US readies defences for North Korean missile attack on Hawaii

Pentagon also monitoring ship suspected of carrying nuclear-related cargo

The United States military was yesterday reinforcing the defences of Hawaii in response to increasing concern that North Korea, stung by new United Nations sanctions against it, may be preparing to launch a long-range ballistic missile in the direction of the Pacific archipelago.

The Pentagon was also monitoring a North Korean freighter, the Kang Nam, which in the past has been suspected of carrying cargo related to the country's nuclear industry. The UN resolution authorises international inspection of ships if there are "reasonable grounds" to think they are carrying such materials.

US officials said they were confident that they would have all the necessary defences in place around Hawaii. They were responding in part to reports in the Japanese media that North Korea was planning to fire a long-range Taepodong-2 missile towards the islands on or around the 4 July holiday.

"I would just say I think we are in a good position should it become necessary to protect American territory," Robert Gates, the Secretary of Defence, said. He conceded: "We do have some concerns if they were to launch a missile ... in the direction of Hawaii."

Mr Gates has ordered the deployment both of a floating radar, which will be stationed near the archipelago to track any incoming missiles, as well as a sophisticated Thaad – a Theatre High Altitude Area Defence ground-to-air missile interception system.

The deployments are the most vivid indicator yet of the deepening concern in Washington about North Korea. The country seems to have set itself once more on a collision course with the West, testing a Taepodong-2 missile in April and then last month detonating an underground nuclear bomb.

It was in response to the nuclear test that the UN Security Council last week unanimously passed the resolution, significantly expanding sanctions against the Stalinist regime. In turn, Pyongyang responded in its usual bellicose style, even going so far as to threaten nuclear war on East Asia.

Few military analysts believe that North Korea is close to having a missile that could fly as far as Hawaii. The missile fired in April, which North Korea insisted was sent to launch a satellite into space, flew over Japan before crashing into the sea. But the US is not taking any chances.

Any launching of a missile towards Hawaii would increase tensions and require an instant decision by the Pentagon on whether to attempt an interception which may not work. A failure by the US to shoot down such a missile might embolden the North Koreans.

The chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, indicated that the US was preparing to implement the UN resolution on shipping. While any high-seas inspection would require permission from the ship's crew, he said the possibilities for inspection improved once a vessel entered a port. "The country of that port is required to inspect the vessel and to also keep the United Nations informed, obviously, if a vessel like this would refuse to comply," he said. Any attempt by the US or anyone else to board a ship like the Kang Nam would also inflame relations with Pyongyang.

*No agreement was reached in talks on the future of a joint North-South Korean factory complex after officials from the South rejected demands from Pyongyang for higher wages and rent. The park sits just inside the North and consists of factories operated by the South which employ about 40,000 people. Its future is now in doubt.

State scam: How Kim cons cash from West

If anyone is asking how North Korea, with its dwindling food stocks and a citizenry scraping by on just pennies a day, can keep its Dear Leader in reasonable luxury and pay for its militaristic endeavours too, one answer may come as a surprise: systematic insurance fraud allegedly perpetrated against Western insurers.

For years, the US has been monitoring North Korea's various illegal money-making scams, including the manufacture of counterfeit $100 bills. But interest is growing in its lucrative insurance fiddles, which reportedly generate hundreds of millions of dollars for the regime of Kim Jong-il.

Some of these activities are now coming to light courtesy of Kim Kwang Jin, a defector who worked for Korea National Insurance Corp. He has described one instance six years ago when his workers stuffed $20m (£12m) that had been paid out by an insurance company into a suitcase in Singapore for personal delivery to the supreme leader as a birthday present. They were rewarded for their efforts with fruit and blankets.

"This money helps keep Kim Jong-il in power at a time he is engaged in nuclear brinksmanship," David Asher, who helped the US State Department track Pyongyang's currency-generating ventures, told The Washington Post. "This is the gift that keeps on giving."

Efforts by the insurance industry to challenge North Korea's claims in successive trials in London have been mostly fruitless. Precisely what sort of claims have been made and on what grounds is not immediately clear partly because the insurers themselves are loathe to say.