The sanctions were designed so they wouldn't stop delivery of humanitarian aid to North Korea. The country lost as many as three million people in the 1990s due to famine. And the North remains heavily reliant on food aid to keep its estimated 23 million people fed.

North Korea's leader, Kim Jong Il, issued a statement through state television today. Along with calling the sanctions an "act of war," the message declared Pyongyang would not yield to international pressure.

KimJong Il took power in 1994 after his father, Kim Il Sung, died. According to reports, Kim Jong Il enjoys luxury goods, including cognac, caviar and expensive sushi flown in from around the world, while his people are among the world's poorest.

China has already begun to impose the sanctions, inspecting shipments into North Korea. Assistant Secretary of State Christopher Hill is the top U.S. negotiator in the six-party talks aimed at eliminating North Korea's nuclear weapons program. Hill attended crisis meetings in South Korea, and he told reporters today the North, the Democratic People's Republic of Korea, or DPRK, was misreading the current situation.

CHRISTOPHER HILL, Assistant Secretary of State: The DPRK is under some impression that, once they make nuclear tests, that somehow we will respect them more. The fact of the matter is: Nuclear tests make us respect them less.

RAY SUAREZ: Secretary of State Condoleezza Rice will arrive in Tokyo tomorrow to rally government support for the sanctions.

Are sanctions effective?
RAY SUAREZ: For more on all of this, we get two views. Selig Harrison is director of the Asia program at the Center for International Policy. He was in North Korea last month meeting with senior officials there. His latest book is "Korean Endgame: A Strategy for Reunification and U.S. Disengagement."

And Balbina Hwang is senior policy analyst for Northeast Asia at the Heritage Foundation. She was born in South Korea and is now a U.S. citizen.

Balbina Hwang, will these new sanctions place hardships, either on the rulers or the people of North Korea?

BALBINA HWANG, Heritage Foundation: Undoubtedly, it will have an effect presumably on the leadership. It's hard to imagine that they will have much effect on the people of North Korea, who are already dreadfully suffering. And, frankly, stopping shipments of nuclear components, weapons materials, and luxury goods certainly will have not have any direct impact on the people of North Korea.

RAY SUAREZ: Selig Harrison, are these designed to really cause some pain among the upper cadres there?

SELIG HARRISON, Center for International Policy: Well, I think we have financial sanctions that have been in place for the last year. Just at the time when we concluded the agreement with North Korea to denuclearize on September 19th of last year, we were starting up a program of financial sanctions then which have hurt.

They've not only hurt the leadership, but they've hurt the economic development of North Korea. They're trying to develop economic reforms. If they want to import equipment for a factory to make consumer goods, these banking sanctions have made that impossible.

So we say we want to open up North Korea to the outside world, but we've been clamping down on them for the past year. And that is what led to the first nuclear test. And if we get a second nuclear test, it's going to be because we put more pressure on. When you put the pressure on North Korea, they feel they have to prove their manhood by resisting it and doing something to show you that they're not going to be pushed around.

It seems to me that our policy should be directed toward rolling back their nuclear program, which they're prepared to do. In my trip, I have no doubt about it, based on all my conversations.

If we would adopt an entirely different approach and say, "Look, we're going to be friends with North Korea," and we would enter into bilateral negotiations, first, to find some compromise on this financial sanctions issue, which we started last year and now we've strengthened it in the U.N. resolution, then it seems to me we would have a basis for getting them to suspend further nuclear tests, further missile tests, to freeze their plutonium production.

And that's the direction we ought to be going in. And the sanctions are really going in the other direction.

Curbing illegal activities
BALBINA HWANG: Actually, I couldn't disagree more. And I think we have to clarify the facts here.

First of all, the so-called financial sanctions that Selig Harrison is talking about, that's technically not even the right term. They are not sanctions.

They were specific actions taken by our Treasury Department, the U.S. government, specifically targeting very specific actions against specific financial institutions that were involved in illegal activities, illegal financial transactions. That is what the Treasury Department has gone after.

You were correct by noting that, in fact, North Korea has already been -- North Korea has never been a participating member of the global economy. And, by the way, the actions -- well, the actions taken by the Treasury Department since last year have cut down specific financial illegalities.

By the way, they have not in any way affected China's ability, nor South Korea's ability, to increase their trade and investment with North Korea.

RAY SUAREZ: Hold on just a second. Let me get a response -- let me get a quick response to Selig Harrison's more general suggestion that pressure, when you're trying get them to stop testing, is not the way to go.

BALBINA HWANG: Well, first of all, what would Selig like us to do? You know, they have tested, despite the fact that it has received universal condemnation from the international community. The fact that you had this unanimous, very rapid, and very speedy condemnation, even from China and Russia, frankly speaks to the fact that they have clearly crossed the line, in terms of acceptable international behavior.

So we are now then supposed to, after they do this -- supposed to say, "OK but now we will speak with you, and we'll lift our so-called sanctions"?

RAY SUAREZ: Selig Harrison, what is the world community supposed to do, if not put more pressure in place?

SELIG HARRISON: Well, we're supposed to look at what we're trying to achieve. And what we want to achieve is the denuclearization of North Korea. And they're ready to negotiate it for the right price.

At the very time when we were concluding the agreement with them last September, we were starting banking sanctions -- not the ones you're talking about. You're talking about a couple of cases where we're cracking down on counterfeiting. But what you don't -- what Treasury Department doesn't like to talk about is that they've now begun to, and they've got it into the U.N. resolution now, is telling the banks of everywhere in the world: Do not deal with North Korea.

BALBINA HWANG: But to illegality activities.

SELIG HARRISON: No, no, no.

BALBINA HWANG: It's illegal activities.

