Re: USA's Economic Campaign against No.Korea


Read the following article from english.chosun.com. PyongYang regime
demands rice from Seoul
government. In other words, PyongYang thugs never knew and never will
know how to fix their
economy and yet demand aid. PyongYang thugs blame others, never
themselves, for wrongs
they themselves caused.


--- english.chosun.com article follows ---

Surprise N.Korean Demands Delay Cross-Border Talks

North Korea Wants It in Writing
Inter-Korean economic cooperation talks snagged Thursday on North
Korea's demand for a draft agreement on South Korea's provision of
rice aid before negotiations began. The talks opened seven-and-a-half
hours late at 5:30 p.m. The ongoing talks are the first in 10 months.

The two Koreas were to have started a general meeting at 10 a.m. North
Korea's demand came unexpectedly since officials took no issue with
the agreed agenda until the Thursday morning. But at 9:40 a.m., 20
minutes before the meeting was to start, a North Korean liaison
officer abruptly demanded a preview of South Korea's keynote address
texts, draft of a joint press release and agreement on rice aid. When
the South declined, the North at 10:20 changed the demand to keynote
speech texts only. The South declined again, and the North postponed
the meeting to 4 p.m. and instead proposed making the meeting public.
The South Korean delegation demurred citing the customary practice of
keeping inter-Korean talks closed, and proposed a meeting of chief
negotiators.

Why did North Korea make the unusual demands on the first day of the
talks? A government official said Pyongyang apparently wanted a sneak
preview of South Korea's negotiating strategies and goals, in
particular to discover what Seoul has in mind about 400,000 tons of
rice it has promised. When South Korean delegates urged Pyongyang to
abide by the Feb. 13 denuclearization agreement, the North Korean
delegation walked out of the meeting, protesting this was not a topic
for economic talks.

In its own keynote speech, North Korea proposed establishing a North
Korean bank in the inter-Korean Kaesong Industrial Complex. The North
wants to conduct foreign currency transactions with the Kaesong branch
of South Korea's Woori Bank via the proposed bank. Seoul's delegation
reportedly declined this as well. A South Korean spokesman said it
will be difficult to permit inter-Korean foreign currency transactions
since the two Koreas have not signed a Corress Agreement, an interbank
currency transaction accord. North Korea last September asked to open
accounts with Woori's Kaesong branch after it was barred from foreign
currency transactions due to U.S. financial sanctions.

(englishnews@xxxxxxxxxx )

--- end of english.chosun.com article ---


On Apr 20, 11:05 am, NY.Transfer.N...@xxxxxxxxxx wrote:
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USA's Economic Campaign against No.Korea

Via NY Transfer News Collective * All the News that Doesn't Fit

Counterpunch - Apr 18, 2007http://www.counterpunch.org/china04182007.html

Gold Digging

The U.S. Treasury Department's Economic Campaign Against North Korea

By CHINA HAND

Reality-based reporting is making a comeback on the matter of Banco Delta
Asia -- fgthe little Macau bank with the frozen North Korean accounts that
has held up execution of the Six Party Agreement for almost two months.

McClatchy's Kevin Hall is one of the few journalists who has followed this
issue closely and critically. He recently posted two important articles on
BDA.

As a result, a clearer picture is emerging of a concerted U.S. effort to
exceed the scope and intent of U.N. sanctions by exploiting the domestic
exigencies of the Patriot Act Section 311 anti-money laundering powers as a
pretext for pursuing a worldwide economic blockade against North Korea.

Now the imperatives of the Patriot Act have collided with the demands of
U.S. diplomacy over the issue of Banco Delta Asia. Diplomacy dictates that
the BDA decision be overruled, but elements within the Bush administration
are unwilling to surrender or curtail the investigatory and sanctioning
power they enjoy under the Patriot Act for the sake of the Six Party
Agreement.

The Bush administration's head might understand the superiority of the
State Department's diplomatic approach to the North Korean (and Iranian)
problems, but its heart is with the coercive anti-diplomacy of a faction
within the Treasury Department.

