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.
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(END) Dow Jones Newswires
September 21, 2017 19:41 ET (23:41 GMT)