North Korea tests push US to action on Chinese banks

The failure of UN sanctions to even slow North Korea's nuclear missile program has many in Washington pushing for unilateral US action against the finance houses doing business with Pyongyang -- a move that would set up a confrontation with China.

World powers maintained a show of unity on Tuesday when the UN Security Council voted unanimously to condemn North Korea's latest missile test, in which it provocatively fired an intermediate range weapon over Japan and into the ocean.

But the quick condemnation did not arrive with any promise of a new UN sanctions resolution, amid reluctance from China and Russia to turn the screw too hard or too fast.

US President Donald Trump's administration was frustrated by the outcome.

Trump vented some of this anger at the slow pace of diplomacy on Wednesday in one of his daily Twitter blasts, declaring: "The US has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!"

Some will see in Trump's intemperate intervention a warning that he may again be considering a pre-emptive military strike to rain "fire and fury" -- in his own phrase -- on North Korea's missile bases and nuclear facilities.

But US officials play down the idea, arguing that it is too late to hope to quash Kim Jong-Un's banned programs in one fell swoop, and that the risks of retaliation against US forces and their allies in the Pacific -- including South Korean civilians -- are too great.

Even the more hawkish voices in Washington favor instead stepping up US sanctions against those foreign banks and companies -- particularly in China -- that help North Korea maintain links to the world economy despite six previous rounds of UN sanctions.

- Unruly neighbor -

Previous US administrations and some diplomats within Trump's current government have been cautious about such measures, concerned that they could provoke China into withdrawing what support it has been giving to efforts to pressure its unruly neighbor.

But in recent weeks, Washington has begun to take some steps, albeit ones that so far have yet to touch the most powerful Chinese banks. Current and former officials now expect to see much tougher measures in the months ahead.

These could come through new enforcement actions by US Treasury agents against foreign banks with ties to the huge US financial sector, from legal cases brought by district federal prosecutors or through new legislation from Congress.

"There was some criticism that the Trump administration policy is the Obama administration policy -- it's clearly not," said Anthony Ruggiero a veteran sanctions and non-proliferation expert who has served in the State and Treasury departments.

"The Trump administration has taken at least six separate actions, whether it's towards Chinese companies, individuals or banks," argued Ruggiero, who is now a senior fellow at the conservative think tank the Foundation for Defense of Democracies.

Senior US diplomats, speaking on condition of anonymity, also defend the administration's record on secondary sanctions, insisting that US officials will take action where foreign firms with operations under US jurisdiction are found to be in breach of sanctions law.

But they are more cautious than some campaigners, and insist that China is already losing patience with Kim and may yet help bring him to the table to discuss nuclear disarmament if Washington avoids provoking a negative response -- an idea Ruggiero dismisses.

- Banks are next -

"There's a lot of rhetoric back and forth, but the Chinese are not going to react in the harsh way that everyone's predicting," he said.

"If you're a senior official in a Chinese bank, you have to be asking yourself serious questions this week, because they're next. It's very clear that they're going to be next, whether it's significant fines or some kind of legal action."

At a public event last week, former assistant secretary of state for human rights Tom Malinowski said he agreed that Chinese banks could be sanctioned, but warned against forcing Beijing to cut all ties with its impoverished and unpredictable ally.

He urged the US administration "not to try to kill all trade and commerce and communication between North Korea and China, because that is what permits ultimately, in the long run, the North Korean people to bring change to their country."

Above all, however, diplomats are concerned that secondary sanctions on Chinese banks would break the one most concrete success of their work at the United Nations -- the unanimous front presented so far by the Security Council.

Whether the sanctions themselves bite economically or damage the missile program is only one factor. Perhaps more important is the message sent Kim by the sight of his only real ally, Beijing, signing on to condemn his tests alongside the US ambassador.

This was not inevitable, a UN diplomat told AFP. Given the North's extremely provocative choice to fire a missile over Japanese territory, even China felt obliged to protest.

"But, at bottom, the positions stayed the same," he warned. "Some want a tougher stance to force North Korea to meet its commitments. Some want a more open dualogue and to avoid any provocations

Source: AFP