Let Them Make Won!

Update: Gee, how curious.

Police recovered a briefcase containing a hoard of probably forged United States Treasury bonds worth $500 million during the investigation of a local theft, Seoul’s Gwanak Police Station announced. Police said they are looking into the possible involvement of international crime networks.

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With Seoul questioning why the United States is making such a big deal out of North Korea’s counterfeiting of its currency and saying it “will take no further steps” against it, the Chosun Ilbo asks the right question:

But what if the shoe was on the other foot? If a country hostile to South Korea forged a huge number of our banknotes and circulated them around the world, what should our government do? And if an ostensible ally of ours defended that counterfeiting country, what would we think of that ally?

As if on cue…

The Bank of Korea said yesterday the number of counterfeit bills is rising at an explosive pace, especially around the backstreet gambling districts.

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Now What? Part 3: Dave, What Are You Doing?

Update: The BOC account played a role in the 2000 summit scandal, according to the Chosun Ilbo.

What skill it must take to step in it this hard:

SEOUL, July 24 (Yonhap) — North Korea is suspected of having printed fake Chinese currency, which prompted the Bank of China (BOC) to freeze all of its North Korean accounts in an apparent retaliation, a South Korean legislator asserted on Monday.

Quoting a number of unidentified U.S. officials, Rep. Park Jin of the main opposition Grand National Party (GNP) said the freezing of North Korean accounts at the BOC is tantamount to virtual imposition of sanctions by Beijing on the North.

“I understand the North is even more frustrated because this means China is in fact imposing sanctions on North Korea,” the opposition lawmaker told Yonhap News Agency in a telephone interview.

No wonder Kim Jong Il wants to talk. Incidentally, I don’t believe Kim Jong Il really did this. Not even he is that brazen, nor is the yuan worth counterfeiting. I suspect this is China’s way of saving face after some pointed threats from the U.S. Treasury Department. Just my own theory, unsupported by any hard facts, but read this before you dismiss it.

Next, watch for more news on the Austrian and Swiss accounts. I’m reminded of the scene in “2001: A Space Odyssey,” where “Dave” disconnects Hal’s circuits, one at a time. My guess is that the North Koreans are coming back to the talks to ask, “Dave, what are you doing?”

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MUST READ: NYT on NK Counterfeiting

The New York Times has a very extensive article on North Korea’s counterfeiting operations:

By 1984, as North Korea’s planned economy began to fall apart, Kim Jong Il, who by that time was effectively running much of the government, issued another directive, according to the North Korean specialist, who told me he has obtained a copy of the document. It explained that “producing and using counterfeit U.S. dollars” was a means, in part, for “overcoming economic crisis. The economic crisis was twofold: not only the worsening conditions among the general population but also a growing financial discontent among the regime’s elite, who had come to expect certain perquisites of power. Counterfeiting offered the promise of raising hard currency to buy the elite the luxury items that they had come to expect: foreign-made cars, trips for their children, fine wine and cognac.
….

Yet Kim Jong Il, defying all expectations, managed to cling to power.

“How this was happening was perplexing, given the huge trade gap, even with adjustments for aid flowing into the country,” [David] Asher [former head of the North Korea Advisory Group] recalled. “Something just didn’t add up. It didn’t account for why Kim was driving around in brand new Mercedes-Benzes or handing out Rolexes at parties and purchasing truly large quantities of cognac.

That’s what I’m talking about — attacking the “palace economy” so that the elite suddenly finds that its basic needs are going unmet. My hope is that a sudden shock would force the regime to triage large enough numbers of people out of the circle of privilege that they’d rebel and destabilize the regime. If in fact we’ve already cut off 40% of the regime’s foreign exchange, it would seem we have reasonable prospects for success (on top of everything else, we’re about to change the printing plates again).

We also seem to know a lot about how the notes are printed:

Today, on Changgwang Street in Pyongyang, the capital of North Korea, there is a barricaded compound of government buildings. Judging from satellite photos, these are unremarkable, rectangular structures that suggest no special purpose. Yet according to a North Korean specialist based in Seoul whom I spoke with recently, and who has interviewed many high-ranking North Korean defectors, including Hwang Jang Yop and Kim Duk Hong, these buildings are the home of Office 39, a government bureau devoted to raising hard currency for Kim Jong Il. (The specialist was granted anonymity because of the sensitivity of relations between North and South Korea.)
….

[T]he regime obtained Swiss-made intaglio printing presses and installed them in a building called Printing House 62, part of the national-mint complex in Pyongsong, a city outside Pyongyang, where a separate team of workers manufactures the supernotes.

We have indicted — even jailed — the leaders of other nations for racketeering before. We’ve also indicted other people for counterfeiting and conspiracy for dealing in North Korean supernotes. Foreign sovereign immunity doesn’t look especially good as a defense for a few reasons: first, the exception for states listed as sponsors of terrorism; second, the holding that such acts as drug trafficking are not immunized “official acts;” and third, the fact that Kim Jong Il, like Noriega before him, is the commander of the armed forces, but not officially the leader of his country (his dad’s corpse is). Nor is Kim Jong Il recognized as North Korea’s leader by the United States, which is a discretionary act on our part.

Hey, I’m just saying….

ht to the Nomad.

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Now What? Part 2

Right after North Korea launched its round of missiles, I outlined a series of options, mostly financial, that the U.S. and other countries could take in response. Two weeks later, several aspects of that forecast are holding up well. What looked at first like another U.N. farce, then a modestly successful sanctions effort (by U.N. standards, anyway), now looks to be an important and hard-won component of a coordinated effort to tighten the squeeze on the regime-sustaining half of North Korea’s dual economy. No wonder the early signs are looking so good for a John Bolton confirmation.

Snipping the Lifelines

The most interesting story of the week attracted little media coverage — Treasury official Stuart Levy’s visit to a series of nations with which the North Korean regime has financial dealings. In each location, he has the rapt attention of senior officials keen to avoid the fate suffered by Banco Delta Asia. One expert believes that the Banco Delta crackdown has cost North Korea a devastating 40% of its foreign exchange.

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At the U.N., Life Imitates ‘Team America’

Kim Jong Il Team America

Kim Jong Il: Hans Brix? Oh no! Oh, herro. Great to see you again, Hans!

Hans Blix: Mr. Il, I was supposed to be allowed to inspect your palace today, but your guards won’t let me enter certain areas.

Kim Jong Il: Hans, Hans, Hans! We’ve been frew this a dozen times. I don’t have any weapons of mass destwuction, OK Hans?