SELIG HARRISON: Unfortunately, read the Wall Street journal on August 23rd, and you'll see Undersecretary Stuart Levey saying we're telling banks, "No North Korea accounts. Don't touch these people."

BALBINA HWANG: The reality is we have not -- the U.S. government has not even rolled back the partial lifting of sanctions that President Clinton put into place in 1998. So there are no -- you know, as far as tough U.S. sanctions, we have not even rolled those back.

Affect on North Korean state
RAY SUAREZ: Balbina Hwang, let me jump in there, because the sanctions passed over the weekend by the United Nations do talk about the seizure of funds, a travel ban for upper-level officials of the North Korean state, the interdiction of sales of various kinds of equipment that could be dual-use.

It could be for farm equipment; it could be for the fabrication of a machine or arguably for defense and proliferation-related purposes. But that's all in the eye of the beholder. If those are enforced by the countries that surround North Korea, what kind of effect will that have inside the North Korean state?

BALBINA HWANG: Well, that is certainly a very big "if." And that's precisely the problem that we have here. It's essentially all voluntary.

By the way, it does not actually call for interdiction. It calls for the voluntary inspection of the participating countries' inspection of those cargos. It actually does not specifically include interdiction, which was precisely part of the concessions that the United States and Japan, frankly, have to make to the Russians and Chinese to get this unanimous resolution.

SELIG HARRISON: Well, look, the real problem we face is that North Korea now has a lot of plutonium reprocessed which it's using in these nuclear tests. They could transfer that to a third party, an al-Qaida or another government, if we drive them into the corner and they feel they have no options financially or otherwise.

You can't solve that problem by getting China to inspect everything that comes across the border or by trying to interdict a ship because you can put enough plutonium to do quite a lot of damage in a thimble. And it's extremely difficult for any inspection procedure to find it.

The only way you can deal with this danger of transfer of fissile material, which is the real danger of this North Korean nuclear program, is through diplomacy. We were doing very well. The problem is, we've got an administration that's divided between people who want to really negotiate with North Korea -- and I would include Ambassador Christopher Hill in that. He's in a tough position.

He's got guys in the administration who think North Korea should be brought down. They're favoring regime change. And he's got to conduct diplomacy in that environment, which he did very successfully last September 19th, despite opposition from within his own delegation in the Beijing talks.

And then, the minute the darn negotiations were concluded, the North Koreans found out that we'd been putting banking sanctions into place. And pretty soon, you've got one nuclear test. And if we get another, it's going to be because of the additional pressure, rather than going back to the bargaining table.

BALBINA HWANG: Let's be very, very clear here about causality. The reason diplomacy is not working is because North Korea has refused to come back to the table.

Since the September 19th agreement -- and you can claim and North Korea can claim whatever it wants to about the reasons of why it's not coming back -- but, frankly, U.S. Treasury actions simply -- about, by the way, illegal activities -- certainly is not a reason for North Korea not to come back to continue the discussion about how to implement the denuclearization of the Korean Peninsula, which you yourself have stated is North Korea's goal. Supposedly, that is North Korea's goal.

Proliferation
RAY SUAREZ: What about the suggestion that proliferation becomes more possible in a situation when North Korea cannot make money any other way but by selling...

BALBINA HWANG: First of all, that is a fallacy. It is absolutely a fallacy to argue that North Korea absolutely has no choice and therefore is driven to proliferate, just as it's a fallacy to argue that the United States or Japan or other countries' actions have forced North Korea to test. That's like trying to argue that poor people must turn to crime because they have no other access.

RAY SUAREZ: OK. Well, let's take driving off the table and just say, is it a possibility that North Korea may then turn to other states...

BALBINA HWANG: No, absolutely...

RAY SUAREZ: ... and sell fissile material?

BALBINA HWANG: Well, that's, of course, always a possibility, but that possibility reveals then that North Korea will continue to act irresponsibly and has absolutely no ability to understand what basic standards of international behavior and rules are.

SELIG HARRISON: There is still an opportunity for diplomacy. It's not too late.

BALBINA HWANG: Of course there is. Of course there is, if North Korea decides to come back.

SELIG HARRISON: They're dying to have bilateral talks with us to find some way to compromise this financial sanctions issue and...

RAY SUAREZ: Would you take Ms. Hwang's point that so far they're not showing that they're dying to reopen these negotiations?

SELIG HARRISON: They are. I mean, they want bilateral negotiations with the U.S., and they have made this very, very clear.

BALBINA HWANG: Which is unacceptable.

SELIG HARRISON: Why is it unacceptable? What's wrong? We've had bilateral...

BALBINA HWANG: I will explain exactly what I think.

RAY SUAREZ: OK. You've got to do it very quickly.

SELIG HARRISON: Jim Baker says it's not appeasement to talk to your enemies.

BALBINA HWANG: Of course it isn't. And I have no issue...

SELIG HARRISON: Well, why not talk to them?

BALBINA HWANG: First of all, it's a fallacy to state that the United States has not had direct, face-to-face talks or bilateral with North Korea. In fact, I believe it's perfectly fine for the U.S. to be discussing bilaterally with North Korea issues that are bilateral in nature. So, for example...

SELIG HARRISON: The financial sanctions are bilateral in nature.

BALBINA HWANG: Yes, they are.

SELIG HARRISON: That's the point.

BALBINA HWANG: Yes, they are. And the U.S. Treasury Department has met with North Korean officials. It's North Korea that has refused.

By the way, they have refused to take actions that would have allowed senior-level U.S. government officials to go to North Korea.

RAY SUAREZ: OK.

BALBINA HWANG: The reason why the nuclear issue will not work is that is not a bilateral issue between the United States and North Korea.

RAY SUAREZ: Well, if somebody is willing to read the transcript of this conversation, I think you agree in some areas more than you realize. But thank you both for being here.