Putin: more U.S. sanctions would be harmful, talk of retaliation premature

Russian President Vladimir Putin attends a meeting with journalists following a live nationwide broadcast call-in in Moscow, Russia June 15, 2017. REUTERS/Sergei Karpukhin

MOSCOW (Reuters) – Russian President Vladimir Putin said new sanctions under consideration by the United States would damage relations between the two countries, but it was too early to talk about retaliation, state news agency RIA reported on Saturday.

The U.S. Senate voted nearly unanimously earlier this week for legislation to impose new sanctions on Moscow and force President Donald Trump to get Congress’ approval before easing any existing sanctions.

“This will, indeed, complicate Russia-American relations. I think this is harmful,” Putin said, according to RIA.

In an interview with Rossiya1 state TV channel, excerpts of which were shown during the day on Saturday, Putin said he needed to see how the situation with sanctions evolved.

“That is why it is premature to speak publicly about our retaliatory actions,” RIA quoted him as saying.

Russia and the West have traded economic blows since 2014, when Moscow annexed Ukraine’s Black Sea peninsula of Crimea and lent support to separatist rebels in eastern Ukraine.

The West imposed economic and financial sanctions that battered the rouble and the export-dependent economy. Moscow retaliated by banning imports of Western food, which also hit ordinary Russians by spurring inflation, and barred some individuals from entering Russia.

The threat of a new wave of sanctions emerged this month as U.S. policymakers backed the idea of punishing Russia for alleged meddling in the 2016 U.S. presidential election and for supporting Syria’s government in the six-year-long civil war.

Putin had previously dismissed the proposed sanctions, saying they reflected an internal political struggle in the United States, and that Washington had always used such methods as a means of trying to contain Russia.

(Reporting by Andrey Ostroukh; Editing by Mark Trevelyan)

U.S. Senate votes near unanimously for Russia, Iran sanctions

National flags of Russia and the U.S. fly at Vnukovo International Airport in Moscow, Russia April 11, 2017. REUTERS/Maxim Shemetov

By Patricia Zengerle

WASHINGTON (Reuters) – The U.S. Senate voted nearly unanimously on Thursday for legislation to impose new sanctions on Russia and force President Donald Trump to get Congress’ approval before easing any existing sanctions on Russia.

In a move that could complicate U.S. President Donald Trump’s desire for warmer relations with Moscow, the Senate backed the measure by 98-2. Republican Senator Rand Paul and Bernie Sanders, an independent who caucuses with the Democrats, were the only two “no” votes.

The measure is intended to punish Russia for meddling in the 2016 U.S. election, its annexation of Ukraine’s Crimea region and support for Syria’s government in the six-year-long civil war.

If passed in the House of Representatives and signed into law by Trump, it would put into law sanctions previously established via former President Barack Obama’s executive orders, including some on Russian energy projects. The legislation also allows new sanctions on Russian mining, metals, shipping and railways and targets Russians guilty of conducting cyber attacks or supplying weapons to Syria’s government.

“The legislation sends a very, very strong signal to Russia, the nefarious activities they’ve been involved in,” Senator Bob Corker, the Republican chairman of the Senate Foreign Relations Committee, said as lawmakers debated the measure.

If the measure became law, it could complicate relations with some countries in Europe. Germany and Austria said the new punitive measures could expose European companies involved in projects in Russia to fines.

The legislation sets up a review process that would require Trump to get Congress’ approval before taking any action to ease, suspend or lift any sanctions on Russia.

Trump was especially effusive about Russian president Vladimir Putin during the 2016 U.S. election campaign, though his openness to closer ties to Moscow has tempered somewhat, with his administration on the defensive over investigations into Russian meddling in the election.

Putin dismissed the proposed sanctions, saying they reflected an internal political struggle in the United States, and that Washington’s policy of imposing sanctions on Moscow had always been to try to contain Russia.

The bill also includes new sanctions on Iran over its ballistic missile program and other activities not related to the international nuclear agreement reached with the United States and other world powers.

UNCERTAIN PATH IN HOUSE

To become law, the legislation must pass the House of Representatives and be signed by Trump. House aides said they expected the chamber would begin to debate the measure in coming weeks.

However, they could not predict if it would come up for a final vote before lawmakers leave Washington at the end of July for their summer recess.

