STEVE INSKEEP, host:
Now the U.N. Security Council resolution on North Korea focuses on ways to prevent it from buying or selling nuclear and missile technology. Tucked into that resolution is a clause that has received less attention. It's a clause that legitimizes and strengthens banking sanctions against North Korea.
NPR national security correspondent Jackie Northam reports.
JACKIE NORTHAM: These financial sanctions are as important and meaningful as anything in the resolution. Selig Harrison is the director of the Asia Program at the Center for International Policy.
Mr. SELIG HARRISON (Director of the Asia Program, Center for International Policy): This language is unambiguous. It's not like some of the other clauses. This one is a very tough clause. And countries are supposed to freeze North Korean funds that the U.N. committee overseeing this says are nuclear and missile related.
NORTHAM: Harrison says it could be difficult to differentiate between funds that were derived legally and funds that weren't. Still, Harrison says this clause cut off millions, tens of millions of dollars from reaching North Korea. The effectiveness of banking sanctions was demonstrated a year ago when the U.S. Treasury Department cracked down on North Korean finances overseas by pressuring a bank based in Macau to freeze about $24 million; money that Pyongyang derived from counterfeiting and money laundering, according to the Treasury Department.
After that, it became difficult for North Korea to do business with many banks, says Daniel Glaser, the Treasury Department's deputy assistant secretary for terrorist financing and financial crimes.
Mr. DANIEL GLASER (Deputy Assistant Secretary of Terrorist Financing and Financial Crimes, Treasury Department): Countries throughout the world responded to that designation by taking a closer look at the business that they were doing with North Korea to make sure that their banks were not being used for illicit purposes by North Korean-related entities. So we did see a very significant ripple effect.
NORTHAM: That had an impact in North Korea, says Jonathan Pollack, a professor of Asian and Pacific Studies at the Naval War College. Pollack says Pyongyang made an issue of the sanctions in nuclear disarmament talks.
Professor JONATHAN POLLACK (Professor of Asian and Pacific Studies, Naval War College): On the record they have said repeatedly that they will not return to the six-party talks unless and until such sanctions are lifted. That remains to be seen. But clearly they have paid a price for this; it does seem to hurt them.
NORTHAM: Pollack says even though the Bush administration says it is not advocating regime change in North Korea, there is a possibility that severe financial sanctions could loosen President Kim Jong Il's grip on power. Pollack says there's a school of thought that Kim doesn't enjoy the same level of loyalty from top military and party officials that his father did, and so has to buy their allegiance with luxury gifts.
Prof. POLLACK: He has to be able to compensate in various ways the upper levels of the elite to be able ensure that kind of loyalty. So if there are ways that restrict, inhibit or prevent outright the flow of these different kinds of resources, the presumption is that it will hurt him. That's the theory, at least.
NORTHAM: But that theory might underestimate the strength of the regime and the resiliency of the North Koreans. Pollack says people have been saying that the North Korean leadership is on the verge of collapse for about 15 years now. Selig Harrison says it's unreasonable to think that withholding luxury goods or money will hasten that collapse.
Mr. HARRISON: The idea that that's what holds the regime together is a very simplistic interpretation of this very tight regime, which has all kinds of historical and cultural reasons why their regime hangs together. And they'll tough it out, even if they can't get their Scotch whisky.
NORTHAM: Jim Walsh, an international security expert at the Massachusetts Institute of Technology, says the U.S. and other nations have to be careful to strike the right balance with sanctions; enough so Kim Jong Il feels the sting but not so much that North Korea implodes.
Mr. JIM WALSH (International Security Expert, Massachusetts Institute of Technology): And we should also ask ourselves, do we want it to fall apart? Is a crash landing, a hard landing in which there is chaos in a country that possesses nuclear weapons, is that really what we want to have happen?
NORTHAM: Walsh says there are just too many unknowns when it comes to North Korea: precisely what weapons it has, what would convince the regime to disarm and what would trigger a belligerent act.
Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
