China stopped the last sanctions committee report being sent to the UN Security Council for several months. A new battle is expected over the latest assessment by Security Council-mandated experts.

Stiff financial and trade sanctions imposed after the North's nuclear tests in 2006 and 2009 have not halted the secretive regime's dabbling in banned nuclear and arms trading, according to the last report, which was only published this month.

And they have not stopped grand pianos, watches, Mercedes cars and now iPod music players reaching the loyal lieutentants of Kim Jong-Il, according to UN investigators and diplomats.

Stopping luxury goods reaching the regime was added to increase pressure on the regime to rejoin nuclear talks with China, Russia, the United States, South Korea and Japan. Despite notorious food shortages in the country, Kim has a widely reported weakness for cognac and other trappings of the Western high life.

A North Korean attempt was foiled in 2009 to purchase two Italian-made luxury yachts worth more than 15 million dollars and destined for Kim.

The last sanctions report said Japan had declared that 34 pianos, four Mercedes Benz limousines and cosmetics had been exported to the North by Japanese trading companies now awaiting punishment.

But there are holes in the sanctions regime. Japan discovered that North Korea was exporting food items such as mushrooms to China which were then sold to Japan at higher prices, according to Leon Sigal, head of a North Asia security programme at the Social Science Research Council, a New York think tank.

The UN report said North Korea uses front companies to trade in nuclear material and arms. "Those same companies also bring in the watches and champagne and everything that Kim and the elite want," said a diplomatic official who has been following the sanctions.

"They want and they are getting Rolexes and iPods, the latest laptops and the best licquor," the official said, speaking on condition of anonymity. "Not every country is declaring all the things they are finding."

The UN report also complained that reporting on sanctions was uneven.

North Korea's economy is estimated to have grown by 3.7 percent for the past two years, according to US government estimates, which put the growth down to a better harvest.

However trade has been badly hit since sanctions were imposed, according to UN figures. Amid new warnings about food shortages in the North, business with China in particular has fallen back.

The last UN sanctions report said China's exports to North Korea fell to 1.2 billion dollars in 2009 from 2.03 billion in 2008. The North's exports to China fell to 501 million dollars in 2009 from 754 million.

China has opposed the nuclear drive by its neighbour. It has also fiercely resisted any UN action that could cause unwanted chaos on its doorstep, arguing that sanctions should not harm the civilian population.

Some analysts also argue that the sanctions have been ineffective in the campaign to bring North Korea back to nuclear negotiations.

The luxury sanctions were imposed in the "dubious belief" that "Kim Jong-Il's hold on the elite can be loosened by denying them Rolexes or Mercedes imported from China," said Sigal at the Social Science Research Council.

According to a US Congress study, between 100 million and 160 million dollars of luxury goods went from China to North Korea in 2008. "That trade is not likely to have dropped enough to make any appreciable difference on the loyalty of the elites long accustomed to tight belts and even tighter social controls," commented Sigal.

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