Senior aides told Reuters they expected some sanctions package would eventually pass, but they expected the measure would be changed in the House. The Trump administration has pushed back against the bill, and his fellow Republicans hold a commanding 238- to 193-seat majority in the chamber.

Secretary of State Rex Tillerson questioned the legislation on Wednesday, urging Congress to ensure that any sanctions package “allows the president to have the flexibility to adjust sanctions to meet the needs of what is always an evolving diplomatic situation.”

Previously, U.S. energy sanctions had only targeted Russia’s future high-tech energy projects, such as drilling for oil in the Arctic, fracking and offshore drilling. They blocked U.S. companies such as Exxon Mobil, where Tillerson was chairman, from investing in such projects.

The new bill would slap sanctions on companies in other countries looking to invest in those projects in the absence of U.S. companies, a practice known as backfilling.

Also included for the first time are discretionary measures the Trump administration could impose on investments by companies in Western countries on Russia energy export pipelines to Europe.

The Senate also voted overwhelmingly on Thursday to add provisions to the bill allowing the U.S. space agency NASA to continue using Russian-made rocket engines and the 100 senators voted unanimously for an amendment reaffirming the U.S. commitment to the NATO alliance.

(Additional reporting by Tim Gardner; Editing by Yara Bayoumy and Tom Brown)

U.N. council to vote on blacklisting more North Koreans: diplomats

The intermediate-range ballistic missile Pukguksong-2's launch test. KCNA/via REUTERS

By Michelle Nichols and James Pearson

UNITED NATIONS/SEOUL (Reuters) – The United Nations Security Council will vote on Friday on a U.S. and Chinese proposal to blacklist more North Korean individuals and entities after the country’s repeated ballistic missile launches, diplomats said on Thursday.

The draft resolution, seen by Reuters, would sanction four entities, including the Koryo Bank and Strategic Rocket Force of the Korean People’s Army, and 14 people, including Cho Il U, who is believed to head North Korea’s overseas spying operations.

If adopted, they would be subject to a global asset freeze and travel ban, making the listings more symbolic given the isolated nature of official North Korean entities and the sophisticated network of front companies used by Pyongyang to evade current sanctions.

It is the first Security Council sanctions resolution on North Korea agreed between the United States and China since President Donald Trump took office in January.

The measures could have been agreed by the council’s North Korea sanctions committee behind closed doors, but a public vote would amplify the body’s anger at Pyongyang’s defiance of a U.N. ban on ballistic missile launches.

The United States had been negotiating with China, Pyongyang’s sole major diplomatic ally, for five weeks on possible new sanctions. The pair reached agreement and circulated the draft resolution to the remaining 13 council members on Thursday.

It was not immediately clear if council veto power Russia would support the draft resolution after the United States imposed its own sanctions on Thursday on two Russian firms for their support of North Korea’s weapons programs.

Russian Deputy Foreign Minister Sergei Ryabkov said Moscow was puzzled and alarmed by the U.S. decision and that Russia was preparing retaliatory measures, Russian media reported.

While Russia has not indicated it would oppose U.N. sanctions or seek to dilute them, its ties with the United States are fraught and that could complicate its joining any U.S.-led initiative on North Korea.

There is no sign of any sustainable increase in trade between Russia and North Korea, but business and transport links between the two are getting busier.

BANKS AND INDIVIDUALS

On Thursday, the United States unilaterally blacklisted nine companies and government institutions, including two Russian firms, and three people for their support of North Korea’s weapons programs.

That list included the Korea Computer Center (KCC), a state-run enterprise that develops computer software and hardware products. Headquartered in Pyongyang, KCC has offices in Germany, China, Syria, and the United Arab Emirates, according to North Korean state media.

North Korea’s Koryo Bank handles overseas transactions for Office 38, the shadowy body that manages the private slush funds of the North Korean leadership, according to a South Korean government database.

Koryo Bank and its subsidiary, Koryo Credit Development Bank, were blacklisted by the U.S. Treasury Department last year.

The U.N. Security Council first imposed sanctions on Pyongyang in 2006 over its ballistic missile and nuclear programs and has ratcheted up the measures in response to five nuclear tests and two long-range missile launches. North Korea is threatening a sixth nuclear test.

The Trump administration has been pressing Beijing aggressively to rein in North Korea, warning that all options are on the table if Pyongyang persists with its nuclear and missile development.

