Clearing Out The North Korean Macao Pot Of Gold

NUKEWARS

The Banco Delta Asia Bank in Macao.

Former US official urges united approach over NKorea
Seoul (AFP) April 24 - International talks on North Korea's nuclear disarmament may drag on forever if the United States and other parties fail to coordinate, a former US official said Tuesday. David Straub, former director of the State Department's Korea section, said North Korea was accustomed to weathering pressure while the five other countries involved in the talks have never had a united policy. "Six-party talks may last forever," he told a seminar. "Over the middle and long term, I'm optimistic about the diplomatic solution. "But it requires major changes in tones and policy on the part of all the other five, especially on the United States." He said a united approach could have a profound impact on North Korea, which missed an April 14 deadline to shut down its nuclear reactor. After its nuclear test last October, North Korea made it clear it expected to negotiate as a nuclear weapons state, Straub said. "As a consequence, its demands will increase," he said. There will be limits, however, to the concessions that US is prepared to make, he said. "President Bush may make some additional concessions in the hope that the talks may yet achieve their goal, but I believe that at some point he will almost certainly say 'no more.'" "In response, North Korea will blame the US for its 'hostility,' and the talks will stall," he predicted. Pyongyang may hope Washington will eventually accept it as a nuclear-armed state, as the US had done with India and Pakistan, he said. "But the cases of India and Pakistan differ in basic ways from North Korea. If North Korea is counting on such an outcome, it has made a most serious strategic miscalculation," he added.

by Lee Jong-Heon
UPI Correspondent
Beijing (UPI) April 24, 2007
Hope is growing for a resolution of the longstanding banking dispute that has derailed efforts to end Pyongyang's nuclear weapons drive, following a trip by North Koreans to a Macao-based bank that has frozen Pyongyang's assets under U.S. restrictions.

During their visit to Banco Delta Asia, North Korean officials have sought ways to transfer their deposits, worth $25 million, to other banks in Asia, according to sources in Macao and Seoul.

North Korean officials, mostly from Zhuhai, China's special economic area bordering Macao, have traveled to the former Portuguese enclave to meet BDA officials to resolve the financial issue, they said.

But no North Korean officials were spotted publicly at the bank located on the busy financial street near Senado Square in central Macao. Officials at BDA and the Monetary Authority of Macao declined comment on North Korea's funds.

If the North Koreans successfully move the controversial funds to other banks, they say they will carry through with their nuclear obligations under the Feb. 13 agreement as promised. It would take more than a month for the transfer of all 52 accounts to be completed.

Last week, North Korea renewed its promise to start shutting down its nuclear reactor once the banking dispute is settled.

In a message to International Atomic Energy Agency chief Mohamed ElBaradei, the head of North Korea's atomic energy department, Ri Je Son, said his country would invite in U.N. atomic agency inspectors the moment it can confirm that its funds have been unblocked. The message also suggested some progress had been made as it said the banking issue has not yet been "completely" settled.

"Working negotiations are now brisk between a DPRK (North Korea) bank and the above-said (Macao) bank to settle the issue," the message said, accorinding to the North's Korean Central News Agency last Friday. "The DPRK still remains unchanged in its will to implement the Feb. 13 agreement, but what matters is that it cannot move as the issue of frozen fund has not yet been completely settled."

The communist North has called for the Macao assets to be transferred to other international banks, a move to rebut suspicions that the funds were linked to illicit activities, such as money-laundering or counterfeiting.

By transferring the funds to other offshore banks, the North wants to see the money accepted internationally and to keep using the international banking system to manage its overseas funds.

But it still remains unclear whether any banks would accept the controversial North Korean funds at the risk of losing reputation. Foreign banks have been reluctant to handle the North Korean funds and fear being tainted by suspect money.

Reflecting the concerns, Hong Kong-based HSBC reportedly has halted transactions with BDA to avoid any role in North Korea's money transfer. With the access to HSBC cut off, only the state-run Bank of China can be used as a channel to move North Korea's BDA funds. There are 27 banks operating in Macao, but all of them, excluding BOC and HSBC, look so small that they can hardly handle the large sums of the accounts, according to financial sources.

In addition, the U.S. Treasury Department officially prohibited American banks from doing business with BDA, effective April 18.

The Macao bank said it had filed a legal challenge to the Treasury Department ruling, calling it "arbitrary and capricious." BDA seems to have delayed the resolution of the North Korean fund issue in an apparent bid to press the United States to remove the bank from the blacklist.

The U.S. measure threatens the survival of the Macao bank as it can no longer deal with U.S. dollars and is reduced to transactions in the territory's pataca currency.

BDA is a private, family-run bank whose major shareholder is Stanley Au. Its deposits were about $318 million before the Treasury Department took action against it in 2005, and by last July its deposits had dwindled to $205 million.

The Macao bank has also been a broker for North Korea, selling its gold and silver. The cash-strapped country earned about $120 million by shipping gold and silver from 2002 to 2004 through BDA, according to a report by the Ernst and Young accounting firm.

earlier related report
NKorea has still not taken blocked funds: China
Beijing (AFP) April 24 - North Korea has still not withdrawn money from a Macau bank despite weeks of efforts to free up the funds that have proved crucial to ending Pyongyang's nuclear programme, China said Tuesday.

"The question is how and by what way can the DPRK (North Korea) get the money and realise the normal transfer of the funds," foreign ministry spokesman Liu Jianchao told reporters.

"There are still some technical issues on this question."

North Korea missed an April 14 deadline to shut down its Yongbyon nuclear reactor under a February six-nation accord, saying it would only do so once it received 25 million dollars that had been frozen in Macau's Banco Delta Asia.

The United States blocked the funds in Banco Delta Asia in late 2005 after accusing North Korea of money laundering and counterfeiting but agreed -- following the February accord -- to release the money.

The United States said last month that money was now available for North Korea to withdraw, but the issue remains outstanding.

Other banks reportedly are unwilling to touch the money because the United States had originally said it was contaminated and they believe the decision to release the money was made for political rather than legal reasons.

Despite the continued delays, Liu insisted that North Korea and the other five nations in the six-party talks remained committed to the February agreement.

The February agreement calls for North Korea to shut down its nuclear plant and invite international nuclear inspectors to the facility in exchange for 50,000 tonnes of fuel oil and talks on diplomatic recognition.

Following this "initial phase," up to 950,000 tonnes of oil or aid equivalent would be offered to North Korea in exchange for the complete dismantling of all its nuclear programmes.

The six-party talks, which involve China, the two Koreas, the United States, Japan and Russia, began in 2003 with the aim of ending Pyongyang's nuclear ambitions but have been plagued by long delays and setbacks.

They also failed to stop North Korea from conducting its first test of an atomic bomb in October last year.

Source: United Press International

Source: Agence France-Presse

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US Welcomes North Korean Pledge On Nuclear Shutdown

Washington (AFP) April 20, 2007
The United States welcomed a renewed North Korea pledge to start shutting down its nuclear program once a banking dispute is settled, but urged the communist state to act quickly.

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