hankyoreh

U.S. Treasury’s Under Secretary for terrorism and financial intelligence

The issue of a “supernote,” high quality counterfeit U.S. 100 dollar bills, has surfaced while the U.S. government is leading discussions on possible financial sanctions as a response to North Korea’s second nuclear test. Some observers are asking if the situation will result in a repeat of the 2005 Banco Delta Asia bank incident in which North Korean accounts in the Macau-based bank were frozen.

U.S.’s Obama administration has been recently focusing significant efforts on strengthening a multilateral response of financial sanctions against North Korea at the United Nations Security Council (UNSC) level. Based on a preliminary draft resolution submitted to the UNSC by the U.S. and Japan, the UNSC would both reconfirm the content of Resolution 1718, which allows for comprehensive financial sanctions, and disallow trade finance support or financing for North Korean businesses. If the resolution were passed, even ordinary trade actions with North Korea would become impossible.

Radio Free Asia (RFA) reported Wednesday (local time) that there is a strong possibility the U.S. government will also pursue independent financial sanctions. In addition, Stuart Levey, Under Secretary for Terrorism and Financial Intelligence in the U.S. Department of the Treasury is known to have met Thursday with South Korea’s First Vice Minister of Finance, Hur Kyung-wook, to discuss the issue of financial sanctions against North Korea. Levey, who is accompanying U.S. Deputy Secretary of State James Steinberg on his South Korea visit, played a leading role in handling the Banco Delta Asia situation in September 2005.

Meanwhile, the Washington Times reported Tuesday that O Kuk-ryol, a general recently promoted to vice-chairman of North Korea’s National Defense Commission, and members of his family have been identified as central figures in the production and distribution of high-quality counterfeit U.S. 100 dollar bills called supernotes. The newspaper cited documents and interviews with U.S. and overseas intelligence officials.

In particular, the Washington Times raised a possible North Korea link with a November incident in which four people were apprehended in Busan after conspiring with ethnic Koreans in China to smuggle in and exchange 10,000 counterfeit U.S. 100 dollar bills, valued at around 1.3 billion won. Officials with the Busan Metropolitan Police Agency’s foreign affairs investigation team have said it is “utterly unconfirmed by police whether these counterfeit bills were manufactured in North Korea.” A source in Washington reported that a U.S. investigation team has visited South Korea in connection with the incident as part of its effort to pinpoint and track the counterfeit bills’ distribution channels.

Experts in South Korea are commenting that the surfacing of the counterfeit bill situation as North Korea faces possible economic sanctions is in all likelihood a deliberate strategy on the part of the U.S. Some are interpreting it as a means of pressuring China, which is opposed to strong sanctions against North Korea. China is known to have expressed strong objections to core items in the U.S.-Japan draft resolution for the UNSC, including the imposition of comprehensive economic sanctions and the searching of North Korean sea vessels.

“The Chinese government is not clear of this situation since a lot of counterfeit currency manufacturing and distribution takes place in China, ” said one expert on North Korean issues who interpreted the raising of counterfeiting concerns by the U.S. as an attempt to use China’s weakness to extract powerful sanctions against North Korea.

Other experts suggest that the U.S. appears to have considered the fact that since North Korean businesses frequently use China-affiliated banks, any financial sanctions the U.S. might pursue independently would have little effect without China’s cooperation.

Meanwhile, others are analyzing the talk about counterfeit bills as part of an effort to prepare a base of public opinion in the U.S. for independent financial sanctions against North Korea. North Korea’s illegal actions were also highlighted in September 2005 as the U.S. Treasury Department began a heavy crackdown on counterfeiting, which subsequently led to the freezing of North Korea’s funds in Banco Delta Asia.

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