US to reportedly go for own sanctions on N. Korea

Sanctions said to call for blacklisting foreign financial institutions that help communist nation launder money and conduct other dubious deals.

Kim Jong Il Collage 248.88 (photo credit: AP)
Kim Jong Il Collage 248.88
(photo credit: AP)
The United States has told South Korea it will impose its own financial sanctions on the North apart from punishments that the UN has been mulling for Pyongyang's latest nuclear test, a news report said Friday. The US sanctions call for blacklisting foreign financial institutions that help the North launder money and conduct other dubious deals, the South Korean Chosun Ilbo newspaper reported. US Deputy Secretary of State James Steinberg briefed the South Korean president on the new sanctions at a meeting Thursday, the mass-market paper said, citing an unidentified official at the presidential office. The US Embassy in Seoul could not confirm the report. Steinberg met with Chinese officials in Beijing on Friday. Last week, Pyongyang conducted a barrage of missile launches and an underground nuclear test that violated previous UN Security Council sanctions. The North also appeared to be preparing for more missile tests, including one believed to be capable of reaching the US A similar US measure imposed on Banco Delta Asia, a bank in the Chinese territory of Macau, in 2005 effectively led to the North being severed from the international financial system, as other institutions voluntarily severed their dealings with the bank and the North. The measure hit the North hard, said Lee Sang-hyun, an analyst at the Sejong Institute think tank, south of Seoul. "Sanctioning North Korea has not worked except for one case, the BDA case, cutting off the financial flows," Lee said. News reports at the time said North Korean officials had to carry around bags of cash for financial transactions. Pyongyang stayed away from nuclear disarmament talks for more than a year in retaliation. Steinberg was in Seoul from Tuesday through Thursday to coordinate a united response to Pyongyang's belligerence. His interagency delegation included Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence. Levey, who was in charge of the 2005 blacklisting of the Macau bank met with South Korean Vice Finance Minister Hur Kyung-wook, and the two agreed to strengthen cooperation in the fight against money-laundering and counterfeiting, Hur's office said. Seoul's Dong-a Ilbo newspaper had a similar report Thursday, saying Seoul and Washington have confirmed the North has kept producing high-quality fake US dollar bills, known as "supernotes," and that Washington could use the counterfeiting as justification for its own sanctions. Steinberg told South Korean President Lee Myung-bak that North Korea would be mistaken if it thinks it can uses its old tactic of making provocations and then getting what it wants through talks, Seoul's presidential office said in a statement. The US delegation left for China on Friday. Complicating the situation, two American journalists were believed to be on trial in North Korea's top court, on allegations they entered the country illegally and engaged in "hostile acts." The North's official news agency said the proceedings were to begin Thursday but no further details were available one day later. Meanwhile in New York, ambassadors from key nations continued to try to reach an agreement on new UN sanctions against North Korea for defying the Security Council and conducting a second nuclear test. Closed-door meetings have been held since May 26. Many analysts have said that economic sanctions against the isolated North won't be effective unless China actively implements them. Pyongyang relies heavily on China for food and energy aid and imports. More than 70 percent of the North's total trade is with China. "Without China's participation, economic sanctions will have nearly no effect," said Cho Myung-chul, a defector-turned analyst at Seoul's state-run Korea Institute for International Economic Policy.