Region Readies For N. Korea Missiles As U.s. Talks Sanctions

The U.S. pointman for sanctions on North Korea holds talks in Malaysia on Sunday, possibly on links banks have to the North's finances, while a report said Pyongyang may have shot mid-range missiles in a series fired on Saturday, Reuters reported.

North Korea launched seven ballistic missiles, South Korea's defense ministry said, in an act of defiance toward the United States on its Independence Day, further stoking regional tensions already high due to Pyongyang's nuclear test in May.

"We are on high alert," a South Korean Defense Ministry source said, adding there were no initial signs more launches were coming on Sunday.

The North appears to have fired three mid-range Rodong missiles, which can hit all of South Korea and most of Japan, and four Scud missiles, which can strike most of South Korea, Yonhap news agency quoted a South Korean official as saying.

"We found five of the seven missiles fell near the same spot in the East Sea (Sea of Japan), which indicates that their accuracy has improved," the official said.

The officials said the missiles flew about 450 kms (280 miles) and it will take a few days to confirm what was fired.

Reports on Saturday said all seven missiles were likely Scuds. The Scud and Rodong are both ballistic missiles and their launch would mark an escalation of military moves by the North, which has fired several non-ballistic, short-range missile since the May 25 nuclear test.

Impoverished North Korea is barred by United Nations resolutions from firing ballistic missiles such as the Scud, which defense officials said were designed by the North to target U.S. allies South Korea and Japan.

The North has more than 600 Scud-type missiles and 300 Rodong missiles, defense officials said.

It was the biggest barrage of ballistic missiles the North has fired since it launched seven, including its longest-range Taepodong-2, in 2006 near the July 4 holiday.

Japan is considering introducing a new ground-based missile defense system to complement interceptors it currently has, the Japanese daily Mainichi reported.

The launches came as the United States has cracked down on firms suspected of helping the North in its trade in arms and missiles, which were subject to U.N. sanctions imposed after the nuclear test and are a vital source of foreign currency for cash-short North Korea.

The United States may have found several bank accounts in Malaysia suspected of belonging to North Korea and may freeze them as part of the crackdown, Yonhap reported, citing an unidentified source in Washington.

U.S. Ambassador Philip Goldberg, the U.S. coordinator for the implementation of U.N. Security Council Resolution 1874, will discuss the banks with officials in Malaysia, the source said.

The resolution, which passed June 12, bans the export of all weapons by North Korea -- which Washington says will cut off a significant source of funds for Pyongyang. It also bans all financial transactions with North Korea that could contribute to its nuclear or ballistic missile programs.

Goldberg went to Beijing last week for talks with Chinese officials on enforcing U.N. sanctions. The help of China, the North's biggest trade partner and benefactor, is essential for enforcing sanctions, experts said.

Chinese foreign ministry spokesman Qin Gang said in a statement on Sunday regarding the missile launches: "China has taken note of this situation and hopes all sides will show restraint and together maintain the peace and stability of the region." Russia has made a similar comment.

The U.S. Treasury brought North Korea's international finances to a virtual halt in 2005 by cracking down on a Macau bank suspected of aiding the North's illicit financial activities. Other banks, worried about being snared by U.S. financial authorities, steered clear of the North's money.

The impact was seen as especially painful for the country's leadership, which was unable to move money around easily.

The North has raised tensions recently by saying it has started a program to enrich uranium, which could give it a second path to a nuclear bomb, threatening to attack the South, and extracting plutonium at its aging Yongbyon nuclear plant.

Analysts said the moves may be aimed at securing internal support for leader Kim Jong-il -- 67 years old and thought to have suffered a stroke a year ago -- as he prepares for his youngest son to succeed him at the head of Asia's only communist dynasty.