U.S. Secretary of State Rex Tillerson told the Security Council on April 28 that it needed to act before North Korea does. Just hours after the meeting, chaired by Tillerson, Pyongyang launched yet another ballistic missile.

Within days the United States proposed to China that the Security Council strengthen sanctions on North Korea over its repeated missile launches. Traditionally, the United States and China have negotiated new sanctions before involving the other council members.

Pyongyang has launched several more ballistic missiles since then, including a short-range missile on Monday that landed in the sea off its east coast.

(Additional reporting by Ju-min Park; Editing by James Dalgleish, Soyoung Kim and Paul Tait)

As U.S. targets Hezbollah, Lebanon lobbies against more sanctions

A general view shows a street hosting banks and financial institutions, known as Banks street, in Beirut Central District, Lebanon June 2, 2017. REUTERS/Jamal Saidi

By Lisa Barrington

BEIRUT (Reuters) – Moves in Washington to widen financial sanctions on the powerful Shi’ite Hezbollah political group have triggered alarm in Beirut where the government fears major damage to the banking sector that underpins Lebanon’s stability.

Not yet proposed as law, draft amendments to an existing law threatening sanctions against anyone who finances the heavily-armed Iranian-backed Hezbollah in a significant way prompted lobbying trips to Washington in May by worried Lebanese bankers and politicians.

They returned saying that U.S. officials recognized their concerns over draft proposals that would widen the scope of the law by subjecting Hezbollah’s political allies to sanctions or scrutiny, and believing any expansion of the law would be a toned down version of the draft.

But with U.S. President Donald Trump keen to curb the influence of Iran and its Middle Eastern allies in the region, the risks have not gone away for Lebanon, where Hezbollah wields huge influence.

“There’s one question anyone who wants to put pressure on Lebanon should remember: Do you want another failed state on the eastern Mediterranean?” Yassine Jaber, a member of parliament who led a delegation to Washington in mid-May, told Reuters.

“Lebanon is very, very vulnerable economically at the moment,” added Jaber, an independent Shi’ite politician who is aligned with Parliament Speaker Nabih Berri’s Shi’ite Amal movement, which was named as a target for investigation in the draft amendments first reported by Lebanese media in April.

Political and financial figures fear more regulatory pressure could damage the banking sector – the cornerstone of Lebanon’s precarious economy – endangering a financial stability maintained despite the war in neighboring Syria where Hezbollah along with Iran backs President Bashar al-Assad.

Hezbollah, led by Sayyed Hassan Nasrallah, was formed to combat Israel’s 1982-2000 occupation of Lebanon. Its battlefield prowess, extensive social works among Lebanese Shi’ites and its alliance with powerful regional states have helped it secure a dominant role in the country’s politics with seats in parliament and government. It is classified by Washington as a terrorist organization.

MAIN WORRY CORRESPONDENT BANKS

The main worry is that U.S. correspondent banks – which face huge fines if found to be dealing with people or companies sanctioned under anti-terrorism financing legislation – might finally decide Lebanese banks are too risky to do business with.

That would threaten the remittances upon which the highly dollarized Lebanese economy depends. Shortly after the Lebanese press published the draft, President Michel Aoun – a Maronite Christian and political ally of Hezbollah – said as it stands it could cause “great damage to Lebanon and its people”.

The draft proposal would widen legislation to include persons and entities affiliated with Hezbollah, and to report on the finances of senior members of Amal. The wording gave rise to speculation in Lebanon that Aoun’s finances could be also targeted for scrutiny.

Jaber told Reuters the draft – a copy of which was seen by Reuters – was now “outdated”.

But sources familiar with the matter told Reuters there remains a strong desire in Washington to press harder against Iran and Hezbollah, and there are likely other measures being drafted.

A U.S. congressional aide told Reuters that Republican representative and head of the U.S. Foreign Affairs Committee Ed Royce, who authored the original 2015 law, is considering additional legislation.

“If they (the banks) aren’t doing business with Hezbollah, they don’t have anything to worry about,” the aide said.

The U.S. Treasury declined to comment on the draft saying it had no formal position.

Jaber said: “The position at the moment is that there might be some congressmen or senators thinking of preparing a bill, but I think our discussions will help in toning it down from what we saw as a draft.”

