Banco Delta Sanctions ‘Severe Blow’ to NK Economy
The Chosun Ilbo, relaying an AWSJ story, reports that the Treasury Department’s action against the Macau-based bank “dealt a severe blow to the secretive country,” “dried up its financial system,” and “brought foreign trade virtually to an end.”
In December, I noted reports that North Korean front companies and spies were fleeing Macau en masse. According to today’s story, Banco Delta has now announced that it’s ending its financial ties with North Korea in an effort to prevent a run on its assets and a devastating rash of actions by other banks to cut their ties with Delta.
Because of the high percentage of bad loans and undercapitalization in the Chinese banking system, Beijing is clearly concerned about controlling the damage to its financial system.
The evidence of North Korean counterfeiting now appears to be beyond serious dispute. The supernote issue emerged with an undercover bust and seizure in the U.S. Shortly thereafter, the Justice Department indicted an ex-IRA terrorist for circulating North Korean supernotes. In January, this article (ht Richardson; pic, too!) reported that North Korean supernotes were found at Las Vegas casinos. Last month, a Chinese government investigation confirmed North Korea’s counterfeiting and money-laundering activities.
Recently, a Korean newspaper reported a huge seizure of North Korean supernotes in Seoul’s famous Namdaemun market, and that South Korean police even sought U.S. assistance in confirming the notes’ North Korean origin. The disclosure was an embarassment to South Korea and its president, which had expressed doubts about the existence of evidence of recent North Korean counterfeiting, despite presumably knowing otherwise.
Although North Korea may be hinting that it’s willing to discuss the counterfeiting issue, the U.S. Ambassador says his government will not be satisfied until the North Koreans hand over the plates and ink.
Update: The BBC also covers the story, with this dramatic fact (as dramatic as banking gets, anyway):
The scandal weakened Banco Delta’s financial position, with customers withdrawing 10% of its total deposits after the allegations surfaced.
Wow. No wonder Macanese authorities had to step in to save the bank from insolvency.
I forget which expert it was and which report, but one of them presented to Congress, I believe, said that the only guess he could make about how NK had progressed from the brink was through the hard currency it recieved through illegal activity through these banks. He said their real econcomy had only deteriorated further and the amount and types of aid from China, SK, and elsewhere did not match up with some of the things the North was able to buy and do without some other unnamed source of revenue.
If it is hurting this badly, I would start lowering the odds on another ICBM test.
I would also look harder for incursions into the DMZ and sea battles.
But, this time, I would worry about the US being the target rather than the South Korean navy.