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10.12.2006

NOKOR NUKE TEST: Economic Repercussions

North Korea's announcement of having successfully conducted a nuclear detonation has resulted to angry reactions from various world leaders.

At this point, the US, China and other countries strongly condemned NOKOR for such action, Japan barred all NOKOR vessels from its ports and has stopped all importations from North Korea. Other countries will possibly implement similar actions.

What are the tensions possible effects to other countries?

Let us start with the direct effects:

  • Japan is said to import US$133 Million/year worth of clams and mushrooms. A sudden end to the deal will most probably result to hunger for millions of North Korean farmers.
  • Korean vessels that are already on its way to Japan will be unable to dock and its cargo (most probably agricultural products) will rot. In addition, the vessels will be unable to bring back precious cargo and/or proceed to the next port of destination. The direct cost to the vessels will be monstrous
  • Other ocean vessels will avoid the area (Sea of Japan and the Yellow Sea) in order to avoid getting caught in the middle of a possible military conflict. This will also result to increases in the cost for millions of tons of vital economic goods.
  • The movement of goods intended for and coming from the neighboring countries (South Korea, China, Japan and Russia- Far East Port) will be directly affected and the recipient of the said countries’ export will experience delays in the arrival of raw materials. It will further lead to immediate delays in production for factories located as far as the United States, Europe and the rest of Asia.

Indirectly, the results include widespread speculations in the prices of petroleum, precious metals, steel products, electronics and telecoms, chemicals, etc..

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