North Korea quits liaison office in setback for South after new U.S. sanctions

FILE PHOTO: South Korean President Moon Jae-in and North Korean leader Kim Jong Un wave during a car parade in Pyongyang, North Korea, September 18, 2018. Pyeongyang Press Corps/Pool via REUTERS/File Photo

By Hyonhee Shin and David Brunnstrom

SEOUL/WASHINGTON (Reuters) – North Korea on Friday pulled out of a liaison office with the South, in a major setback for Seoul, just hours after the United States imposed the first new sanctions on the North since the second U.S.-North Korea summit broke down last month.

North Korea said it was quitting the joint liaison office set up in September in the border city of Kaesong after a historic summit between leader Kim Jong Un and South Korea’s President Moon Jae-in early last year.

“The North’s side pulled out after conveying to us that they are doing so on the instructions from a higher level, during a liaison officials’ contact this morning,” South Korea’s Vice Unification Minister Chun Hae-sung told a briefing.

South Korea regrets the decision and urged a swift normalisation of the arrangement, Chun said, adding the South would continue to staff the office, set up as a regular channel of communication to ease hostility between the rivals, which technically remain at war.

The move came after the United States on Thursday blacklisted two Chinese shipping companies it says helped North Korea evade sanctions over its nuclear program and cited 67 vessels it said engaged in illicit trade helping the North.

It was the first such step since a second meeting between President Donald Trump and North Korean leader Kim Jong Un in Hanoi broke down over conflicting demands by the North for relief from sanctions and from the United States for Pyongyang to give up its nuclear weapons.

The North’s withdrawal from the office was another blow to Moon, who has seen his standing as a mediator between Pyongyang and Washington deteriorate and divisions grow within his government over how to break the impasse.

Moon’s administration had touted the office as a major feat resulting from his own summit with Kim last year despite U.S. concerns about possible loosening of sanctions.

The South’s Chun said he would not directly link the North’s move to the failed Hanoi summit. But experts saw a pattern in the North lashing out against the South when its crucial strategic position with Washington is in jeopardy.

“The North sees its nuclear issue and ties with the United States as a matter of greater strategic importance, so when they try to assert its position, they sacrifice the ties with the South, which is considered inferior,” said Shin Beom-chul of the Asan Institute for Policy Studies in Seoul.

Moon’s office reacted by holding an urgent meeting, headed by his national security adviser, to discuss the withdrawal.

The won weakened about 0.4 percent against the dollar in non-deliverable forward (NDF) trade after the news.

NEW SANCTIONS

The U.S. Treasury Department identified two Chinese firms for new sanctions – Dalian Haibo International Freight Co Ltd and Liaoning Danxing International Forwarding Co Ltd – which had helped the North evade U.S. and international sanctions, it said.

It also cited 67 vessels for engaging in illicit transfers of refined petroleum with North Korean tankers or facilitating the export of the North’s coal.

Reuters was unable to locate contact details for either of the Chinese companies to seek comment.

The U.S. sanctions prohibit U.S. dealings with the designated companies and freezes any assets they have in the United States.

“The United States and our like-minded partners remain committed to achieving the final, fully verified denuclearization of North Korea and believe that the full implementation of North Korea-related U.N. Security Council resolutions is crucial to a successful outcome,” Treasury Secretary Steven Mnuchin said in a statement.

The latest sanctions showed there was some “leakage” in North Korea sanctions enforcement by China, but it was mostly abiding by U.N. resolutions, a senior U.S. official told reporters on condition of anonymity.

While declining to say whether Washington was trying to send a post-summit message to Pyongyang, the official said Trump “has made clear that the door is wide open to continuing the dialogue with North Korea.”

LIMBO

U.S.-North Korean engagement has appeared to be in limbo since the Feb. 27-28 summit, despite U.S. Secretary of State Mike Pompeo saying on March 4 he was hopeful he could send a team to North Korea “in the next couple of weeks.”

North Korea has warned it is considering suspending talks and may rethink a freeze on missile and nuclear tests, in place since 2017, unless Washington makes concessions.

