Kim Jong Il Unplugged, Part 7 (Updated)

[Update: My closing comment below about an expansion of our goals was an understatement:

The U.S. Treasury Department, in a shift in its policy toward North Korea, has decided to treat all transactions involving the nation as suspect and subject to sanctions while dictator Kim Jong Il develops nuclear weapons.

“Given the regime’s counterfeiting of U.S. currency, narcotics trafficking and use of accounts worldwide to conduct proliferation-related transactions, the line between illicit and licit North Korean money is nearly invisible,” said Stuart Levey, Treasury’s undersecretary for terrorism and financial intelligence.

Levey’s statement to Bloomberg News departs from Treasury’s earlier position that it was targeting only overtly illegal activities by North Korean companies. The policy change, which may impinge on foreign banks, coincides with an effort by President George W. Bush to pressure North Korea to return to talks aimed at scrapping its nuclear-weapon and ballistic- missile programs.

It looks like my calls in this post are holding up pretty well. This is essentially a PATRIOT 311 approach without the formal designation. I can’t say whether it’s the opaque dullness of international finance or the fact that George W. Bush finally has an effective North Korea policy, but almost no one seems to have taken note of the most important U.S. policy initiative toward North Korea in decades. H/t NKZone.]

==============================================================
Now, it’s Russia:

Fresh U.S. and Japanese economic sanctions against North Korea are becoming more likely with signs that the reclusive country may be preparing for a nuclear test. A government official in Seoul said Friday the U.S. regards Pyongyang’s outrage at earlier financial sanctions as feigned, implying that the freezing of the North’s accounts in a Macau-based bank last September may have just been the first step.

Peter Beck, a North Korea expert at the International Crisis Group in Seoul, says the next target of U.S. investigations will be North Korea’s accounts in Russia. He added the Bush administration was very pleased with the results of the investigation in Asia. Beck said the U.S. chased accounts and financial transactions in Asia, then in Europe, and now for the final stage will be moving on to Russia.

After having its accounts in Macau frozen, North Korea attempted to open accounts in Vietnam, Mongolia and Hong Kong but was turned down everywhere. Increasingly desperate, the Stalinist state turned to Luxemburg and Germany but was rebuffed there too. “The U.S. has the ability to put all kinds of pressure on European banks,” a government official here said.

This sort of pressure makes the re-imposition of trade sanctions we lifted in 1999 seem meaningless. What we’re doing now is cutting off everyone’s trade with Kim Jong Il, not just ours. Eventually, this will result in a direct confrontation between the United States and South Korea over trade with the North.

To further show just how dramatically the U.S. has moved toward squeezing the North Korean regime, the State Department’s chief negotiator is getting behind the effort:

The top U.S. point man with North Korea will urge Asian powers to end arms-related trade with Pyongyang as ordered by the U.N. on a tour of the region next week, U.S. officials say.

Assistant Secretary of State Christopher Hill, who departs on Sunday for Japan, China and South Korea, will assure them that despite the U.N. order increasing pressure on the North, the United States still backs six party talks to persuade it to abandon its nuclear activities, one official said.

The United Nations order to choke off weapons-related trade with North Korea passed after Pyongyang launched multiple missile tests on July 5.

The U.N. vote did not signal a new U.S. attitude to the six-party talks. “Our problem is that we don’t have a negotiating partner” in Pyongyang, said the official, who spoke on condition of anonymity because of diplomatic sensitivities.

That sounds about right to me. I also sense an expansion of the goal here, from choking off the missile trade to the arms trade as a whole. I’m certainly not going to criticize that.