The US announced on Wednesday that it would widen sanctions on North Korea to more individuals and companies, in its latest gesture of solidarity with South Korea over the sinking of one of its warships earlier this year.

Speaking in Seoul, Hillary Clinton, the US secretary of state, said that Washington had done “intensive research” on the new targets for sanctions and warned of serious consequences if there were any new attacks by Pyongyang.

The sanctions announcement comes ahead of a combined US and South Korean naval exercise that starts this weekend. Designed as an act of deterrence against North Korea, it has turned into something of a battle of wills with China.

The initiatives are part of a combined response to the sinking of the Cheonan warship in March, killing 46 sailors, which Washington and Seoul blame on North Korea. Pyongyang has denied involvement and the United Nations Security Council has avoided directly blaming North Korea for the attack, partly as a result of Chinese influence.

“We are aiming very specifically, after much intensive research built on what was done before but not limited to that, to target the leadership, to target their assets,” Mrs Clinton told reporters in Seoul.

The US would also launch “new efforts with key governments to stop DPRK [North Korean] trading companies engaged in illicit activities from operating in those countries and banks in those countries from facilitating illicit transactions,” she said. The US may also look to expand travel restrictions on North Korean officials involved in proliferation. Mrs Clinton named no specific institutions or countries. North Korea’s richest allies are China and Iran.

The stepped-up sanctions are reminiscent of the freezing of $24m of North Korean assets in Banco Delta Asia, a Macao bank, in 2005.

One banker with experience in North Korea thought it unlikely that the US could exert much leverage. “Most of the financing is done with China and I do not think they are too vulnerable to the US,” he said.

The joint naval exercise will calm nerves in Seoul, where continued postponement of the exercise raised questions about whether Washington was vacillating under pressure from China, which has been strongly critical of the plan.

In an article in the People’s Daily last week, Major General Luo Yan said that the entry of a US aircraft carrier into the Yellow Sea between Korea and China would present a potential threat to “the heartland of Beijing and Tianjin”.

Quoting from Mao Zedong, he added: “China will never allow others to keep snoring beside our beds.”

However, there were some signs that the US has made concessions to China, given that the exercise this weekend will take place off the eastern side of the Korean peninsula.

Admiral Robert Willard, commander of the US Pacific Command, said that future drills would take place in the Yellow Sea, off Korea’s west coast.

The prevarications about the drill in Washington have left some domestic critics to claim that the US was establishing a dangerous precedent by letting China dictate what sort of naval vessels can operate in certain international waters. It comes at a time when China is pursuing its naval ambitions with greater confidence than in the past, including the holding of its own naval exercise in the Yellow Sea last weekend.

However, the crisis over the Cheonan has also allowed the US to remind other Asian countries about its central naval role in the region, to reinforce its ties with South Korea and Japan and to complicate Beijing’s efforts at rapprochement with Tokyo and Seoul.

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