North Korea: So If the Banking Issue Is Resolved, What’s Next?

in Program

By Alan D. Romberg – Reports from Seoul, Moscow and Washington indicate that a way has been found to transfer $25 million of North Korean funds from the tainted Macau Banco Delta Asia (BDA) to a DPRK account in Russia via an American bank. This would presumably satisfy Pyongyang’s demand that it not only receive all of the funds in the Macau accounts that have been “on hold” for the past year and a half while BDA was being investigated for complicity in money laundering, but that the transfer take place as a “usual” bank transfer (rather than, for example, showing up at the bank’s door with a large carpet bag).

If this “technical” issue is finally resolved, one can expect the DPRK to fulfill its obligations under Phase I of the 13 February “Initial Actions” agreement. That is, it will “shut down and seal” its Yongbyon nuclear facilities under IAEA monitoring and verification and it will “discuss” with other parties its nuclear programs that will eventually be abandoned pursuant to the Joint Statement of 19 September 2005.  

Of course, the other parties also have obligations in this phase. These include not only the provision of emergency energy assistance equivalent to 50,000 tons of heavy fuel oil, but, on the US part, for example: starting bilateral talks aimed at resolving bilateral issues and moving toward full diplomatic relations; beginning the process of removing the designation of the DPRK as a state-sponsor of terrorism; and advancing the process of terminating the application of the Trading with the Enemy Act with respect to the DPRK.  
What “discussing,” “starting,” “moving toward,” “beginning” and “advancing” mean in this context is likely to be somewhat contentious, with the North trying to push in the direction of “completion” while the United States will take a far more constrained view.  

Still, it seems unlikely that the process will bog down at this point over those issues, though they will assume greater importance if and as the process moves forward.  
Once the parties have taken the above actions, we move into Phase II of the “Initial Actions” agreement.  And it is here that things could bog down. It is in Phase II that the DPRK is obligated to provide “a complete declaration” of “all” nuclear programs as well as to undertake the “disablement” of “all” existing nuclear facilities in exchange for receipt of an additional tranche of energy assistance equivalent to 950,000 tons of heavy fuel oil.  

At least two issues stand out as deal breakers. First, the United States will insist that in some way the DPRK account fully for the materials and equipment obtained for a uranium enrichment program over the past decade. The North has denied having an enrichment program. The art of the diplomacy here will apparently involve a prior discussion about uranium enrichment, which the North hopes will satisfy the United States without having to admit the existence of an enrichment program or declaring it under the Phase II requirements. This may not prove impossible, if a full accounting is otherwise obtained. After all, the point is not to pin the North to the wall, forcing it to confess it has (or had) a “program” and to recant, but rather to deal with what is known to have been an acquisition program in such a way that any materiel and equipment is controlled and eventually removed.  
Second, the question of “disablement” is very likely to prove contentious. The United States clearly has in mind some action that will make it very difficult (i.e., time-consuming and expensive) to restart any “disabled” facility, while the North is virtually certain to take a minimalist position on what “disabling” means. Again, this doesn’t mean eventual agreement is impossible, just that it is not likely to come easily or quickly.  

Finally, as everyone acknowledges, the 13 February “Initial Actions” agreement is just that, an initial set of steps that still leave one short of implementing the heart of the 19 September 2005 Joint Statement: the denuclearization of the Korean Peninsula. At a minimum, success in that endeavor is viewed skeptically by many people as inconsistent with the North’s conception of its nuclear weapons as the ultimate guarantee of the DPRK regime’s survival. At a very minimum, it would require a total transformation of the relationship with the United States to a degree that would convince the North Korean leadership it no longer faced a threat from America (and hence did not need a nuclear deterrent). For the military leaders who now feel they have a “proven” nuclear deterrent, it will be a hard sell to trade such a physical capability for the ephemeral benefits of normalization of relations with Washington. Especially if “Dear Leader” Kim Jong Il is incapacitated, as some Western media are reporting, the role of the military-already extremely strong-will be decisive.  
This is not the moment to review why we never needed to get to this point with the North and how the Bush Administration drove us here by pushing things in the wrong direction during its first six years in office. But at some point it will be important to review that history in order to avoid repeating it when things get tough in the current negotiations, as they inevitably will.


Share on twitter
Share on facebook
Share on linkedin
Share on email
Choose Your Subscription Topics
* indicates required
I'm interested in...
38 North: News and Analysis on North Korea
South Asian Voices