On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

1590 AM Coldwater, Michigan 95.5 FM Coldwater, Michigan

Weather

Current Conditions(Coldwater,MI 49036)

More Weather »
62° Feels Like: 62°
Wind: NE 0 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Partly Cloudy 44°

Tomorrow

Mostly Sunny 69°

Thurs Night

Mostly Clear 44°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Japan, Australia to sanction North Korean bank as part of U.S.-led crackdown

North Korean bank note are seen at a pavilion, just south of the border between the two Koreas, in Paju, north of Seoul, February 15, 2013.
North Korean bank note are seen at a pavilion, just south of the border between the two Koreas, in Paju, north of Seoul, February 15, 2013.

By Antoni Slodkowski and Warren Strobel

TOKYO/WASHINGTON (Reuters) - Japan and Australia plan to sanction North Korea's Foreign Trade Bank as part of U.S.-led efforts targeting Pyongyang's main foreign exchange bank for the role Washington says it has in funding the country's nuclear program.

A Japanese government source said Tokyo could act within the next two to three weeks. Australian Foreign Ministry sources said Canberra might also unveil sanctions soon.

A senior U.S. official said the Obama administration was trying to convince other governments to crack down on the bank after Washington announced its own measures this month.

Washington had urged the European Union to take action, a State Department official said on Monday. David Cohen, the U.S. Treasury undersecretary for terrorism and financial intelligence, told reporters he raised the issue of the bank with Chinese officials in Beijing last week, although he did not say what their response was.

Experts said the U.S. move was designed to make foreign banks that do business in the United States think twice about dealing with the Foreign Trade Bank, much the same way banks have become wary about having ties with financial institutions in sanctions-hit Iran.

"It was obvious to us, fairly early on, that this bank is key to the North Korean ability to finance and fund" their nuclear and ballistic missile programs, said the senior U.S. official, who spoke on condition of anonymity. "And so it was decided it would make sense to do everything we could to put pressure on their proliferation efforts and their WMD (weapons of mass destruction) efforts by putting pressure on this bank."

Not much is publicly known about the bank. One South Korean expert said it also handled legitimate trade and investment with China. The State Department official said some EU countries with embassies in Pyongyang used the bank for embassy business.

Washington had asked the U.N. Security Council to include the bank in fresh sanctions imposed on North Korea for its February 12 nuclear test, but China and Russia were opposed, said the senior U.S. official and U.N. diplomats. They did not say why Beijing and Moscow rejected the proposal.

Neither Russia's U.N. mission in New York nor China's had an immediate comment. Russia and China each wield vetoes in the Security Council.

The United States announced its unilateral measures against the bank several days after the U.N. resolution was passed on March 7. Washington's measures prohibit any transactions between U.S. entities or individuals and the North Korean bank.

REPUTATIONAL DAMAGE

The Japanese government source with direct knowledge of the matter said Tokyo was expected to announce sanctions once legal documents were prepared.

"The (bank) doesn't have a branch in Japan so the main reason behind the move is an attempt to cause as much reputational damage as possible," the source said, referring to any institutions that might be doing business with the bank.

In Canberra, Foreign Ministry sources said sanctions would be applied to prevent Foreign Trade Bank operations in Australia. Talks were under way with bank representatives, the sources said, declining to say what the measures would be or where the talks were taking place.

The office of Foreign Minister Bob Carr said that up to now regulators had yet to find any record of a Foreign Trade Bank branch in Australia. Australia has diplomatic ties with Pyongyang. Japan does not.

"We are continuing to review our sanctions regime against North Korea, including the further tightening of financial sanctions," said a spokeswoman for Carr.

The senior U.S. official indicated the American campaign was not meant to be coercive, but rather aimed at explaining Washington's concerns about the bank and advising other countries to take similar action. The United States took that approach, warning other countries and banks of reputational risk, in its drive to cut off Iran's access to the global financial system.

One expert said Washington was following up U.N. sanctions with its own, tougher measures, which meant going after specific entities and isolating them.

"Then countries have to decide whether they want to do business with North Korea, or do business with the rest of the financial community," said Mark Dubowitz from the Washington-based Foundation for Defense of Democracies, who has advised the Obama administration on sanctions focused mainly on Iran.

AS ALWAYS, CHINA THE KEY

The new U.N. sanctions tighten financial curbs on North Korea, including the illicit transfer of bulk cash, and crack down on its attempts to ship and receive banned cargo.

One of the challenges is stopping the transfer of bulk cash, which U.N. diplomats say is one of Pyongyang's preferred methods of moving money - often in briefcases carried by its diplomats. Sanctions on the Foreign Trade Bank could force North Korean diplomats to carry more cash, exposing them to the risk of capture, the Japanese government source said.

The success of the new U.N. measures depends to a large extent on China, North Korea's sole diplomatic ally and its major trading partner.

However, China has become increasingly frustrated with North Korea, Chinese experts have said. Besides the latest nuclear test, North Korea launched a long-range missile in December and has stepped up its rhetoric against the United States and South Korea.

Cho Bong-hyun, an expert on the North Korean economy at the IBK Economic Institute in Seoul, said China might act against the bank but would not shut it down. China's actions could include limiting the bank's activities in China, partly by making it harder to transmit money, Cho said.

"The impact would be significant. It could mean the flow of money through the bank would dry up. The key is China is not likely to impose such actions indefinitely," he said.

The State Department official, briefing reporters in Brussels on Monday on condition he not be further identified, said it was complicated for the EU to impose sanctions on the bank because some European countries used it in Pyongyang.

Non-governmental organizations (NGOs) and humanitarian organizations may also use the bank, he said, adding: "We are not going after NGOs that do legitimate work."

An EU source said the bank was not on the current EU sanctions list. EU diplomats are expected to discuss additional sanctions soon, the source said.

The senior U.S. official contrasted the effort against the Foreign Trade Bank with the 2005 U.S. action against Macau-based Banco Delta Asia (BDA), which Washington alleged handled illicit funds for Pyongyang. Some $25 million in North Korean money was frozen in that U.S. Treasury-inspired raid.

Unlike BDA, the Foreign Trade Bank is a domestic North Korean institution.

"This is more an effort to impede their financial system's ability to operate" in the nuclear and missile sector, the senior U.S. official said.

(Additional reporting by Rob Taylor in Canberra, Patricia Zengerle and Anna Yukhananov in Washington, Louis Charbonneau in New York, Adrian Croft in Brussels and Jack Kim in Seoul. Writing by Dean Yates. Editing by Ian Geoghegan)

Comments