Fri, Jul 17, 2009 page5

• UN nears agreement on N Korea

  MORE SANCTIONS US officials said they had succeeded in increasing awareness of the ‘deceptive financial practices’ employed by Pyongyang to sell illicit weapons

  • REUTERS
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  The UN Security Council neared agreement on Wednesday on North Korean firms and individuals to be added to a blacklist for involvement in Pyongyang’s nuclear and missile programs, diplomats said.

  Japanese Ambassador Yukio Takasu told reporters “we are very close” to agreement on the expanded sanctions list. Diplomats said a council committee was on target to meet a weekend deadline for completing its task and could do so as early as yesterday.

  As diplomats put the finishing touches on expanding UN sanctions, US officials said they had succeeded in increasing international awareness of methods North Korea uses to disguise its trade in illicit weapons as legal business transactions.

  “North Korea engages in a variety of deceptive financial practices that are intended to obscure the true nature of their transactions,” said a senior official from the administration of US President Barack Obama.

  A US team is traveling to key world capitals to warn governments and banks that North Korean practices make it “virtually impossible to distinguish between legitimate and illegitimate business,” the official said in Washington.

  Firms and governments in China, Hong Kong and other places North Korea does business were taking seriously the US warnings about Pyongyang’s practice of using front companies and unusually large cash transactions, he said.

  The official said the goal was to bring scrutiny and thwart suspicious activities, not to hit all North Korean trade. Humanitarian aid would not be affected.

  Arms sales are a vital source of foreign currency for destitute North Korea, with a yearly GDP of about US$17 billion and a broken economy that produces few other items it can export.

  The US-based Institute for Foreign Policy Analysis estimates North Korea earns some US$1.5 billion a year from missile sales. Other studies said the figure may be in the hundreds of millions of dollars and prior sanctions have cut into exports.

  Analysts said the new UN measures would make it more costly for the North to trade arms but would not likely deter customers, including Iran, who have shown little interest in joining international plans to punish Pyongyang.

  North Korea’s annual legitimate trade is estimated at about US$3.8 billion, with China being its largest partner with exchanges of about US$2.8 billion a year. Previous UN sanctions have not dented trade.

  Beijing has been reluctant to cut trade, a lifeline to its impoverished neighbor, fearing it could cause a collapse of the North’s government and lead to chaos on its border.

  “Countries that actually do business with North Korea may find loopholes in the interpretation as to what is legitimate or not,” said Shin Sang-jin, a professor at South Korea’s Kwangoon University who specializes in North Korean-China relations.

  The UN Security Council passed a resolution on June 12 that expanded UN sanctions against North Korea in response to a nuclear test it carried out on May 25, and asked the committee to add more names to the sanctions list.

  The committee in April placed two North Korean firms and a bank on the list in its first action in two years. That move followed a long-range rocket launch earlier in the month by Pyongyang.

  This week’s blacklisting is expected to go further by specifying individuals and goods to be subject to sanctions, as well as additional companies. The measure would prohibit companies and nations from doing business with the named firms and require them to freeze assets and impose travel bans on the individuals.

  The steps described by the US official were in addition to the UN measures and targeted counterfeiting, narcotics trafficking and other North Korean activities in addition to illicit weapons proliferation, officials said.

  “There’s a broad consensus, including by China, that this is the right way to go and I don’t think the Chinese would take this stuff lightly,” a second US official said.

  The official said there was a growing consensus that tightening sanctions on North Korean entities is “the best chance we have to influence their calculations.”
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