Apparently unwilling to choose between one or another, the Bush
administration has awkwardly attempted to split the difference and as a
result its diplomacy in North Asia is thrown into confusion.

Now an unwelcome light is being cast both upon the use of Patriot Act
Section 311 as a policy -- as opposed to a national security-tool, and on
the role of the Treasury Department in exploiting, misrepresenting, and,
quite possibly abusing the Act in turf struggles with realists in the State
Department.

At the heart of the BDA matter is the Bush administration's fundamental
conundrum in Asia-whether it should confront or conciliate China.

Hall's first article, Money laundering allegations by U.S. false, report
says describes the (relatively) clean bill of health Ernst & Young gave to
BDA in its audit, characterizing it as a legitimate bank doing legal
business, albeit with weak internal controls, and debunks the counterfeit
supernote moneylaundering canard.

The second article, Gold sales may have spurred Macau bank's blacklisting,
posits that the real motive for the crackdown on BDA was to cut off North
Korea's (legitimate) gold bullion sales, noting that BDA purchased and
resold about $110 million of North Korean gold.

The significance of McClatchy's reporting is that it further undercuts the
U.S. assertion that the BDA sanctions executed under Section 311 of the
Patriot Act were independent Treasury efforts to protect U.S. currency from
compromise by counterfeit currency and prevent terrorists from exploiting
the world financial system--and should not, indeed can not, be subordinated
to the exigencies of U.S. diplomacy.

However, cutting off bullion sales by the North Korean government was not
part of the U.N.-approved international sanctions regime against
Pyongyang's WMD industries; and it could not be construed as a legitimate
pretext for sanctioning BDA under the Patriot Act.

Cutting off North Korean government sales of bullion looks like part of a
campaign of economic blockade and financial warfare that goes beyond the
targeted sanctions regime endorsed by the United Nations.

And using Patriot Act Section 311 as the means to shut down BDA's bullion
purchases from North Korea looks less like a legitimate use of the Act to
protect U.S. national security and more like an element in a campaign of
coercion on behalf of a unilateral United States foreign policy-a secret
policy that had regime change at its heart.

As to the question of how important BDA was to North Korea's gold bullion
sales, I will admit to being an agnostic.

Gold is as good as...gold. People like it, especially when desperate
sellers provide a discount, as North Korea probably does.

North Korean gold is probably not that hard to sell, even in the context of
North Korea's rumored production of six tons per annum and in the face of a
U.S. campaign to cut North Korea off from the world financial community.

What the United States has probably accomplished is simply to make it very
difficult for North Korea to trade gold on the established international
markets, and force it to dispose of the gold at a less desirable price.

As the Christian Science Monitor reported in January:

One indication of North Korea's need to sell gold was its decision to
provide information needed by the London Bullion Market Association
(LBMA) to list the North's central bank as a "good deliverer" of gold
and silver. Listing with the LBMA is essential for refiners who want to
sell their products in London. The bank's listing was suspended 2-1/2
years ago when it failed to respond to LBMA requests for "proactive
monitoring."

The LBMA said it does not "take into account any political criteria,"
and will keep the bank on its rolls for another three years without
monitoring.

Despite the listing, market experts say the big banks that are major
buyers of gold and form the LBMA's core membership are not likely to
flout the spirit of the US Treasury order against Banco Delta Asia,
through which North Korea exported gold prior to the ban.

"The fact that they're on the list does not mean they can deliver to the
London market," says Stewart Murray, the LBMA's chief executive. "When
we have sanctions, none of the facilities will accept delivery from a
company or a country that is subject to these sanctions."

Of course, North Korean gold exports haven't been officially banned, so
Murray's statement that, despite being listed as a "good deliverer", North
Korea was not allowed to sell gold on the London market makes little sense
except in the context of a U.S. campaign to discourage trade in North
Korean gold on the London exchange, using either diplomatic pressure or the
threat of some Treasury enforcement action.

Colin McAskill -- who purchased Daedong Credit Bank, the bank which has $6
million in funds tied up in BDA -- has been campaigning to make it possible
for North Korean gold bullion and other metals to be sold freely on the
international market, thereby making foreign investment in North Korea's
gold and other metals and raw materials industries more feasible and
attractive.

