by
Keun-sik Kim
[Professor, Kyungnam University]
posted May 14, 2007
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 Preface : |
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Article : |
Evaluating the BDA Issue
Relations between the U.S. and North Korea advanced steadily
after the participant countries in the six-party forum made
progress on the nuclear issue through the February 13th
Agreement, however the schedule as outlined by the agreement has
been delayed by unforeseen difficulties in the process of
resolving the Banco Delta Asia (BDA) issue. It was agreed that
North Korea would shut down its nuclear facilities at Yongbyon
and allow inspections within 60 days if the U.S. lifted the BDA
financial sanctions. Yet despite the progress made within the
first month, the entire schedule has floundered, as the BDA
issue was not fully resolved.
By all appearances, the BDA issue, which has become the primary
point of contention, is in the peculiar situation of having been
politically settled but technically unresolved. Although North
Korea and the U.S. have reached a political agreement,
practicalities have delayed implementation of the agreement.
Given that the refusal of transit banks to accept North Korean
funds for deposit is fundamentally due to the logic of the
market and the financial system's concept of credit, there is
not much left that the U.S. can do in pressuring the market,
even though it is primarily responsible for the DPRK's inability
to freely send remittances and transfer funds with other banks.
As it stands, Washington has shown its good faith. But good
faith can only go so far, as both Washington and Pyongyang have
come up against the logic of the financial market. It is
generally agreed that, at this point, both countries must find
common ground on this issue.
North Korea seeks a restoration of normal transactions with the
international financial community, which naturally became
stricter after financial sanctions were imposed against the BDA.
The DPRK insists that the more important issue is not the
release of the $25 million but rather the normalization of
unfettered financial transactions with third-party banks. In
spite of this insistence, through the process Pyongyang may have
come to terms with the reality that it is difficult for
Washington to formally guarantee any such normalization.
Although the U.S. has in good faith endeavored to accommodate
North Korea's demands, the government cannot intervene to
resolve the issue of remittances and transfers.
Of course, it is not as if there is nothing to be regretted. As
pointed out by some, the reason that other banks refuse to
accept the remittance or transfer of North Korean funds is based
on America's "conviction" of the BDA as a money-laundering
institution. Only when this designation is revoked can the
DPRK's demands be accommodated.
However, in order to accomplish this, the U.S. would have to
take the rather self-contradictory step of repudiating the
findings of its own 18-month investigation. It is also
regrettable that North Korea has not adopted a softer stance in
its confrontation with the United States. Although the United
States, having identified the BDA as a money-laundering bank, is
somewhat responsible for the DPRK's curtailed transactions, it
is fair to say that the U.S. has done all that it can. As for
North Korea -- to which the restoration of normal financial
transactions is a higher priority than the retrieval of its
money -- all it can do is vociferate. In order for North Korea
to reenter the international financial community, it must allay
any suspicions of illegal activity, which is of more importance
than an American political decision.
The continuing stalemate of the BDA affair is a direct result of
the gap between North Korea's maximal demands and the United
States' maximal action. The North believed a political approach
would solve everything; the U.S. cannot renege on its judgment
of the BDA. Now reality is teaching both a lesson.
The Trap of Bilateral Negotiations between the U.S. and North
Korea
What we can gather from the recent BDA predicament is DRPK-U.S.
bilateral negotiations are somewhat of a trap. It is well known
that the leading impetus for the February 13th process was the
negotiations between Washington and Pyongyang, and direct talks
between these two principal parties can help resolve the
situation.
Indeed, the nuclear issue remained at a standstill until 2006
due to the Bush administration's refusal to engage in bilateral
talks. As such, the other participant countries in the Six-
Party Talks all requested and counseled the U.S. to talk
directly with the North. Finally, in January 2007 direct
negotiations took place in Berlin, which led to the issuance of
the February 13th agreement. This was followed by the meeting
in New York between Vice Foreign Minister of the DPRK Kim Gye-
gwan and U.S. Assistant Secretary Christopher Hill, which in
turn rapidly spawned talk of a peace regime on the Korean
peninsula and normalization of DPRK-U.S. relations. However,
after the two countries agreed on the resolution of the BDA
issue, the actual process of implementation stagnated. Nearly a
month and a half have wasted by, with no movement on the Six-
Party Talks or the nuclear problem.
In reality, neither the multilateral talks nor other actors
involved have figured prominently in resolving the BDA issue.
Although direct talks between the U.S. and DPRK do have a
positive facet, negative consequences can arise if all matters
are left solely in their hands. For one, the role of outside
parties as a mediator or driving force -- a critical
consideration in light of the mutual mistrust and discord
between North Korea and the U.S. -- could be limited. The
resolution of the BDA issue is not clearly stated in the
February 13th document signed by all six parties; rather the U.S.
and North Korea came to an understanding at the Berlin meeting
and then agreed to implement the bilateral agreement within 30
days of the February 13th agreement. This would seem to
restrict China and South Korea from taking an active role to
break the current stalemate.
Considering that the role of third parties has been severely
limited in breaking the stalemate, one lesson to be learned from
the BDA issue is that bilateral frameworks must be in sync with
the multilateral framework. Not only DPRK-U.S. negotiations but
also simultaneous, active discussion between the U.S. and China,
North Korea and China, and the two Koreas can serve as a buffer
to help resolve issues. China has curtailed its role as an
active intermediary due to its unvoiced discontent regarding the
BDA affair, while South Korea, having linked inter-Korean
relations with the nuclear issue, has been limited in its role
by a passive policy towards the North, proverbially dragging one
foot behind. Several obstacles remain in the path of resolving
the nuclear issue, and thus a more balanced and multilateral
system -- one that includes, in addition to DPRK-U.S.
negotiations, productive discussions in the six-party forum as
well as talks between the U.S. and China, North and South Korea,
and North Korea and China -- must be put in place in order to
ensure smooth progress ahead.
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