News Analysis: North Korea: Are the Six-Party Nuclear Talks Dead?

Last September, the six-party talks regarding North Korea’s nuclear program produced a joint statement that was hailed as a significant diplomatic breakthrough. But a year later, the talks are on the verge of collapse, with negotiators from China, Japan, North Korea, Russia, South Korea, and the United States last having met as a group in November.

Pyongyang blames the breakdown primarily on U.S. efforts to crack down on what Washington says are illicit North Korean financial transactions. Pyongyang argues that these efforts represent the latest attempt by the Bush administration to undermine the Kim Jong Il regime and extract concessions in the six-party talks. Further talks, North Korea says, will only serve as a diplomatic fig leaf until the Bush administration commits itself to serious negotiations.

By contrast, the United States says that the financial measures were not imposed as a negotiating tactic but to prevent money laundering for illegal activities. Bush administration officials have dismissed Pyongyang’s criticisms as diplomatic bluster, aimed at providing a convenient excuse to avoid discussing its September 2005 pledges to give up its nuclear weapons programs. Washington also argues that, in the long run, constraining these illegitimate activities will encourage North Korea to return to the bargaining table and follow through on its commitments. (See ACT, April 2006.)

However, recent actions by Pyongyang appear to have brought the efficacy of this U.S. strategy into question. In July, North Korea escalated tensions by conducting ballistic missile tests. It is also suspected of preparing for a nuclear test explosion.

Former U.S. officials and nongovernmental experts are increasingly pessimistic that the talks will produce any meaningful results, if they resume at all. In an interview with Arms Control Today Aug. 24, Peter Beck of the International Crisis Group likened the talks to a “dead man walking.”

Indeed, neither the United States nor North Korea appear to be willing to meet each other’s conditions for restarting the talks and making progress. Absent U.S. efforts to demonstrate seriousness about negotiating with North Korea, analysts say, there is little chance that North Korea will return to the talks. Pyongyang’s refusal to participate in the talks has reinforced Washington’s view that North Korea prefers propagandizing to negotiating. Even if the talks were to take place, the analysts expressed even more pessimism that negotiations would produce a meaningful agreement. In the meantime, they warn, Pyongyang will likely continue to produce additional plutonium for use as fissile material in nuclear weapons.

As a high-ranking North Korean diplomat told a former Department of State official Aug. 7, the two countries “are now headed toward confrontation.”

Washington versus Pyongyang

The September 2005 agreement appeared to represent a watershed after more than four years of high tension between Pyongyang and the Bush administration and more than three years of six-party talks.

Pyongyang agreed at that time to abandon verifiably both its plutonium and highly enriched uranium (HEU) nuclear programs. For its part, Washington agreed to respect North Korea’s sovereignty and said that, at some future point, it would consider allowing Pyongyang a light-water nuclear reactor.

Nonetheless, the diplomatic situation began to deteriorate almost immediately. Bush administration critics frequently note that comments from U.S. officials such as Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill and Secretary of State Condoleezza Rice following the statement suggested that the United States was backing off of its commitments regarding the light-water nuclear reactor. Those remarks were followed by a North Korean statement suggesting that Pyongyang would not meet its disarmament obligations until much later than implied by the joint statement. (See ACT, December 2005.)

North Korea’s Foreign Ministry claimed Aug. 26 that North Korea “likes to have the six-party talks more than ever as it will gain from the implementation of the agreement more than others.” Yet, it also contended that the United States is not serious about implementing the joint statement.

The North Korean diplomat also reportedly remarked that Pyongyang continues to believe that the Bush administration’s policy is to eschew serious negotiations while attempting to strangle the North Korean economy through what it calls “financial sanctions.” Pyongyang, therefore, will concentrate on strengthening its “nuclear deterrent,” the diplomat said.

These financial sanctions refer to the Department of the Treasury’s September 2005 designation of the Macau bank Banco Delta Asia as a “money laundering concern.” The United States asserts that the bank provided financial services to North Korean government agencies and front companies engaged in illicit activities, such as drug trafficking and the distribution of counterfeit U.S. currency. Since the U.S. designation, the bank has frozen North Korea’s accounts. Other financial institutions have also reportedly curtailed their dealings both with the bank and North Korea. (See ACT, May 2006.)

The North Korean Foreign Ministry statement described the “financial sanctions” as “a stumbling-block lying in the way” of Pyongyang returning to the talks, as well as a “barometer judging whether the U.S. is willing” to alter its North Korea policy.

According to the North Korean diplomat, Pyongyang still wants the United States to end its investigation of Banco Delta Asia so as to unfreeze approximately $24 million in North Korean funds.