Hans Blix: Then let me look around, so I can ease the UN’s collective mind. I’m sorry, but the UN must be firm with you. Let me in, or else.

Kim Jong Il: Or else what?

Hans Blix: Or else we will be very angry with you”¦ and we will write you a letter, telling you how angry we are.

Hans BrixOn balance, reality may be more farcical than parody. The real Kim Jong Il doesn’t deny having WMD’s. He demonstrates them (if ineptly). But his mockery of the U.N. lacks no trappings of contempt but a trap door … over a shark tank. The following quote is not from “Team America:”

“Our military will continue with missile launch drills in the future as part of efforts to strengthen self-defense deterrent,” said the statement, carried in state-run media.

“If anyone intends to dispute or add pressure about this, we will have to take stronger physical actions in other forms.”

Ready for the firm and unified response of which we were assured? Well, it depends on who you believe. John Bolton claims that Japan’s proposed resolution, which would deny North Korea the materials and funds to make more missiles, has “broad and deep support.” Yet that seems less than clear:

Russia’s deputy U.N. ambassador told The Associated Press that Moscow would not back sanctions, as the resolution calls for. Instead, Russia wants the council to pass a nonbinding presidential statement with the goal of getting North Korea back into six-party talks on its nuclear program.

“No, we don’t think that sanctions is the instrument, the leverage which is to be employed right now and right here,” Konstantin Dolgov told the AP.

A non-freaking-binding presidential statement? Has this guy acquired a crack habit? This may be the Abyssinia moment when sober historians will eventually agree that the United Nations became, irredeemably, what the League of Nations became before it: a kabuki theatre for tyrants to play out their cynical and pecuniary machinations. We may as well recognize the institution’s name for the oxymoron it has become. The nations are not united. We have national interests. And for all our imperfections and disagreements, we still share a consistent set of values with many other individual democracies. We must protect those interests, multilaterally or otherwise.

Russia wouldn’t be saying that if China weren’t taking a similar position, which, as James pointed out already, it is. China actually has the cojones to say it’s not their problem that their client threatens our national security. I read that as license to pursue our interests without regard to the amount of Chinese assets we collaterally freeze, or whether it ultimately brings down the Bank of China. While that’s not the best outcome for anyone, it’s probably cheaper than replacing a city, and it certainly doesn’t rule out more incremental pressure on China’s exports or currency.

I’ve already pointed out that we have a wide range of realistic ways to put a firm grip between Kim Jong Il’s collarbone and his chins, up to and including robust enforcement of the Proliferation Security Initiative that would constitute a de facto blockade.

Or, we could simply extend this Great American puss-out until North Korea has the quantities, warheads, and silos to pose a genuine and fully transferrable threat. There is an even greater danger in this, however: North Korea will have demonstrated that no one will stand in its way, no matter how flagrant its behavior. That vastly increases the danger of some horrible malice or miscalculation becoming a causus belli.

Just to help me underscore the point, the North Koreans show every sign of preparing more tests, possibly to include another Taepodong II. It would be a lovely “coincidence” if this one also fails during its first stage. That seems more likely than effective action by the United Nations.

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Now What?

North Korea’s missile test opens up new options for the United States. Here is a list of them.

[Scroll down for updates.] It too easy to say, as many will in the coming days, that there is little that the United States and other nations can do to North Korea diplomatically or economically now that it has done the unthinkably stupid and launched its (taepo)dong and (count ’em!) five smaller missiles [Update: make that six]. Let me express my respectful disagreement with some of the analysts cited by my colleague Richardson below, and let me follow that with a list of specifics.

True, the United States doesn’t have ambassadors in Pyongyang to recall, and there are no direct flights to suspend. Not that either measure is more than cosmetic in any event. There is much, much more that the United States and other nations could do in response to North Korea’s missile test, both unilaterally and multilaterally. That may explain what Stephen Hadley is up to:

The administration quickly launched a diplomatic counter offensive to the missile shots — including one missile capable of reaching the Unites States, but made clear the response will be diplomatic and not military.

“You are going to see a lot of diplomatic activity here in the next 24-48 hours,” said … Hadley.

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The End of the Rainbow

Really, this piece by Michael O’Hanlon and Mike Mochizuki is well reasoned and said. Even if I disagree with much of it, I think they have a good grasp of which threats we ought to be worrying about. The debate about whether regime change would work is competely speculative until we actually try it in earnest, of course. At this point, they had me:

[T]he administration should build its North Korea policy around the notion that we need to present Pyongyang with a choice — improve its behavior, reform its country, and engage with the world, or retreat further into isolation and lose many of the benefits it enjoys now (especially from South Korea and China, to the tune of more than $2 billion a year in aid and trade). We should focus on substance, not process; on core values, not tactical judgments.

But then, we have this:

To make this policy workable, we need to make it appealing in Beijing and Seoul. That means offering enough positive inducements, should North Korea be willing to try the path of reform that Vietnam and China itself have taken in the last 30 years, to show that we are willing to work with the regime under the right circumstances. Only if a sincere effort at engagement fails will China and South Korea consider the sorts of economic coercion needed to make Kim Jong Il and his cronies in Pyongyang feel real pain from their actions.

(emphasis mine)

“A sincere effort at engagement?” If all of the things we have done or offered to do over the last decade-plus still don’t amount to a sufficiently “sincere effort at engagement” for Chinese and South Korean sensibilities, then this is an eternally vanishing goal. After all of South Korea’s “sincere efforts at engagement,” it still can’t reunite one of its kidnapped citizens with his octagenarian mother for more than a few hours of being watched like the Unabomber’s mom on her annual visit to Supermax. Here, if I’ve ever seen one, is a prerequisite that swallows what seems, at first, to be a very sensible policy.

At least my kids will have something to blog about.

No question, putting severe pressure on North Korea would be much easier with the help of Seoul and Beijing, but you have to play the cards you’re dealt, and in China’s case, there’s really only so much we can expect. We can hope that Seoul will move closer to the U.S. position after its general elections in 2007, and we still have plenty of influence in South Korea if we’re willing to use it. Beijing will continue to make as much mischief as its interests allow, but there are ways to raise the strategic and financial costs of supporting North Korea for China, too.

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Bush’s Old “New” Approach

[Update 2, 5/18: On the other hand, the “Kim Jong Hill” plan looks great next to the Richard Lugar plan, which is nothing more than a shiny new formula for buying lies with bribes. Lugar is a very nice person to meet and has his heart in the right place, but diplomatically, this is not the thing to be proposing when our financial crackdown and our political offensive are both showing some promising signs of success. When dealing with gangsters, it’s important to heed the lesson of Sollozo: never show division to an enemy.]

