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Update No: 047 - (28/03/07)

Much process, some progress
After February 13's landmark agreement - technically, a Joint Statement (JS) - at the six-party nuclear talks in Beijing, much of March was taken up with starting to implement the many and various working groups and further meetings specified in this remarkably detailed document (whose provisions we outlined in last month's Update - now archived). 

Mixed results
Unsurprisingly, this was not all plain sailing. A visit to the US by North Korea's chief nuclear negotiator, vice foreign minister Kim Kye-gwan, went well; but talks between the DPRK and Japan in Hanoi were rapidly wrecked on the usual rock, the abduction issue. A sixth round of full six-party talks (6PT) in late March was stillborn, with Pyongyang boycotting it after monies due to be released from accounts frozen under US pressure in Macao for 18 months were slow to actually arrive. 

Despite that upset, Christopher Hill - the tireless US assistant secretary of state and chief negotiator - remained optimistic that the 6PT will resume soon. But the timetable is tight, with a key deadline approaching. By April 13 North Korea is supposed to shut down its Yongbyon nuclear site. On past form Pyongyang can be expected to prevaricate, yet even if it does this will not now jeopardize the entire 6PT process. The other five will grit their teeth and continue patiently to apply pressure.

A volte-face by Washington
The main reason for cautious optimism is a major strategic shift. Not by Kim Jong-il, whose commitment to full nuclear disarmament remains to be tested - the Feb. 13 deal is only about preliminary steps - but rather in Washington. Six years into George W Bush's presidency, the pro-engagement camp in his administration has finally vanquished the neocons who hitherto frustrated every move to negotiate seriously with North Korea.

With Donald Rumsfeld and John Bolton sacked and vice-president Cheney weakened, not only is Condoleezza Rice as secretary of state fully behind Chris Hill, but she has persuaded Bush - perhaps now thinking of his overall foreign policy legacy - that at least this one member of the axis of evil is after all amenable to a deal. That is a huge U-turn, as clearly seen in two major recent retreats on what hitherto were key cruxes for the US.

Macao money
The first is that Macao money: a saga covered in several previous monthly Updates, now drawing to a messy close which leaves many questions unanswered. While North Korea has long been suspected of money laundering and even counterfeiting US currency, it was never clear quite why the US Treasury Department chose to target Banco Delta Asia (BDA) in Macao in September 2005 - just when the 6PT were getting somewhere. Was this hawk sabotage, or just a lack of joined-up government in Washington?

Either way, it gave Pyongyang a predictable pretext to boycott the 6PT for over a year. Undaunted, having leaned on Macao to freeze DPRK accounts worth US$25m in BDA, Treasury widened its campaign - with no little success. Banks in mainland China and Vietnam, among others, severed all links with North Korea rather than incur US wrath. 

If some in DC were gleeful to have at last found a stick to poke Kim Jong-il in the eye, this had a downside. Besides jeopardizing the 6PT, sanctions were a blunt instrument. At least some of the US$25m caught in BDA was clean: not least, it was insisted, US$7m belonging to Daedong Credit Bank (DCB), a British owned and managed JV.

State versus Treasury
Another puzzle is that Treasury has yet to publish its evidence of DPRK malfeasance, or indeed any results from its 18-month probe. Its never very convincing insistence that this was entirely a criminal investigation, with no political overtones, crumbled on March 19 when the US point man on the issue - Daniel Glaser, the deputy assistant secretary to the Treasury - announced a resolution of the matter. The US$25m would be transferred from BDA to a special acccount at the Bank of China in Beijing, which Glaser said (to many a snort and guffaw in Washington) that the North Koreans had assured him would be used strictly for humanitarian purposes.

Clearly Treasury had been told to stop holding up the 6PT. Whatever the ethics or politics of this climbdown, passing the buck (literally) to China turned out not to be that simple. When the funds did not immediately arrive North Korea took a tough line: boycotting the sixth round of the 6PT, also due to start on March 19. After four days' stalemate China as host called a recess, and the other envoys flew home. The hapless Glaser was dispatched to Beijing, where at this writing he remains, to sort out the money transfer from Macao. Complicating that, Daedong CB's new owner Colin McAskill threatens to sue the Macao monetary authority if Daedong's $7m is sent to China - or to North Korea. This mess all reflects poorly on US policy formulation, coordination and implementation. Chris Hill, ever the optimist, insists that rhe money transfer is a purely technical problem, and that once it is resolved the 6PT will be able to resume within a fortnight. We shall see.

