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 carol.lee@wsj.com, Jay Solomon at
jay.solomon@wsj.com and Andrew Grossman at
andrew.grossman@wsj.com
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