China's measured response

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LISA MULLINS: Those UN diplomats might do well to recall some measures against North Korea that worked. Banco Delta Asia in Macau was one of Pyongyang's favorite banks, but US Treasury agents pretty much took it out of business back in 2005, according to The Washington Post's UN correspondent Colum Lynch.

COLUM LYNCH: The United States was concerned that this bank was being used to launder essentially counterfeit American dollars that Americans accuse the North Koreans of producing in large quantities, and so it was an effort by the Americans to shut this whole operation down. And what was interesting about that strategy was not so much simply penalizing on a bank or placing restrictions on its ability to operate � it's an international financial institution � but you have the United States Treasury Department visiting foreign capitals using this as a tool to apply pressure on European banks and on other financial institutions not to deal with this bank.

MULLINS: Just for clarification. So when the administration � it was the Bush administration in 2005 � put pressure on other countries to not do business with this bank in Macau, which happened to be Pyongyang's favorite bank, how did that ultimately end up hurting North Korea?

LYNCH: It took a key bank that the North Koreans had relied on to do business � it took them out of the equation. It was impossible for Banco Delta Asia to do business with North Korea because, you know, they were under the microscope. Other sort of commercial partners were anxious about doing business with them, so it clearly had an impact. I'll give you another example. One of the things that the Security Council wanted to do after the first nuclear test was select a whole series of North Korean state companies that were involved in selling, trading ballistic missile technology. So after the April missile test in North Korea, the United States and the Europeans essentially resumed that effort and they identified last month 3 companies that have been identified with the ballistic missile program � and they have essentially barred any sort of international financing institutions from doing any business with them. The interesting thing about these companies is that they have been sanctioned for many years previously by the US government for engaging in this trade. And what North Koreans have simply done is change the names of their companies and try to sort of conceal the business that they're doing. So every couple of years, you know, you find that a company shows up under a new name and you've got to reapply sanctions. So they've been fairly effective at trying to dodge these sanctions.

MULLINS: Well, as you say, this � apparently when dealing with finances, this has had some impact previously. Right now, the UN Security Council is trying to figure out what's going to have some kind of an effect right now on Pyongyang. Here's what the US ambassador to the United Nations, Susan Rice, had to say when she was speaking about where the security council stands right now, and where North Korea is, in and of itself, vulnerable.

SUSAN RICE: I think North Korea is surprisingly in tune to international reaction and international action. And indeed, they are trying to test whether they can intimidate the international community. There was a period of time a few weeks ago where the Security Council met and issued a tough response and increased sanctions. They're trying to say that unless the Council backs down and apologizes, they're going to pursue this course. And the message we're sending back is that the international community is united. North Korea is isolated. The international community will not be intimidated, and the pressure on North Korea will only increase if it continues on this course.

MULLINS: Is that the way it looks from your perspective at the United Nations?

LYNCH: Well, yeah, but everything's tricky. I mean, they're clearly isolated. Everybody including important neighbors are unhappy about it. At the end of the day, I think the US government is trying to sort of determine for itself what do the North Koreans want? What is this all about? Are they simply trying to increase their negotiating leverage when they resume � if and when they resume international talks with the Americans and other key players so they get a better deal? So that in exchange for giving up their nuclear weapons, they get greater trade, economic incentives, their sort of relations with the United States are normalized. I mean, there is this whole process in and effort to sort of persuade or to incentivize North Koreans to give up their nuclear weapons. But at the end of the day, you don't know is that what they're trying to do, get a better deal in exchange for giving up their nuclear weapons, or are they trying to buy time and do they see the development of a more advanced nuclear weapons program as an essential part of their long-term security?

MULLINS: Or maybe it's a combination of all of those things?

LYNCH: Or a combination of all of them.

MULLINS: Colum, is anybody at the United Nations right now talking about some kind of naval blockade or military action?

LYNCH: No. You know, it's funny. The first time this came up, the Japanese had introduced a resolution back in 2006, which was you know, sweeping language talking about the prospects of what was essentially a comprehensive economic embargo in North Korea. Perhaps they're pushing for that sort of you know, very, very extreme kind of response. Highly unlikely that China or Russia will accept that and, you know, as you know, resolutions don't get passed without the approval of the five veto-wielding members of the Security Council, and China's one of them. So China has to buy into this.

MULLINS: That is Colum Lynch who covers the United Nations for the Washington Post.