also worsened last year with international experts fearing North Korea was facing the worst drought in 16 years, though late summer rains helped avoid acute food shortages.

North Korean leader Kim Jong Un in April vowed to switch the country’s strategic focus from the development of its nuclear arsenal jump starting his economy, but analysts say that will be difficult while sanctions remain in place.

“As long as exports of minerals are part of the sanctions, by far the most profitable item of its exports, Pyongyang will have no choice but to continue with its current negotiations with the U.S.,” said Kim Byeong-yeon, an economics professor at the Seoul National University who specializes in the North Korean economy.

U.S. President Donald Trump has said that sanctions won’t be lifted until Kim moves to give up his nuclear and missile arsenal.

INDUSTRY TAKES A HIT

North Korea’s coal-intensive industries and manufacturing sectors have suffered as the UN Security Council ratcheted up the sanctions in response to years of nuclear tests by Pyongyang.

Industrial production, which accounts for about a third of the nation’s total output, fell 8.5 percent. That marked the steepest decline since 1997 as factory production collapsed on restrictions of flows of oil and other energy resources into the country. Output from agriculture, construction industries fell by 1.3 percent and 4.4 percent, respectively.

China, its biggest trading partner, suspended coal purchases last year which cut North Korea’s main export revenue source while its suspended fuel sales into to country sparked a surge in gasoline and diesel prices, data reviewed by Reuters showed earlier.

Since then, however, fuel prices have stabilized and even dropped in recent weeks, according to a report published last week on the North Korean Economy Watch website.

“My best guess is that it’s a combination of increased smuggling, perhaps aided by China’s declining vigilance in enforcing sanctions and restrictions against illicit trade across the border,” analyst Benjamin Katzeff Silberstein wrote in the report.

North Korea’s black market, or Jangmadang, has grown to account for about 60 percent of the economy, according to the Institute for Korean Integration of Society.

“Shrinking trade first hits the Kim regime and top officials, and then later affects unofficial markets,” said Kim at Seoul National University, noting the squeeze would also be felt in household income and private consumption.

China’s total trade with North Korea dropped 59.2 percent in the first half of 2018 from a year earlier, China’s customs data showed last week.

The BOK uses figures compiled by the government and spy agencies to make its economic estimates. The bank’s survey includes monitoring of the size of rice paddy crops in border areas, traffic surveillance, and interviews with defectors.

HUMAN TOLL

Prices for food staples like rice and corn have remained stable under changing sanctions, and there are signs that a growing number of North Koreans have access to electronic appliances, often powered by solar panels, according to data gathered by the DailyNK website.

North Korean defectors in the South, however, say they hear reports of increased suffering.

“The economic status in Hamgyong area was very bad, according to my sources within North Korea,” said Kim Seung-cheol, a defector who heads the NK Reform Radio station in Seoul, referencing an area near the border with China.

“In South Hamgyong, some people died of hunger. Since trade with China fell significantly, foreign traders in the border area are suffering from poverty.”

The United Nations’ top aid official visited the country last week and said there was “clear evidence of humanitarian need.”

Other U.N. officials warn that aid groups face difficulties accessing international banking channels, transporting goods into the North Korea, while rising fuel prices hinder aid delivery.

North Korea’s Gross National Income per capita stands at 1.46 million won ($1,283.52), making it about 4.4 percent the size of South Korea’s, the BOK said.

Overall exports from North Korea dropped 37.2 percent in 2017, marking the biggest fall since a 38.5 percent decline in 1998, the BOK said on Friday, citing data from the Korea Trade-Investment Promotion Agency.

($1 = 1,137.5000 won)

(Additional reporting by Cynthia Kim,; Editing by Sam Holmes)