The United States says Hezbollah is financed not just by Iran but also by networks of Lebanese and international individuals and businesses. The 2015 law, known as HIFPA, aimed to cut off these funding routes.

TRIGGERED TENSIONS

Its implementation triggered domestic tensions in Lebanon. Worried about losing their relationship with correspondent banks, Lebanese banks began closing some customers’ accounts, including Shi’ites who were not Hezbollah members.

Critics of the law in Lebanon say it resulted in the unfair targeting of the Shi’ite population. Charity networks run by Shi’ite clerics were hit when some of their accounts closed for a time.

The law led to an unprecedented dispute between Hezbollah and the central bank which asked all banks to comply with the legislation. Last June, a bomb was set off at the headquarters of leading Lebanese bank Blom Bank, causing no casualties.

Since taking office in January, Trump has imposed new sanctions on individuals and businesses involved with Iran’s ballistic missile program and with Hezbollah.

Ali Hamdan, an Amal member who went on the lobbying trip to Washington, echoed Jaber, saying the leaked draft was outdated and could be forgotten. “An understanding was reached,” said Hamdan, media adviser to Berri. “[We] told them: more, wider, generalized sanctions are a recipe to destroy Lebanon.”

The Association of Banks in Lebanon (ABL) dispatched its own delegation in May and met with a “good response” in Washington and from U.S. correspondent banks in New York.

ABL head Joseph Torbey made the case that existing legislation was sufficient and that the new draft was open to “inappropriate interpretations”.

(Reporting by Lisa Barrington; Additional reporting by Patricia Zengerle and Yeganeh Torbati in Washington; Editing by Tom Perry and Peter Millership)

U.S., Japanese leaders agree to enhance sanctions against North Korea: White House

U.S. President Donald Trump (R) and Japan's Prime Minister Shinzo Abe shake hands during a bilateral meeting at the G7 summit in Taormina, Sicily, Italy, May 26, 2017. REUTERS/Jonathan Ernst

TAORMINA, Italy (Reuters) – President Donald Trump and Japanese Prime Minister Shinzo Abe agreed on Friday to expand sanctions against North Korea for its continued development of nuclear weapons and ballistic missiles, the White House said in a statement.

“President Trump and Prime Minister Abe agreed their teams would cooperate to enhance sanctions on North Korea, including by identifying and sanctioning entities that support North Korea’s ballistic missile and nuclear programs,” the White House said after the two men held a one-on-one meeting in Sicily.

“They also agreed to further strengthen the alliance between the United States and Japan, to further each country’s capability to deter and defend against threats from North Korea,” the statement said.

North Korea’s growing nuclear and missile threat is seen as a major security challenge for Trump and Abe both. Trump has vowed to prevent the country from being able to hit the United States with a nuclear missile, a capability experts say Pyongyang could have some time after 2020.

(Reporting by Steve Holland, writing by Steve Scherer; editing by Crispian Balmer)

U.N.’s North Korea sanctions monitors hit by ‘sustained’ cyber attack

A man types on a computer keyboard in front of the displayed cyber code in this illustration picture

By Michelle Nichols

UNITED NATIONS (Reuters) – United Nations experts investigating violations of sanctions on North Korea have suffered a “sustained” cyber attack by unknown hackers with “very detailed insight” into their work, according to an email warning seen by Reuters on Monday.

The hackers eventually breached the computer of one of the experts on May 8, the chair of the panel of experts wrote in an email to U.N. officials and the U.N. Security Council’s North Korea sanctions committee, known as the 1718 committee.

“The zip file was sent with a highly personalized message which shows the hackers have very detailed insight into the panel’s current investigations structure and working methods,” read the email, which was sent on May 8.

“As a number of 1718 committee members were targeted in a similar fashion in 2016, I am writing to you all to alert you to this heightened risk,” the chair of the panel of experts wrote, describing the attack as part of a “sustained cyber campaign.”

A spokesman for the Italian mission to the United Nations, which chairs the 1718 sanctions committee, said on Friday that a member of the panel of experts had been hacked.

No further details who might be responsible were immediately available.

North Korea’s deputy United Nations envoy said on Friday “it is ridiculous” to link Pyongyang with the hacking of the U.N. panel of experts or the WannaCry “ransomware” cyber attack that started to sweep around the globe more than a week ago.

