South Korea has called new U.S. financial sanctions against North Korea “appropriate,” while Pyongyang described them as “counter-productive.” President Obama's executive order Friday targeting three North Korean entities and 10 individuals followed a cyberattack on Sony Pictures that Washington blames on North Korea.
A South Korean Unification Ministry spokesman on Monday said Seoul considers the new sanctions an appropriate measure. However, he declined to say how it might impact the North-South relationship.
On Sunday, North Korea denounced the U.S. action as a “hostile act” aimed at saving face, despite what the statement called “international skepticism” over the results of a U.S. investigation blaming the North for the November cyberattack on Sony Pictures. Pyongyang has offered to conduct a joint investigation with the United States into the hacking, which resulted in the publication of sensitive information and loss of revenue for the media company.
The attack was linked to the release of the film “The Interview,” a comedy about an assassination plot against North Korean leader Kim Jong Un. Pyongyang denounced the film, although it has denied any involvement in the Sony hacking. A group calling itself Guardians of Peace did claim responsibility for the cyberattack.
In a statement last month, the Federal Bureau of Investigation (FBI) concluded the North Korean government was responsible, citing an analysis of the malware and infrastructure used. However, media reports quoting cyber experts have cast doubt on the extent of Pyongyang”s involvement.
Friday, the U.S. Treasury Department identified three organizations, including the North’s primary intelligence organization, and 10 individuals with links to arms exports for targeted sanctions, including a denial of access to the U.S. financial system. That would effectively limit their access to international financial services.
Treasury Secretary Jack Lew said these steps underscore that the United States “will employ a broad set of tools to defend U.S. businesses and citizens and to respond to attempts to undermine our values or threaten the national security of the United States.”
President Obama called the additional sanctions a response to the North’s “ongoing provocative, destabilizing, and repressive actions and policies.” The White House called the response “proportional” and suggested it was only the first step.
Outgoing Senate Foreign Relations Committee chairman Robert Menendez said Sunday on U.S. television that the sanctions were “a good first step,” but said the United States needs to look at putting the North back on the list of state sponsors of terrorism.
Troy Stangarone of the Washington-based Korea Economic Institute said the sanctions will accomplish two objectives. He refers to the 2007 U.S. decision to cut ties with Macau-based Banco Delta Asia (BDA) for its alleged business dealings with North Korea.
"There will probably be a small, short-term to medium-term hit to the North Koreans, which seems to be where the administration is going. I think they’re viewing a proportional response as this cost Sony a certain amount of money, [so] we’re going to try to hit North Korea in the pocketbook as well. But, in terms of long-term [implications], after BDA, the North Koreans began changing how they handled money. They kept it in smaller amounts, moving it through different channels to try to evade future financial sanctions. My guess is that, while this may impede some of their arms shipments in the short-term, they will follow the same pattern and try to re-route some things that, in the long-run, this [set of sanctions] will have minimal impact," said Stangarone.
Stangarone added that while putting North Korea back on the state sponsors of terrorism list might be the next step, further financial sanctions are also possible given President Obama”s recent assessment that the Sony attack was an act of “cybervandalism.”
On New Year’s Day, North Korean leader Kim Jong Un said he was open to expanding "dialogue and cooperation" with South Korea. The South earlier offered to hold high-level meetings with North Korea this month.
Stangarone does not believe that will be impacted by the new sanctions, and said the Obama Administration is trying to compartmentalize the situation.
"The State Department had put out a statement saying that they supported South Korean efforts to reach out to North Korea. I think anything that happens between the North and the South will take time to develop, even if we see a summit as Kim Jong Un has suggested. That, most likely, will not be until later in the year after any response to the cyberattack had taken place, and there would be an opportunity for South Korea to lay the groundwork for something like that. So, I think, in terms of inter-Korean relations, I don’t see it having much impact," said Stangarone.
Stangarone said it is unclear whether North Korea will accept the format offered by the South, which includes a new unification committee, but the fact that Kim Jong Un did not reject it during his New Year’s Day remarks is positive. Stangarone added the Koreas need to take a step-by-step approach in order to build up a consistent rapport.