Frozen funds to be released to North Korea
The United States and North Korea have resolved a thorny dispute involving about $25 million in frozen Macao bank accounts belonging to the Pyongyang government, a U.S. official said today.
The standoff had threatened to undercut talks opening today aimed at halting the isolationist nation’s nuclear weapons program.
Deputy Assistant Treasury Secretary Daniel Glaser said in a statement that the funds would be transferred to a Bank of China account in Beijing for use in North Korean education and humanitarian programs.
The accounts at the privately run Banco Delta Asia were frozen by Macao’s banking authorities in 2005, after Washington warned that American banks should not do business with the Macao bank, which the U.S. suspects of involvement in money laundering, counterfeiting and other illicit activities. A subsequent run on the bank prompted Macao’s monetary authorities to place the institution under receivership.
Macao, a former Portuguese colony near Hong Kong, is a semiautonomous territory in China.
Disagreement over the frozen funds had threatened to derail a Feb. 13 agreement under which North Korea pledged to dismantle its nuclear weapons program within 60 days in exchange for 1 million tons of heavy fuel oil and other aid. North Korea’s nuclear envoy warned Saturday that Pyongyang would not shutter its Yongbyon nuclear reactor unless the money was released.
Analysts said the breakthrough, announced hours before broader talks opening in Beijing, allowed both sides to save face. The Treasury Department is reluctant to give a clean bill of health to a bank that has been one of North Korea’s main conduits for a variety of transactions it deems suspicious. But the agency has been under political pressure not to stall broader negotiations.
Under a ruling by the Treasury Department last week, Banco Delta Asia will remain cut off from U.S. banking and financial systems because of its suspected role in money laundering, transactions related to Pyongyang’s nuclear program, and trade in counterfeit currency and cigarettes and narcotics.
North Korean officials and Banco Delta Asia have denied the U.S. charges.
North Korea, for its part, gets its money back, having held the U.S. to its word that the financial issue would be resolved by mid-March. The agreement eases North Korean financial concerns and relieves pressure on legitimate trading companies.
“This is a pretty creative solution,” said Li Dunqiu, an analyst with the Development Research Center of the State Council in Beijing. “It’s significant.”
Six-nation talks on denuclearizing the Korean peninsula, involving the two Koreas, the United States, China, Japan and Russia, are expected to last two days. Analysts cited as a good early sign the fact that North Korea did not use the financial issue to raise new demands or otherwise torpedo the talks.
“We have assurances the funds are going to be transferred to a bank in Beijing to be used for humanitarian and educational purposes,” Glaser said in the statement.
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Yin Lijin in The Times’ Beijing Bureau contributed to this report.
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