Cyber security researchers have found technical evidence they said could link North Korea with the WannaCry attack.

Reuters reported on Sunday that North Korea’s main spy agency has a special cell called Unit 180 that is likely to have launched some of its most daring and successful cyber attacks, according to defectors, officials and internet security experts.

The U.N. Security Council first imposed sanctions on North Korea in 2006 and has strengthened the measures in response to the country’s five nuclear bomb tests and two long-range rocket launches. Pyongyang is threatening a sixth nuclear test.

A second email by the U.N. sanctions committee secretary to the 15 Security Council members on May 10 said the U.N. Office of Information and Communications Technology was “conducting an analysis of the affected hard drive.”

“Increased vigilance relating to 1718 Committee-related correspondence is therefore advised until data analysis and related investigations are completed,” the email read.

(Reporting by Michelle Nichols; Editing by Alistair Bell)

North Korea says U.S. has to roll back ‘hostile policy’ before talks

FILE PHOTO: A North Korean flag flies on a mast at the Permanent Mission of North Korea in Geneva October 2, 2014. REUTERS/Denis Balibouse/File Photo

By Michelle Nichols

UNITED NATIONS (Reuters) – North Korea’s deputy U.N. envoy said on Friday the United States needed to roll back its “hostile policy” toward the country before there could be talks as Washington raised concern that Pyongyang could be producing a chemical used in a nerve agent.

“As everybody knows, the Americans have gestured (toward) dialogue,” North Korea’s deputy U.N. ambassador, Kim In Ryong, told reporters on Friday. “But what is important is not words, but actions.”

“The rolling back of the hostile policy towards DPRK is the prerequisite for solving all the problems in the Korean Peninsula,” he said. “Therefore, the urgent issue to be settled on Korean Peninsula is to put a definite end to the U.S. hostile policy towards DPRK, the root cause of all problems.”

North Korea, also known as the Democratic People’s Republic of Korea (DPRK), has vowed to develop a missile mounted with a nuclear warhead that can strike the mainland United States, saying the program is necessary to counter U.S. aggression.

U.S. President Donald Trump warned in an interview with Reuters in late April that a “major, major conflict” with North Korea was possible, but said he would prefer a diplomatic outcome to the dispute over its nuclear and missile programs.

Trump later said he would be “honored” to meet the North’s leader, Kim Jong Un, under the right conditions. A U.S. State Department spokesman said the country would have to “cease all its illegal activities and aggressive behavior in the region.”

The U.N. Security Council first imposed sanctions on North Korea in 2006 and has strengthened the measures in response to the country’s five nuclear tests and two long-range rocket launches. Pyongyang is threatening a sixth nuclear test.

U.S. Ambassador to the United Nations Nikki Haley raised concern on Friday about an application by North Korea to patent a process to produce sodium cyanide, which can be used to make the nerve agent Tabun and is also used in the extraction of gold.

“The thought of placing cyanide in the hands of the North Koreans, considering their record on human rights, political prisoners, and assassinations is not only dangerous but defies common sense,” Haley said in a statement.

North Korea submitted the patent application to a U.N. agency, the World Intellectual Property Organization (WIPO), for processing. The agency does not grant patents.

U.N. sanctions monitors said they are investigating the case for any violations. Under U.N. sanctions, states are banned from supplying North Korea with sodium cyanide and Pyongyang has to abandon all chemical and biological weapons and programs.

WIPO said in a statement that it has strict procedures to ensure full compliance with U.N. sanctions regimes. It noted that “patent applications are not covered by the provisions of U.N. Security Council Resolutions.”

Haley said: “We urge all U.N. agencies to be transparent and apply the utmost scrutiny when dealing with these types of requests from North Korea and other rogue nations.”

(Reporting by Michelle Nichols; Editing by Jonathan Oatis and Leslie Adler)

North Korea sends rare letter of protest over new U.S. sanctions

FILE PHOTO - A North Korean flag flies on a mast at the Permanent Mission of North Korea in Geneva October 2, 2014. REUTERS/Denis Balibouse/File Photo

By Ju-min Park

SEOUL (Reuters) – North Korea sent a rare letter of protest to the U.S. House of Representatives on Friday warning that a new package of tougher sanctions would only spur its development of nuclear weapons, North Korea’s state media reported.

