WASHINGTON — The Obama administration on Tuesday slapped financial sanctions on two North Korean firms, including one based in Iran, as part of a crackdown on North Korea's ballistic missile and nuclear weapons programs following a May nuclear test blast and a series of provocative missile launches.
The action also might've been aimed at further restricting Iran's access to hard currency in the wake of the Iranian regime's violent repression of nationwide protests over hard-line President Mahmoud Ahmadinejad's disputed June 12 re-election.
"This is clearly an action that affects Iran as well, but (administration officials) don't want to do something overly provocative given the domestic situation in Iran right now," said Michael Jacobson, a senior researcher at the Washington Institute for Near East Policy and a former top Treasury Department adviser on combating terror financing.
Jacobson said the blacklisting of the Iran-based North Korean front company and a Pyongyang nuclear-related company underscored President Barack Obama's determination to use a 2005 Bush administration executive order on targeted sanctions to strangle the North Korean and Iranian missile and nuclear programs.
"It is very much an indication that targeted financial measures are going to be part of the Obama administration's approach," he said.
It was the first time that the Obama administration has used the Bush executive order against North Korea, and the third time against companies tied to Iran's missile program.
"We have, I think, been fairly explicit with the North Koreans about what . . . we expect them to live up to," said White House Press Secretary Robert Gibbs. "And I think today's action demonstrates the seriousness of what we intend to do to address it."
The U.S. action was announced as the administration sent Philip Goldstein, a U.S. envoy charged with coordinating U.N. measures banning North Korea from selling arms and nuclear-related materials, for talks in China on implementing the measures.
China is North Korea's main trading partner.
The U.N. Security Council approved the measures after North Korea detonated an underground nuclear test blast on May 25, its second since October 2006, and conducted a series of ballistic missile launches.
The U.S. actions against Hong Kong Electronics, the North Korean front company based on Iran's Kish Island, and the Namchongang Trading Corp., of Pyongyang, freezes any of their assets in U.S. banks and prohibits U.S. citizens from doing business with them.
However, the sanctions are also aimed at discouraging other nations' banks and companies from doing business with the firms or risk being targeted by the U.S. government themselves.
A Treasury Department statement said it was targeting Hong Kong Electronics for "transferring millions of dollars" on behalf of Tanchon, a North Korean bank, and the Korean Mining Development Trading Corp., the isolated Stalinist country's main arms exporter.
Tanchon, Treasury said, has played a central role in financing sales of ballistic missiles for the mining company, including to an Iranian organization responsible for developing liquid-fueled missiles that is has been sanctioned both by the United States and the United Nations.
Since 2005, the North Korean bank has also "maintained an active relationship with various branches" of Iran's Bank Sepah, which has also been sanctioned along with other major Iranian banks, Treasury said.
"North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions," said Treasury Undersecretary Stuart Levey in the statement.
The State Department, meanwhile, said that sanctions were being imposed on Namchongang Trading Corp. for purchasing nuclear-related equipment suitable for enriching uranium since the late 1990s.
The Bush administration expanded the use of sanctions as a lever to achieve U.S. policy goals, employing them against targets ranging from Mexican and Colombian drug cartels to repressive regimes like North Korea, Iran and Myanmar.
The expanded sanctions became controversial when they were used against banks in former Soviet republics and the Chinese island of Macau. In those cases, the Treasury Department cited provisions of the USA Patriot Act that give the accused virtually no due process rights and are based on secret information that the accused can never see or contest.
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