U.S. to strengthen sanctions against N. Korea after sinking of S. Korean ship

The U.S. announced that it will strengthen sanctions against North Korea as Secretary of State Hillary Clinton and Defense Secretary Robert Gates toured South Korea.
By Craig Whitlock and Karen DeYoung
Thursday, July 22, 2010

SEOUL -- Searching for new ways to punish North Korea after blaming it for sinking a South Korean warship in March, the Obama administration announced Wednesday that it will strengthen existing sanctions against the North and impose new restrictions on its weapons trade and trafficking in counterfeit currency and luxury goods.

Administration officials traveling here with Secretary of State Hillary Rodham Clinton and Defense Secretary Robert M. Gates offered few details of what seemed a hastily put-together addition to previously announced warnings and measures reflecting displeasure. On Tuesday, the United States and South Korea said they would hold "large-scale" military exercises in an attempt to deter further hostile acts by North Korea.

Seoul and Washington have also agreed that U.S. commanders will retain operational control of their joint military forces in South Korea, in the event of a new war, until at least December 2015. Previously, the U.S. military was scheduled to hand over operational command in 2012.

Officials from both countries said they had been considering the delay before the March 26 sinking of the Cheonan, but that recent concerns about North Korea clinched the decision.

On an unprecedented joint visit Wednesday to the Demilitarized Zone that divides the two Koreas, Clinton and Gates marked the 60th anniversary of the start of the Korean War. Clinton said that as she gazed through binoculars across the most heavily guarded border in the world, delineated by razor wire and land mines, "it struck me that although it may be a thin line, these two places are worlds apart."

Gates was making his third trip to the DMZ; Clinton had never been there. The defense secretary said his last visit was 20 years ago, when he was director of the CIA.

"It is stunning how little has changed up there and yet how much South Korea continues to grow and prosper," Gates said, standing with Clinton in the rain outside a small U.N. building that straddles the border. "The North, by contrast, stagnates in isolation and deprivation. And, as we saw with the sinking of the Cheonan, it continues its history of unpredictable and, at times, provocative behavior."

Clinton and Gates later laid a wreath at the Korean War memorial and met with their South Korean counterparts. They were to meet Wednesday night with President Lee Myung-bak. Along with a visit to Seoul by Adm. Mike Mullen, the Joint Chiefs of Staff chairman, the meetings and events were intended to send a message of strong U.S.-South Korean relations at a time of heightened tensions in the region.

It was unclear Wednesday what effect, if any, the new sanctions would have. North Korea is already the most isolated country in the world, with heavy U.S. and U.N. restrictions against financial and military dealings with it.

Senior administration officials told reporters traveling with Clinton, whose week-long trip to Asia ends Friday in Vietnam, that they are still examining new types of sanctions. They said they are paying particular attention to illegal trade in counterfeit cigarettes, liquors and "exotic foods" that are a lucrative source of income for the North Korean elite.

At a news conference with Gates and South Korea's defense and foreign ministers, Clinton said the goal of the sanctions was to "target [North Korea's] leadership, to target their assets."

The officials said they would also seek to further tighten North Korean dealings with international banks, using the banks' fear of "reputational risks" as well as specific measures that would cut them off from U.S. financial institutions.

Analysts generally agree that the most successful round of sanctions against North Korea occurred in 2005, when the U.S. Treasury designated the Macao-based Banco Delta Asia as a money-launderer of North Korean illicit assets. Banks across the world cooperated, worried that the Treasury Department would block them from doing business with the United States. North Korea returned to the six-party talks on its nuclear weapons program, but its price was $25 million held by Banco Delta Asia. It took the Treasury Department five months to find a bank willing to wire the money to Pyongyang.

Asked whether suspended six-party talks over the North's nuclear weapons program and other issues could be resumed if North Korea would admit responsibility for the Cheonan sinking and apologize, Clinton said that talks "are not something we are looking at yet. . . . We expect to see North Korea" not only accept responsibility for the sinking, but also take "irreversible steps" to stop its weapons program.

Staff writer John Pomfret in Washington contributed to this report.

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