The protest was lodged by the recently revived Foreign Affairs Committee of North Korea’s Supreme People’s Assembly, which said the U.S. House of Representatives was “obsessed” with a sense of disapproval and warned it of dire consequences.

“The U.S. House of Representatives should think twice,” the committee said in its letter, a copy of which was published by the KCNA state news agency.

Tension has been high for weeks over North Korea’s nuclear and missile development and fears it will conduct a sixth nuclear test or test-launch another ballistic missile in defiance of U.N. Security Council resolutions.

The House of Representatives overwhelmingly approved legislation this month to tighten sanctions by targeting North Korea’s shipping industry and companies that do business it.

The U.S. legislation was intended to cut off supplies of cash that help fund North Korea’s nuclear program, and increase pressure to stop human rights abuses such as the use of slave labor, the bill’s sponsor said.

The North’s committee said it would fail.

“As the U.S. House of Representatives enacts more and more of these reckless hostile laws, the DPRK’s efforts to strengthen nuclear deterrents will gather greater pace, beyond anyone’s imagination,” the committee said, referring to North Korea by the initials of its official name, the Democratic People’s Republic of Korea.

Last month, North Korea reconvened the Foreign Affairs Committee, which was abolished in the late 1990s, in what analysts saw as an attempt to improve relations with the outside world amid its deepening isolation.

The committee is chaired by Ri Su Yong, a close aide to leader Kim Jong Un and a career diplomat.

(Reporting by Ju-min Park; Editing by Robert Birsel)

South Korea urges ‘parallel’ talks and sanctions to rein in North Korea

South Korean President Moon Jae-in speaks with Chinese President Xi Jinping by telephone at the Presidential Blue House in Seoul, South Korea in this handout picture provided by the Presidential Blue House and released by Yonhap on May 11, 2017. Blue House/Yonhap via REUTERS

By Ju-min Park and Christine Kim

SEOUL (Reuters) – South Korea’s new president launched international efforts to defuse tension over North Korea’s weapons development on Thursday, urging both dialogue and sanctions while also aiming to ease Chinese anger about a U.S. anti-missile system.

Moon Jae-in, a liberal former human rights lawyer, was sworn in on Wednesday and said in his first speech as president he would immediately address security tensions that have raised fears of war on the Korean peninsula.

Moon first spoke to Chinese President Xi Jinping and later to Japanese Prime Minister Shinzo Abe, with how to respond to North Korea’s rapidly developing nuclear and ballistic missile programs, in violation of U.N. Security Council resolutions, dominating talks.

“The resolution of the North Korean nuclear issue must be comprehensive and sequential, with pressure and sanctions used in parallel with negotiations,” Moon’s spokesman, Yoon Young-chan, quoted Moon as telling Xi.

“Sanctions against North Korea are also a means to bring the North to the negotiating table aimed at eliminating its nuclear weapons,” Yoon told a briefing, adding that Xi indicated his agreement.

Moon has taken a more conciliatory line with North Korea than his conservative predecessors and advocates engagement. He has said he would be prepared to go to Pyongyang “if the conditions are right”.

Regional experts have believed for months that North Korea is preparing for its sixth nuclear test and was working to develop a nuclear-tipped missile capable of reaching the United States, presenting U.S. President Donald Trump with perhaps his most pressing security issue.

Trump told Reuters in an interview last month major conflict with North Korea was possible though he would prefer a diplomatic outcome.

North Korea says it needs its weapons to defend itself against the United States which it says has pushed the region to the brink of nuclear war.

“Threats from North Korea’s nuclear and missile development have entered a new stage,” Japan’s Abe told Moon in their telephone call, according to Japanese Deputy Chief Cabinet Secretary Koichi Hagiuda.

“How to respond to North Korea … is an urgent issue. I would like to closely cooperate with the president to achieve the denuclearization of North Korea,” Abe told Moon.

But Abe also said “dialogue for dialogue’s sake would be meaningless” and he called on North Korea to demonstrate “sincere and concrete action”, Hagiuda said, adding that Moon shared Abe’s views.

Japan has been concerned that Moon will take a tough line on feuds stemming from the bitter legacy of its 1910-1945 colonization of the Korean peninsula and could fray ties at a time when cooperation on North Korea is vital.

