Mick Hartley

The Obama administration is preparing to wield broad financial pressure to try to force North Korea to dial back its weapons program, building on strategies former President George W. Bush employed, but then unwound.

The Treasury Department is taking a leading role and will work through international banking channels to try to restrict funds to 17 North Korean banks and companies that U.S. officials say are central players in Pyongyang's nuclear and weapons trade. These firms serve as a financial lifeline to leader Kim Jong Il, his family and ruling circle.

United Nations sanctions call for the banning of the shipment of all luxury goods to Pyongyang's leadership. American diplomats are also negotiating through the U.N. Security Council to sanction by July 12 as many as a dozen North Korean individuals or companies active in Pyongyang's weapons trade. There is likely to be overlap with the U.S. Treasury's list of 17 sanction targets.

U.S. officials said they're targeting key nodes in the North Korean financial system. The language of the new Security Council resolution also provides Washington with leeway to go after a much wider range of targets, said these officials.

"There are some very powerful provisions" in the new resolution, said a senior U.S. official working on the effort. "It calls for the prevention of all financial services that could contribute to North Korea's…weapons of mass destruction-related programs."

The Bush administration pioneered the use of the global banking system as a weapon against nations involved in arms proliferation and terrorism, such as North Korea, Iran and Syria.

The Treasury Department's 2005 blacklisting of Macau's Banco Delta Asia, which held a large number of North Korea accounts, is viewed today as a model for how the private sector can punish rogue states. The Treasury didn't initially ban U.S. firms from engaging the bank, but simply warned that such transactions risked skirting U.S. law. The result was a run on the bank's accounts and a contagion effect that nearly froze North Korea out of the international banking system in 2006, said current and former U.S. officials.

Mr. Bush eventually eased the clampdown as an incentive for North Korea pushing ahead with disarmament talks.

Senior Obama administration officials say this decision was a mistake that eased pressure on Pyongyang before it took irreversible steps to dismantle its nuclear program. They also said it reaffirmed Pyongyang's belief that it could use international diplomacy to win economic concessions from the U.S.

A year ago, who would have suspected that we’d be celebrating the replacement of a liberal accommodationist named George W. Bush with a hard line neocon named Barack Obama, who would finally show signs of grasping not just the reality of North Korea’s bad faith, but some of the very best tools for breaking it?

U.S. officials said Tuesday that a North Korean ship has turned around and is headed back toward the north where it came from, after being tracked for more than a week by American Navy vessels on suspicion of carrying illegal weapons….

The ship left a North Korean port of Nampo on June 17 and is the first vessel monitored under U.N. sanctions that ban the regime from selling arms and nuclear-related material.

The Navy has been watching it — at times following it from a distance. It traveled south and southwest for more than a week; then, on Sunday, it turned around and headed back north, two U.S. officials said on condition of anonymity….