By Louise Radnofsky in New York and Ian Talley in Washington
President Donald Trump launched a new phase of a crackdown on
North Korea on Thursday, expanding sanctions to hit any
individuals, companies and financial institutions doing business
with Pyongyang, not only those involved in aiding its weapons
program or laundering funds.
Mr. Trump signed an executive order giving the U.S. Treasury
Department the power to sanction any entity involved with North
Korean trade or finance, freeze the U.S. assets of foreign banks
working with the country and ban those institutions from accessing
U.S. financial markets.
The action steps ups Washington's effort to strangle financing
to the nuclear-armed state in the face of repeated missile tests by
the Kim regime.
"Foreign banks will face a clear choice: doing business with the
United States or facilitate trade with the lawless regime in North
Korea," Mr. Trump said in remarks at a lunch with leaders of South
Korea and Japan in New York, alongside U.N. meetings.
The presidential order authorizes Treasury to target a broad
swath of North Korean trade, including textile and seafood exports,
technology, and shipping networks. North Korean defectors, U.S.
officials and analysts all have said those trade and finance
networks are funneling cash into the country's nuclear-weapon and
intercontinental-ballistic-missile programs.
"For far too long, North Korea has evaded sanctions and used the
international financial system to facilitate funding for its
weapons of mass destruction and ballistic missile programs,"
Treasury Secretary Steven Mnuchin said on the sidelines of U.N.
meetings "No bank -- in any country -- should be used to facilitate
Kim Jong Un's destructive behavior."
U.S. officials cast their moves as part of a growing
international effort. Mr. Trump praised Chinese President Xi
Jinping for a recent move by Beijing's central bank to bar
transactions with North Korea. China accounts for more than 90% of
Pyongyang's trade, and much of those transactions are conducted
through the Chinese banking system.
"China, their central bank has told their other banks...to
immediately stop doing business with North Korea," Mr. Trump
said.
Meanwhile, European Union officials agreed in principle Thursday
to boost the bloc's own sanctions on North Korea by adding new
individuals to the asset-freeze and travel-ban list, according to
people familiar with discussions.
U.S. congressional leaders who have pressed for a tougher
sanctions regime applauded the Trump administration's announcement.
Many analysts have said the sanctions in place against North Korea
pale in comparison to the efforts aimed at Iran before the 2015
accord preventing it from producing nuclear weapons.
In that case, the U.S. was able to convince much of the world --
notably its European allies -- to shut down investment and capital
flows to Iran, with the U.S. levying multi-billion-dollar fines
against major European banks to enforce that effort.
The North Korean sanctions regime doesn't yet have that
magnitude, but analysts say this latest effort is part of the
administration's plan to steadily ratchet up economic pain on the
country.
"Finally, we are beginning to apply maximum pressure on Kim Jong
Un," said Rep. Ed Royce, the California Republican who heads the
House Foreign Affairs Committee. "Tough enforcement, and additional
pressure, will now be critical."
"It's a new level of pressure," said Patrick Cronin, senior
director of the Asia-Pacific program at the Center for New American
Security, a Washington think tank. "This is putting a much tighter
noose around Korea's illicit network."
Mr. Trump said the new order would cut sources of revenue used
to fund North Korea's efforts to develop nuclear weapons.
"It is unacceptable that others financially support this
criminal, rogue regime," he told President Moon Jae-in of South
Korea and Prime Minister Shinzo Abe of Japan, who were both present
with delegations.
Mr. Abe replied, in remarks that were translated into English,
that he considered the North Korean nuclear tests unacceptable,
calling them "beyond the scale of Hiroshima," a reference to the
first atomic bomb dropped by American forces during World War
II.
The Treasury Department already has the power to ban foreign
banks from accessing U.S. financial markets, as it recently did
with China's small Bank of Dandong, saying it helped finance
Pyongyang's weapons program.
Being banned from access to the world's deepest financial market
and most traded currency can cripple a financial institution,
preventing it from accessing the dollars that borrowers need to for
deals and to keep their businesses afloat.
The latest order broadens that authority, Treasury said.
"What this does is take it a step further," U.S. Ambassador to
the U.N. Nikki Haley said on Thursday. "This says that anyone that
deals with North Korea, any financial institution that deals with
North Korea, is going to be punished."
Mr. Cronin said Beijing's directive banning financial
transactions with North Korea could make additional U.S. sanctions
banning Chinese banks from the U.S. less likely for now. Secondary
sanctions targeting banks are only necessary if other actors aren't
taking the steps the U.S. believes are responsible actions, he
said.
But that could change if China doesn't follow through.
"Is China is sincere? Yes, up to a point," Mr. Cronin said.
"Issuing the order is an important step. But the question is, will
it be monitored, will it be enforced? We don't know that yet."
Asked whether the action was aimed at China, Ms. Haley suggested
that would depend on the country's actions. "It only impacts those
that continue to do business with North Korea," she said. "So if
China does business with North Korea, yes, it will impact
them."
In his comments on Thursday, Mr. Trump twice mentioned the U.S.
trade agreement with South Korea, from which he has threatened to
withdraw, but said it mattered less than the two countries' shared
security interests.
"We are on a very friendly basis working on trade, we're working
on a trade agreement. But much more important, frankly, than trade
is the other aspect of our relationship...North Korea," Mr. Trump
said.
"Because of the fact that our trade deal is so bad for the
United States and so good for South Korea...we're going to try to
straighten it out and make it fair for everybody. But our real
focus will be on the military and our relationship with South
Korea, which is excellent," he added.
The U.S. pushed a resolution last week that resulted in the
Security Council agreeing to sanction 90% of North Korea's annual
revenue and reduce the country's oil imports by 30%.
Ms. Haley acknowledged that while the new sanctions may not
change Mr. Kim's thinking, they could cut the revenue to the North
Korean government and crimp its missile and nuclear program.
"We always knew that the sanctions may not work," Ms. Haley
said. "What the goal of the sanctions was always intended to be was
to cut the revenue so they could do less of their reckless
behavior."
--Paul Sonne in New York and Laurence Norman in Brussels
contributed to this article.
Write to Louise Radnofsky at louise.radnofsky@wsj.com and Ian
Talley at ian.talley@wsj.com
(END) Dow Jones Newswires
September 21, 2017 19:41 ET (23:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.