HEU: not so sure, now
A similar case, where the US is now downplaying what had been a key issue, concerns highly enriched uranium (HEU). In October 2002 the US accused North Korea of having a second, covert nuclear programme based on HEU, separate from its known plutonium-based activities. Pyongyang denied this, but under US pressure the Korean Peninsula Energy Development Organization (KEDO) suspended heavy fuel oil (HFO) supplied under the 1994 US-DPRK Agreed Framework (AF), negotiated under President Bill Clinton, which defused the first North Korean nuclear crisis. Pyongyang riposted by expelling International Atomic Energy Agency (IAEA) monitors and reopening its Yongbyon site, mothballed under the AF, and becoming the first state ever to leave the Nuclear Non-Proliferation Treaty (NPT) in early 2003.

Thus in 2002 HEU concerns were ostensibly serious enough for the Bush administration to confront North Korea, in the event unleashing a second, ongoing nuclear crisis. Yet on February 27 the main intelligence official dealing with the DPRK, Joseph DeTrani, told a Senate committee that confidence in the existence of a North Korean HEU program has declined since 2002. DeTrani has since complained of being misconstrued, but similar comments by Hill strongly suggest that the US stance on HEU has significantly softened.

An avoidable crisis
This has both past and future implications. Historically, it strongly and gallingly suggests that the ongoing second North Korea nuclear crisis was, if not deliberately manufactured, then at least avoidable. Without this, the AF would have remained in place, Yongbyon would have stayed sealed - and Kim Jong-il would not now have the bomb.

That is water under the bridge now. Going forward, by April 13 the DPRK is to discuss a list of its nuclear programmes to be abandoned under the February 13 agreement, prior to a full declaration of all such activities in the next phase. If as expected Pyongyang goes on denying any HEU programme, the US will have to decide whether to make an issue of this. Washington's new stance, allied to scepticism all along in China and perhaps Seoul - either on the evidence, which again the US has never made public, or in judging if this was really an issue worth going down to the wire for - suggests the matter may be let go.

KKG wows then in NY
February's joint statement also set up five separate working groups on diverse topics, and said they must meet within a month. All duly did so. Arguably the most important, at this stage, are the WGs on normalizing the DPRK's relations with the US and Japan. These had mixed fortunes. For the former, Kim Kye-gwan spent the first week of March in the US on a successful visit, where besides official talks he also starred at seminars and met a range of public figures, including Henry Kissinger. While concrete progress in two areas specified - removing the State Department's designation of the DPRK as a sponsor of terrorism, and freeing up trade by ceasing to apply the Trading With The Enemy Act - may not be swift, at least a good atmosphere and some momentum were created.

No joy with Japan
It was very different in Hanoi. The Vietnamese capital was the neutral venue agreed for talks between North Korea and Japan, which rapidly fell apart after just two incomplete days on March 8. The predictable crux was the abduction issue, where the two sides remain poles apart: Pyongyang insists it is settled, while Tokyo demands a fuller account both of eight Japanese who died in North Korea and of further suspected kidnap victims.

Unless one side or the other shifts, it is hard to envisage any progress. This in turn raises the question of the status of the five working groups: if one gets nowhere, does this have implications for the others? The intention is to keep them pragmatically separate, but in practice we shall see how this is handled as and if matters progress.

The remaining three WGs are on denuclearizing the peninsula; establishing a peace and security mechanism in northeast Asia; and economy and energy cooperation. All held their first meetings in March, but will not becone crucial until mid-April's deadline for closing Yongbyon - for which North Korea will receive aid equivalent to 50,000 tonnes of HFO. A further 950,000 tonnes is to follow in the next phase - no time period is laid down - once Pyongyang fully declares and disables all its existing nuclear facilities.

IAEA snubbed
With the February 13 agreement also specifying the IAEA's return to North Korea, the UN agency's head, Mohamed ElBaradei, visited Pyongyang on March 13-14. Despite his professing himself satisfied, this was a brief visit - and ElBaradei was denied an expected meeting with Kim Kye-gwan, who was supposedly too busy preparing for the next 6PT. 

It was hard not to see this as a slight, and as such ominous for the DPRK's future attitude to an agency with which it has proved much less than cooperative in the past. The crunch will come when forthcoming lower-level meetings decide precisely how and with what access the IAEA will be allowed to determine if Yongbyon has indeed been resealed.

Hurdles ahead
In sum, despite the technical hitch in the US retreat on alleged DPRK financial crimes, Chris Hill's breezy optimism regarding his handiwork- on March 26 he said he expects this hiccup to be sorted out "in the next couple of days" - seems justified thus far. But the real hurdles lie ahead. In the same talk in Washington, Hill added that by the "early part of April - certainly by the first half of April - we will have the reactor shut down, sealed and we will have international inspectors back [at Yongbyon]." Yet with hawks like John Bolton still sniping from the sidelines and decrying the February 13 JS as a bad deal for the US, it would only take a little backsliding by Pyongyang to make such cockiness look premature. It may seem foolish for Kim Jong-il to undermine Hill, but North Korea has a way of pulling out the rug from under friend and foe alike. Come mid-April, we shall see.

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