Posted on 03/21/2007 9:57:34 PM PDT by TigerLikesRooster
Rice helped unfreeze N Korean funds
By Demetri Sevastopulo in Washington and Andrew Yeh in Beijing
Published: March 21 2007 22:13 | Last updated: March 22 2007 00:48
Condoleezza Rice, US secretary of state, orchestrated a significant shift in US policy towards North Korea by persuading the US Treasury to agree to Pyongyang’s demands to release $25m frozen in a Macao bank since 2005.
Current and former officials say Christopher Hill, the chief US negotiator on North Korea, convinced Ms Rice that the US should sacrifice the issue of the frozen funds to push forward the broader goal of implementing last month’s six-party accord on denuclearising the Korean peninsula.
Several people familiar with the debate said Hank Paulson, Treasury secretary, agreed to overrule officials responsible for terrorism financing, who objected to the move, after Beijing warned that a failure to return the North Korean funds would hurt the Sino-US strategic economic dialogue.
North Korea had insisted that the funds – which were frozen in Banco Delta Asia of Macao after the US accused the bank of turning a blind eye to illicit North Korean activities in 2005 – be returned before it would implement the six-party nuclear deal.
Washington’s shift in policy signals increasing flexibility by the Bush administration in dealing with what it deems rogue regimes. It also represents the increasing influence of Ms Rice following the recent departure of several hardline administration officials.
Sean McCormack, state department spokesman, said the Treasury and state department were ”on the same page.” He also denied that the move to release the entire $25m represented a shift.
However, the move has opened Washington to charges of hypocrisy. The Treasury last week concluded its investigation into BDA by prohibiting US financial institutions from dealing with the bank. While the ruling paved the way for the bank to dispose of its assets, Treasury officials insisted that the US would play no role. They said the Macao government, which assumed control of BDA in 2005, would determine how much would be returned to North Korea.
Many experts, and some White House officials, were dismayed when Daniel Glaser, the Treasury deputy assistant secretary for terrorist financing and financial crimes, said in Beijing on Monday that the US and North Korea had agreed on a mechanism to refund all the money. Critics also derided the explanation that Pyongyang had vowed to use the money for humanitarian purposes.
Gordon Flake, a Korea expert who heads the Mansfield Foundation, said the Treasury shift angered even supporters of the broader nuclear disarmament accord. He said Treasury had insisted for 18 months that the move against BDA was a “law enforcement action” that was not linked to the nuclear talks. But he said the statement in Beijing clearly showed there was a political link.
“We have traded away the pressure we had on them,” said Mr Flake.
Molly Millerwise, a Treasury spokeswoman, said: ”while the Macanese have authority over the funds, both the Macanese and US agreed that the proposal presented by the DPRK was a good solution for moving forward.”
Mr Flake and a former administration official said the state department had also reduced pressure on North Korea in other ways. He said Ms Rice had blocked the sending of cables to US embassies outlining the process for implementing the United Nations sanctions on North Korea. Mr McCormack, the state department spokesman, denied the claims.
Mr Flake and a former administration official said the state department had also reduced pressure on North Korea in other ways. He said Ms Rice had blocked the sending of cables to US embassies outlining the process for implementing the United Nations sanctions on North Korea. Mr McCormack denied those claims.
Until the intervention by Mr Paulson, Treasury had been prepared to tell the Macao government that it would not object to returning about a third of the $25m for which there was less-than-conclusive evidence of illicit activity. Treasury on Wednesday dismissed suggestions that it had succumbed to political pressure.
“Eighteen months ago this money was held in a bank that was, at best, turning a blind eye to illicit activity, and at worst was facilitating illicit activity,” said Molly Millerwise, a Treasury spokeswoman. “We now have assurances from the North Koreans, in the context of the six-party talks, that will allow these funds to be used for the betterment of the North Korean people.”
But Jack Pritchard, president of the Korea Economic Institute and former Bush administration envoy to North Korea, said Treasury had reluctantly acquiesced to the state department.
“The Treasury action seems contradictory,” said Mr Pritchard, who was a critic of the original Treasury move. “Yes, BDA is guilty, but we are giving back all the money – not because we think it is the right thing to do, but because we are being forced to do so politically.”
Mr Pritchard also questioned why the US did not have the foresight not to pursue a two-track policy – of engaging the North Koreans on the one hand, while attempting to squeeze them on the other – two years ago.
