US must choke off N. Korea access to cash: Experts

WASHINGTON (AFP) - United States (US) policy has failed to end North Korea's nuclear ambitions and Washington must now seek tighter sanctions to cut off access to hard currency for the country's elite, experts said on Tuesday.

While the isolated authoritarian state is already under heavy global sanctions, the experts told US lawmakers that Pyongyang has raised billions of dollars through such things as smuggling arms and precious metals.

"We must go after Kim Jong Un's illicit activities like we went after organised crime in the United States: identify the network, interdict shipments and disrupt the flow of money," said Representative Ed Royce, chairman of the House Foreign Affairs Committee.

"North Korea is uniquely vulnerable to targeted financial sanctions, because unlike any other authoritarian government in the world, the regime is so dependent on such illicit streams of revenue," expert Sung-Yoon Lee agreed.

"Damming, if not all, even some of those streams of revenue would achieve secondary, tertiary effects... that would lead to a rise in the number of disgruntled men in the North Korean party bureaucracy, military."

North Korea's neighbour and main ally, China is also still helping to support the Pyongyang regime financially, and probably exports about a billion dollars of goods a year to North Korea.

But this may be changing, however.

"Things are tightening up on China," said Mr Joseph DeTrani, former US special envoy to the six-party talks and now president of the Intelligence and National Security Alliance.

"I think China's looking at things very closely. So I think the Kim Jong Un government is looking at some significant financial problems."

US lawmakers debated the issue as the United States and China called on the United Nations Security Council to sanction North Korean diplomats and "illicit" cash transfers following Pyongyang's third nuclear test.

Maybe as much as 40 per cent of North Korea's roughly US$40 billion (S$50 billion) economy comes from such activities, estimated Mr Lee, assistant professor in Korean studies at Tufts University.

He urged the US administration to designate the whole North Korean government a primary money laundering concern.

Such a move would give the US Treasury special powers to force banks to take tough precautions against Pyongyang's revenues. He also said Treasury should be given investigate powers to follow the money.

The US should also draft a new law expanding what is considered a banned activity by Pyongyang including the import of luxury goods and sales of military arms.

Mr David Asher, senior fellow at the Center for New American Security and former State Department senior advisor on East Asian affairs, said sanctions were biting already.

But he warned North Korea "has been aggressively exporting monetary and nonmonetary gold", which could have raised as much as a billion dollars.

"If you're trying to tighten up the financial effect against North Korea, you need to look at these tradable precious metals as a sanctioned item."

He argued Washington should also consider covert actions "to actively undermine the North Korean nuclear programme" saying the goal of "a complete, verified, irreversible disarmament" had become "a fantasy".

"The leadership in Pyongyang will not make concessions on its nuclear and missile programmes unless it is confronted with a credible threat that calls into question the need for its continued existence," agreed Mr Lee.

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