Suspected North Korea arms ship changes course

SEOUL (Reuters) - A North Korean ship tracked by the U.S. Navy on suspicion of carrying a banned arms cargo may be returning home, a U.S. official said, as Washington cracks down on companies helping Pyongyang export missile systems.

North Korea will find it increasingly difficult to trade arms due to U.S. moves and U.N. sanctions to punish it for a May nuclear test, but those measure will not end the weapons exports the destitute state relies on for foreign currency, experts said.

"Of course, it raises the costs of doing the arms and weapons of mass destruction business, but it won't stop them from trying to circumvent the sanctions," said Daniel Pinkston with the International Crisis Group in Seoul.

The North Korean cargo ship Kang Nam was the first to be monitored by the U.S. Navy under a new system to track the North's arms shipments that were a part of the U.N. sanctions.

A U.S. official, speaking on condition of anonymity, said on Tuesday the Kang Nam was heading back in the direction of North Korea after turning around within the last few days.

"We've no idea where it's going," the official said. "The U.S. didn't do anything to make it turn around."

The ship was suspected of carrying missile parts and had been headed toward Myanmar, South Korean broadcaster YTN had quoted an intelligence source as saying. North Korea and Myanmar have drawn closer in recent years, perhaps deepening their affinity as the world moves to increasingly isolate them, analysts said.

On Monday Japanese police arrested three people, including one North Korean resident of Japan, on suspicion of trying to export to Myanmar a magnetic measuring device that could be used in missile construction, the Yomiuri newspaper said.

Tightening the screws further, the U.S. Treasury and State Departments said they had targeted North Korea's Namchongang Trading Corp and Iran's Hong Kong Electronics under an executive order that would freeze their U.S. assets and bar U.S. firms from dealing with them.

CALLING ON CHINA

The moves came as Philip Goldberg, U.S. envoy for coordinating arms and other sanctions against North Korea under a recent U.N. resolution, headed for Beijing, seeking to enlist China's help in targeting the North's weapons programme.

China, the North's biggest benefactor, backed a U.N. resolution condemning the North's nuclear test and imposing fresh sanctions on its arms trade, but Beijing has long been reluctant to press for more.

"As long as China, to a large extent, and Russia, to a lesser extent, do not implement the sanctions, they will not work," said Cho Myungchul, a research fellow at the South's Korea Institute for International Economic Policy.

In a sign it was pushing ahead with its weaponization programme, the North has warned it would conduct military firing exercises between June 29 and July 21, according to Japan's Coast Guard. The exercises are to be carried out in 10 areas mostly near the North Korean coast.

Japan's Defense Ministry was growing increasingly concerned about a possible missile launch in around the first week of July with images from spy satellites showing the reclusive state moving ahead with preparations, Kyodo news agency reported.

Within North Korea, the food crisis was worsening with aid drying up following its May nuclear test, a U.N. official just back from the country said in Beijing.

"But more importantly it should be noted that we have a situation where a very large part of the population has been undernourished for 15 or 20 years," Torben Due, the World Food Programme's North Korea country representative, told reporters.

(Additional reporting by Arshad Mohammed, Nancy Waitz, Andrew Gray and Andrea Shalal-Esa in Washington, Chisa Fujioka and Yumi Otagaki in Tokyo and Ben Blanchard in Beijing; Editing by Ken Wills and Sanjeev Miglani)