North Korea’s top nuclear negotiator Kim Kye Gwan said Thursday that Pyongyang’s decision to halt nuclear facilities, as outlined in initial steps included in the Feb. 13 six-way agreement, will depend on the U.S. lifting of financial sanctions against North Korea. [Kyodo News; ht Richardson]
The U.S. negotiator at the six-party talks, Chris Hill, once said that “[l]ife is too short to overreact to every statement coming out of Pyongyang.” It’s true that the North Koreans do more than their share of alimentary vocalization, but it’s also true that there’s a difference between what the North Koreans say in propaganda mouthpieces like the Rodong Sinmun and KCNA, and what their diplomats declare to be national policy. Hill may have perfectly sensible reasons not to react to this statement in public if he really believes that he can — and should — smooth over this first of many controlled eruptions. But there’s no pretending that we can accomodate this North Korean demand, or that it’s consistent with what we’ve agreed.
What Was Agreed
What did we actually agree to do? Richardson has already cited the appropriate provisions, to which I need add little else. The agreement — I appended the complete text to this post — is silent on any action by Treasury or on the lifting of sanctions or financial measures. The only thing that vaguely hints at North Korea’s new demand is this language:
5. Recalling Section 1 and 3 of the Joint Statement of 19 September 2005, the Parties agreed to cooperate in economic, energy and humanitarian assistance to the DPRK. In this regard, the Parties agreed to the provision of emergency energy assistance to the DPRK in the initial phase. The initial shipment of emergency energy assistance equivalent to 50,000 tons of heavy fuel oil (HFO) will commence within next 60 days.
That doesn’t support North Korea’s position. Although otherwise lacking in hard deadlines or benchmarks — really, it’s hardly an agreement at all — the agreement does have a few hard deadlines within the first 60 days, which the quasi-agreement calls the “initial phase.” One is that the North Koreans must “shut down and seal [Yongbyon and its reprocessing facility] for the purpose of eventual abandonment;” within the same period, the United States must deliver the first 50,000 of up to 1 million tons of heavy fuel oil.
By the way, have a look at the facilities themselves: an area overview, the reactor, the nearby reprocessing facility nearby, a palace I presume to be for the use of you-know-who, the perimeter defenses, and a SAM site. Click thumbnails to enlarge; as always, coordinates are on the bottom of the screen.
Here is a prediction: If the North Koreans don’t shut down Yongbyon within 60 days, it will be politically difficult, perhaps impossible, for the United States to deliver the first shipment of fuel oil. Note that the steps taken in the initial phase are to be “coordinated,” which is diplospeak for “reciprocal.” Another prediction: the South Koreans will want to deliver it anyway to preserve the appearance that the agreement survives; the U.S. side may not object for the very same reason. This will be a very important test of the Administration’s will.
What Hill Told Congress About U.S. Financial Measures
On February 28, 2007, Chris Hill testified before the House Committee on Foreign Affairs. As is customary for senior officials, he presented a written statement with his testimony. Hill’s statement, which was undoubtedly very carefully vetted by the State Department, restated U.S. policy on financial restrictions on North Korea in considerable detail:
The Banco Delta Asia (BDA) issue is being discussed on a separate track from the Six-Party Talks, managed by experts from the Treasury Department. In December and January, Treasury had two rounds of useful discussions with DPRK authorities, where the North Koreans provided information about BDA account holders. This week Treasury officials were in Macau and Hong Kong to discuss details of the BDA case. We are hopeful that this will help in bringing about a rapid resolution of the BDA case. Treasury advised the DPRK about steps it could take to avoid future problems, be less isolated in the international financial system, and eventually join international financial institutions.
The measures the U.S. Treasury Department has taken with respect to North Korean finances, specifically the designation of Banco Delta Asia in Macau as an “institution of primary money laundering concern,” clearly had a significant impact on the regime. These actions affected Pyongyang’s ability to access the international financial system and conduct international transactions as banks everywhere began to ask themselves whether doing business with North Korean entities was worth the risk.
Treasury is now prepared to resolve the Banco Delta Asia matter. But this will not solve all of North Korea’s problems with the international financial system. It must stop its illicit conduct and improve its international financial reputation in order to do that.
Once Treasury has concluded its regulatory action with respect to BDA, the disposition of the bank and of the funds that were frozen by the Macau Monetary Authority will be the responsibility of Macau, in accordance with its domestic laws and international obligations.
Note also Treasury’s assessments of North Korea’s, and BDA’s, involvement in counterfeiting of U.S. currency and laundering of the proceeds. It’s not as if we can just let those things slide.
