NK has painful, triumphant memories from BDA

By Kang Hyun-kyung

North Korea learned two “unforgettable” lessons from the Banco Delta Asia (BDA) case where $25 million of North Korean assets were frozen after the U.S. government designated it as a money-laundering concern in 2005.

Sanctions were so painful that, according to North Korean rhetoric, they felt like “their blood was almost frozen.”

In return for the intense pain, Nicholas Eberstadt, Henry Wendt Chair in Political Economy of the American Enterprise Institute, observed Pyongyang “successfully faced down” the then Bush administration over an earlier round of the BDA sanctions.

“Pyongyang forced Washington to backtrack, if it wanted to get North Korea back to the nuclear negotiating table,” Eberstadt said in an email interview with The Korea Times.

“North Korea’s rulers may feel confident that they will be able to force the Obama administration to fold, too, if they hit back hard enough.”

Eberstadt made the remarks a day after Robert Einhorn, the U.S. State Department’s special advisor for nonproliferation and arms control, gave a sneak-peak of the fresh sanctions that Washington was working on finalizing, Monday.

The United States will adopt and implement the new measures to target entities engaged in the export or procurement of conventional arms by or for North Korea, the procurement of luxury goods for North Korea and other illicit activities conducted by North Korean officials.

These activities include the counterfeiting of U.S. currency and other goods, narcotics smuggling, and other illicit and deceptive activities in the international financial and banking systems.

Eberstadt forecast that “bumpy weather” would be unavoidable with regard to the prospects for U.S.-North Korea relations.

“If Washington’s new sanctions against North Korea are going to hold, America and her allies had better prepare for some unpleasant times in the period immediately ahead,” the North Korea watcher said.

Steven Weber, professor of political science at the University of California, Berkeley, said provocations by North Korea now will be particularly unproductive given the American election coming up.

“I think it’s important to remember that even the North Korea issue, for the moment, is being seen in Washington through the lens of electoral politics,” he told The Korea Times.

“With our midterm elections coming in November, the Obama administration is going to be very reluctant to be offering any positive inducements which could be read as concessions to the North Koreans.”

Blame game

During the news conference held in Seoul, Monday, Einhorn played hardball with North Korea with regard to dialogue.

“We can’t repeat the kind of cycle that we’ve been through on a number of previous occasions where North Korea engages in talks, makes commitments, and then abandons those talks. We have to break that cycle,” he said.

“Before the six-party talks to be convened, it’s essential that North Korea demonstrate in an intangible way that it’s prepared this time to make commitments and to fulfill them. And there are some important commitments already existing such as September 2005 commitments.”

In 2005, the parties of the multilateral talks agreed on the joint statement to end North Korea’s nuclear program.

Under the framework, North Korea committed to dismantle its nuclear program, to rejoin the Nuclear Non-Proliferation Treaty and to allow International Atomic Energy Agency inspectors to return to the North in return for energy assistance.

The statement also included a security guarantee for the North, saying North Korea and the United States would exist peacefully together.

A year later, the North test-fired a Taepodong-2 missile and conducted the first underground nuclear test in October, which drew condemnations from the U.N. Security Council.

Washington accused the North of breaking the deal.

In response, Pyongyang alleged that it was the United States, not North Korea that broke the deal.

The U.S. Treasury Department designated the Macao-based BDA bank as a money laundering concern under the Patriot Act for laundering $25 million in North Korean funds in September 2005 and the bank froze the assets.

Washington said the BDA case was unrelated to the six-party talks. But Pyongyang accused Washington, calling it a deal breaker.

The ghost of the BDA haunts North Korea in the wake of Washington’s announcement of the plan to impose new financial sanctions on North Korea.

Daniel Glaser, treasury deputy assistant secretary in charge of terrorist financing and financial crimes who joined the U.S. delegation, hinted that the fresh sanctions would be as effective as the BDA in cutting off illicit funds to the North.

But some experts still questioned the effectiveness, saying it remains to be seen if the new measures will be helpful in stopping proliferation.