[Update: “Kim Jong Hill?” Not a good sign; scroll down.]

A pessimistic prediction about diplomacy with North Korea never waits long for vindication, and I’m not about to take my chips away from the table over this New York Times story:

President Bush’s top advisers have recommended a broad new approach to dealing with North Korea that would include beginning negotiations on a peace treaty, even while efforts to dismantle the country’s nuclear program are still under way, senior administration officials and Asian diplomats say.

Aides say Mr. Bush is very likely to approve the new approach, which has been hotly debated among different factions within the administration. But he will not do so unless North Korea returns to multinational negotiations over its nuclear program. The talks have been stalled since September.

Bush’s stated aim for a long time had been the establishment of diplomatic relations with North Korea, after the complete, verifiable, and irreversible dismantlement (CVID) of Kim Jong Il’s nuke programs. Because diplomatic relations and war are presumably inconsistent, one presumes that a peace agreement to end the Korean War would be a part of that process at some point. All that’s really new here is the relative timing of things. Via Tony Snow, there won’t be any down payments. Uh huh.

Ways to View This, Part 1

One view is to conclude nothing, because we really have no idea how much these people are willing to give away. Appearances at think tanks and carefully crafted comments to the press will tell us more in the coming days.

Ways to View This, Part 2

My instinctive reaction was that this the latest retreat by a hopelessly divided and indecisive Administration that has steadily given ground to an intransigent North Korea. The retreats have been punctuated by words and occasional actions meant to create the appearance of decisiveness, but this report seals the continuity of those retreats fairly seamlessly since the Clinton Administration. Whereas our former position had been to work toward diplomatic recognition “eventually,” with non-specific discussions about human rights being a “soft” precondition, there’s really no saying if and how the issue would ever have been a part of the U.S. agenda. I personally believe that the State Department establishment has never met an agreement it didn’t like and is desperate to have this one before we enter the next presidential election cycle. That simple explanation is probably the most likely, and David Sanger’s NYT story notes that this is indeed the doing of Condi Rice and Philip Zelikow. Sanger, by the way, seems to have good connections in the White House. His information is generally accurate.

Plus, it’s hard to see what four-party talks will do that six-party talks couldn’t. The one nation that had been negotiating like a U.S. ally was Japan, which won’t be part of this round. The United States will find itself surrounded by three enemies.

Ways to View This, Part 3

Another possibility is that the Administration sees little hope for a deal, wants to continue squeezing the North, doesn’t want to be seen as the diplomatic bad guy, and is engaging in some very subtle diplomatic theater. Today’s rumors of a North Korean missile test bolster that theory somewhat, as does the proximity to a South Korean election. Next, consider the issues that will be front-loaded here:

[I]t is far from clear that North Korea would engage in any new discussions, especially if they included talk of political change, human rights, terrorism and an opening of the country, topics that the Bush administration has insisted would have to be part of any comprehensive discussions with North Korea.

At least under this proposal, human rights issues and the more fundamental question of North Korea’s fundamental receptivity to transparency aren’t deferred indefinitely. If the U.S. avails itself of the opportunity, it could speak openly about concentration camps, famine, food aid, and freedom even as it plays the role of peacemaker and explores North Korea’s readiness to let us explore suspicious facilities. Engaging in a public debate over those issues is a win, even (and especially) if the North Koreans refuse. Japan will see an opportunity to add abductions to that agenda, and rightfully so. Other nations are more of a question mark. China will probably issue a cautiously positive statement, but China and South Korea might not want to end up in the position of opposing human rights, transparency, food aid, or (in South Korea’s case) a final peace treaty. With those terms also under discussion, of course, it’s more likely that both the United States and North Korea will see how irreconcilable their views are.

Not a bad place to be, if we play our cards right.

Why this will probably never happen:

The U.S. side says a prerequisite to the deal is North Korea rejoining the six-party talks. The North Koreans say they won’t rejoin the talks until the U.S. stops its crackdown on their counterfeiting and money-laundering. The U.S. side continues to say that these law enforcement measures will continue (at least “until we have the plates”). The crackdown has caused the North Koreans pain, but South Korea and China will probably supply enough cash to persaude Kim Jong Il that he can ride the Bush Administration out. That will disabuse him of any motive to compromise.

Finally, the North Koreans may be good hagglers and bargainers, but they suck as diplomats. Good diplomats recognize opportunities to deceive others to their own advantage; they know a good thing when they see it. Case in point: Kim Dae-Jung’s election-eve ride on Peace Train. Why are the North Koreans too stupid to help their boy Roh out by strumming along for just a few weeks? Another case in point: their brutish handling of the recent inter-Korean military talks.

Look — the North Koreans will never have a South Korean government that would do more to accomodate them than this one. We know they take a keen interest in South Korean elections, and that they’re not exactly endorsing the GNP. So why are they doing so much to help the GNP? Ditto their Southern puppets. Do they really think threats and violence will win friends and influence people? Why not simply tell the kids to put down the sticks for a while until the election is over? Why not give Roh his photo op with Kimigula? Why not pretend, just for a few weeks, that the ballistic sword of Damocles will be lifted from Seoul’s head? Why not at least stop pushing Tokdo off Page One?

I can only think of one sensible answer: they’re too fucking stupid.

That’s pretty scary when you consider some of the things they have in their arsenals.

Finally, consider the North’s political system. Do the North Koreans really want to open themselves up to the world, so that their people can see how great people have it everywhere else? No, and they need external enemies to justify the isolation and control that keeps them in power. They need hostility with the United States, and all the concessions we could ever give won’t change that fact.

Reasons why it’s remotely possible that this could happen:

The big question about America’s financial squeezing of North Korea is, “To what end?” Either this is Victor Cha’s hawk engagement approach — negotiation from strength — or someone finally realized that there’s no dealing with these people and that we need to run them out of business entirely. Feel free to drop a comment if you have some inside knowledge. What follows presumes the first of these possibilities, which on balance is also the more likely.

