The New York Times
WASHINGTON — The latest target for the United States, as it tries to tighten the screws on North Korea, is a shadowy party organization, known as Office 39, which raises hard currency to buy fine liquor, exotic food and luxury cars for cronies of North Korea’s leader, Kim Jong-il.
The Obama administration on Monday singled out Office 39 as one of several North Korean entities that it says are engaged in illicit activity — fleshing out new sanctions that were first announced in July by Secretary of State Hillary Rodham Clinton during a visit to South Korea.
Under a new executive order, the United States will try to choke off the flow of luxury goods into North Korea, which officials say Mr. Kim uses to buy the loyalty of the political elite, as well as the sale of conventional weapons by the North. The Treasury Department also designated entities suspected of trafficking in nuclear technology, using existing authority.
“We need to send a signal to the North that provocative behavior will not go unpunished,” said Robert J. Einhorn, the State Department’s special adviser on arms control and nonproliferation issues. “They are not directed at the people of North Korea, but at their leaders.”
The administration finds itself at something of a crossroads in its North Korea policy: determined to keep up the pressure on the North, while starting to question whether and when to engage the government. A wide range of outside experts have counseled Mrs. Clinton to restore some contact, contending that the sanctions have done little to change North Korea’s behavior and that the impasse is becoming increasingly dangerous.
The administration’s moves came as Mr. Kim returned from a mysterious visit to China last week, during which he met with President Hu Jintao.
The North Korean leader passed up an opportunity to meet former President Jimmy Carter, who was in Pyongyang, the North’s capital, to win the release of a jailed American citizen. Mr. Kim’s decision puzzled administration officials and North Korea experts.
Among the possible explanations, said one official: North Korea is now so economically and politically dependent on China that Mr. Kim felt that he could not afford to delay a planned visit to China. Then, too, Mr. Carter was not carrying any diplomatic message from the Obama administration, which may have made it easier for Mr. Kim to skip the meeting.
In a letter to Congress on Monday, President Obama said the new sanctions were justified after North Korea’s “unprovoked attack” in March on a South Korean warship, the Cheonan, which killed 46 sailors; as well as its nuclear and missile tests, and a variety of other illicit activities.
Eager to demonstrate solidarity with South Korea, Mrs. Clinton previewed the measures during a visit to Seoul with Defense Secretary Robert M. Gates, in which he announced joint American-South Korean military exercises. At the time, though, officials had few details.
On Monday, the Treasury filled in the blanks, designating five entities and three individuals linked to weapons of mass destruction. Some of these entities, like the Korea Taesong Trading Company, have already been sanctioned, either by the State Department or the United Nations Security Council.
Mr. Obama, in his new executive order, identified two entities and one individual suspected of involvement in conventional arms sales. The best known is the Reconnaissance General Bureau, an intelligence agency. The order also designates the commander of the agency, Gen. Kim Yong Chol.
The focusing on Office 39 builds on longstanding efforts to deprive the North Korean elite of luxury goods. Sometimes known as Room 39, Office 39 is a branch of the Korean Workers’ Party that raises and manages a slush fund of hard currency for Mr. Kim’s family and friends.
While some of Office 39’s dealings are believed to be legitimate — it exports exotic mushrooms, ginseng and seaweed, for example — the organization is suspected of being involved in the counterfeiting of American currency and drug trafficking.
The Treasury Department said Office 39 had been involved in methamphetamine distribution and the production of heroin and opium.
Office 39, which answers directly to Mr. Kim and has its headquarters not far from his villa, also procures luxury goods for the leadership. Last year, American officials said, the Italian government foiled its attempt to buy two Italian-made luxury yachts worth more than $15 million for Mr. Kim.
Critics say that most of North Korea’s luxury goods flow through China, which is unenthusiastic about sanctions. Mr. Einhorn said that he would travel to Beijing soon to encourage the government to enforce the measures rigorously.
Stuart A. Levey, the undersecretary of the Treasury for terrorism and financial intelligence, said the designations of entities would have global impact because “there is already a real wariness” among foreign banks and companies about doing business with North Korean enterprises.
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