North Korean and U.S. officials met in March to discuss the Banco Delta Asia matter, but no further discussions have taken place since then. At the time, North Korean officials made several suggestions for resolving U.S. concerns about the country’s illicit activities. These reportedly included allowing Pyongyang to open a U.S.-based account so Washington might better monitor North Korea’s financial transactions. The Bush administration, however, apparently rejected these proposals. Hill told reporters July 21 that “there are plenty of technical ways” for North Korea to demonstrate that it has stopped the counterfeiting of U.S. currency.

Pyongyang has reiterated its interest in bilateral talks with the United States. For example, a June 1 Foreign Ministry statement invited Hill to visit North Korea and “directly explain” the U.S. position regarding the September joint statement. The Foreign Ministry also argued that the Bush administration’s unwillingness to meet bilaterally with North Korean officials is an indication that it is not sincerely committed to negotiations.

For its part, the Bush administration has continued to turn down North Korean requests for direct negotiations outside of the six-party context, instead calling on North Korea to return to the talks where the two sides could then discuss the matter bilaterally. Rice stated July 28 that “the United States remains ready at any time, at any place and without any conditions” to engage in the six-party talks. Furthermore, Hill told the Senate Foreign Relations Committee July 20 that the administration is not seeking regime change in North Korea, adding that “we have to deal with” the existing government.

U.S. actions to constrain North Korea’s financial transactions seem likely to continue. Deputy Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes Daniel Glaser told Arms Control Today Aug. 9 that the United States is working to persuade more financial institutions to curtail their dealings with Pyongyang.

Similarly, Stuart Levey, treasury undersecretary for terrorism and financial intelligence and Glaser’s superior, claimed in an Aug. 28 interview with the Associated Press that banks in China, Mongolia, Singapore, and Vietnam are choosing to no longer engage in financial transactions with North Korea.

“Is there a complete cutoff, so that they can’t get banking anywhere? No, that’s not the case, but they’re having a very difficult time finding banking services,” Levey said. “You’re seeing a near complete isolation.”

The United States has also targeted North Korean firms suspected of being involved in transferring weapons of mass destruction-related materials to other countries. For example, the United States placed sanctions July 28 on two North Korean firms for providing unspecified equipment and technology that could aid Iran’s missile or nuclear, chemical, or biological weapons programs.

There appears to be little prospect for compromise. Chris Nelson, author of The Nelson Report, an in-depth newsletter with a strong emphasis on East Asia, told Arms Control Today Aug. 25 that he believes there are no effective advocates within Washington for compromising with North Korea. Beck added that the Bush administration has “no appetite” for such conciliatory measures, saying that it had displayed its maximum flexibility during last summer’s six-party talks.

Whither the Six-Party Talks?

Predictions regarding the future of the talks depend in part on how one perceives North Korea’s motivations. Some experts portray Pyongyang as a frustrated negotiator. Leon Sigal of the Social Science Research Council said in an Aug. 21 interview with Arms Control Today that North Korea has tried to negotiate in good faith but has not found a willing negotiating partner in Washington. According to such advocates of engagement, only a sincere U.S. diplomatic effort involving bilateral talks, for example, or an end to the financial measures would provide Pyongyang with sufficient incentive to compromise.

David Straub, who handled Korean affairs at the State Department during 2002-2004, agreed that the Bush administration has not sufficiently tested North Korea’s intentions by engaging in serious bilateral diplomacy. But he also cautioned Aug. 24 that North Korea’s willingness to reach a mutually acceptable solution to its nuclear program has been open to question since at least the Clinton administration.

Indeed, Michael Green, who was President George W. Bush’s National Security Council senior director for Asian affairs until December 2005, told Arms Control Today Aug. 21 that Pyongyang’s escalation is “opportunistic” rather than “reactive” and reflects a long-standing North Korean strategy to obtain a nuclear arsenal.

Green said that North Korea might return to the talks in response to increased international pressure. But Green warned that Pyongyang is not likely to give up its nuclear weapons program, even in exchange for generous incentives. He said that North Korea has expressed no interest in pursuing any of the inducements contained in the September 2005 joint statement.

Similarly, James Kelly, who served as assistant secretary of state for East Asian and Pacific affairs during Bush’s first term, said in an Aug. 25 interview with Arms Control Today that North Korea might agree to abandon its plutonium-based nuclear program but would probably seek to retain its HEU program.

The Impact of the Missile Tests

North Korea’s July 4-5 ballistic missile launches, which included a test of its Taepo Dong-2, a missile that some U.S. intelligence estimates said was potentially capable of reaching the United States, produced a clear negative response from the international community. But it is unclear that this response will induce North Korea to be more conciliatory.

