|The Issue of Financial Sanctions against North Korea |
|The US Treasury Department on March 14 announced the final results of its investigation of the Macao-based Banco Delta Asia (BDA), where accounts related to North Korea have been frozen. Recognizing that the BDA allowed money laundering and other illicit acts, the department has officially banned transactions between the BDA and US financial institutions, left the handling of the frozen North Korean accounts, amounting to a total of $25 million (about 2.9 billion), to the Macao authorities from now on, and also stated that Washington is ready to continue financial consultations with Pyongyang. As a result, the United States has in a way fulfilled its promise agreed in last month’s six-party talks to resolve the issue of financial sanctions within 30 days as an initial-phase measure toward the denuclearization of North Korea.|
It was in September 2005 that the United States deemed the North Korean–linked accounts at the BDA to be involved in illegal acts and designated the bank as a primary money laundering concern on the basis of US domestic law. Since then, the US investigation had been making headway with the cooperation of the Macao authorities, and it was suspected that the illegal acts covered a wide range, including the use of counterfeit US banknotes, the illicit trade of drugs and fake brands of tobacco, and activities leading to the proliferation of weapons of mass destruction. The total amount of money laundering was thought to reach several hundred million dollars.
In the six-party talks in November 2005, North Korea strongly called for a lifting of the financial sanctions and brought the talks to a standstill for more than a year. During that time, North Korea carried out missile-test launches and a nuclear test. In the six-party talks held in February 2007, however, a joint statement was adopted that stipulated North Korea’s abandonment of its nuclear programs in return for assistance from the related countries. The lifting of the financial sanctions this time means the removal of one of the pending issues impeding the further development of the talks.
On March 15 Prime Minister Shinzo Abe stated to reporters about the partial lifting of financial sanctions by the US government against North Korea, “It had been expected, so I don’t think it will have a big impact on talks between Japan and North Korea and other matters.”
Japan’s main newspapers all carried editorials on the issue of the lifting of financial sanctions in their March 16 editions.
Under the headline “Lifting U.S. sanctions won't rein in N. Korea,” the Yomiuri Shimbun editorial noted, “The money, which has been judged as having no connection with any illegal activities, will be returned to North Korea. The U.S. decision, in effect, paves the way for unfreezing these accounts at the bank. But some observers have pointed out that perhaps less than half of the North Korean funds frozen at the bank will be released. Although the next step is entirely in the hands of the Macao authorities, any partial lifting of North Korean assets would not necessarily lead the reclusive state to agree to abandon its nuclear development programs in line with the agreement reached at six-party talks.” It stressed, “The United States quite justifiably criticized the Macao bank for its lax auditing and discipline and took the legal measure of banning transactions between the Macao bank and U.S. financial institutions. Continued monitoring of these illegal activities is essential.” The Yomiuri also commented, “At the six-party talks held in February, participants agreed to offer North Korea energy aid in return for Pyongyang taking the first steps to stop the operation of and seal nuclear facilities at Yongbyon within 60 days, measures that would halt the production of plutonium. An airtight process for permanently dismantling Pyongyang’s nuclear development programs remains elusive. Now is an important stage at which relevant countries must take necessary steps toward the goal.”
The Mainichi Shimbun editorial, titled “Don’t let North Korea’s belligerence pay off,” stated, “The question will be whether North Korea shows a sincere attitude toward the abandonment of its nuclear programs in the various working groups. North Korea is saying that it will only respond to partial measures unless the financial sanctions are fully lifted, but that is absurd.” It emphasized, “In order for the next talks to be fruitful, it is essential to take steps not to allow North Korea’s belligerence to pay off. Japan and the United States must maintain coordination with China, South Korea, and other countries and be prepared to tighten the reins if necessary.”
The Asahi Shimbun editorial, titled “Financial sanctions: Pyongyang needs to keep the big picture in focus,” observed, “The key here concerns suspicions of North Korea’s involvement in the laundering of forged U.S. dollars and other illicit monies connected to criminal behavior. It makes little sense, therefore, to link the matter to the six-way talks. But if North Korea remains so adamant on sticking to that stance, then the issue surely must be seen as a possible bargaining chip for advancing progress on the nuclear standoff.” Regarding Pyongyang’s recent declaration that “without a total release of its BDA account balance, the measures agreed to on its nuclear program would be limited in application,” the Asahi said critically, “This is a selfish demand. There is no viable linkage between the six-party consensus and the Macao controversy. North Korea should act in good faith and promptly sit down for talks with the IAEA [International Atomic Energy Agency].” It concluded, “These critical negotiations are on the verge of turning the corner from bargaining into the realm of realization. At this crucial juncture, North Korea should keep the big picture in focus.”
Under the headline “The US must not break the basic principle of its North Korean policy,” The Nikkei editorial commented, “Ahead of the six-party talks that will be resumed on March 19, this move presents a carrot to North Korea in order to accelerate the nuclear talks, but the North is showing a stance of only responding to the initial-phase measures toward denuclearization bit by bit until the full lifting of the sanctions. We strongly hope that the United States does not fall into the North’s trap and make more concessions, thereby taking the sting out of the policy of ‘dialogue and pressure.’”
The Sankei Shimbun editorial, headlined “Too early for the North to laugh,” commented, “Against Iran also, in September 2006 and January 2007 the United States invoked financial sanctions on two state-run banks on the basis of the Patriot Act. The sanctions have had repercussions on the financial institutions of other countries, and the sense of crisis in Iran is said to be increasing. We want to closely watch the impact on North Korea as well. The next focal point will be the problem of Washington’s lifting of its designation of North Korea as a state sponsor of terrorism. This problem involves the abduction issue. If Washington abandons the abduction issue, criticism of the United States will surge among the Japanese. We hope that from now on also the United States will not make any easy compromises.”