The debate over Washington’s handling of the Macao affair came as the six-party talks ran into a stumbling block in Beijing on Wednesday. North Korea has refused to continue negotiations towards implementing last month’s agreement – which provides economic aid in stages as North Korea freezes and then dismantles its nuclear reactor – until the $25m was physically deposited in an account it holds with the Bank of China.
One US official who broadly supports the nuclear deal said the administration was scrambling to find a way to return the $25m, which had been complicated by the fact that some banks were reluctant to help move the money because the US Treasury had previously insisted it was “contaminated”.
The official added that the administration had to be careful that the deal would not “come a cropper” because of delays by the North Koreans that would reduce support for the agreement in Washington.
The same official, who broadly supports making small sacrifices to achieve the larger gain, said it was “very unseemly” to have Treasury publicly acquiesce in Beijing. It also appeared at odds with previous statements by Mr Hill, who in a speech to the American Enterprise Institute in 2006 said he had no influence over the Treasury action on BDA.
“We have a separation of duties and it is not for me to tell law enforcement people not to pursue and not to do their jobs,” Mr Hill said.
Bush administration officials who support the move – including those who disagree with the way it was unveiled - argue that returning the full amount was a less-than-ideal compromise that was necessary to ensure North Korea moved forward on the nuclear agreement. They also argue that critics of the deal underestimate the North Korean threshold for pain, meaning the regime is unlikely to crumble because of financial sanctions.
Officials also dismiss suggestions that the US has gone soft on North Korea by pointing out that the BDA ruling sent a very strong message to the international banking community about dealing with North Korea. They add that the US will continue to investigate alleged North Korean illicit activities and that
Jon Wolfsthal, a North Korea expert at the Center for International and Strategic Studies, welcomed the move to test whether Pyongyang was serious about movnig ahead with denuclearising.
”Holding denuclearisation hostage to $25m is short-sighted,” said Mr Wolfsthal.
Selig Harrison, a North Korea expert at the Center for International Policy who has been covering Asia for more than 50 years, expressed support for the policy shift. He said it was “essential” to convincing the North Korean regime that the US was serious about normalising relations, which is one of the stated end goals of the recent nuclear accord.
Mr Harrison said the move would also demonstrate to the North Koreans that US policy was less dysfunctional, because it showed that the administration was not prepared to allow Treasury to block progress towards denuclearisation. But he said further progress would require the US to stop sending the signal to the banking community that all North Korean financial transactions were tainted by illicit activity.
One Capitol Hill staffer said the Bush administration may have calculated that North Korea was finally prepared to move on the nuclear issue, so that it made sense to sacrifice the $25m for the possibility of nuclear disarmament.
“Chris Hill may believe North Korea is on the cusp of making a strategic choice [to disarm] and that is the big prize,” said the staffer.
He added that the Treasury shift came after the departure of Bob Joseph, the former state department hardliner on North Korea who “worked hand in glove” in opposing Mr Hill.
But critics say the deal was a victory for Kim Jong-il, the North Korean leader.
”I think the trade-off was a mistake and that the way it was handled only compounded the problem,” said Bruce Klingner, a former senior Central Intelligence Agency intelligence analyst on Korea now at the Heritage Foundation. “The ‘six-party talks progress uber alles’ philosophy is now running roughshod over principles such as adhering to international agreements and punishing those who violate them.”
The latest deal will likely face questions on Capitol Hill. Ed Royce, a California congressman, on Wednesday said: “The February 13 [nuclear disarmament] agreement is a package - with illicit activities included. It’s done that way because this issue reinforces the North Korean commitment to disarm. Retreating in the illicit activities area harms the overall process and odds for success. What type of signal does this send Pyongyang, which cheated on a previous agreement?”
Ping!
WHATTT
What Condi Rice thinking of
There is one million ton of heavy oil, light-water nuke reactor, massive food aid to follow. After all things are said and done, the difference of offered aid money between the two would narrow considerably.
Well, so much for the axis of evil. Looks like they fared better against us than the evil empire.
Unfortunately, I have to agree with you.
Sounds like a good strategy to separate NoKo from their [few remaining] apologists. This is a bait to show our "good face efforts" to the rest of the multi-party participants that we've gone the extra mile to enforce the terms of agreement.
