North Korea talks break down again!

Just as other press releases inform us the bank issue is solved this happens. I am not surprised at all. In fact in an earlier post I had predicted that US actions on the bank might very well cause problems. This article is not very useful in that it does not give details or even try to find out North Korea's reasons. However, the US decided to ban all US banks from dealing with the Macau bank and accuses it of money laundering etc. The money released is probably only a partial release of what the US might term "clean" money but this is hardly what North Korea expected. At the time of the US decision it was clear that China for one was very displeased with the US action. It knew what might happen. Of course things could very well be patched up so we will just have to watch but given the Bush administration's penchant to demonise North Korea and opposition to the deal among some in the administration things could fall apart completely. However, maybe the Bush administration has enough problems on its plate so that it will keep this issue on the back burner.

N. Korea departs nuclear talks after Macau bank row
Last Updated: Thursday, March 22, 2007 | 5:59 AM ET
CBC News
North Korea's chief nuclear envoy flew home from Beijing Thursday after disarmament talks broke down.

Kim Kye Gwan refused to participate in the six-party talks that had dragged on this week with little success, apparently dissatisfied with a deal to transfer about $25 million of North Korean funds frozen in a Macau bank.

North Korea has refused to take part in the talks aimed at pushing forward a Feb.13 agreement to dismantle its nuclear facilities before the issue of the Macau funds is resolved. The U.S. said on Monday that the North Korean money would be transferred from the Macau bank to a bank in China following money-laundering investigations.

The transfer did not happen quickly enough for Kim, who departed without discussing the next steps in disarmament, leaving the remaining five nations frustrated with the lack of progress.

Kim waved to reporters when he arrived at the Beijing airport but did not comment.

Under the February disarmament deal, Pyongyang agreed to start shutting down its nuclear facilities in exchange for energy aid.

The six-party negotiations between North Korea, South Korea, the U.S., China, Japan and Russia began Monday in Beijing and were to end on Wednesday. But the talks dragged on until Thursday at the insistence of North Korea to discuss the issue of the money held in Macau.

With files from the Associated Press

US official says Macau bank issue resolved.

THe North Koreans demanded that the US lift sanctions on the Macau bank. They did not do that. Quite the opposite they re-imposed a ban on US banks dealing with the bank. The Chinese were not impressed. The North Koreans have kept their cool so far. The spin put on this by the US is ludicrous and headlines dutifully repeat it. Macau bank issue supposely resolved when the exact opposite is the result of the US policy.

Dispute over N. Korean money in Macau bank resolved: U.S. nuclear envoy
Last Updated: Friday, March 16, 2007 | 5:45 AM ET
The Associated Press
The top U.S. nuclear envoy insisted Friday that a dispute over North Korean funds held in a Macau bank has been resolved, potentially removing a key stumbling block that has bedevilled progress on dismantling Pyongyang's nuclear weapons program.

Meanwhile, the UN top nuclear inspector told envoys to international arms talks that Pyongyang reassured him of its commitment to following the February agreement that laid down initial steps for disarmament including co-operation with International Atomic Energy Agency inspectors, Japanese officials said in Beijing.

However, IAEA head Mohamed ElBaradei, who visited Pyongyang earlier this week, said the North had stressed that the other countries at the arms talks also needed to honour their commitments — repeating demands for the lifting of sanctions on the Macau bank, a Japanese delegation member said on condition of anonymity because of the sensitivity of the issue.

North Korea has yet to react publicly to the U.S. decision Wednesday to ban American financial institutions from dealings with Macau's Banco Delta Asia for its complicity in North Korean money laundering.

The bank had been blacklisted by the U.S. Treasury Department since September 2005, leading to a freeze of $25 million US in North Korean accounts.

The North boycotted nuclear talks for more than a year over the bank issue, during which it conducted its first nuclear test in October. But North Korea agreed to move toward disarmament after the U.S. promised to resolve the bank issue.

No question bank issue resolved: Hill
U.S. Assistant Secretary of State Christopher Hill said Friday there was no question that the issue had been solved.

"I think they want assurances that the Banco Delta Asia issues are resolved and we can give them those assurances that it is resolved," Hill told reporters.

His remarks came a day after China expressed "deep regret" over the U.S. decision.

A senior U.S. Treasury Department official, Daniel Glaser, is to travel to Macau to share the report's findings with officials there on Saturday. That could lead to the Macau government releasing some of the funds deemed to have resulted from legitimate business.

Banco Delta Asia, however, said it would appeal the ruling. It also denied that it "knew or suspected" that its North Korean customers were engaged in money laundering, said Stanley Au, chairman of Delta Asia Group (Holdings) Ltd. The bank is a unit of the group.

