hankyoreh

the U.S. negotiator Christopher Hill

The six-party talks came to an abrupt halt in Beijing on Thursday as North Korea boycotted negotiations until its US$25 million frozen at a Macau bank to be transferred to its account. The U.S. had agreed to unfreeze the money on March 19, and insisted that the delay was merely due to issues of a bureaucratic nature.

However, Pyongyang may be trying to use the current situation as an opportunity to get a guarantee from the international community for normal financial status down the road.

Chun Young-woo, South Korea’s top negotiator to the nuclear talks, said, "The North didn’t want to get the money back in cash, nor have the money transferred to an account at its banks in North Korea, but to one at a foreign bank [Bank of China]." These comments could be interpreted as North Korea seeking not only the funds in question but a general return to normalized relations within the international financial community, as it has requested the funds be transferred into a foreign bank.

Though the U.S. announcement that it would unfreeze the North Korean funds - which had been held at Macau-based Banco Delta Asia since September 2005 - represents the resolution of a major rift between the U.S. and North Korea, Pyongyang is still not able to gain access to most international financial institutions because it is still "blacklisted."

The Bank of China, which said it was willing to handle the $25 million and was accepted by both North Korea and the U.S., refused to place the money in an already existing North Korean account there, instead agreeing only to transfer the money to a third bank that has not yet been decided upon. The Bank of China, which is already listed on the Shanghai and Hong Kong stock markets as of last year and plans to list on the New York Stock Exchange, is reportedly worried about the potential disadvantages it would face in the international financial community if it accepted the money into one of its accounts.

For North Korea, just being guaranteed its money back may not be enough to ensure it that it will quickly be welcomed again as a member of the international financial community. The countries party to the talks could not have surmised that the U.S.-led sanctions, which were announced in September 2005, would lead to the North being so strongly shunned by the international financial community. Given the situation, it would come as no surprise if the North, through insisting upon a foreign bank as the destination of its fund, is placing less emphasis on whether it can get its money back than on whether all of its financial capabilities return to normal in the international sphere.

If the North does in fact demand a return to full status in the international financial community, the current stalemate would escalate into something that would be a tall order to tackle.

Since the North has not yet made such demands officially, the $25 million is the first task at hand. Chun said that all parties are mulling over any possible ways to send the money back to an account held by the North in a third country through the Bank of China.

"The most daunting task is whether we can find any [third] bank willing to accept the money [to be transferred by the Bank of China]," Chun added.

The U.S. is also busy on its part to try to get the funds back to North Korea. A treasury department official reportedly provided a written guarantee for an unnamed Chinese bank to accept the North Korean money, while Daniel Glaser, deputy assistant treasury secretary, is hurriedly planning a visit to China, presumably related to the money transfer issue.

Please direct questions or comments to [englishhani@hani.co.kr]