I wonder if McAskill's enthusiasm for bringing North Korea in from the cold
on gold sales is a reason why the obviously legitimate and private
character of his bank's account at BDA has been ignored by the champions of
the free market and capitalism at the Treasury Department and, instead of
being repatriated separately, his monies will disappear into Kim Jung Il's
suitcase as part of the funds "resolution".

As befits its anonymous, fungible character, North Korean gold has found
its way into the world market through other channels.

An interesting article by Bertil Lintner in Asia Times describes the growth
of North Korean gold and silver sales to Thailand. Precious metal exports
from North Korea to Thailand grew from virtually zero to $40 million in
2006.

Along the way, Lintner also documents the financial harassment of North
Korea in Europe:

The action against Banco Delta Asia, a privately owned bank that the
Macau government later had to prop up to prevent it from collapsing, was
the second move against North Korea's assets abroad. In a much less
publicized action, North Korea's only bank located in a foreign country
- the Golden Star Bank in Vienna - was forced to suspend its operations
in June 2004.

The Golden Star was 100% owned by the Korea Daesong Bank, a state
enterprise headquartered in Pyongyang, and was allowed to set up a
branch in the Austrian capital in 1982. For more than two decades,
Austrian police kept a close eye on the bank, but there was no law that
forbade the North Koreans from operating a bank in the country.

Nevertheless, Austria's police intelligence department stated in a 1997
report: "This bank [Golden Star] has been mentioned repeatedly in
connection with everything from money-laundering and distribution of
fake currency notes to involvement in the illegal trade in radioactive
material."

Eventually the international pressure to close the bank became too
strong. Sources in Vienna believe the US played an important
behind-the-scenes role in finally shuttering Golden Star's modest office
on 12 Kaiserstrasse in the Austrian capital. Until then, Vienna had been
North Korea's center for financial transactions in Europe and the Middle
East. Visitors to North Korea have noted that euro coins in circulation
in the country - the US dollar is not welcome in Pyongyang - invariably
came from Austria. (Euro notes are the same in all European Union
countries, but coins designate individual member countries.)

Here's another data point, courtesy of Daily NK:

Singaporean newspaper "Singapore Lianhe Zaobao" reported, "Though the
recent BDA issue ended in shambles, Macao and BDA did face some trials"
and "With the U.S. able to strangle any county with international
financial sanctions, the BDA issue rang alarm bells for illegal acts
occurring throughout the world."

The Zaobao's online site reported on the 24th, "7~8 small scale family
run banks in Macau banks are faced with the threat of closing down as
BDA concluded that these banks were acting as North Korea's 'laundering
black money.'

Macau has been caught in this political issue after being targeted as a
place dealing North Korea's money laundering." The newspaper also
analyzed that the international community had questioned China's morals
[emphasis added].

China's morals are probably not the issue here.

China's insistence on following the letter of the UN sanctions and not the
broad interpretation favored by the United States is probably at the nub of
it all.

China is North Korea's largest trading partner. It can purchase exportable
North Korean outputs for its own use or even repackage and re-export them.

It can pay for North Korean exports using foreign exchange, let North Korea
hold the funds in a Chinese bank, and permit North Korean companies to use
those funds to open letters of credits for imports.

Its jewelry industry can easily absorb North Korea's bullion-or, if
desirable, resmelt it into clean, pretty bars-without reference to any de
facto sanctions by the London exchange.

Therefore, China is the weak link in any U.S.-led financial blockade of
China.

And we all know, a chain is only as strong as its weakest link.

Which means that an effective financial blockade of North Korea had to
include an effective China component-something which is apparently lacking.

Unfortunately, diplomacy was apparently not part of the Bush administration
skill set, and the big stick was trundled out to threaten China with dire
consequences if it didn't participate in the unilateral U.S. sanctions
regime.

As David Asher-the State Department's previous pointman for the North
Korean effort at State -- acknowledged in a recent interview, the ultimate
target of Treasury's investigations in Macau was China.

