NK Fund Dispute

Pyongyang Should Start Denuclearization Process

North Korea has refused to implement a Feb. 13 denuclearization agreement because of problems over the transfer of its money from a Macau bank which the United States unfroze in March to facilitate the disarmament process. It is disappointing that the implementation has hit a snag over such a technical problem. It is necessary for Pyongyang to show its sincerity to the world in discarding its nuclear ambitions in accordance with the six-party deal.

The U.S. and North Korea will have to resolve the money transfer issue in a desperate effort to resuscitate the denuclearization pledges made by the world's last Stalinist country. Pyongyang has continued to ask Washington to transfer the money to its account before it takes initial steps to shut down its nuclear reactor in Yongbyon. The money in question is $25 million worth of North Korean funds, which were frozen in the Macau-based Banco Delta Asia (BDA) in 2005 on U.S. allegations that they were the proceeds of money-laundering and counterfeiting.

North Korea is still having difficulty in getting the money back because it cannot find any bank to accept the funds as international banks are reluctant to receive money that has been blacklisted by Washington. In this situation, there are media reports that the South Korean government is considering using the state-run Export-Import Bank of Korea to help North Korea recover its funds from the BDA.

It is undesirable for Seoul to mediate in the transfer of the money, despite its unwavering efforts to keep the North's disarmament process going and settle peace on the Korean Peninsula. South Korean officials ought to bear in mind that the banking dispute is a problem to be solved by Washington and Pyongyang. Even banks in China, the traditional ally of North Korea, are also hesitant to play a role of transferring the money from the BDA to the Stalinist country. There is no doubt that any bank would suffer from damage to its credibility if it engages in the transfer of the money suspected to have been earned from North Korea's illicit operations.

Therefore, we hope the Seoul government will give up its plan, if any, to mobilize any state-owned bank for the resolution of the BDA issue, because it would see its credit rating downgraded by international rating agencies, face difficulties in issuing bonds abroad, or come under attack for failing to abide by anti-money-laundering rules.

What's somewhat relieving is that the U.S. and North Korea are reportedly making last-ditch efforts to settle the banking dispute. Kim Myong-gil, the North's deputy chief of mission to the United Nations, confirmed that his country invited chief American nuclear negotiator Christopher Hill to visit Pyongyang. Hill already expressed his willingness to travel to the North. We hope that his possible visit will break the deadlock in the money transfer and get North Korea to start implementing denuclearization.