There are ways the United States could force the South Koreans and the Chinese to stop propping up Kim Jong Il. A drastic downsizing of the alliance would bring South Korea in line and have the added benefit of being in the best interest of the United States. In China’s case, keep your eye on this possibility, which may or may not be sufficient. Austin Bay falls back on a popular, pollyannish view of China being ready to cut North Korea off once it decides that North Korea is bad for business (which it has been for a very long time). I think Kissinger is more correct here, despite his generally superficial understanding of the North Koreans’ thinking:

The expectation that China is so reluctant to see nuclear weapons on the Korean Peninsula — and therefore ultimately in Japan — that it will sooner or later bring the needed pressure on North Korea has so far been disappointed. This is because China has not only military concerns but also strategic objectives on the Korean Peninsula. It will try to avoid an outcome in Korea that leads to the sudden collapse of an ally, producing a flood of Korean refugees into China as well as turmoil on its borders.

Not to mention dividing U.S. forces that could be called on to aid Taiwan. If China and South Korea did cut North Korea off, however, the North Koreans could become desperate for a deal. So what do they really have to lose? They’ve signed deals before, after all (with South Korea seemingly never putting ink to the paper). They may well gamble — and probably correctly — that the next American administration would go easier on them. Then, they could go right back to being dishonest and defiant, with everyone but a few pesky Republican congressmen and powerless bloggers being willing to pretend that all is well.

Until it undeniably isn’t.

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The announcement, naturally, bought cries of jubilation in Seoul. Right? Not exactly.

SEOUL, South Korea_Negotiations on a peace treaty to formally end the state of war on the Korean Peninsula are likely only after substantial progress is made on ending North Korea’s nuclear program, a senior South Korean official said Thursday.

Shockingly, the South Koreans aren’t even all singing from the same page:

However, the head of South Korea’s task force on the nuclear standoff, said there was “absolutely nothing” new in the report.

“The headline was big but the content was not,” said the foreign ministry task force chief Lee Young-Joon.

“The main theme of the New York Times piece is that the Bush administration is planning to include peace treaty negotiations in talks with North Korea. But that is already the case. Everybody knows.”
. . . .

“Peace treaty negotiations are just one part of a series of implementation points. In order to start implementing the agreements we must first have a new round of six party talks.”

I officially have no idea what the fuck is going on here, so here are some lines of speculation instead.

1. Panic! I had thought inwardly for some time that there would be secret talks between Washington and Pyongyang after the supernotes/Banco Delta measures started to bite. I have absolutely no proof of this; it’s purely my speculation. But if the South Koreans suspect the same, they may smell a deal by which the United States would withdraw from South Korea in exchange for North Korean CVID. China certainly wouldn’t object, we could bring Japan along, Russia wouldn’t mind (as if it matters), leaving South Korea with its dick hanging in the cold North wind. I’d be fine with all of the aforementioned, except for the Faustian abandonment it would mean for the North Korean people for us to include any “security guarantees” for that regime.

2. Caution. South Korea is tamping down any speculation or expectations that could destabilize already negative public opinion trends less than two weeks before an election. They still don’t know the details, which goes far to explain why Chris Hill is on the way to talk to them out of Dick Cheney’s earshot. I’d expect some of the dumb things South Korean politicians have been saying recently will also come up, plus South Korea’s best efforts to remove all motives for North Korea to compromise or respect the sovereignty of other nations:

[M]any top officials have all but given up hope that North Korea’s government will either disarm or collapse during Mr. Bush’s remaining time in office. Increasingly, they blame two of Mr. Bush’s negotiating partners, South Korea and China, which have poured aid into North Korea even while the United States has tried to cut off its major sources of revenue.

3. Because it’s true (which is irrelevant). There’s one of you born every minute.

4. It’s Never Enough. The South Koreans won’t be happy until we give Kim Jong Il the Aleutian Islands.

5. Pride. The South Koreans are miffed that Washington didn’t consult them and is (!) making its own independent policy. See also “Panic,” supra no. 1.

6. Outflanked. This could put a serious kink into the Uri strategy of trying to appear more peace-loving and accomodating than Washington, so Seoul has to minimize the importance of this initiative.

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Update 5/18: Well, this doesn’t look good:

Bush administration officials say Assistant Secretary of State Christopher Hill, a leading advocate of conducting peace talks with North Korea, has gone overboard in taking a conciliatory line on the regime in Pyongyang, as part of an effort to coax the communist regime back to the now-stalled six-part talks on its nuclear program.

One senior administration official said Mr. Hill’s pro-North Korea bent has bordered on appeasement. Insiders say they privately are calling the diplomat in charge of the State Department’s Asia policy “Kim Jong-Hill,” after North Korean dictator Kim Jong-il.

Mr. Hill has sought to block or slow President Bush’s tougher posture toward North Korea that includes placing more restrictions on Pyongyang for its illegal activities, including currency counterfeiting, illegal drug trafficking and other sub rosa activities.

Well, I don’t know much about Hill’s inner thoughts. His previous statements hadn’t caused me many concerns, but his signing of a crappy deal last September certainly concerned me. One problem here is a subtle conflict between national and personal interests. The principal in a negotiation that ends with an agreement is defined as a “success;” walking away from a bad deal isn’t. Everyone remembers Kissinger for his Nobel Peace Prize, but everyone seems to forget that his deal left half of the North Vietnamese Army in South Vietnam, which led to predictable results, and other results that surpassed our predictions. A “successful” deal can mean that a diplomat is set for life: promotions, fame, media adulation, lucrative consulting work, and even book deals. That doesn’t necessarily mean that lives were saved, as Professor Rudy Rummel has documented in meticulous detail. Or, as P.J. O’Rourke put it, “peace kills.”

This phenomenon, not an innate opposition to diplomacy in general, is what worries me about this latest whipsawing of the U.S. strategy (the latter word being a very charitable description, unless I’m somehow misunderestimating something here).

That said, I’ve already noted that this proposal contains opportunities for human rights advocates. If the right person becomes America’s principal negotiator for this second track of U.S. diplomacy, that person will suddenly have a superb pulpit for discussing a whole list of things that should be preconditions to normal relations with North Korea:

– International inspection of concentration camps, prisons, detention facilities, and places where the regime has been accused of gassing kids.

– The acceptance of sufficient amounts of food aid in accordance with accepted international standards for monitoring.

– An orderly process by which people who suffer political persecution in North Korea can leave the country.

– Transparent inspection of locations where we believe drugs, supernotes, and counterfeit goods are produced or trafficked.

On the arms control track, there will also have to be a comprehensive approach that deals not just with the nuclear program, but chem and bio, plus missiles, plus all of the artillery pointed at South Korea. It means a repositioning of forces on both sides, away from the DMZ, and a reduction of North Korea’s gargantuan military, which millions have died to sustain. The most important foci must be transparency and verification.