Activity was detected at the North’s main rocket test facility around the time of the failed summit, fueling concern that Pyongyang may be about to resume weapons development to ratchet up pressure on Washington.

On Monday, two senior U.S. senators called for the Trump administration to correct a slowing pace of American sanctions designations on North Korea, saying such actions had seen a marked decline in the past year of U.S. diplomatic engagement with Pyongyang.

They pointed to a recent U.N. report that North Korea continued to defy U.N. sanctions with an increase in smuggling of petroleum products and coal and violation of bans on arms sales.

A U.N. sanctions panel said in the report Liaoning Danxing was suspected of illicitly shipping Mercedes-Benz limousines to North Korea. Last July, the Netherlands seized a cargo of Belarusian vodka, also banned as luxury goods, en route to North Korea via the company, it said.

(Reporting by David Brunnstrom, Matt Spetalnick and Doina Chiacu in Washington and Hyonhee Shin and Joyce Lee in Seoul; Additional reporting by Choonsik Yoo in Seoul and Gao Liangping and Ben Blanchard in Beijing; Editing by Jack Kim and Clarence Fernandez)

U.S. open to North Korea talks despite missile program activity

FILE PHOTO: Intercontinental ballistic missiles (ICBM) are driven past the stand with North Korean leader Kim Jong Un and other high-ranking officials during a military parade marking the 105th birth anniversary of the country's founding father Kim Il Sung, in Pyongyang April 15, 2017. REUTERS/Damir Sagolj/File Photo

By David Brunnstrom and Hyonhee Shin

WASHINGTON/SEOUL (Reuters) – U.S. President Donald Trump is open to additional talks with Pyongyang over denuclearization, his national security adviser said on Thursday, despite reports that North Korea is reactivating parts of its missile program.

New activity has been detected at a factory that produced North Korea’s first intercontinental ballistic missiles (ICBMs) capable of reaching the United States, South Korea’s JoongAng Ilbo and Donga Ilbo newspapers reported, citing lawmakers briefed by the National Intelligence Service.

This week, two U.S. think tanks and Seoul’s spy agency said North Korea was rebuilding a rocket launch site, prompting Trump to say he would be “very, very disappointed in Chairman Kim” if it were true.

The reports of North Korean activity raise more questions about the future of the dialogue Trump has pursued with North Korean leader Kim Jong Un after a second summit between the two leaders in Vietnam broke down last week.White House national security adviser John Bolton said on Thursday that Trump was still open to additional talks with North Korea over denuclearization.

“The president’s obviously open to talking again. We’ll see when that might be scheduled or how it might work out,” Bolton said in an interview with Fox News.

He said it was too soon to make a determination on the reports of the North Korean activities.

“We have a lot of ways of getting information,” he said. “We’re going to study the situation carefully. As the president said, it would be very, very disappointing if they were taking this direction.”

The Vietnam summit between Kim and Trump last week collapsed over differences on how far North Korea was willing to limit its nuclear program and the degree of U.S. willingness to ease economic sanctions against the isolated country.

Trump, eager for a big foreign policy win on North Korea that has eluded his predecessors for decades, has repeatedly stressed his good relationship with Kim. He went as far late last year as saying they “fell in love,” but the bonhomie has failed so far to bridge the wide gap between the two sides.

MISSILE FACTORY

Movement of cargo vehicles was spotted recently around a North Korean factory at Sanumdong in Pyongyang, which produced ICBMs.

South Korean spy chief Suh Hoon told lawmakers he viewed the activity as missile-related, the JoongAng Ilbo said. It quoted Suh as saying North Korea continued to run its uranium enrichment facility at the main Yongbyon nuclear complex after a first summit between Trump and Kim last June in Singapore.

The Sanumdong factory produced the Hwasong-15 ICBM, which can fly more than 13,000 km (8,080 miles). After its test flight in 2017, North Korea declared the completion of its “state nuclear force,” before pursuing talks with South Korea and the United States last year.

South Korea’s presidential office and defense ministry declined to confirm the reports on Sanumdong, saying they were closely monitoring North Korea’s activities together with the United States.

