Yu Myung-hwan

Strangling the flow of cash to North Korea is the most effective non-military way to hold the Stalinist country accountable for the sinking of the Navy corvette Cheonan, Foreign Minister Yu Myung-hwan said Tuesday.

"The U.S. is keeping a close eye on North Korea's trafficking of counterfeit banknotes, drugs and tobacco while strictly applying existing sanctions on the North," Yu told the Chosun Ilbo. He said the U.S. has a web of mechanisms to thwart North Korea's trade, financial transactions and weapons exports but has not yet been running them to full capacity. Now, however, it will gradually step up action.

The U.S. has monitored North Korea's illicit activities including the forgery of banknotes but has held off from punitive measures so far.

"It's quite possible to punish North Korea effectively through individual actions taken by South Korea's allies such as the U.S., Japan and the EU even if the UN Security Council won't impose additional sanctions on North Korea," Yu said.

Strangling off the cash flow would be effective, he said, because the North "has to import parts to develop weapons of mass destruction including nuclear weapons, so restricting the cash flow will make that more difficult and discourage North Korea from pursuing provocations."

Yu said Seoul will decide whether to take the case to the UNSC after close discussions with China and Russia as well as the U.S. and Japan. Both China and Russia as permanent member have a veto in the UNSC, so their resistance could scupper any concerted action. "South Korea has to pay attention to China's stance that it will not defend either side," he said. "But Beijing's priority is avoiding military conflict on the Korean Peninsula while Seoul is stressing the importance of preventing North Korea from committing more provocations. That is the difference."

Russia, which also remains allied to North Korea, has already sent a team of experts to Seoul to check the findings in an international probe of the sinking. "I believe Russia will cooperate with South Korea in handling the Cheonan issue," Yu said.