EXCLUSIVE-Trump administration weighing broad sanctions on North Korea -U.S. official


(Adds Chinese Foreign Ministry comment)
    By Matt Spetalnick and David Brunnstrom
    WASHINGTON, March 21 (Reuters) - The Trump administration is
considering sweeping sanctions aimed at cutting North Korea off
from the global financial system as part of a broad review of
measures to counter Pyongyang's nuclear and missile threat, a
senior U.S. official said on Monday.
    The sanctions would be part of a multi-pronged approach of
increased economic and diplomatic pressure - especially on
Chinese banks and firms that do the most business with North
Korea - plus beefed-up defenses by the United States and its
South Korean and Japanese allies, according to the
administration official familiar with the deliberations.
    While the long-standing option of pre-emptive military
strikes against North Korea is not off the table - as reflected
by U.S. Secretary of State Rex Tillerson's warning to Pyongyang
during his Asia tour last week - the new administration is
giving priority for now to less-risky options.
    The policy recommendations being assembled by President
Donald Trump's national security adviser, H.R. McMaster, are
expected to reach the president's desk within weeks, possibly
before a summit with Chinese President Xi Jinping in early
April, the official said, speaking on condition of anonymity.
North Korea is expected to top the agenda at that meeting.
    It is not clear how quickly Trump will decide on a course of
action, which could be delayed by the slow pace at which the
administration is filling key national security jobs.
    The White House declined comment.
    Trump met McMaster on Saturday to discuss North Korea and
said afterward that the country's leader, Kim Jong Un, was
"acting very, very badly."
    The president spoke hours after North Korea boasted of a
successful rocket-engine test, which officials and experts think
is part of a program aimed at building an intercontinental
ballistic missile capable of hitting the United States.

    The administration source said U.S. officials, including
Tillerson, had privately warned China about broader "secondary
sanctions" that would target banks and other companies that do
business with North Korea, most of which are Chinese.
    The move under consideration would mark an escalation of
Trump's pressure on China to do more to contain North Korea. It
was not clear how Chinese officials responded to those warnings
but Beijing has made clear its strong opposition to such moves.
    In Beijing, Chinese Foreign Ministry spokeswoman Hua
Chunying said the situation on the Korean peninsula was at a
crossroads and there were two prospects.
    One, she said, was that the relevant parties could continue
to "escalate toward conflict and potential war".
    "The other choice is that all sides can cool down and
jointly pull the Korean nuclear issue back to a path of
political and diplomatic resolution," Hua told a daily news
briefing on Tuesday.
    China would strictly and comprehensively implement its
duties under the U.N. Security Council resolutions, which meant
implementing sanctions but also making efforts to get back to
talks, she added.
    The objective of the U.S. move being considered would be to
tighten the screws in the same way that the widening of
sanctions - to encompass foreign firms dealing with Iran - was
used to pressure Tehran to open negotiations with the West on
its suspected nuclear weapons program. That effort ultimately
led to a 2015 deal to restrict Iran's nuclear program in return
for sanctions relief.
    For such measures to have any chance to influence the
behavior of North Korea, which is already under heavy sanctions,
Washington must secure full international cooperation -
especially from China, which has shown little appetite for
putting such a squeeze on its neighbor.
    Analysts also have questioned whether such sanctions would
be as effective on North Korea as they were on a major oil
producer such as Iran, given the isolated nation's limited links
to the world financial system.
    North Korea has relied heavily on illicit trade done via
small Chinese banks. So, to be applied successfully, the new
measures would have to threaten to bar those banks from the
international financial system.
    Also under consideration are expanded efforts to seize
assets of Kim and his family outside North Korea, the official

    The military dimension of the review includes a strengthened
U.S. presence in the region and deployment of advanced missile
defenses, initially in South Korea and possibly in Japan. The
U.S. military has begun to install a Terminal High Altitude Area
Defense, or THAAD, system in South Korea, despite Chinese
    Washington is increasingly concerned, however, that the
winner of South Korea'sMay 9 presidential election might
backtrack on the deployment and be less supportive of tougher
sanctions. [nL3N1GU5JV]
    Tillerson warned on Friday that Washington had not ruled out
military action if the threat from North Korea becomes
unacceptable. [nL3N1GU1NR]
    For now, U.S. officials consider pre-emptive strikes too
risky, given the danger of igniting a regional war and causing
massive casualties in Japan and South Korea and among tens of
thousands of U.S. troops based in both allied countries.
    Another U.S. government source said Trump could also opt to
escalate cyber attacks and other covert action aimed at
undermining North Korea's leadership.
    "These options are not done as stand-alones," the first U.S.
official said. "It's going to be some form of 'all of the
above,' probably excluding military action."
    Trump is known to have little patience for foreign policy
details, but officials say he seems to have heeded a warning
from his predecessor, Barack Obama, that North Korea would be
the most urgent international issue he would face.
    In his North Korea briefings, Trump has asked repeatedly how
many nuclear warheads and missiles Pyongyang has, at the same
time as demanding to know how much South Korea and Japan are
paying for their own defense, one U.S. official said.

 (Reporting by Matt Spetalnick and David Brunnstrom; Additional
reporting by John Walcott, and Michael Martina in Beijing;
Editing by Kieran Murray, Peter Cooney and Nick Macfie)
 ((Matt.Spetalnick@thomsonreuters.com; +1 202 898 8300  ;
Reuters Messaging:


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