Sunday, June 10, 2007

DPPRK - PRC And Dollars

Last February, North Korea agreed to shut down it’s one and only nuclear reactor but it never really happened. News today is that the DPPRK reactor resumes operations in Yongbyon after a few days of “maintenance” downtime. The problem in Dear Leader’s mind is that millions of dollars in North Korean funds are still effectively frozen at Macau based Banco Delta Asia (BDA). The monies were sequestered as suspected gains from illegal activity and the United States is expressing concerns the NORKs may have recidivist tendencies.

North Korea's Frozen Funds: BDA is "complicated" for the State Department for the reason that it does not have the legal power to end the bank's blacklisting. The Treasury Department has that power. The blacklisting of BDA came about through Treasury's imposition of a regulation following a period of public notice and comment that set the table for an 18-month US government investigation of the Macau bank, whose results remain secret. If that regulation were lifted, DPRK funds on deposit at BDA or any other bank could once again circulate freely through the global banking system. More importantly, the Six Party process that has ground to a halt over the BDA issue could resume and contribute toward the easing of tensions in Northeast Asia. Treasury, however, remains unwilling to withdraw the regulation.

Diplomacy has ground to a halt as Kim Jong-Il insists on getting his money before agreeing to play nice with the rest of world. Meanwhile South Korea continues to withhold food aid to the NORKs until the nuclear weapon program goes away. Yet in the larger picture, the real diplomacy action may be reminding the Chinese that our economies are extensively intertwined and behaviors causing problems with our finances can also be unhealthy for theirs. Consider this tidbit from the prior source.

David Asher, once the State Department's point man on North Korea (now with the Heritage Foundation), has made the revealing admission that BDA "had never been the main offender in Macao." Despite "voluminous" evidence of money laundering at other Macau banks, BDA was blacklisted because it was "an easy target in the sense that it was not so large that its failure would bring down the financial system." He stated that "Banco Delta may be a sacrificial lamb in some people's minds, but it is not about Banco Delta." The real target, Asher said, was several larger Chinese banks committing financial crimes in collusion with the DPRK.

The frustrating thing about diplomacy is there is no end point because goals continually change. I suppose that makes for really good permanent employment opportunities. But still, someone needs to just insist that all money laundering and atomic bomb building will stop March 31, 2008, so America can get back to expanding our a national healthcare bureaucracy.