Moon told Abe to “look straight at history” and not make the past “a barrier”, though he raised South Korea’s dissatisfaction with a 2015 agreement meant to put to rest a dispute over Japanese compensation for South Korean women forced to work in Japanese brothels before and during World War Two, Korea’s presidential office said.

(For a graphic on South Korea’s presidential election, click tmsnrt.rs/2p0AyLf)

‘IMPROVE UNDERSTANDING’

While South Korea, China and Japan all share worry about North Korea, ties between South Korea and China have been strained by South Korea’s decision to install a U.S. anti-missile system in defense against the North.

China says the Terminal High Altitude Area Defense (THAAD) undermines its security as its powerful radar can probe deep into its territory.

China says the system does little to curb the threat posed by North Korea’s nuclear and missile programs, which it has been pressing ahead with in defiance of U.S. pressure and UN sanctions.

The deployment of THAAD was agreed last year by South Korea’s previous administration after North Korea conducted a long-range rocket launch that put an object into space.

Moon came to power with a promise to review the system and he told Xi that North Korea must cease making provocations before tension over the deployment could be resolved, officials said.

In the first direct contact between the South Korean and Chinese leaders, Xi explained China’s position, Yoon, the South Korean presidential spokesman said, without elaborating.

“President Moon said he understands China’s interest in the THAAD deployment and its concerns, and said he hopes the two countries can swiftly get on with communication to further improve each other’s understanding,” Yoon told a briefing.

South Korea and the United States began deploying the THAAD system in March and it has since become operational.

Xi told Moon South Korea and China should respect each other’s concerns, set aside differences, seek common ground and handle disputes appropriately, China’s foreign ministry said in a statement.

As well as clouding efforts to rein in North Korea’s nuclear ambitions, the THAAD deployment has also led to recriminations from Beijing against South Korean companies.

Moon explained the difficulties faced by South Korean companies that were doing business in China and asked for Xi’s “special attention” to ease those concerns, Yoon said.

China has also denied it is doing anything to retaliate against South Korean businesses.

(Additional reporting by Ben Blanchard in BEIJING and Kiyoshio Takenaka in TOKYO; Writing by Jack Kim; Editing by Paul Tait, Robert Birsel)

Germany eyes new North Korea sanctions: government sources

The City Hostel Berlin beside the compound of the North Korean embassy is pictured in Berlin, Germany, May 9, 2017. REUTERS/Fabrizio Bensch

BERLIN (Reuters) – Germany will tighten economic sanctions against North Korea over its nuclear program in line with a U.N. resolution passed in November and subsequent EU regulations, German government officials said on Tuesday.

Berlin plans to ban Pyongyang from leasing properties that belong to its embassy in the heart of the German capital, foreign ministry sources said, confirming news first reported by Sueddeutsche Zeitung newspaper and broadcasters NDR and WDR.

“We must increase pressure to bring North Korea back to the negotiating table. That means we must consistently implement sanctions imposed by the United Nations and the European Union,” said foreign ministry state secretary Markus Ederer.

“In that regard, it is particularly important that we do even more to dry up the financial resources used to fund the nuclear program,” he said in a statement. “The German government is in complete agreement and the responsible authorities will now take the necessary steps.”

Before Germany’s reunification in 1990, North Korea had diplomatic relations with Communist East Germany and owned an embassy and several buildings in East Berlin.

The embassy has continued to operate while one building has since be turned into a low-cost hotel and another into a conference center, according to German media reports.

The embassy collects “high five-digit” sums in rent for the properties leased to two operators since 2004, they say.

The United Nations explicitly banned such leasing arrangements by North Korean embassies worldwide as part of U.N. Security Council Resolution 2321, passed in November 2016 after Pyongyang’s fifth nuclear test.

The resolution says: “All member countries shall prohibit North Korea to use real estate that it owns or leases for other than diplomatic or consular activities.”

Tensions between North Korea and the global community have increased over the past year amid repeated missile tests by Pyongyang.

U.S. President Donald Trump warned in an interview with Reuters this month that a “major, major conflict” was possible with North Korea, but then raised eyebrows by saying he would be “honored” to meet North Korean leader Kim Jong Un under the right circumstances.

(Reporting by Andrea Shalal and Andreas Rinke; Editing by Madeline Chambers and Tom Heneghan)