In comparison with Banco Delta Asia, the information that had been
collected on evidence of money laundering by the Macao branch of the
Bank of China was "voluminous," Asher said.

Asher insists that the move against Banco Delta Asia was the direct
consequence of law enforcement efforts and was not designed as political
leverage in talks that were taking place simultaneously with North Korea
on nuclear disarmament.

He advocates that efforts to curtail North Korea's links to criminal
activity, and to ensure that China joins the enforcement effort, should
not be suspended for the sake of expediency in the disarmament talks in
Beijing.

"Banco Delta may be a sacrificial lamb in some people's minds, but it is
not about Banco Delta," he said. "It's about Macao, Macao's government,
China, the Chinese government and their complicity and their
accommodative behavior toward North Korea's illegal activities,
proliferation activities and leadership financial activities." (Donald
Greenlees and David Lague, How a U.S. inquiry held up the N. Korea peace
talks, International Heritage Tribune, April 11, 2007)

It looks like Treasury took the provocative step of threatening Bank of
China with a money laundering tag in a failed attempt to get Macau and its
patron Beijing to fall into line on America's unilateral sanctions
initiative against North Korea.

The threats apparently persisted even after the so-called March 14
resolution of the BDA funds-the Treasury Department's scorched-earth final
decision denouncing BDA. After the decision was announced, Daniel Glaser
went to Macau and presented the results of the Treasury investigation to
the Macau authorities in an effort to persuade them not to release some of
the BDA funds.

Reading between the lines, Glaser probably declared that Treasury's
campaign against purported laundering of North Korean funds by Macau banks
would not be suspended unless Macau obeyed Treasury's diktat concerning the
BDA funds.

My hypothesis is when Macau didn't respond with appropriate enthusiasm,
Glaser injudiciously escalated the confrontation by promising further
investigation of mom-and-pop banks in Macau, possibly an indictment of
BDA's directors for being knowing conspirators (something that was bruited
about in the Macau press) and, most unwisely, threatened to make it known
that Treasury considered Bank of China Macau to be implicated in the North
Korean money laundering web.

This kind of threat against the reputation and viability of Bank of China
Macau is the best explanation I can come up with for China's remarkably
harsh and pointed subsequent summons to Treasury.

On March 21, the Chinese Ministry of Foreign Affairs stated:

In an effort to safeguard the financial stability in the Macao Special
Administrative Region (MSAR), China yesterday demanded the US consult
and negotiate with the MSAR government to address the latter's concerns
over the issue of Banco Delta Asia (BDA), a Macao-based bank.

Foreign Ministry spokesman Liu Jianchao made the remarks at a regular
press conference commenting on the frozen capital of North Korea at BDA.
... He urged the US to negotiate with the MSAR government on the issue
to maintain Macao's financial and social stability.

Nothing here about greasing the wheels for the Six Party Agreement. Or
doing the right thing by a little bank that got caught in the middle of
superpower diplomacy.

China's talking about the "financial and social stability" of Macau.

That probably means Bank of China Macau.

So Daniel Glaser was called back for what appears to have been ten days of
stonewalling during which he refused to lift the threats against Bank of
China Macau and other banks handling North Korean money or gold.

His line of defense -- in his discussions with perhaps his most determined
opponent, the State Department -- probably hinged on the fact that Patriot
Act 311 enforcement had been sold as an independent U.S. enforcement
initiative unrelated to whatever U.N. sanction or Six Party diplomatic
process involving North Korea.

If the sanctions against BDA were removed explicitly to facilitate the Six
Party Agreement, then the legitimacy of Patriot Act Section 311
investigations-and their intimidating aura of implacable, inexorable malice
- -- would be lost.

And Daniel Glaser and his boss, Stuart Levey, would look like jerks who had
been using the pretext of supposed U.S. law enforcement obligations to
promote a secret, unilateral, destabilizing North Korea policy under false
pretenses.

Which, in my opinion, is exactly what they did.

And now I think the world-and Beijing--knows it.