The U.S. State Department said it could not comment on intelligence matters.

Separately, U.S. think tanks reported on Thursday that North Korea’s Sohae Satellite Launching Station appeared to be operational again after work that began days before Trump met with Kim in Hanoi.

Washington’s Center for Strategic and International Studies think tank called the work a “snapback” after North Korea partially dismantled the site, acting on a pledge by Kim to Trump at the Singapore summit.

“The rebuilding activities at Sohae demonstrate how quickly North Korea can easily render reversible any steps taken towards scrapping its WMD program with little hesitation,” it said.

“North Korea’s actions constitute an affront to the president’s diplomatic strategy (and) demonstrate North Korean pique at Trump’s refusal to lift economic sanctions during the meetings in Hanoi.”

The Washington-based 38 North think tank also said the Sohae site appeared now to have returned to normal operational status.

FILE PHOTO: North Korean leader Kim Jong Un makes his way to board a train to depart for North Korea at Dong Dang railway station in Vietnam, March 2, 2019. REUTERS/Kim Kyung-Hoon

FILE PHOTO: North Korean leader Kim Jong Un makes his way to board a train to depart for North Korea at Dong Dang railway station in Vietnam, March 2, 2019. REUTERS/Kim Kyung-Hoon

SANCTIONS WARNING

Some analysts see the work as aimed at pressing Washington to agree to a deal, rather than as a definite move to resume tests.

A U.S. government source, who did not want to be identified, said North Korea’s plan in rebuilding the site could have been to offer a demonstration of good faith by conspicuously stopping again if a summit pact was struck, while furnishing a sign of defiance or resolve if the meeting failed.

Imagery from Planet Labs Inc analyzed by the Center for Nonproliferation Studies at the Middlebury Institute of International Studies in California showed activity at Sohae from Feb. 23 until Wednesday.

38 North said photos from Wednesday showed the rail-mounted transfer building used to move rockets at the site was complete, cranes had been removed from the launch pad and the transfer building moved to the end of the pad.

“But we don’t draw any conclusions from that besides they are restoring the facility,” Joel Wit of 38 North told Reuters. “There is no evidence to suggest anything more than that.”

On Wednesday, Bolton, a hardliner who was argued for a tough approach to North Korea in the past, warned of new sanctions if it did not scrap its weapons program.

Despite the sanctions talk, there have been signs across Asia that Trump’s “maximum pressure” sanctions campaign against North Korea has sprung leaks.

In a new sanctions breach, three South Korean companies were found to have brought in more than 13,000 tons of North Korean coal, worth 2.1 billion won ($2 million) since 2017, by making it out to have been produced in China and Vietnam, South Korea said.

North Korean media has given conflicting signals about its relations with the United States, while appearing to target Bolton as a spoiler.

Its state television aired a 78-minute documentary late on Wednesday focused on showing a cordial mood between Trump and Kim as the summit ended, indicating Pyongyang was not about to walk away from negotiations, experts say.

It also showed a stone-faced Bolton during a meeting in Hanoi, while Trump and other U.S. participants were all smiles.

In a return to a more usual, strident tone, the KCNA news agency criticized new small-scale military exercises that the United States and South Korea plan to hold instead of a large-scale spring exercise they have called off.

The news agency said the drills would be a “violent violation” of agreements signed between the United States and North Korea as well as between the two Koreas.

The U.S. and South Korean militaries said last week that they would not carry out a large-scale spring joint military exercises, replacing it with smaller-scale ones.

(Reporting by Jeff Mason and David Brunnstrom; additional reporting by Mark Hosenball, David Alexander and Tim Ahmann in Washington and Hyonhee Shin and Joyce Lee in Seoul; Editing by Clarence Fernandez and Alistair Bell)

North Korea called ‘extraordinary threat’ in Trump missile defense review

FILE PHOTO: Intercontinental ballistic missiles are seen at a grand military parade celebrating the 70th founding anniversary of the Korean People's Army at the Kim Il Sung Square in Pyongyang, in this photo released by North Korea's Korean Central News Agency (KCNA) February 9, 2018. KCNA/via REUTERS

WASHINGTON (Reuters) – U.S. President Donald Trump is due to unveil a revamped missile defense strategy on Thursday that singles out North Korea as an ongoing “extraordinary threat,” seven months after he declared that the nuclear threat had been eliminated.

