Highlights of draft U.N. North Korea sanctions resolution

(Reuters) - The United States on Thursday proposed a draft United Nations Security Council resolution that would dramatically tighten sanctions on North Korea following Pyongyang's recent nuclear test and missile launch. Here is an overview of the draft resolution circulated to the 15-member council: CONVENTIONAL ARMS The draft resolution targets North Korea's conventional arms capabilities by closing a gap in the arms embargo that had allowed small arms and light weapons to be sent to North Korea. North Korea would instead be subjected to a full arms embargo on all weapons. It has an unprecedented ban on the transfer to North Korea of any item that could directly contribute to the operational capabilities of the North Korean armed forces, such as trucks that could be modified for military purposes. It bans states from hosting North Korean military and policy trainers and advisors. NORTH KOREAN PROLIFERATION NETWORKS The draft resolution has a new requirement that states expel North Korean diplomats who are involved in illicit activities. CARGO AND INTERDICTION PROCEDURES The draft resolution has a new requirement that states must inspect on their territory all cargo going to or coming from North Korea via land, sea or air. Previously states were only required to do this if they had reasonable grounds to believe there was illicit cargo. It calls upon states to carry out inspections in a way that minimizes impact on the transfer of humanitarian relief cargo. It would ban all flights suspected of carrying prohibited items and ban all port calls by any vessel suspected of engaging in illicit activities. All vessels belonging to Ocean Maritime Management Company Limited would be banned from entering any port. It would require states to ban the chartering of their vessels or aircraft by North Korea, unless the state determines those services are for "livelihood purposes" and will not be used by North Korea to generate revenue. It also requires states to ban their nationals from operating North Korean vessels or using North Korean flags of convenience. RESOURCES The draft resolution would ban the supply or transfer to North Korea of aviation fuel, including rocket fuel. It would ban the export of gold, titanium ore, vanadium ore and rare earth minerals. It would also ban the export of coal, iron and iron ore unless such transactions are for "livelihood purposes" and would not be generating revenue for North Korea's nuclear and missile programs. FINANCIAL SANCTIONS The draft resolution would require states to freeze the assets of any entity of the North Korean government or the ruling Workers Party of Korea that is associated with the nuclear and missile programs or other prohibited activities. It would require states to ban North Korean banks from opening branches on their territory or engaging in correspondent relationships. It would require states to ban their financial institutions from opening new offices, subsidiaries, branches or banking accounts in North Korea. It would require states to close existing financial activities in North Korea if there are reasonable grounds to believe those services could contribute to North Korea's nuclear or missile programs. It would ban all public and private financial trade support to North Korea if there are reasonable grounds to believe there is a link to proliferation. NUCLEAR AND BALLISTIC MISSILE PROGRAMS The draft resolution would require states to prevent the transfer of any item that could contribute to North Korea's nuclear or ballistic missile programs. It would also update a list of banned chemical and biological weapons materials. FIVE ANNEXES TO THE DRAFT RESOLUTIONS 1) A list of 17 North Korean individuals to be blacklisted. A U.S. official said this includes people based outside of North Korea and involved in the country's illicit programs, such as representatives of Korea Mining Developing Trading Corp, Pyongyang's primary arms dealer. Also listed are leaders of key North Korean companies responsible for illicit programs. 2) A list of 12 North Korean entities, many of which are key North Korean government agencies responsible for illicit programs, including the National Aerospace Development Administration, the Ministry of Atomic Energy Industry, a set of banks, including Korea Kwangson Banking Corp. 3) A list of 31 vessels - with names and International Maritime Organization numbers - belonging to Ocean Maritime Management Company Limited. 4) A list of additional technical items that could be used to advance North Korea's nuclear, missile, chemical or biological activities. 5) An illustrative lists of banned luxury items: watches, aquatic recreational vehicles, snowmobiles valued more than $2,000, lead crystal and recreational sports equipment. (Reporting by Michelle Nichols; Editing by James Dalgleish)