We can speak forcefully about these things in the course of a two-track negotiation; all that is lacking is the right speaker and the authority to say what must be said. North Korea’s refusal to discuss any of these things should be publicly declared to be an impassible obstacle to agreement, though not to further talks. That way, in the likely event that talks reach no agreement, we will still have advanced America’s political goals and given the people of North Korea hope for a better future.

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Korea Diary, 17 May 06

If you need an even better illustration of the idiocy of the Tokdo distraction, read this moving story about the families of two hostages, one Japanese and one South Korean, who married during their captivity in North Korea.

Yokota expressed gratitude that his son-in-law was a South Korean. “I am so lucky to have a South Korean son-in-law, not a North Korean. I am so happy that I can hope that our families may meet one another again. He said the couple “loved each other and had such a beautiful child” — Hae-gyong, who North Korea says is their daughter – “a healthy and sweet girl. I thank Young-nam for taking such good care of my granddaughter and I thank you, too.

Tears prevented Choi from replying, But Kim’s sister Young-ja (48) spoker for her. “Hae-gyong’s picture makes us believe that she is just as pretty as her mother. Pyongyang says Megumi Yokota is dead but has failed to provide convincing evidence.

How can South Korea let itself to be diverted away from the greater interests of protecting its own citizens and the stolen half of its nation over two worthless, shit-spattered rocks? But diversions are all the rage in Korea these days:

The Pan-National Committee to Deter the Expansion of U.S. Bases … seems bent on invoking a 2002 accident in which a U.S. Army vehicle ran over two middle school students in nearby Yangju by staging the rally around the fourth anniversary of the deaths. The incident occurred on June 13, but the committee scheduled the demonstration on Sunday, June 11 to enable more people to attend.

The word “expansion” is a blatant lie to all of us who live in reality. The U.S. Army is actually reducing its presence in Korea, in terms of both land area and personnel. If an accident that happened four years ago still provokes more outrage than the deliberate murder of Korean babies, there’s not much of an argument for an optimistic view of South Korea.

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Speaking of diversions:
the “Northern Wind” is the oldest trick in the book of unethical Korean politics. Good to know that I’m not the only one who sees through this one. Interesting to know that it was first used by a rightist dictator to consolidate his power.

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Free Trade Agreement talks come and go, and the world still turns. I favor an FTA with South Korea, but not for North Korea, the world’s most oppressive, least law-abiding nation, and certainly among the leading dealers in contraband. Including Kaesong in a US-South Korean FTA represents a back-door FTA for North Korea, and what nation is really less deserving of an FTA? This should be a pre-election deal-breaker.

Jodi’s view on this is worth reading.

I think Seoul’s proposal poses a huge moral issue for the U.S. and I’m surprised they even brought this up because there is obviously no way the States will agree to this. (Not only out of personal interests but think about how would it appear to the international arena should Washington accept this proposal?).

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Good news: they turned on the lights. Bad news: they turned off the food.

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Give Him an Inch… If you gratuitously offer “to make many concessions” to North Korea, North Korea will ask you to move your borders. What will it take for South Koreans to realize that the North isn’t going to be reasonable?

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Lessons of Libya: NYT Alum Judith Miller — the one who did jail time for refusing to reveal her sources under court order — has a long and very interesting piece on the WSJ about Libya’s abandonment of WMD:

“The administration overstates Iraq, but its critics go too far in saying that force played no role,” says Bruce W. Jentleson, a foreign-policy adviser to Al Gore in the 2000 presidential campaign and professor at Duke University, who has written the most detailed study of why Col. Gadhafi abandoned WMD: “It was force and diplomacy, not force or diplomacy that turned Gadhafi around . . . a combination of steel and a willingness to deal.”

That sounds about right to me. Neither threats nor negotiation alone can disarm a dictator. You may also recall some recent ontroversy about opaque regimes and faulty CIA witchcraft intelligence we collect on them. The margin of error works both ways, apparently.

The inspection team returned in December 2003, with even greater access. They were astonished by what they learned during their visits to weapons sites, labs and dual-use and military facilities. Although Libya claimed that it had no biological or germ-weapons-related facilities, and that its chemical capabilities were less than the CIA had feared, U.S. intelligence had underestimated Libya’s nuclear progress.

Libyan scientists revealed that, between 1980 and 1990, they had made about 25 tons of sulfur mustard chemical-weapons agent at the Rabta facility (which the CIA had long ago identified), produced shells for more than 3,300 chemical bombs, and tried to make a small amount of nerve agent. But they had not mastered the art of binary chemical weapons, in which chemicals come together to form a lethal agent only when the bomb explodes. Thanks to sanctions, a U.S. official wrote recently, Libya was unable to acquire an essential precursor chemical.

The nuclear front was more troubling. Not only had Libya developed highly compartmentalized chemical and nuclear programs that were often unknown even to the Libyans who worked at the facilities, they had already imported two types of centrifuges from the Khan network–aluminum P-1s, (for Pakistan-1), and 4,000 of the more advanced P-2s. By 1997, Libya had already gotten 20 preassembled P-1s from Khan and components for another 200. In 2000, it got two P-2 model centrifuges, which used stronger steel, and had ordered 10,000 more. Libya had also imported two tons of uranium hexafluoride to be fed into the centrifuges and enriched as bomb fuel. In fact, it had managed to acquire from the Khan network what it needed to produce a 10-kiloton bomb, or to make the components for one, as well as dozens of blueprints for producing and miniaturizing a warhead, usually the toughest step in producing an atomic weapon.

What does this all have to do with North Korea, you ask? Remember all the controversy about uranium hexafluoride from North Korea?

Relying on the Khan network meant he no longer had to worry about the origin of the equipment and material, or haggle with individual suppliers over the price and (often shoddy) quality of goods on the nuclear black market. He said he never knew (nor wanted to know) where Khan was getting most of what he bought for Libya, though international inspectors say it came mainly from Pakistan, Germany and Malaysia. He claimed that he never knew whether the casks filled with uranium hexafluoride for Libya’s gas-enrichment program had originated in North Korea, as U.S. intelligence analysts now believe (based on isotope fingerprints of traces found on the containers).

Translation: the North Koreans left traces of plutonium on those containers that matched known samples of North Korean plutonium, probably taken by U.N. inspectors. The Washington Post tried to make a scandal of this obvious non-sequitur — the meaningless distinction between whether North Korea sold UO6 directly to Libya or did it through the A.Q. Khan network. The latter stream of commerce is arguably more dangerous for proliferation of nuclear material to terrorists and clearly crossed the “red line,” although either could arguably be a causus belli, if war were really an option here.