I was also present for the members’ questioning of Hill. In response to questions from Rep. Ed Royce, R., Cal., Hill said that “law enforcement will not be compromised.” A few days later, the New York Times published a story (now walled off as premium content), citing unnamed U.S. government sources, on the outlines of just what the Treasury would be prepared to do regarding Banco Delta. Although Hill had stated in his testimony that it was difficult to distinguish the proceeds of North Korea’s legal and illegal activities, according to the story, Treasury would release up to $12 million, less than half of the $25 million in frozen North Korean assets.
Even the larger sum isn’t that much. The real problem for North Korea is the upstream effect on its finances at Banco Delta and other banks. Banks saw what happened to BDA, meaning that their directors, officers, and shareholders don’t want to touch North Korean business, which means that North Korea’s shadowy “trading companies” can’t send money to the accounts where the regime can access them. That problem is much greater than simply unfreezing $12 million. It will persist as long as Treasury considers North Korea’s income sources to be suspect. The definition of “suspect” gained new breadth and clarity with the passage of two U.N. resolutions in 2006, and now includes weapons, missiles, and luxury items for Kim Jong Il and his loyalists.
The fact that this agreement probably represents only a slight short-term relaxation of financial pressure on North Korea is the single most comforting thing about it. In the longer term, however, it threatens to set back U.S. efforts to secure the compliance of other nations like China, Russia, and South Korea.
U.N. Security Council Resolutions 1695 and 1718
Finally, the United States lobbied other Security Council members very hard to get two unanimous resolutions after North Korea’s missile test in July 2006 and its nuclear test in October 2006. Since Resolution 1695 was a functional subset of 1718, I will focus on the terms of 1718 as they apply to restrictions on North Korean finances. First, another excerpt from Hill’s February 28, 2007 statement to Congress:
North Korea is well aware that it remains under Chapter VII UN sanctions. Today, UNSCR 1718 remains in effect, and North Korea understands that the international community will continue to fully and effectively implement the resolution. North Korea continues to face a basic strategic choice. There are political and material incentives on offer to North Korea, but it must fully denuclearize to realize the full benefits of those incentives. North Korea understands that it must abide by its commitments to receive these benefits.
Second, the relevant excerpt from UNSCR 1718, specifically, Paragraph 8(d):
(d) all Member States shall, in accordance with their respective legal processes, freeze immediately the funds, other financial assets and economic resources which are on their territories at the date of the adoption of this resolution or at any time thereafter, that are owned or controlled, directly or indirectly, by the persons or entities designated by the Committee or by the Security Council as being engaged in or providing support for, including through other illicit means, DPRK’s nuclear-related, other weapons of mass destruction-related and ballistic missile-related programmes, or by persons or entities acting on their behalf or at their direction, and ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any persons or entities within their territories, to or for the benefit of such persons or entities;
Notwithstanding China’s own spotty compliance with 1718, or South Korea’s blatant violation of it, it’s difficult to imagine that we could simply unlimber all financial restrictions on North Korea while its nuclear programs just keep humming along.
Yes, almost everyone ignores U.N. resolutions, but someone made the United States an exception to that rule. Even U.N. Resolutions have shelf lives, and this one isn’t even a year old. Finally, the proponent of a resolution will have much more trouble ignoring it than those who were pressured into voting for it.
Related post: Peace in Our Time! Abductions Edition
Update: One well-informed reader e-mailed to question whether Kyodo misunderstood the North Korean delegate, but now, the Yomiuri Shimbun is reporting the same thing:
A top North Korean official said the U.S. must lift sanctions against his country before it will shut down its nuclear reactor as part of an international disarmament deal, news reports said Friday.
North Korean Vice Foreign Minister Kim Kye Gwan, making a brief, surprise stopover at Tokyo’s main international airport late Thursday en route to Beijing from New York, said Pyongyang would be watching Washington’s moves closely, the mass-circulation Yomiuri newspaper reported.
“The United States promised to resolve the problem of sanctions against our country within 30 days. If this promise is kept, then we will shut down our nuclear facilities in 60 days,” said Kim, the chief negotiator to the disarmament talks.
That would suggest that it’s the North Koreans themselves who are either misunderstanding or reinterpreting. Meanwhile, the news site AsiaNews.it is reporting that the U.S. has already agreed to remove it from the terror-sponsor list by this coming April. I think that’s something that requires a public response from the United States. If it’s true, I certainly wonder just what the North Koreans have promised to do in exchange.