Obama goes after Kim Jong Il’s creature comforts

The Obama administration on Monday announced a limited expansion of the list of entities that fall under U.S. sanctions on North Korea, as well as new sanctions designed to curtail the illicit activities of Kim Jong Il‘s regime and keep luxury goods out of the hands of the Hermit Kingdom’s elite.

The new measures are a response to the sinking of the South Korean ship Cheonan as well as other recent provocations attributed to Pyongyang. Although the new measures specify just eight organizations and four individuals in North Korea, there are also new authorities the administration could use later to target other businesses and persons who aid the country’s nuclear program and its involvement in arms proliferation, currency counterfeiting, money laundering, and illicit drugs.

"North Korea’s government helps maintain its authority by placating privileged elites with money and perks, such as luxury goods like jewelry, luxury cars, and yachts," said Stuart Levey, the under secretary of the Treasury for terrorism and financial intelligence, in a briefing with reporters at the Treasury Department Monday.

"The North Korean government also benefits from illicit activities including drug trafficking, counterfeiting U.S. currency, and selling counterfeit cigarettes. All of this activity makes up a crucial portion of the North Korean government’s revenues. These activities are carried out by a global financial network that generates this income and procures the luxury goods for the government of North Korea."

President Obama added five organizations and three individuals to the list of targets under Executive Order 13382, which only covers those who are helping North Korea obtain weapons of mass destruction. The president also issued a new executive order that covers the regime’s other illicit activities and named three organizations and one individual as targets.

One of the organizations targeted in the new executive order is the ultra secretive "Office 39" of the Korean Worker’s Party, which allegedly produces methamphetamines, tries to procure yachts for North Korean elites, and uses Banco Delta Asia to launder its proceeds, according to the U.S. administration. In 2005, the Bush administration used the Patriot Act to single out BDA as a major money-laundering concern.

But there are no companies or persons targeted in today’s announcement from any country outside North Korea, as had been advocated internally by ally South Korea, according to sources familiar with the discussions. Levey said the new rules will allow the president to add such entities to the list down the line, if warranted.

Asia experts welcomed the new measures as a small but constructive step in the right direction. They said that even though the measures have little chance of changing North Korea’s behavior, by targeting the worst actors, some progress can be made.

"I think the administration has got this right," said Patrick Cronin, director of the Asia security program at the Center for a New American Security, who said that naming companies from countries like China would have only invited trouble.

"They want to maximize the potential to put pressure on North Korea and at the same time not unnecessarily damage the rest of your interests.  Smart sanctions here means getting specific with the entities that are doing the dirty dealing," he said.

Moreover, designating these entities as targets places them as a higher priority for intelligence gathering, which has its own intrinsic benefit, Cronin said. "Sanctions don’t have to ‘work’ to be useful,".

Weston Konishi, associate director of Asia-Pacific studies at the Institute for Foreign Policy Analysis, said that there have been so many rounds of sanctions against North Korea that there’s not much added benefit to additional measures.

"I don’t think they are going to fundamentally alter the equation here," he said, adding that the move was symbolically important to show solidarity with South Korea.

In addition to various U.S. unilateral sanctions, North Korea is also sanctioned by the United Nations, chiefly under U.N. Security Council Resolutions 1718 and 1874, which seek to curtail North Korea’s nuclear development and weapons proliferation, respectively.

Robert Einhorn, the State Departments special advisor for nonproliferation and arms control, said Monday that the administration’s overall policy toward North Korea has not changed. The administration is still interested in engaging North Korea, but only if Pyongyang affirms its commitment to denuclearization and abides by its previously signed agreements.

"We’re not prepared to reward North Korea simply for returning to the negotiating table, including by removing or reducing sanctions," said Einhorn. "We’re not interested in talks for talks’ sake."

The timing of the announcement had nothing to do with the trip to North Korea by former President Jimmy Carter, who returned from Pyongyang last weekend with pardoned prisoner Aijalon Mahli Gomes, Einhorn said.