By Adrian Croft
BRUSSELS (Reuters) - The United States is urging the European Union to impose sanctions on North Korea's Foreign Trade Bank, which Washington believes helps finance North Korea's ballistic missile program, a U.S. State Department official said on Monday.
North Korea earlier this month threatened the United States with a pre-emptive nuclear strike as the United Nations Security Council tightened sanctions in response to Pyongyang's third nuclear test.
A few days later, President Barack Obama's national security adviser, Tom Donilon, said the U.S. Treasury was imposing sanctions on the Foreign Trade Bank, North Korea's main foreign exchange institution, for its role in supporting Pyongyang's nuclear weapons program.
"Our decision to sanction the Foreign Trade Bank is a big deal and we hope the European Union looks hard at this," the State Department official said, briefing journalists on condition he was not further identified.
He said Washington hoped the EU would put the bank on its sanctions list. Until it did so, the EU should "look hard at the actions of the Foreign Trade Bank", he said.
North Korea launched a rocket in December that the United States said was a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far away as the continental United States.
The State Department official said it was complicated for the EU to impose sanctions on the Foreign Trade Bank because some European countries with embassies in Pyongyang used the bank for embassy business.
Non-governmental organizations (NGOs) and humanitarian organizations may also use the bank, he said, adding: "We are not going after NGOs that do legitimate work."
The 27-nation EU tightened sanctions on North Korea last month. The sanctions expanded on those approved by the U.N. Security Council in January, adding measures preventing trading in North Korean government bonds, gold, other precious metals, and diamonds.
The EU sanctions also barred North Korean banks from opening new branches in the European Union and European banks from opening new branches in North Korea.
An EU source said North Korea's Foreign Trade Bank was not on the current EU sanctions list. EU diplomats are working on implementing the latest U.N. sanctions at EU level and are expected to discuss additional sanctions soon, the source said.
The U.S. State Department official said he had revised his earlier view that sanctions would not work against North Korea because its economy was too small and too isolated.
North Korea's economy was "more linked to the outside world than many people realize" and it may be more susceptible to sanctions, especially if China was involved, than he had thought, he said.
"Given the increased threat from North Korea, increasing sanctions is worth a try. The Department of State and Treasury and the White House are working very closely together to see what more can be done," he said.
He said there was still scope to increase sanctions on North Korea. "I don't know what will succeed, but we haven't 'maxed out', there is headroom, and we have to give it a try," he said.