The UN Security Council adopted Resolution 1695 on July 15, which condemned the tests and may pave the way for other countries to put restrictions on North Korea’s weapons programs and financial transactions. Additionally, South Korea and Japan unilaterally took punitive actions against Pyongyang.

Rice argued July 16 that China’s vote for the Security Council resolution showed that Washington’s strategy is “really paying off.”

Still, Pyongyang conducted the missile tests despite public pressure from all other participants in the talks, suggesting that the country is more willing to defy its neighbors, notably China, than many experts had previously believed. Most sources agreed that the missile tests are a sign of North Korea’s willingness to risk increased tensions and possibly further sanctions, although to what end is unclear.

Nelson suggested that North Korea may have viewed the test as part of a long-standing tactic of escalating tensions to improve its leverage in the six-party talks.

North Korea’s defiance, however, may also be a sign that Pyongyang has fundamentally changed its policy toward the negotiations. Several sources argue that North Korea may have concluded that the talks will not yield positive results. Therefore, Pyongyang would be better off bearing the political or economic consequences and continuing to improve its nuclear and missile capabilities.

Some proponents of this view attribute this change to internal North Korean politics, arguing that the “center of gravity” within Pyongyang has shifted to more hard-line elements increasingly skeptical of engagement with the United States. This assertion reportedly was confirmed by the North Korean diplomat. Hill seemed to support this view as well during a June 29 House International Relations Committee hearing. “Even dictatorships have politics,” Hill said, adding that “there are certainly indications…that some factions are more wedded to nuclear weapons than others.”

According to another North Korean pundit, hard-liners in Pyongyang seem to have discounted the missile tests’ impact on the talks. They have decided that “it is futile to negotiate with the Bush White House,” said Peter Hayes, executive director of the Nautilus Institute for Security and Sustainable Development.

Under these conditions, some worry that there are few incentives to encourage North Korea to refrain from a nuclear test, which may be Pyongyang’s next step in the escalation ladder.

However, North Korea might be dissuaded from testing by fears that the flow of trade and aid from North Korea’s neighbors, particularly South Korea and China, would be cut. Indeed, South Korean Foreign Minster Ban Ki-moon has warned North Korea against such a move, the Associated Press reported Aug. 23.

But China’s and South Korea’s thus far limited response to the missile tests may have signaled to Pyongyang that the costs of a nuclear test would be limited. Furthermore, according to Green, Pyongyang may not value its current levels of trade and aid enough to forgo a nuclear test. He noted that North Korea’s neighbors have kept the country from collapsing but have not helped it to prosper.

North Korea’s motivation to conduct a nuclear test explosion may be to demonstrate, beyond doubt, that it possesses a nuclear weapons arsenal. There would also be a technical advantage to proof-testing a North Korean weapon design.

Short of a test, North Korea could choose another way to escalate the crisis. Sigal suggested that North Korea might choose to shut down its five-megawatt nuclear reactor in order to at least give the impression that it is producing more plutonium.

The Limits of Pressure

Although the Bush administration appears determined to carry out its current strategy, North Korea’s missile tests, along with its continued intransigence, may have revealed the limits of this approach.

The amount of additional pressure that the United States can bring to bear on North Korea is limited. The two countries lack diplomatic relations and have no significant economic interactions. Pressuring North Korea therefore requires the cooperation of other participants in the talks, such as South Korea and China, but they have been reluctant to squeeze North Korea without greater U.S. flexibility or willingness to engage in bilateral talks.

For example, Chinese Foreign Ministry spokesperson Liu Jianchao has argued that the “problem of [financial] sanctions must be solved urgently if the Korean Peninsula is to be denuclearized,” Interfax news agency reported Aug. 8.

Four days earlier, Liu said that the United States should engage North Korea in bilateral discussions in order to “resuscitate” the six-party talks, Yonhap News Agency reported. The South Korean foreign minister echoed this statement Aug. 3.

Some U.S. commentators agree. Robert Gallucci, who served as Washington’s point man for negotiations with North Korea during a 1993-1994 confrontation over its nuclear program, told Arms Control Today in July that even if Security Council Resolution 1695 helped pressure North Korea to return to the talks, “in the end the United States should find a way to get beyond the six-party modality and begin direct, even informal, negotiations with Pyongyang.”

In addition, targeting North Korean financial transactions and illicit activities could have less of a material effect on the country than the administration appears to believe. April congressional testimony from Secret Service and State Department officials indicates that activities such as narcotics trafficking and counterfeit currency production may not be a large source of revenue for the regime. Straub concurred that the studies concluding otherwise are “best guesses.”