Under the landmark Feb. 13 disarmament agreement involving North Korea, the United States and other regional powers, Pyongyang has pledged to shut down its main nuclear reactor and processing facility and allow UN inspectors for verification by April 14.

In return, North Korea would receive energy and economic assistance and a start toward normalizing relations with the U.S. and Japan.

North Korea is eventually to receive assistance worth 907,000 tonnes of heavy fuel oil if it fully discloses and dismantles all nuclear programs.

Working groups to implement the pact are meeting in Beijing this week ahead of a full session of the six-nation talks Monday.

How to make agreements come unstuck!

While the Banco Delta Asia may unfreeze some North Korean assets US banks are banned from dealing with the bank. This will no doubt severely hurt its banking activity. The reaction of the Chinese clearly shows that this will cause difficulties for upcoming talks. I suppose people will express surprise if there are new problems when the talks begin again.

Rift opens over U.S. bank move ahead of nuclear talks
Thu Mar 15, 2007 7:54 AM EST



By Chris Buckley

BEIJING (Reuters) - A rift opened between the United States and China on Thursday on how to end a dispute about North Korean bank accounts, with China angry over a U.S. decision it said might harm talks to end Pyongyang's nuclear threat.

U.S. envoy Christopher Hill said the decision on North Korean accounts frozen in Macau's Banco Delta Asia (BDA) would help advance a deal obliging Pyongyang to close the reactor at the heart of its nuclear weapons program.

"I think we have fulfilled what we need to do," Hill told reporters of the bank decision. "I think we will get ourselves into a situation where BDA will not pose a stumbling block to the six-party process."

Those talks, which group the two Koreas, the United States, China, Japan and Russia, struck an accord on February 13 giving North Korea 60 days to shut its Yongbyon reactor in return for energy aid and security pledges. The United States then also promised to defuse within 30 days North Korea's complaints about the bank crackdown.

Pyongyang had no immediate comment on the bank move in which the U.S. Treasury Department barred U.S. banks from dealing with Banco Delta Asia.

The Treasury's announcement signaled an end to its 18-month investigation in Banco Delta Asia, which the United States says was a "willing pawn" in illicit North Korean financial dealings.

The U.S. move will allow the Chinese-controlled gambling enclave of Macau to decide whether to release an estimated $8 million to $12 million in frozen accounts.

But China, which worked closely with Hill in the disarmament talks, abruptly criticized the U.S. decision, raising the risk the dispute has not been laid to rest ahead of fresh disarmament talks scheduled in Beijing next week.

"We express our regret at the United States insisting on using U.S. domestic law to apply a ruling," Foreign Ministry spokesman Qin Gang told a news conference.

The spokesman, grim-faced and notably downcast, said that China wanted any decision on the North Korean accounts to help protect Macau's financial and social stability and to help the six-party talks, which were stalled for more than a year over North Korea's anger at the bank squeeze.

REGRET

"The reason China has expressed its regret because we have those two concerns and these should be fully taken into account," Qin said.

When pressed to elaborate on China's worries, Qin simply repeated the two concerns.

The Macau monetary authority also expressed "regret" over the U.S. decision, and said it would take steps necessary to maintain Macau's financial stability.

The bank move was the latest in a burst of diplomacy ahead of the talks on Monday aimed at implementing the first phase of the disarmament plan before a 60-day deadline.

International Atomic Energy Agency chief Mohamed ElBaradei was in Beijing on Thursday after visiting North Korea to negotiate the return of IAEA nuclear inspectors to the country.

ElBaradei said North Korea would be ready to re-admit its inspectors for the first time since the North kicked them out in late 2002, but that Pyongyang had made settling the dispute over what Washington has called illicit banking a condition for moving forward with denuclearization.

In September 2005, Washington labeled BDA a "primary money-laundering concern" that helped funnel Pyongyang's takings from counterfeiting U.S. money, drug trafficking and other misdeeds.

Chinese spokesman Qin did not directly answer questions about whether his country would raise the bank issue in the six-party talks and what Beijing hopes Pyongyang's response will be.

"We will express our concerns to the United States through suitable channels," he said. "I can't speak for North Korea."

Pyongyang stunned the world last October with its first nuclear test, drawing widespread condemnation and U.N. sanctions.

An Australian diplomat who visited the reclusive country this week said on Thursday the North Koreans had assured him they were committed to seeing through the February 13 deal.

(Additional reporting by Lindsay Beck in Beijing and Chisa Fujioka in Tokyo)