Supernotes Update: No Refuge in Denial

South Korea’s president Roh Moo-Hyun may have entered office with the hope of a multifaceted agenda, but that agenda has only one surviving facet. His moves to create a more redistributive economy has sufficiently damaged the economy that Roh’s allies would dream of running on that record in the 2006 elections. The attempt to move the capital out of Seoul was a political disaster; it was blocked in the courts, and mostly succeeded in creating a dangerous new political enemy in Lee Myung-Bak. Promises of a cleaner government had an exceptionally short shelf life, even by the standards of Korean politics. The predictable promises to make Korea the hub of this-or-that came and went. Even the feel-good politics of publicly diminishing relations with Japan and the United States have failed to produce lasting support at the polls. There are some signs that with the United States moving to downgrade the alliance on its own accord, voters think things may have gone too far.

Paradoxically, the one Uri policy that still appears to have substantial public support is appeasment of the North, although that policy is arguably the least successful of all. I intentionally use the politically-loaded term “appeasement” to mean accomodation of North Korea’s every crime–whether against its citizens, other nations, humanity as a whole, or even Seoul itself–without any expectation of significant countervailing concessions by North Korea. The Uri government often treats North Korea’s very arrival at a meeting to accept more generous gifts from South Korean taxpayers as a concession in itself. This isn’t surprising, given that the government couldn’t find much else to boast about. It has yet to bring home even such fundamental concessions as the North’s minimal compliance with the 1953 armistice, which required the return of all prisoners of war.

Thus, the appeasement of North Korean behavior–no matter how unquestionably beyond the pale–is the one surviving piece of the Roh agenda for which significant popular support exists, and Roh now finds it under dire threat now that the FBI, Homeland Security, and Treasury have unrolled a global network of North Korean counterfeiting operations. Denial is a predictable enough response for the Roh Administration, but the facts persistently intrude to disturb the conception of the new policy:

A South Korean intelligence official told the JoongAng Daily yesterday that the North’s counterfeiting activities have been monitored since the early 1990s and that evidence gathered during that period is enough to give credibility to Washington’s claim that Pyongyang has manufactured forged U.S. dollar bills.

“With current government policies in place that want to keep the North’s regime afloat, the government wants to delay acting on the issue as long as possible,” the official said. “North Korean counterfeiting activities are nothing new, and they are a known lifeline for the North.”

Most officials here have been dodging questions and repeating that the administration wants more decisive evidence. “For us, there is the big picture to be considered. We have never said that we will just sit down and do nothing if there are illegal activities,” said one senior government official.

U.S. Ambassador Alexander Vershbow has also been making the case:

Washington is sending a team of State Department officials and agents to Seoul in January to provide new and detailed information on North Korean counterfeiting, including its purchase of special ink and printing equipment , a source in Washington said yesterday.

The source said in a phone interview that the large number at a briefing in Washington last Friday on North Korean counterfeit activities, in which diplomats from 40 countries participated, made it hard to provide strong evidence at the time.

Which is odd, because there are few nations that are less reliable recipients of U.S. intelligence today than South Korea.

Meanwhile, referring to an incident earlier this year in which South Korean intelligence officials said, without disclosing the origin, high quality $100 bills were in circulation in the country, U.S. Ambassador to Seoul Alexander Vershbow said yesterday, “We are quite convinced that the origin of these supernotes can be traced to North Korea.”

The ambassador reiterated that the issue was separate from ongoing nuclear talks with the North. Nonetheless, he also reaffirmed Washington’s unmoving position on the matter. “We will take the necessary measures to protect ourselves and to enforce our laws,” said the U.S. ambassador.
. . . .

Just hours after the remarks, Seoul took an immediate stance on the ambassador’s remarks. A senior South Korean official suggested that Mr. Vershbow’s remarks could be described as “careless,” and that they were inappropriate for an ambassador to make.

This might just as well have been another “The Death of an Alliance” post. I should also point out that Vershbow has also warned the North Koreans that this should not be seen as an excuse for more stalls and standoffs in the six-nation goat rodeo that increasingly appears headed for the the goat corral, and the goat knacker.

Even your correspondent has gotten in on the discussion. Over the weekend, I was called by a reporter from one of South Korea’s major dailies (I won’t say which one) asking me to provide what evidence I’ve gathered in blogging this story–and I can justifiably claim to have recognized its significance since it first broke. I was flattered to assist with numerous links, and the person was clearly interested in a thorough exploration of the facts. A better partnership between blogs and traditional media means more democratization of our information, and it may also mean that some underreported aspects of this story may get more attention than they’ve received thus far.

The editorial page of the Chosun Ilbo also shows some thinking with which I couldn’t exactly argue, either, starting with a few more details on South Korea’s own assessment of North Korea’s counterfeiting activities:

The National Intelligence Service, in a 1998 report titled “A New Threat in the 21st Century: Realities of and Responses to International Crimes”, said North Korea forges and circulates US$100 bank notes worth $15 million a year, and that the counterfeiting is carried out by a firm called February Silver Trading in the suburbs of Pyongyang.

The NIS said in reports to the National Assembly the same year and the next that the North operates three banknote forging agencies, and that more than $4.6 million in bogus dollar bills were uncovered in circulation on 13 occasions since 1994. “That North Korea is a dollar counterfeiting country was common knowledge among intelligence officials,” said a former senior NIS official.

Yet suddenly, when the U.S. brings up the question of North Korea’s counterfeiting activities, our government says there is insufficient evidence. That has prompted American officials to accuse our government of lying. The reason for the volte-face is that Seoul is afraid of antagonizing Pyongyang while six-party talks aimed at denuclearizing North Korea hang in the balance.

It then goes on to restate a point in which I’ve taken great pleasure in repeating:

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?

That’s my cue: