U.S. expands North Korea sanctions, Kim hopes for talks

WASHINGTON/BEIJING (Reuters) - President Barack Obama on Monday expanded financial sanctions against North Korea amid signs that the isolated nation is hoping for an early resumption of stalled nuclear talks.

Obama signed an order which allows Washington to go after the assets of North Korean entities that trade in conventional arms and luxury products and that counterfeit U.S. currency -- all steps U.S. officials hope will sharpen pressure on North Korean leader Kim Jong-il to abandon nuclear programs seen as a direct threat to U.S. allies South Korea and Japan.

Chinese state media confirmed that Kim, who rarely leaves his country, visited China in recent days and told Chinese President Hu Jintao that he remained committed to the "denuclearization" of the Korean Peninsula.

"North Korea has not shifted in its support of the denuclearization of the Korean Peninsula, and does not want to see tensions on the peninsula," Kim told Hu in the northeast Chinese city of Changchun, according to Chinese state television's main evening news.

The new U.S. sanctions steps, which Secretary of State Hillary Clinton generally outlined in July, aim to target the leadership of the isolated, authoritarian nation, which is preparing for a key party congress that analysts say could nail down succession plans.

U.S.-North Korean relations have deteriorated since Obama took office, with his aides deeply unhappy about Pyongyang's decision to conduct its second nuclear test last year as well as the March 26 sinking of the South Korean corvette Cheonan.

Forty-six South Korean sailors were killed in the incident, which the United States, South Korea and other nations have squarely blamed on North Korea. Pyongyang has denied responsibility.

Obama's order said North Korea's actions had destabilized the Korean Peninsula and constituted "an unusual and extraordinary threat" to U.S. interests.

U.S. analysts said the timing of the U.S. sanctions announcement was not necessarily related to Kim's visit to China, which is his country's only major ally and is seen as anxious to resume stalled multilateral talks on North Korea's nuclear program.

Kim "hopes to maintain close communication and coordination with China to promote an early resumption of the six-party talks and ease tensions on the Korean Peninsula," Chinese state television said, referring to the nuclear talks.

China's Hu said maintaining peace and stability in Korea was "everyone's aspiration" and that the talks should "be restarted as quickly as possible," the report said.

The reports did not mention Kim's youngest son and presumptive heir Kim Jong-un. A source had told Reuters at the weekend that Kim had been accompanied by his son in what analysts said could be an attempt to gain support for his succession plans.

North Korea's official KCNA news agency also made no mention of Kim's son in its report of the visit.

TENSIONS AND TALKS

Political analysts said Kim's words appeared intended to ease tensions after the sinking of the South Korean ship, but noted many obstacles to resuming the six-party talks aimed an ending Pyongyang's nuclear weapons development.

"At least verbally, this is a significant shift, but we will have to observe just what he means by six-party talks. It may be that North Korea's concept for them differs from other sides'," said Zhang Liangui, an expert on North Korea at the Central Party School, a prominent state institute in Beijing.

North Korea removed one irritant to its relationship with the United States on Friday when it released U.S. citizen Aijalon Mahli Gomes, who was arrested in January and sentenced to eight years of hard labor for entering the country illegally.

But Pyongyang may seek to shift the focus in any fresh negotiations away from its own nuclear disarmament and to broader demands, including an end to U.N. sanctions, a peace treaty to formally end the Korean War and broader international nuclear disarmament, analysts said.

"Effectively, that amounts to demanding North Korea's recognition as a nuclear power," said Zhang.

U.S.-based analysts were skeptical that the Obama administration was ready to move quickly back to talks, saying Washington wanted both a clear apology for the Cheonan incident and verifiable moves and tangible steps to show that it is committed to abandoning its nuclear programs.

"This does not mean that they are not averse to negotiation diplomacy. But it is pretty clear what the North needs to do," said Victor Cha, a former National Security Council official now at the Center for Strategic and International Studies think tank in Washington.

China's state television showed Hu and an alert-looking but limping Kim hugging each other. Kim is widely believed to have suffered a stroke in 2008, and in previous public appearances has come across as haggard and shuffling.

Foreign analysts say Kim may be hoping to secure China's backing for plans to install his son Kim Jong-un as the next head of the dynasty that has led North Korea since its founding more than 60 years ago.

The Workers' Party, which rubber-stamps big decisions in the North, is due to hold a rare meeting in September that could set in motion succession steps.

(Additional reporting by Jack Kim in Seoul; writing by Andrew Quinn; editing by Mohammad Zargham)