Which means the credibility of Patriot Act Section 311 investigations is
shot. European banks (and governments) leery of the U.S. approach on North
Korea and Iran will find it easier to opt out of an explicitly politicized
Section 311 investigation and sanctions regime.

And obtaining explicit waiver from Section 311 investigations will emerge
as a central theme in trade negotiations between China and the United
States (whose team will be led by Levey and Glaser's boss, Treasury
Secretary Paulson).

Nevertheless, Levey and Glaser probably insisted to President Bush that the
club of Section 311, exploiting the central position of the United States
in the world financial system and shielded from international and U.S. law
under the national security aegis, was too powerful a weapon to repudiate
for the sake of the Six Party Agreement (indeed, this is an assertion that
Glaser and Asher and their advocates have been making with suspicious
frequency in public fora).

And perhaps President Bush, himself a big fan of coercive middle-finger
unilateralism, backed them, in effect splitting the baby, letting State
pursue engagement and Treasury continue with confrontation.

Maybe it was the Chinese and the State Department who blinked, in effect
throwing up their hands, ginning up a workaround, proceeding with the Six
Party Agreement, and leaving the question of what to do about Patriot Act
initiatives against Chinese banks-and the issue of the Treasury
Department's refractory attitude--for Secretary Paulson's upcoming China
trade talks.

Given the general contempt for North Korea and the credulity and sloppiness
of most Western reporting on this subject, the only reason that we know or
care that the Treasury Department is out to screw the North Koreans no
matter what is the embarrassment and chaos its intransigence has brought to
American diplomacy.

But now, thanks to the saga of the $25 million that somehow could not make
it out of Macau, the narrative emerging from the BDA mess is not of the
threat from North Korean supernotes, contraband, or WMDs.

It's a picture of a U.S. campaign of economic warfare against North Korea,
a campaign which may have registered successes in cutting off access U.S.
financial institutions, intimidating European banks, ostracizing North
Korea from the London gold exchange, and twisting the arm of the Macau
monetary authority to stop BDA and possibly other Macau banks from selling
Kim Jung Il's gold.

And it's the disturbing picture of a campaign that went too far, stalled
and become meaningless except as an unnecessary irritant to China, a
crucial world power, because the United States lacked the political will
and international support to initiate a high-stakes confrontation with
North Korea's powerful protector over a little country with a little bomb.

Even more disturbing, it's a picture of a campaign that has been so
extensive, so prolonged, so demanding of our allies, so insistent and
coercive upon international financial institutions, and so central to
American prestige and credibility that we are unable to abandon it and move
beyond a campaign of harassment against a tiny bank in Macau-and
provocation directed against a country that is central to the United
States' economic and fiscal well-being.

But the true story is not one of confusion, contradiction, and mixed
messages in U.S. policy.

The story is one of American shortsightedness.

If North Korea wants to be insulated from the international financial
community, all it needs to do is hide behind China's coattails.

But that's not what it wants.

North Korea wants to achieve international legitimacy and access to world
financial markets. It wants to export directly, attract foreign investment,
raise capital on the international financial markets, and sell its gold on
the world exchanges.

North Korea doesn't want to grovel to the Chinese and sell energy,
resources, and gold to Beijing at below-market prices.

Quite the opposite.

Returning from North Korea, Bill Richardson noted:

Interestingly, North Korea sees themselves eventually as an ally of the
United States; in other words, as an ally against China. They see
themselves as playing a strategic role as a buffer between the United
States and China.

Every American comes back from North Korea with the same message.

North Korea wants to break free of Chinese domination and align itself with
the United States.

And what do we do?

Every time the North Korean dog sticks its head out of its Chinese kennel,
we beat it on the snout with a stick-and force it back to the heel of its
Chinese master.

And we persist with the policy even when it runs counter to our current
diplomatic efforts and security strategy for the region.

It's a policy that's blind, self-defeating, and futile.

And now that the U.S. has abandoned a policy of confrontation with North
Korea, it's also become ridiculous.

[China Hand edits the very interesting website China Matters athttp://chinamatters.blogspot.com/.]

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