hankyoreh

The difficult issue of transferring North Korean funds held at Macau’s Banco Delta Asia (BDA) back to Pyongyang - a situation which has prompted the North to miss a deadline to honor a nuclear disarmament agreement reached at the six-party talks - continues to be prolonged with no end in sight.

At the onset of the issue, South Korean and U.S. officials said the technical and procedural issue would be resolved ‘within a couple of days.’ However, another month has passed. Thus, pessimism is heightening over the North’s plans to implement the February 13 agreement on ending the North’s nuclear program.

The $US25 million funds were frozen in September 2005 after the U.S. Treasury Department declared them illicit. The treasury has lifted this sanction on the funds but not its condemnation of the bank. As a result, no bank has been willing to transfer the funds to Pyongyang, per its demand, for fear of repercussions after touching the money, including, in a contradictory twist, possible prosecution by the U.S. under the Patriot Act.

In Beijing on May 30-31, U.S. Assistant Secretary of State Christopher Hill, Washington’s chief negotiator for the six-nation talks, met his Chinese counterpart Wu Dawei and reportedly discussed a ‘new proposal’: at the meeting, Hill was believed to ask China to replace executives at BDA or to let the bank be acquired by a third party, aimed at lifting the U.S. Treasury department’s sanction against the bank.

However, Hill failed to persuade China to do so because Beijing has been unhappy over the U.S. sanctions against the Macau-based bank from the beginning. Stanley Au, BDA’s owner and a member of the Chinese People’s Political Consultative Conference, is strongly resisting his possible removal or a sell-off of the bank. The situation is developing into a ‘ping-pong game’ between the two nations.

Hill’s visit to Beijing was aimed at seeking a breakthrough after a plan to transfer the funds to North Korea via U.S. bank Wachovia Corp. fell into disarray because of little cooperation from the U.S. Treasury and Justice departments. The departments are reluctant to make an exception regarding Article 311 of the Patriot Act, which says that banks dealing with funds deemed illicit could face prosecution. In addition, the U.S. Treasury department is balking over exempting BDA from sanction, according to sources. To break the impasse, South Korea reportedly offered to consider transferring the funds via its state-run Export-Import Bank of Korea, but the proposal was rejected by both the U.S. and North Korea.

With things getting worse, Hill suggested North Korea first take steps to shut down its nuclear facility. But the North’s response was icy. Kim Myong-gil, deputy chief of the North Korean mission to the United Nations, said on May 31 that "our position has been clear from the beginning. The BDA issue has to be resolved first." In a recent interview with the Hankyoreh, Kim said, "In an agreement reached between hostile nations, any party should be required to honor the agreement rather than showing [one-sided] concession."

U.S. chief negotiator Hill is increasingly losing ground on his position. Sources in Washington’s diplomatic circles said conservatives and hard-liners outside the Bush administration have publicly criticized Hill, and while criticism inside the administration has not been public, it is definitely present, the sources said. Japan’s Kyodo News reported on May 31 that the U.S. president Bush told Japanese prime minister Shinzo Abe in late April that the U.S. had "screwed it up," acknowledging the U.S. government’s failure to realize how wide-reaching the repercussions surrounding the Treasury Department sanctions would be.

Attention is focusing on how long the U.S. president’s patience will persist. The Bush administration has recently shifted its focus to diplomacy in order to try to resolve the North’s nuclear standoff, which it perceives as easier to solve than problems in Iraq or Iran. On June 6-8, the Group of Eight nations - which includes the six-party members U.S., Russia, and Japan - will hold a summit in Germany and are expected to adopt a resolution to urge North Korea to implement the February 13 agreement.

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