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(News Focus) Fresh U.S. sanctions symbolic, but impact in doubt: analysts

All Headlines 14:12 August 31, 2010

By Chang Jae-soon

SEOUL, Aug. 31 (Yonhap) -- The new U.S. sanctions against North Korea are highly symbolic as they target Pyongyang's leadership, but it is unclear how hard they will hit the communist regime that has already been under an array of international sanctions, analysts said Tuesday.

Washington added a total of eight North Korean entities and four individuals to its sanctions blacklist for their alleged involvement in proliferation of weapons of mass destruction, trade in conventional arms, procurement of luxury goods and other illicit activities.

The new sanctions are aimed at punishing North Korea for the deadly sinking of a South Korean warship in March, warning against future provocations and pushing the defiant regime to give up its nuclear arms programs.

U.S. President Barack Obama said in a new executive order for sanctions that the North's "continued actions and policies," including the ship sinking and its nuclear and missile tests, "destabilize the Korean Peninsula and imperil U.S. armed forces and allies and trading partners in the region."

The new additions to the blacklist are divided into two groups -- those added under an existing anti-WMD executive order and the others listed under a new executive order targeting Pyongyang's trade in conventional arms, luxury goods and other illicit activities.

Those blacklisted under the new executive order include Office 39 of the North's ruling Workers' Party that has been accused of engagement in illicit economic activity, including drug trafficking, to support the North's government. They also include the North's Reconnaissance General Bureau, a key intelligence agency, and its chief, Gen. Kim Yong-chol.

A government official in Seoul said that Office 39 is called Kim Jong-il's "personal safe" for its role in raising and managing secret funds, and procuring luxury goods for the reclusive leader. The Reconnaissance General Bureau has also been suspected of orchestrating March's ship sinking.

"I think this is an expression of the U.S. intention to push strongly for bilateral sanctions against North Korea," said Dong Yong-seung, a senior analyst at the Samsung Economic Research Institute think tank. "But I don't think we will be able to see its impact immediately."

The sanctions call for freezing the U.S.-based assets of those blacklisted and banning American financial institutions from transactions with them. Analysts have said the sanctions themselves are not expected to have much impact on Pyongyang, as the North has few assets in the U.S. and little dealings with American financial institutions.

But the measures could prove painful to the North if Washington's move leads to financial institutions in other nations halting dealings with targeted entities. Officials in Seoul have said that the success of the new sanctions will depend on how much cooperation Washington can get from other nations in carrying out the measures.

Dong said that it is unlikely for third countries to voluntarily join the U.S. sanctions campaign "until there is a specific case" of Washington taking punitive steps against a foreign institution that continues dealing with those blacklisted.

In 2005, the U.S. imposed similar financial sanctions on Pyongyang by designating a bank in the Chinese territory of Macau with links to the North. That is considered to have hit the North hard because the move scared away other global financial institutions from dealing with Pyongyang for fear they would also be blacklisted.

Dong also said that the naming of the North's Reconnaissance General Bureau and its chief, Gen. Kim, could be a U.S. message to Pyongyang that the regime punish them, holding them responsible for the ship sinking that left 46 South Korean sailors dead.

Other analysts expressed doubts over the sanctions' impact, saying that China could blunt them.

"The sanctions won't have a big impact if China remains passive about it," said Yang Moo-jin, a professor at Seoul's University of North Korean Studies.

The U.S. announcement of new sanctions came just hours after Beijing and Pyongyang announced Kim's secret trip to the neighboring ally that has provided the impoverished and provocative North with food and energy aid as well as diplomatic protection.

Kim held a summit with Chinese President Hu Jintao last Friday, pledging to further bolster their traditional ties. China has a track record of blunting international sanctions on North Korea by giving the neighboring regime assistance through backdoors.

Robert Einhorn, a senior U.S. official overseeing sanctions against the North and Iran, and other officials have said that the new sanctions could have "the broader effect of isolating North Korean entities from the international financial system in cooperation from third countries."

Einhorn is expected to travel to Beijing next month in an attempt to enlist Chinese support.

Professor Kim Yong-hyun of Seoul's Dongguk University said that the new sanctions represent U.S. pressure on the North's leadership, adding that its impact is not expected to be more than a symbolic level.

"The U.S. appears to be taking a two-track approach of seeking sanctions and dialogue at the same time," Kim said. "But I think more weight is on the dialogue side."

As China steps up efforts to reopen the six-party talks on North Korea's nuclear programs, Washington could move gradually toward that direction, he said.

Beijing's chief nuclear envoy, Wu Dawei, visited Pyongyang earlier this month and won the North's consent to push for a "three-step" resumption of the nuclear talks that involve the two Koreas, China, Japan, Russia and the U.S.

China's official Xinhua news agency also said that the North's leader called for reopening the nuclear talks at an early date when he held summit talks with China's president last week.

Wu has been on a tour of the dialogue partners. He was in Seoul and Tokyo, and is scheduled to visit Washington to push for resuming the negotiations that have been stalled since the last session in late 2008.

Some officials in Seoul have also said that the impact of the sanctions won't be big as North Korea has already been under a series of international sanctions for its nuclear and missile tests.

"North Korea is already under almost all possible sanctions. Additional measures will be to fill possible holes in the net of the sanctions," a senior official said earlier this month on condition of anonymity. "The question is how stringently they will be implemented."


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