“While a possible new avenue to peace now exists with North Korea, it continues to pose an extraordinary threat and the United States must remain vigilant,” the report said in its executive summary, which was reviewed by Reuters ahead of its release on Thursday.

The Missile Defense Review is a sweeping examination of efforts to shield America from missile threats. It singles out concerns about advancing capabilities by North Korea, Iran, Russia and China.

(Reporting by Phil Stewart; Editing by James Dalgleish)

U.S. vows all-out defense against ‘grave’ North Korean threat

U.S. Secretary of State John Kerry (R) holds a 2+2 ministerial meeting with South Korea's Minister of Foreign Affairs Yun Byung-se and Minister of National Defense Han Min-koo (L) at the State Department in Washington, U.S.

By David Brunnstrom and Arshad Mohammed

WASHINGTON (Reuters) – The United States and South Korea agreed on Wednesday to step up military and diplomatic efforts to counter North Korea’s nuclear and missile programs, saying they posed a “grave” security threat following repeated tests this year.

After talks in Washington between their foreign and defense ministers, the countries said they had agreed to set up a high-level Extended Deterrence Strategy and Consultation Group to leverage “the full breadth of national power – including diplomacy, information, military coordination, and economic elements” in the face of the North Korean threat.

U.S. Secretary of State John Kerry said the United States      would do “whatever is necessary” to defend itself, South Korea and other allies against North Korea.

Kerry and U.S. Defense Secretary Ash Carter reaffirmed that any attack by North Korea would be defeated, and any use of nuclear weapons “met with an effective and overwhelming response,” a joint statement said.

It said Kerry and Carter reiterated the “ironclad and unwavering” U.S. commitment “to draw on the full range of its military capabilities, including the U.S. nuclear umbrella, conventional strike, and missile defense capabilities, to provide extended deterrence” to South Korea.

Asked what the United States could do to prevent North Korea conducting more nuclear tests after those in January and September, Kerry told a news conference:

“We will up and energize those three things that we have already been doing and put greater pressure, put greater diplomacy to work, and put greater deterrence to work so that in every case we will underscore the futility of what Kim Jong-un and North Korea are pursuing.”

He said the military option was a last resort and Washington was working to tighten sanctions, including by trying to close a loophole in U.N. steps that allowed North Korea to export coal for “livelihood” purposes.

Kerry said this was “obviously being abused … because the greatest amount of coal, and the greatest amount of revenue, historically, has just passed between China and North Korea.”

As part of the military effort, Kerry said the United States would deploy the Terminal High Altitude Area Defense anti-missile system to South Korea “as soon as possible.”

China strongly opposes deployment of the U.S. system, saying it would impinge on its own strategic deterrence.

South Korean Foreign Minister Yun Byung-se said North Korea was nearing the “final stage of nuclear weaponization” and the allies would mobilize “all tools in the toolkit” to defend themselves.

“What is most important is to continuously demonstrate our capability and deterrence with our commitment and actions so that Pyongyang can feel the panic under their skins,” he said.

South Korea’s Yonhap news agency said “extended deterrence” could include permanent deployment of U.S. “strategic assets” in South Korea, such as nuclear-capable B-52 and B-1B bombers, F-22 stealth fighter jets and nuclear-powered submarines.

Yun said he understood this would be discussed in talks between Han and Carter at the Pentagon on Thursday, but declined to elaborate.

The Pentagon did not immediately respond when asked about the possibility of such deployments, but Carter said earlier that Washington and Seoul would “continue to modernize our alliance, seize new opportunities and address evolving threats.”

(Reporting by David Brunnstrom, Arshad Mohammed and Lesley Wroughton; Editing by Chris Reese and Tom Brown)