April 6 (Bloomberg) -- Hillary Clinton raised the question in a television ad last year of whether she or campaign rival Barack Obama was better suited to answer the inevitable 3 a.m. phone call about a crisis somewhere in the world.

As it turned out, both got the call yesterday, and it came at a little after 4:30 a.m. in Prague. That was when Obama, now president, and Clinton, the secretary of state, got word that U.S. intelligence and defense officials had confirmed North Korea launched a Taepodong-2 rocket over the Sea of Japan.

Robert Gibbs, the president’s spokesman and a confidant, was the one who roused Obama in his Hilton Hotel suite.

“I woke the president up and gave him a very quick download,” Gibbs said. “As we got more information from defense and intelligence officials, he spent a lot of time being briefed.”

Obama is dealing with his first international crisis just 11 weeks into his presidency -- a timetable foreshadowed by Vice President Joe Biden, who said in October that an emergency would be “generated” within six months of Obama’s taking office “to test the mettle of this guy.”

Mike Green, a senior adviser at the Center for Strategic and International Studies in Washington, called North Korea’s rocket launch “a brazen challenge.”

“This is going to be a real litmus test for a lot of countries about how Obama and his team handle threats,” said Green, who served as an Asian-affairs specialist on the White House National Security Council under former President George W. Bush. Among the potential actions outside the UN would be cutting off access for North Korea and its leaders to the U.S. banking system, Green said.

Shift to UN

The president’s first step was to dispatch United Nations Ambassador Susan Rice to seek a Security Council resolution during an emergency session yesterday afternoon in New York.

Clinton, who is traveling with Obama in Europe, telephoned her counterparts in Japan, China and Russia. All three countries are part of six-nation talks aimed at persuading North Korea to give up nuclear weapons development. She also conferred with Rice and other top U.S. officials.

Biden was at his home in Wilmington, Delaware, and was briefed by his national security adviser, Tony Blinken, via telephone.

The news was no surprise. Kim Jong Il’s regime had been telling the world for weeks that it intended to fire the satellite-bearing rocket between April 4 and 8.

No Surprise

“The president has been involved in several meetings about this situation over the course of the past three to four weeks,” Gibbs said. “This was something that had long been planned for.”

After learning of the launch, Obama spent the next several hours on the telephone conferring with national-security aides, including Defense Secretary Robert Gates, National Security Adviser James Jones, White House Chief of Staff Rahm Emanuel and General James Cartwright, vice chairman of the Joint Chiefs of Staff, according to Gibbs. Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, is traveling, he said.

Obama’s speechwriters began crafting language to be inserted into the president’s 10 a.m. address in Prague laying out a goal of stopping the spread of nuclear weapons and eventually ridding the world of such arms.

“Just this morning, we were reminded again of why we need a new and more rigorous approach to address this threat,” Obama told some 20,000 people in Hradcany Square.

Need for Action

“North Korea broke the rules once again by testing a rocket that could be used for long-range missiles,” he said. “This provocation underscores the need for action -- not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons.”

Gibbs said there is no indication that North Korea timed the launch to coincide with Obama’s speech. They had announced their intentions weeks ago, he said, well before the topic for the president’s remarks in Prague were settled. A “pretty big coincidence, is what it was,” he said.

North Korea has defied past U.S. attempts to rein in its weapons programs and ignored threats of UN sanctions. On Oct. 9, 2006, Kim’s regime tested a nuclear explosive device even as the Bush administration was pressing negotiations. Four years earlier, the North Koreans admitted they were continuing nuclear weapons development in violation of an agreement reached under former President Bill Clinton.

Seeking Sanctions

David Axelrod, a senior Obama adviser, said on the “Fox News Sunday” program that the administration is prepared to push for new economic sanctions if North Korea continues its defiance.

The Security Council in October 2006 passed Resolution 1718, which among other sanctions calls for freezing the financial assets of any North Korean individual or organization aiding the country’s nuclear and missile programs.

If the UN doesn’t enforce the sanctions, the administration unilaterally could threaten to cut off from the U.S. financial system any bank working with the North Koreans, Green said.

“North Korea negotiates under pressure,” he said.

In 2005, the Treasury Department found under the USA Patriot Act that Banco Delta Asia SARL, a Macau institution, was a “primary money laundering concern” because of its dealings with the North Koreans.

The designation prompted the Macau government to take over Banco Delta, freezing $25 million in allegedly laundered funds linked to North Korea.

Kim’s regime refused to participate in nuclear talks until the funds were released to them. The U.S. agreed with the decision to give the North Koreans the money in 2007.

Financial analysts have said the incident showed the U.S. has the ability to destroy a bank.

“We would get everyone’s attention” if the power was used again, Green said. “That is definitely a tool in the box.”

To contact the reporters on this story: Hans Nichols in Prague, at hnichols2@bloomberg.net; Edwin Chen in Prague at echen32@bloomberg.net

Last Updated: April 5, 2009 18:37 EDT