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Staying on the subject of nuclear proliferaton for a moment, I have to ask, “Are They Insane?”

Europe Weighs Giving Reactor to Iran.”

With allies like Europe . . . you end up dropping more bombs than you would without allies like Europe.

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Pot, Beat Kettle: When I read things like this, I know why Korea won’t be a hub of tourism for a few more years.

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Backlash Watch: Oranckay is back; he links to some fascinating poll results from the Hankyoreh’s new English edition. They’re all the more fascinating because they ask stunningly loaded questions (“Do you approve of using excessive force against protestors at Camp Humphreys?” Thirty-five percent didn’t say “uh, noooooooooooo.”) and yet those polls still show a shift “toward the center” — which is somewhere to the right of the left, I believe.

The issue of Seoul expanding economic aid for North Korea as part of its sunshine policy was in 2004 supported by 58.9 percent of the respondents and opposed by 41.1 percent. However, the gap has been narrowed in this year’s survey to 53.5 percent and 46.5 percent.

The portion of the people who support the idea that Korea should respect the United States government’s view on Korean Peninsula security issues has been growing from 20 percent in 2002 to 30.2 percent in 2004 and 37.1 percent in the latest survey. Yet, a dominant 62.9 percent of those surveyed still favor Korea’s independent diplomacy toward the U.S.
. . . .

Concerning rallies by Pyeongtaek residents and peace activists protesting the expansion of U.S. military bases there, 62.5 percent of the polled people disapproved of the excessive use of force by law enforcement authorities.

The use of force to suppress rallies was “categorically opposed” by 27.3 percent and “generally opposed” by 35.2 percent. But disparity between categories’ viewpoints was fairly insignificant, as overall the general disapproval ratings of each group hovered between 61.5 and 62 percent. This is the same level (62.9 percent) who said that Korea should respect the U.S. view when there is disagreement on security issues related to the Korean Peninsula.

Korea’s planned signing of a free trade agreement with the U.S. was favored by 58.1 percent and opposed by 41.9 percent. Nearly 68 percent of the respondents from the agriculture, forestry and fisheries industries disapproved the plan while 67.3 percent of self-employed workers supported the free trade agreement.

The word is “mercurial.”

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A Crime Syndicate With a Seat at the U.N.

Wasn’t it only yesterday when the Japanese caught a North freighter smuggling in amphetamines? Now look:

During the last two years, Japanese maritime police officers have frequently caught foreign ships leaving North Korean ports trying to smuggle fake cigarettes, the Japanese newspaper Tokyo Shimbun reported.
Citing intelligence data from satellites, the newspaper said that the fake cigarettes were at times transferred onto other ships waiting in the South Korean port of Busan or near Taiwanese waters. The foreign ships were from Cambodia, Mongolia and Taiwan.

The top cigarette brand forged by North Korea was the American Marlboro. Japanese brands, such as Mild Seven and Seven Star, as well as British tobacco brands were also included in the list.

The Japanese newspaper said in its report over the weekend that North Korean manufactured cigarettes use high-quality wrapping paper, while the tobacco leaves used in the forged cigarettes are inferior to the genuine products.

Maddeningly, the Japanese didn’t seize the cargoes, as they weren’t bound for Japan. There’s more info on North Korea’s fake cigarette smugging here. I even debated former U.S. Ambassador to South Korea Donald Gregg about the issue, in a BBC pilot that I’m told never aired. Gregg ducked the issue.

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Kofi Annan Calls on N. Korea to Account for Abductees

Well, it’s a start.

U.N. Secretary-General Kofi Annan on Monday said North Korea must be held to account for the suffering and rage of people it kidnapped and the anxiety of families who never discovered what happened to their loved ones. He called on the North to return every one of those it abducted in its bizarre campaign in the 1970s and 80s.

He also called on human rights and counterfeiting to be dealt with separately from, and (impliedly) after the nuke situation is resolved. The State Department is trying to resolve those issues separately, too, although the NK Human Rights Act requires the U.S. government to make human rights an issue in the talks. The U.S. position is that counterfeiting is an unrelated law enforcement issue that it will resolve now.

Annan, as you may recall, was last seen making himself conspicuously scarce during the Seoul Freedom House Conference. Overall, the U.N. has been a non-presence on NK human rights issues. This really doesn’t change that fact, although even this contributes to South Korea’s diplomatic isolation on the issue. The South Korean position is that individual nations should solve the issue through “quiet diplomacy,” and the less said publicly, the better.

Update:

The Joongang Ilbo has a different take on this:

With Foreign Minister Ban Ki-moon, an announced candidate to succeed him, at his side, Mr. Annan endorsed Seoul’s undivided focus on eliminating nuclear weapons in North Korea, saying it should have a “separate category and priority” than human rights and other issues.

The remarks were an indirect criticism of Washington’s policies on North Korean human rights issues and illicit trade by the communist regime. The U.S. government contends that weapons, rights and activities such as currency counterfeiting, although separate, are equally important and should be addressed simultaneously.

That’s more like what I’d expect from someone of Annan’s moral caliber. So is Annan endorsing Ban Ki-Moon as his successor?

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Chris Hill on North Korea’s Creative Financing

“They might have thought they were a small country that could get away with it “¦ but when you get involved with nuclear weapons, you get looked at,” said Assistant Secretary of State Christopher Hill, who was on his way home from an academic conference in Tokyo, where he briefly saw his North Korean counterpart. “They should not be surprised”¦. This is life in the fast lane.”

Link here. While I don’t actually agree that Amb. Hill is the good cop here — I think that ship actually sailed with Amb. Joe DiTrani on board — Hill worked for State, which was the only part of the U.S. government that was determined in its belief that diplomacy with the North might actually go somewhere.

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Links of Interest

* The United States wants South Korea to join it in imposing sanctions against North Korean shipping. South Korea will not agree, though the move would be almost exclusively symbolic.

* LiNK will hold a fund-raising happy hour at the K Street Lounge, 1301 K St. NW, Washington, DC, on April 20th at 6 p.m.

Join us as LiNK DC hosts the K Street Lounge Happy Hour! With free first drinks, we promise a great time networking with like professionals and getting together for a good cause. $20 donation with proceeds towards Project Safe Haven, a LiNK initiative supporting over 30 Chinese safehouses that house NK refugees. LiNK is a non-proft, non-partisan, non-ethnic, and non-religious group passionate about educating the world about North Korea.

