White House Weighs Options Against North Korea – Wall Street Journal

By

Carol E. Lee,
Jay Solomon and
Andrew Grossman

Dec. 21, 2014 8:14 p.m. ET

HONOLULU—The White House is considering an array of options for responding to North Korea’s alleged hacking of Sony Pictures, including measures that would intensify financial pressure on Pyongyang by targeting banks and trading companies controlled by leader Kim Jong Un and his ruling elite, according to senior administration officials.

The consideration of such tough measures, as well as a White House review of whether to redesignate North Korea as a state sponsor of terrorism and a U.S. effort to persuade China to intervene, comes as Republicans in Congress are ramping up pressure on President Barack Obama to back sanctions legislation targeting the Kim regime.

Mr. Obama is mounting his own push for lawmakers to pass cybersecurity legislation he says would better guard against attacks like the one on Sony Pictures, but said North Korea’s actions didn’t amount to “an act of war.”

“I think it was an act of cybervandalism that was very costly, very expensive,” Mr. Obama said in a CNN interview that aired Sunday. “We take it very seriously. We will respond proportionately.”

North Korea, which denies it was involved in the cyberattack, sharpened its response to the accusation on Sunday, vowing to launch a “counteraction” against the U.S. that is “thousands of times greater” than the one against Sony Pictures. In a statement published Sunday and attributed to the National Defense Commission, the country’s highest decision-making body, North Korea said that it had launched an retaliatory cyberattack on the U.S. and that it had “clear evidence that the U.S. administration was deeply involved” in the making of a movie at the center of the controversy.

Last week, Sony announced it wouldn’t release “The Interview” on Christmas Day as planned, after threats from hackers led several theater chains to say they wouldn’t show the film. David Boies , a lawyer for Sony Pictures, said Sunday on NBC the studio is still seeking to distribute the film.

Mr. Obama is facing growing pressure from Republicans to hit back hard against North Korea and criticized his reaction so far as not tough enough.

“I think the president does not understand that this is a manifestation of a new form of warfare, when you destroy economies, when you are able to impose censorship,” said Sen. John McCain (R., Ariz.). “We need to react vociferously.”

Rep. Mike Rogers (R., Mich.), the outgoing chairman of the House Intelligence Committee, said Mr. Obama hasn’t responded quickly enough to the cyberattack and suggested that the U.S. should punish North Korea with additional sanctions.

“The United States has the capability to make it very difficult for the North Koreans to do an attack like this anytime soon,” Mr. Rogers said Sunday on CBS .

Mr. Rogers, however, stopped short of calling the attack an act of war, noting that the U.S. hasn’t decided what that term means in cyberspace.

The White House, in devising new penalties for Pyongyang, could seek to reprise efforts pursued by the George W. Bush administration beginning in 2005 that were seen as causing panic inside the North Korean government by largely cutting off its ability to conduct foreign-exchange transactions through overseas banks.

Mr. Bush unwound some of these measures in 2007 and 2008 in pursuit of an agreement with Pyongyang to dismantle its nuclear-weapons program.

North Korea ultimately reneged on the deal. And many U.S. government officials and lawmakers felt the Bush administration had let North Korea and its ruling Kim family off the hook.

Rep. Ed Royce (R., Calif.), the chairman of the House Foreign Affairs Committee, said in a statement Friday that when the new, Republican-controlled Congress convenes next year, the Senate should pass a North Korea sanctions bill that cleared the House earlier this year.

“The administration’s failure to impose the type of tough financial sanctions that hit the Kim regime hard in 2005, before they were unwisely ended, is more indefensible by the day,” Mr. Royce said. “The regime must feel the great economic pressure these sanctions brought, and could bring again.”

The Bush administration also took North Korea off its list of state sponsors of terrorism in 2008 in a bid to secure the nuclear accord. Mr. Obama said in the CNN interview that he is considering reversing that move.

Mr. Obama is expected to receive recommendations for the U.S. response in coming days while on vacation with his family in Hawaii.

The White House’s consideration of new sanctions on North Korea underscores how central financial pressure has become for the U.S. in pursuing its national-security policies.

Mr. Obama, in announcing his policy reversal toward Cuba last week, said decades of sanctions had failed to unseat the Castro family from power. Yet he has stressed in recent days that the targeted penalties enforced on Russia and Iran have greatly weakened Russian President Vladimir Putin and Iran’s Islamist government.

“There was a spate of stories about how [Mr. Putin] is the chess master and outmaneuvering the West and outmaneuvering Mr. Obama,” the president told CNN. “Right now, he’s presiding over the collapse of his currency, a major financial crisis and a huge economic contraction.”

Officials who’ve worked on North Korea said the country, though isolated, remains vulnerable to the sanctioning of its financial sector.

Measures pursued by the Bush administration included targeting dollar transactions conducted by Pyongyang world-wide. This was achieved by provisions enforced under the U.S.’s Trading with the Enemy Act.

“We should essentially facilitate a financial quarantine of North Korea,” said David Asher, who led the Bush administration efforts against Pyongyang.

Such an effort by the Obama administration, however, could lessen the chances of any assistance from China, which has been a critical conduit for the U.S. on matters concerning North Korea, given its relationship with rulers of the isolated dictatorship.

Cybersecurity also has been a point of contention between the U.S. and China, particularly after the Justice Department earlier this year indicted five Chinese military officials accused of stealing information from American companies.

—Jonathan Cheng
contributed to this article.

Write to Carol E. Lee at [email protected], Jay Solomon at [email protected] and Andrew Grossman at [email protected]

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