If NoKo refuses to start allowing inspections and disarmament, there is no more excuses or phony accusations they can offer, it's over for them, and screws will be seriously tightened, next "agreement" will not be so "generous" for them. China is already cheesed off on Kim, if he starts causing problems after this "gesture of good will" he'll be in a heap of trouble with Chinese. They stand to lose the most, if their "client" doesn't play by the rules they helped set up.
$25 million "advance" of their own "frozen" assets is cheap and shrewd way to flush out Kim's intentions.
Good thinking by Condi, she is probably a good chess or poker player, 5 moves ahead of boneheads in State Dept.
We have been through the course you have just described. We were all led to believe that, if N. Korea set off their nuke, it is a last straw and all involved parties including China would enforce stiff sanctions. However, what happened? Chia shrugged it off after realizing that Japan is not about to go nuclear soon, nor scrap its pacifist constitution.
So what if N. Korea stiffs U.S. again? China would pretend to be annoyed. So would Russia. However, there would be no real change in their position.
Do you think that Dems would go along with ramping up pressure on N. Korea? Do you think that China would shut off all economic aid altogether?
More importantly, when it comes to disarmament and inspections, if N. Korea balks at thorough inspection on items not publicly disclosed yet, what would we do? Demand it steadfastly even at the risk of full-scale confrontation or resort to creative semantics and decided not to push it by saying that "it may not exist." There are many things that are under suspicion but not whose existence is not publicly confirmed, such as Yongbyon reactor. U.S. may forget about it, and take a stance that as long as they stay inside N. Korea, it won't push the matter. After all, it is important to smoothly pursue "strategic duologue with China."
Bush administration folks love to say again and again that if it fails next time, it would be the end, and tough retaliation would follow. Yet, they did not push it. It lost the political will. N. Korea knows it, and so does China & Russia.
What this administration is pursuing is to give the appearance of progress out of political expedience, and glory of State Dept..
Too many people worry about what would happen to their financial portfolio and shy away from the idea of confronting China in any meaningful way. In the era when just about everybody worries about financial portfolio, the fragility of financial market factors into the decision-making of national security matters. Financial market can be rattled badly and asset value could plunge if there is a major international crisis. People have become extremely risk-averse. That is the best weapon N. Korea and China have against U.S.
If you want on or off the list, go to the link for instructions. Otherwise, it won't be guaranteed that you will be put on or taken off (it still won't be 100% guaranteed, anyway, but will be much more hihttp://www.freerepublic.com/perl/post?id=1803421%2C1 Posting Commentghly probable).
No, we have not been on that course. Clinton's agreement had no enforcement or inspections provisions, it was "outsourced" to UN, a "kick the can" joke of a "solution".
The point is that some agreement with NoKo had to be reached *eventually* - I am sure nobody is advocating military attack on NoKo at this point. The fact that Kim himself agreed to inspections showed that China pressure strategy is working. Kim is China's problem now - not that they want it, but they got it. The tit-without-tat game is over, and everybody knows it now. Inspections and disarmament will start before substantial aid starts to flow... any temper tantrum and spigot turns off, and it wouldn't be so easy to turn it back on next time without more giveaways by Kim. It won't be smooth, but it's a serious progress - short of military action. We made the first "gesture of good will", from now on it's "turtles all the way down" - Kim's turn. Flow of aid will never be comfortable enough for him to stop and go back. It's just a matter of execution now, when in Albright's case there was nothing to execute - it was a sham because it was designed to be a sham.
NoKo is "contained" for the moment, and maybe permanently, and at the very least Kim's position is severely weakened. We have truly serious issues with Iran (much shorter fuse, threat is more immediate, and more volatile), we shouldn't get distracted with NoKo strategies right now, only execution - the train is on the rails and it's only a matter of execution and time. If we have to bomb them someday (if Kim totally loses his cool), there will be no excuses and we'll have their neighbors on our side for a change. Kim presents far more danger to China now, that was not done in the case of bilateral Clinton agreement.
Outside of verifiable disarmament agreement, and step-by-step enforcement, what other options (short of military) could one expect or hope for? Kim will try to play games, but we know that and prepared for it now, and we are not in this alone anymore, neighbors have "skin in the game" now, and UN is not "involved" with their feckless "inspections".
Overall, much better than one could expect from our State Dept.
on the flip side, a ton of poker players money sitting in Neteller has been frozen. That'll show 'em!
North Korea and its ally Red China can tally up another success.
