Thursday, March 15, 2007

Another Baby Step in the 6PT

Glenn Kessler and Ed Cody of the Post report that the US Department of the Treasury has ended its investigation of Banco Delta Asia and has formally ordered US banks to cut ties with the Macau-based bank of international fame.

The decision was apparently released immediately (timing is different from causality) after Mohamed ElBaradei's recent meeting in Pyongyang. According to Elbaradei, DPRK officials expressed a willingness to shut down the reactor but only after the US lifts the measures that have frozen the ~$25 million in DPRK linked accounts at BDA.

At first glance, I failed to see how this was a step forward. The article notes, however, that the move will allow officials in Macau to release the funds. A second Post article (cited below) suggests that the ending of the investigation allows the US to place specifc restrictions on BDA, as opposed to blanket restrictions...thus increasing its options with regard to financical transactions. Interestingly, depending on how the DPRK reacts, it could turn out that some parties are happy because the US just instituted strict financial restrictions on BDA and publicly condemned it. Funny how that works out.

So I guess the US wins because it gets to lay into the bank about it's poor practices and chastise the DPRK about the funds and how they were managed and the DPRK wins because it gets its money back with little in the way of overt punishment (with the exception perhaps of the inconvenience or underlying economic trouble caused by the freeze since it was put in place...and I haven't seen figures on this).

It's also interesting to note that it seems there's a lack of clarity on whether this will placate the North. Does this speak to the lack of clarity in the negotiations that took place (listing measures to be taken and what would be considered acceptable), to a lack of faith in the North's underlying intentions, or to a lack of understanding on the part of outside officials as to what the DPRK's end goals are? Probably a bit of each.

The North hasn't issued an official reaction yet. But China has. Chinese Foreign Ministry spokesman Qin Gang expressed, "...deep regret for the ruling by the U.S." He didn't explicitly say why, but others guessed it might be partly out of concern that the move could affect the denuclearization process and partly out of concern for China's reputation (in terms of Macau). Assistant Secretary of State Christopher Hill, in part, agreed, saying with reference to China, "They want to make sure that Macau's reputation is intact, so I am not surprised."

Well, the working groups are at it...working one would assume. Let's see what comes out of the round-up meeting on Monday. (My guess: very little information, a couple of pithy, uninformative quotes, general optimism, and an agreement to have more meetings.)


Eric said...

This move is the most impressive foreign policy I have seen in regards to North Korea since the July missile tests. I am almost surprised it was developed and approved by the powers that be.

It is a great policy for the US - first, it basically guarrantees the destruction of BDA with the blood on the hands of the Macau authorities. Second, the US maintains the strong position that the goings-on at BDA were illicit and no exoneration is given to either BDA or NK (as NK hoped for). Third, NK only has a small amount of room to complain (and they will), because they're going to get the funds back before BDA is dismantled. For you Office fans, it's a win-win-win.

Erin Robinson said...

At this point, everyone's reactions seem to make sense. China can protest because they have nothing to lose by it, and it can perhaps reaffirm to the North Korean government that they are on their side, while not really angering the US at all. For the US there was no way they could not place the bank on restrictions or do something after investigating it for so long, and this way North Korea appears to get its money back (I don't know that much about banking so I'm going off what the others have said). Does this move impact anyone else?

But yes, it seems to be logical moves all around, which will be good for continued negotiations, I would guess.

In terms of placating the North, i would guess you're right, it's just hard to know what exactly they would. I would think it would, because the US is criticizing the bank, not the DPRK directly? Maybe? And they get their money, which they wanted. So that would seem effective. But who knows?