The US is preparing to take unilateral action against North Korea.

(Baonghean.vn) - According to an article in The Wall Street Journal on July 11, the administration of US President Donald Trump is preparing to unilaterally tighten sanctions against Pyongyang, targeting Chinese companies and banks that Washington believes are funding Pyongyang's weapons program.

In recent days, cabinet officials have signaled that the White House is prepared to use its power to cut off cash flows to the Kim Jong-un regime, although officials say they still want collective action through the United Nations (UN) and with the support of China. Analysts believe North Korea's ballistic missile test on July 4th will accelerate these unilateral efforts by the United States.

North Korean leader Kim Jong-un reportedly ordered missile launches to be ready within 12 months of December 2016. Photo: Reuters

Over the years, North Korea has demonstrated good resistance to such pressure, and many experts question whether this pressure will make any difference.

Pyongyang has become "adept" at evading sanctions, including disguising its financial and trading companies through those in China. The U.S. itself has virtually no direct relationship with North Korea after imposing a series of bilateral sanctions in retaliation for previous nuclear and missile tests.

According to analysts, North Korea's main trading partner, China, also opposes tightening sanctions against its neighbor due to concerns that the collapse of the Pyongyang regime could trigger a "flood" of refugees, and also because Pyongyang creates a buffer zone for Beijing to counter US power in Asia.

Since increased pressure on North Korea necessitates targeting more Chinese companies, unilateral action is likely to reignite simmering tensions between Washington and Beijing. This move could also complicate Washington's efforts to give American companies greater access to the world's most populous nation and garner Beijing's support on other international issues.

On July 6, the Department of Justice named "overseas USD accounts linked to a network of five companies connected to a Chinese citizen named Chi Yupeng. Among these is one of the largest importers of North Korean goods into China, Dandong Zhicheng Metallic Material Co."

The Justice Department, citing several sources including two North Korean defectors, said the so-called Chi Yupeng network conducted transactions that helped finance North Korea's weapons and military programs. While not a target of U.S. sanctions, analysts believe it represents a vital source of funding that could be cut off in a manner similar to how the U.S. targeted another Chinese company last year, Dandong Hongxiang Industrial Development Co. Ltd.

Satellite imagery shows activity at the nuclear test site. Photo: AP

Analysts suggest that nearly 20 Chinese banks accused of laundering money for Dangdong Hongxiang could be targeted. Currently, the Chinese Foreign Ministry has not commented on the information, while US media outlets have not been able to contact Chi Yupeng or Dandong Zhicheng Company.

Even before North Korea conducted its missile test on July 4th, the Trump administration had begun seeking to tighten sanctions to cut off "all illegal funding for North Korea." Speaking just days before Pyongyang's missile test, Treasury Secretary Steven Mnuchin said: "We will continue to review these actions and continue to tighten sanctions."

Last month, the U.S. Treasury Department announced it would remove China's Dandong Bank from U.S. financial markets, alleging that North Korea is using bank accounts under fictitious names and conducting financial transactions through banks in China, Hong Kong, and Southeast Asia. The Treasury also added two Chinese nationals to its sanctions list, accused of working for shell companies established to circumvent existing sanctions against North Korea.

Many former U.S. diplomats, including Juan Zarate, a top sanctions diplomat under the Bush administration, argue that Washington must increase pressure on Chinese companies and banks.

Some former U.S. officials and analysts suggest that the U.S. has so far been cautious about pushing Beijing too hard, given other vital geopolitical issues on which the two powers need to cooperate. According to Nicholas Eberstadt, a North Korea security expert at the American Enterprise Institute, North Korea's latest missile test has altered the administration's calculations. He predicts the White House will accelerate sanctions against Chinese companies.

US President Donald Trump and Japanese Prime Minister Shinzo Abe. Photo: AP

The primary goal of the strategy to exclude one Chinese bank from the U.S. financial system is to freeze transactions by other Chinese institutions. Access to U.S. financial markets and the U.S. dollar is crucial to global trade and finance. However, to make this effort more convincing, Eberstadt suggests the administration should list several other Chinese banks to create a broader deterrent effect.

Analysts and senior officials from both previous US administrations argue that the current sanctions against North Korea are still "meager" compared to the elaborate sanctions against Iran under the administration of former President Barack Obama. It was that US sanctions effort that plunged Iran into crisis, forcing the country to negotiate, although many foreign policy experts question the effectiveness of the agreement the US subsequently reached with Iran.

Lan Ha

(According to the Wall Street Journal)