U.S., NK Meeting Could Aid Six-Party Talks

For several months, progress in talks aimed at a negotiated solution to the North Korean nuclear crisis has been held up by Pyongyang’s complaints about U.S. pressure on North Korean financial transactions. But the two sides recently agreed to meet in early March to discuss the U.S. clampdown on North Korea’s illicit activities that has angered Pyongyang , potentially providing an avenue toward restarting broader talks.

North Korea has resisted moving forward with the talks, insisting that Washington first lift what it terms “financial sanctions,” a reference to the Department of the Trea sury’s September 2005 designation of the Macau bank Banco Delta Asia as a “money laundering concern.”

The six parties, which also include China, Japan , Russia, and South Korea, began their most recent round of talks in November hoping to build on a September statement of principles for a negotiated solution to the crisis. But the North Korean delegation focused almost exclusively on the bank designation during that meeting, U.S. officials have said. (See ACT, December 2005.) Since then, no further talks have been scheduled.

Washington maintains that North Korea should return immediately to the talks, contending publicly that the U.S. actions against Banco Delta Asia are law enforce ment actions unrelated to the talks. The United States asserts that the bank provided financial services to North Korean government agencies and front companies engaged in such activities as drug traffick ing and counterfeit U.S. currency distribution. (See ACT, January/February 2006.) North Korea argues that U.S. actions such as the Banco Delta Asia designation are part of a “hostile policy” designed to collapse Kim Jong Il’s regime. This policy, Pyongyang says, is inconsistent with Washington’s pledge in the September joint statement to respect Pyongyang’s sovereignty and must be reversed in order for the talks to succeed.

Despite the Bush administration’s public claims to the contrary, knowledgeable current and former Department of State officials have told Arms Control Today that targeting North Korea’s illicit activities also is thought by some administration officials to be a useful mechanism for persuading Pyongyang to be more conciliatory in the six-party talks. Other officials have come to see such pressure as a tool to change the North Korean regime.

Since the U.S. designation, Banco Delta Asia has frozen North Korea’s accounts. Other financial institutions have also reportedly curtailed their dealings both with the bank and North Korea. A high-ranking North Korean diplomat told a former State Department official that such actions have cut into Pyongyang’s hard currency earnings, the official told Arms Control Today Feb. 17.

State Department spokesperson Adam Ereli told reporters Feb. 23 that North Korean Deputy Director-General for North America Li Gun will meet March 7 with Treasury Department officials to receive a briefing about U.S. “actions taken in response” to Pyongyang ’s “illicit financial activities.”

Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill offered to arrange such a briefing during the November meeting, but Pyongyang had refused.

A flurry of diplomatic activity preceded the Feb. 23 announcement. For example, Hill met in Beijing with North Korean Vice Foreign Minister Kim Gye Gwan Jan. 18 in an effort to restart the talks.

Sounding cautiously optimistic, North Korea ’s ambassador to the United Nations, Pak Gil Yon, said in New York that Pyongyang would return to the talks if Washington “shows sincerity,” South Korea ’s Yonhap news agency reported Feb. 23.

North Korea has recently shown other signs that it may be willing to compro mise. For example, the high-ranking North Korean diplomat said that Pyong yang is willing to prosecute individual citizens if Washington presents evidence of criminal activity. Similarly, a North Korean Foreign Ministry spokesperson asserted Feb. 9 that although “there is no evidence” that Pyongyang is guilty of counterfeiting or money laundering, the individuals guilty of such acts “are liable to severe punishment.” North Korea will “actively join the international actions against money laundering,” he added.

The spokesperson also suggested that North Korea accept U.S. “efforts to protect their own state interests and currency.”

The scope of the investigation could prove contentious. According to the former State Department official, the North Korean diplomat said that Pyongyang does not want an open-ended investigation into its financial activities.

U.S. Ambassador to South Korea Alexander Vershbow suggested Feb. 9 that Washington will not be satisfied with Pyongyang’s conciliatory gestures. De scribing North Korea’s offer as “interesting,” he added that Washington believes that the North Korean government is involved in illicit activities and must take “concrete actions” to prove that the activities have stopped.

For its part, Pyongyang believes that Washington is not committed to the negotiations. The North Korean Foreign Ministry spokesperson said that North Korea “attaches so much importance to the lift of the financial sanctions because it is a touchstone showing whether Washington is willing to make a switchover in its policy.”

A State Department official told Arms Control Today Feb. 17 that the Bush administration is committed to the talks, but added that its “tolerance” for anoth er 13-month wait, like that from June 2004 to July 2005 between the third and fourth round of talks, is “pretty low.”