According to the (North) Korean Central News Agency, a total of 26 professors and officials at the country's prestigious Kim Il Sung University were awarded the watches inscribed with the captions, "Gift of Great Leader Kim Il Sung," in reference to the country's founding leader and father of the current leader Kim Jong Il.

The award was part of Kim's unique ruling technique of using gifts to keep a key group of supporters in his hands.

Under the "gift politics," Kim has provided wrist watches and other luxury goods to his aides and ruling elite members to reward their unconditional loyalty toward him. Most of the luxury items were made outside of North Korea, in places such as Japan or Switzerland, according to North Korean defectors and intelligence sources.

Gifts for loyalists also include cars, pianos, camcorders and leather love seats, among others.

But the North Korean leader may no longer use the "gift politics" because U.N. members have moved to impose bans on shipments of luxury goods -- including cars and wrist watches -- in a bid to obstruct the personal consumptions of Kim Jong Il and his ruling elite.

The U.N. Security Council unanimously adopted Resolution 1718 after the North's nuclear test last month, calling for all U.N. members to impose wide-ranging sanctions on the communist country, including a ban on exports of luxury goods as well as large conventional weapons and weapons of mass destruction.

In line with the U.N. resolution, Japan's Cabinet this week approved bans on exports of 24 kinds of luxury goods to North Korea, including cars, wrist watches, alcohol, cigarettes, jewelry, perfume and caviar.

The list also includes beef, tuna fillet, cosmetics, leather bags, fur products, crystal glass, motorcycles, yachts, cameras, musical instruments, fountain pens and works of art antiquities. The total export value of the 24 items was about $9.2 million in 2005.

Prime Minister Shinzo Abe described the ban, which took effect Wednesday, as a move to "send a strong message of the international community to the (North) government's executive officials." The measures are designed "to block the transfer of goods used by North Korean leaders for themselves or supplied by the leaders," Japanese officials said.

France, Switzerland, Germany and other countries are also preparing for their own lists of luxury goods subject to the export ban, including high-quality cosmetics, shoes, watches and gold or silver tableware.

Analysts in Seoul say the U.N. measures would hurt the North Korean leader's personal consumption and his gift politics.

Kim is said to be fond of cognac, wine, caviar, and other imported delicacies, according to testimonies by Kim's former aides, including a Japanese chef, Kenji Fujimoto, who fled the communist state in 2001.

Kim was reportedly the largest single consumer of Hennessy cognac, importing more than $650,000 worth a year.

North Korea had purchased luxury watches in Switzerland for use as special rewards for Kim's loyalists. It imported $24 million worth of Swiss watches from 1995 to 2004 at a time when millions of North Koreas were virtually starving to death, Radio Free Asia reported, citing information provided by the Federation of the Swiss Watch Industry.

North Korea also purchased luxury items from Germany, spending $12 million in importing furniture, jewelry, sports goods, games and toys from 2000 to 2004, the RFA said, citing the German Federal Statistical Office.

The country has also spent $1.3 million to buy French perfume in the 1990s. The North has imported 4,000 to 5,000 units of Mercedes-Benz cars distributed to Kim's aides, including Fujimoto.

Offices No. 38 and No. 39 of the North's ruling Workers' Party have been in charge of purchasing the luxury goods and managing Kim's private funds, according to intelligence sources. The CIA estimates Kim's wealth at $4 billion, mostly deposited in overseas bank accounts.

About $24 million of the North Korea's holdings in accounts of Macau-based Banco Delta Asia is also believed as Kim's private funds.

"North Korea has angrily responded to the U.S. move to freeze BDA accounts because the money is Kim's private funds mainly used to buy luxury items," said a source close the North.

Pyongyang has boycotted the six-party talks since November last year after the United States slapped restrictions on the BDA accused of laundering money for North Korea. Late last month, North Korea said it would return to the six-party talks on its nuclear issue on the premise that the BDA issue would be settled in the meeting.

"Kim Jong Il has used his private funds to purchase luxury goods for his loyalists," said Nam Sung-wook, a North Korea specialist at Korea University in Seoul. "If such goods are no loner available, a sense of crisis is likely to grow in the ruling elite."

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