* For all its faults, I count myself a fan of the jury system, though more a fan of the military system, where the panel members are selected based on such relevant factors as age, experience, education, training, and “judicial temperament.” I often get the impression that civilian jurors fall short of the very high standards I came to expect of military panel members, who often asked better questions than the lawyers. That’s still better than the Korean system, where according to several reliable reports, the septuagenarian judges actually doze off during testimony. I like hearing that Korea plans to adopt a jury system. This little experiment, however, looked like a silly P.R. stunt to me. I also worry that a jury system will make things worse for Americans who go on trial there.

* The Chosun Ilbo is making the point I made earlier (fourth item) about Japanese pressure being needed to get the remains of a Korean returned home. You had to know someone would pick up on that.

* Who snubbed who here? Pleasanties are fine, if they’re willing to knock off the counterfeiting . . . which they still aren’t.

* He should try Netflix.

“Send me video tapes of the annual award shows for TV drama, pop songs, and comedy programs from Korea Broadcasting System (KBS) and Munhwa Broadcasting Corporation (MBC),” “A South Korean magazine ran an article about me. I’ll have to be careful,” wrote Kim Jong Nam (photo), the eldest son of North Korean leader Kim Jong Il, in an e-mail that he sent to his close aide in China in late 2002.

And another thing — if you forgot the Jenna Jameson DVD this time, I will freaking kill you!

* Columnist (not ex-president) Kim Dae Joong tries to come to terms with South Korea’s dependency on America, and irrational feelings that often go along with it.

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More Bad News for Kim Jong Il

From UPI:

The United States plans to enact tougher restrictions on North Korean ships to counter suspected smuggling of drugs and weapons, diplomatic sources said.

The new measures include limiting port calls by North Korean-registered vessels in the United States and strictly screening their insurance, Japan’s Kyodo News reported Friday.

Japan did the same thing last year.

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Is Kim Jong Il Bankrupt?

There is more evidence to suggest that North Korea really is in dire financial straits after all. Some would not call this a novel conclusion to make about a country in which 2.5 million people have starved to death, but a careful reading of what NGO workers and refugees tell us of how the food was passed out suggests that the North Korean regime was not unduly upset about that, as long as its elite ate well and never lacked for brandy, luxury cars, or nice places to go bowling. Or MiGs.

Preserving that status quo meant maintaining sources of foreign exchange, most of them illegal. Operation Smoking Dragon was the first sign those sources were imperiled; the U.S. Treasury Department’s action against Banco Delta appears to have administered a powerful shock to the North Korean system of privileges on which the regime’s power structure rests. Like-minded (to me) individuals in the Bush Administration are encouraged by the results, reports Yonhap:

Newspapers here have said the U.S. policy on the North is showing signs of changing in the direction of lumping the protracted nuclear crisis with other problems, such as counterfeiting, human rights abuse, and illicit weapons trade, for a package solution.

Which would be fine with me. . . .

Hard-line officials in Washington have been encouraged by the bigger-than-expected success of their latest financial sanctions on North Korea to put pressure on the already isolated regime, they added.

The LA Times’s Barbara Demick, almost certainly the best reporter covering North Korea today, explains that the growing lure of American capital helped the Macanese authorities put Banco Delta and the North Korea trade into perspective (big ht to Plunge here):

Businesspeople here say the North Korean presence became a liability at a sensitive time. The North Korean government in Pyongyang is more unpopular than ever internationally because of its pursuit of nuclear weapons. At the same time, China is trying to develop Macao into a gambling destination to rival Las Vegas.

After Macao reverted to Chinese control in 1999, the Chinese government busted the casino monopoly of billionaire Stanley Ho, a long-standing friend of the North Korean government and the owner of a casino in Pyongyang.

The first U.S.-owned casino in Macao, the Sands Macao, opened in 2004, and a $1.2-billion casino operated by Las Vegas mogul Steve Wynn is scheduled for a September opening. Even Ho’s family — he has passed many of his casino interests to his daughter, Pansy — has struck a deal with MGM Mirage for another new casino.

“Today people here want to do business with the Americans, not the North Koreans,” said Jose Rocha Dinis, director of the Jornal Tribunal de Macau, a Portuguese-language newspaper, as he drove along a waterfront cluttered with construction cranes. “When they are seeking investment from the outside, they can’t let the North Koreans get in the way.”

For the sheer quality of the reporting, look at how Demick finds knowledgeable sources everywhere, beginning with financial crimes guru David Asher:

“Macao had to clean up its act,” said David L. Asher, a former State Department official who specialized in North Korea and was one of the architects of the action against the Macao bank. “There are $5 billion in annual gaming revenues at stake. They have to work with the United States.”

Demick assesses the impact with the help of a British banker who actually works inside Pyongyang:

The freezing of the $25 million in the Banco Delta Asia has been a particularly big blow for a government scraping by for lack of hard currency. North Korean banks kept large sums of money in the Macao bank. Now, with those accounts suspended and other banks frightened off by the Treasury Department action, North Korea has been largely cut off from international trade.

“The impact is severe,” said Nigel Cowie, a British banker based in Pyongyang who is general manager of the Daedong Credit Bank, serving mostly the tiny foreign community in the North Korean capital.

In a telephone interview from Pyongyang, Cowie said that North Korea, because it had no credit and a weak banking system, dealt almost exclusively in cash, which might have created the appearance that it was laundering money when it was not.

“I can’t speak for what everybody was doing, but I can say that in our case, a lot of legitimate business has been hurt,” Cowie said.

Legitimacy being a matter of subjective definition, one supposes. But after reading Demick’s article, you may well come away with the impression that Bush has Kim Jong Il by the balls after all. Left unresolved is whether he’ll be swayed by falsetto appeals for mercy.

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Who Is Ma Young-Ae, and What Does She Know?

[Updated 6 Apr 06; scroll down]

Via The Flying Yangban, it looks like the U.S. may be on the verge of accepting its first North Korean refugee. Like the Yangban, I’m happy about it. Unlike the Yangban, I don’t see this as necessarily precedent-setting for the broader issue of accepting refugees fleeing persecution in North Korea.

Reason: this refugee is also fleeing persecution in South Korea. No, that wasn’t a typo:

Ma came to South Korea in 2000. In April 2004, she went to the U.S. for the events of a North Korea Freedom Day organized there, but the South Korean government revoked her passport because of her anti-North Korean activities abroad. In response, Ma applied for asylum in the U.S.

What that means is that I’ve actually met Ms. Ma, although I can’t match her name with a face. Otherwise, I have no other knowledge of the matter than the reports I’ve linked here.