I wonder if Ms. Albright will be sent back over to publicly celebrate our new Sunshine policy since apparently she has been declared persona grata in this process.
hypocrisy is the theme of the bush administration
why change the tune when you're tone deaf?
Brillinat,< /s>
Great job there condi ya dope.
No, we have not been on that course.
Yes, we have. I was referring to Bush admin's actions about N. Korean nuke test, not sorry-ass Clinton's escapade. Bush and China appeared to draw the line on the nuke test, but when it happened, China did not do much, and let it slide. Bush was initially serious but swiftly backtracked himself after losing mid-term election. That is why I said we have been through this course before. I do not understand why you got it wrong. Perhaps you are referring to the characterization of Condi=Maddie. Condi may have an improvement on some issues. However, lacking firm resolve is the same in both cases. Whatever the Condi's improvement is, it is woefully short to impress Kim Jong-il. No wonder Kim Jong-il and Kim Kye-Kwan are all smiles these days.
The fact that Kim himself agreed to inspections showed that China pressure strategy is working.
Yeah, N. Korea can let us inspect and eventually shut down a few well-known installations which are no longer really productive. What about N. Korea's not-yet-detected secret facilities and bombs? Are you going to take N. Korea's words on it? Certainly, we don't know exactly how much plutonium they have, nor the extent of HEU program, or other secret facilities. If N. Korea submits report on a fraction of what they have, how would U.S. determine if N. Korea has cheated U.S. again. As I said in the previous reply, is U.S. prepared to demand inspection to resolve all suspicions? N. Korea would balk and make hissy fit again. What would U.S. do? Just pretend that China would resolve it to U.S.'s satisfaction? If China muddles along not resolving it, what leverage does U.S. have? Is U.S. prepared to slap some punitive measure against China? I doubt it.
Outside of verifiable disarmament agreement, and step-by-step enforcement, what other options (short of military) could one expect or hope for?
It is a disingenuous mischaracterization to cast this as military option vs. current negotiation. Negotiation can proceed step-by-step for disarmament. To convince it, we need to put longer and harsher sanction against N. Korea. When N. Korea feels that it has truly run out of any option, then it might seriously negotiate. This can be certainly done while Iran crisis is still brewing.
This all boils down to what serious leverage U.S. has on China or S. Korea. So far I see little or none. U.S. had enough trouble to raise a measly fraction of Yuan's value over several months. I need to hear convincing case of how China would behave different now. If it is a classified matter now, fine. Then you don't have to tell me, but I can't subscribe to your argument until it gets unclassified and becomes public knowledge.
Remind me again what Bush's options were?
If nothing was done, no pressure on China was applied, then why did Kim not just go on doing what he was doing? Why do an about-face, just to start playing games with their [now] only benefactor China? China didn't mind Kim being a thorn in our side for awhile, but now that Kim is a bigger thorn in their side, his games are becoming their problems - they don't need him anymore, this "useful idiot" has outlived his usefulness to them and became a burden. They can't milk him anymore, like they used to. The point was to impress on China that Kim's games were more dangerous to her than they are to us. He might still try and play games but the result of the endgame is now understood. That's the success of our strategy.
Again, Kim is "contained" for the moment, any wrong move now and they risk alienating the only hope he has of surviving. He can have no assurances now that China doesn't just cut his lights out. NoKo has nothing to offer to buy anybody else's loyalty or devotion in sufficient numbers to go on for a long time. He has nothing to sell that China can't sell more and better.
As a result, we now have partners who are finally "involved" and have a self-interest and responsibilities to keep NoKo in check and step-by-step process of distributing flow of aid from them - substantially different from what we had before. I didn't expect at any time Kim signing terms of unconditional surrender on the deck of USS Reagan.
We now have time to concentrate on real pressing issue at hand - Iran. Once Iran is resolved, and if we are still unhappy with how NoKo is going, we can then start tightening the screws there. Priorities are important, and you have to give a little to get most of what you want, but it will take time. Soviet Union didn't fall apart in one day, no matter how abrupt it seemed at the time.
Condi has political perspective to understand that :
Condi Rice speech at Princeton University September 30, 2005
http://www.state.gov/secretary/rm/2005/54176.htm
(there is also a link to video)
Everthing you just wrote was used to justify Maddie Halfbright's deal with the Norks.
Just how many times do you suggest we go down this road before you see the light?
(Fool me once... shame on you. Fool me twice...)
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