Why would the South Koreans do something this dumb, assuming the accuracy of the report? One excellent reason might be Ma’s background as a former North Korean counterintel agent, via this NY Times piece archived by our colleague Richardson. Having worked for the Dear Leader in China, Ma no doubt knows where some bodies are buried, and that might even know a few things about one case that’s of the utmost interest (among many others) to Rep. Henry Hyde and other powerful members of Congress — the disappearance of the Rev. Kim Dong Shik, a U.S. permanent resident who was living in Hyde’s home state of Illinois. Rev. Kim, who was sick and wheelchair-bound, was abducted from China in 2000 while trying to help North Korean refugees escape. In 2004, the South Koreans actually caught Yoo Young-hwa, one of the North Korean spies implicated in his abduction. Yoo even admitted his role, possibly hoping to get the same treatment afforded to the spy who abducted Megumi Yokota.

Despite the lack of indication that Yoo has revealed anything of interest on Rev. Kim’s whereabouts, Rep. Hyde’s letter made it quite clear that North Korea isn’t coming of the U.S. terrorism list until North Korea explains exactly what happened to Rev. Kim, except perhaps over the dead bodies of those in the Illinois delegation.

I’m speculating, of course, that Ma knows about Rev. Kim, but if she does, and tells it to the Americans, it could prove extremely embarrassing to South Korea, which consistently seeks to cover for North Korea with the United States. If Ms. Ma is willing to testify about the activities of a terrorist or criminal organization, it could be another avenue for a possible criminal indictment of Kim Jong Il, something that’s already reported to be under consideration over his counterfeiting activities.

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This puts Ms. Ma in a much better legal position than the unfortunates who’ve heard that South Korea is but a stepping stone to the USA. But of course, asylum isn’t about letting people pick their favorite country; it’s about saving lives and giving refuge from persecution. That much is specifically required by this federal statute, which I’ve long considered the State Department to be willfully flouting.

That being said, if the U.S. has only so much room, better to set it aside for those in greater peril in China, Vietnam, or Thailand. For those not among the nearly 20% of refugees who report being subjected to censorship by South Korea, the ROK is a place where they can speak, live, and eat relatively freely. It’s a long-standing principle of international law that a refugee doesn’t get to hop from refuge to refuge.

Update: UniFiction Minister Lee Jong Seok is denying it:

The unification minister said the government does not and cannot suppress North Korean defectors, let alone anyone else, in the country.

“South Korea is a democratic society. How would that even be possible? I don’t know whether he is doing this to win refugee status in the United States, but it is disrespectful to the (South Korean) government and the people,” Lee told a press briefing.

Lee’s version contains some fundamental factual errors, starting with Ma’s gender, and ending with the preposterous claim that South Korea doesn’t suppress defectors’ speech. Lee ought to ask South Korea’s own National Human Rights Commission about that one.

I have no idea whether Ma is telling the truth. I just know that Lee isn’t.

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The Other Nuclear Option

Much info on the economic front of late, including some initial, sketchy evidence to back U.S. claims that the sanctions are biting.

The Chosun Ilbo continues to tremble over what the U.S. Treasury Department’s next move could be. Have a look at Section 311 (115 Stat. 298) of the USA PATRIOT Act, and if you can bear it, keep reading. It empowers Treasury to declare all of North Korea a jurisdiction of special money laundering concern — as we’ve apparently done to the Ukraine for a brief period — and thereby force the entire world economy to choose between the United States and North Korea:

[T]he designation of North Korea as a whole would likely paralyze its transactions with any international financial institutions, which must maintain a place of business in the U.S. if they are to conduct dollar transactions. “It would mean North Korea is in effect kicked out of the international financial world, where the U.S. exercises the greatest influence,” a government official said.

It’s curious to watch how North Korea’s neighbors have only just “discovered” supernotes within their own borders. Partly as a result of a single massive seizure last year, Seoul is reporting a dramatic rise in the amount of counterfeit currency detected in South Korea last year (Discrepancy alert! Was it $40,000 or $140,000? If last year’s total was in fact $121,760, I presume that it’s the lower figure.). The DailyNK reports that China is cracking down on North Korean counterfeiting, to which I’d add that the threat of sanctions against Chinese banks may have been an incentive.

Next, I pick up where James left off with this Washington Post piece, which notes that there’s some debate about how this will affect diplomacy with the North. Some believe North Korea will keep stalling; others believe North Korea’s Tokyo meeting with representatives of the other five nations means that the North is newly incentivized. The pressure isn’t relaxing yet:

Japanese politicians have made progress on both a bill threatening sanctions if it does not negotiate in good faith on the nuclear issue and a dispute over Japanese citizens abducted by the North Koreans during the 1970s and ’80s to help train potential spies. On Tuesday, Japan added 20 North Korean firms and institutions to an export restriction list aimed at keeping them from obtaining materials and technology that could have military use.

How is this affecting North Korea? It’s obviously hard to say with certainty, but the Dong-A Ilbo makes an admirable effort to pierce the opacity:

North Korean authorities no longer have access to outside financing after fiscal restrictions imposed by the U.S. blocked North Korean access to illegal funds, estimated to be worth 500 million dollars annually. These funds were largely generated from the trading of counterfeit dollars, drugs, and missiles.

The making and selling of weapons of mass destruction has become an impossible task for North Korea now because it lacks sufficient funds to buy the necessary high-tech components. Recent visitors to the North tell stories of how North Korean authorities often express their agonies over the financial crackdown.

Chairman of the National Defense Commission Kim Jong Il met Chinese President Hu Jintao January this year and said, “U.S. fiscal restrictions might disintegrate the North Korean system,” reported an article from the latest edition of Newsweek.

Finally, what may be the most curious story of all: why are members of the North Korean elite reportedly buying up large amounts of dollars (presumably a mixture of real and fake) on the black market?

The official exchange rate in the North is W150 per dollar. But in the black market, the greenback had soared from around W2,000 to W2,600 by late last year. “It varies from region to region, but the dollar now seems to have risen to W3,000 because of the financial sanctions,” a South Korean official said.

A North Korean defector says in some black markets in Pyongyang and Shinuiju $1 will fetch W3,800-4,000 and rising. An expert on North Korea said rumor has it that some people are hoarding dollars in the expectation that their value will keep going up.

Given that the average monthly income of North Korean workers is around W3,000, the surge has effectively reduced their wage to less than $1 a month.

Obviously, one wishes that the hardship imposed by these actions could be focused tightly on the elite, rather than ordinary workers. Barring that, it should cause us to redouble our efforts and public pressure to get a strictly monitored feeding program in place.

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