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3 Sanctions under the
shadow of war By Martin
Hart-Landsberg and John Feffer
engage in extensive, direct
negotiations with North Korea. Only when the
Chinese threatened to blame the US publicly for
the failure of diplomacy was an agreement finally
signed in September 2005.
This September
19 agreement called for a step-by-step process in
which North Korea would freeze and abandon its
nuclear programs in exchange for US provision of a
proliferation-resistant reactor and normalization.
It is this process that died a quick
death with the US designation
of a bank in the Chinese port city of Macau as a
"primary money-laundering concern".
Restrictions and negotiations In September 2005, the US Treasury Department
designated Banco Delta Asia (BDA) in Macau as a
suspected conduit for counterfeit $100 bills,
so-called "supernotes" that North Korea was
allegedly producing. In response, the Macau bank
froze North Korea's accounts. The timing was
suspect. US concerns over counterfeit bills date
back to 1989. For many years, in fact, US
government officials thought Iran was behind the
counterfeiting, and some experts doubt North
Korea's capacity to print such supernotes. Again,
like the suspected HEU program, the threat paled
in comparison to the larger risks of nuclear
proliferation. According to the US Treasury, the
total value of identified counterfeit notes is $50
million.
Nevertheless, the Treasury
Department encouraged other countries to follow
the US lead and freeze bank accounts that North
Korea maintains overseas, a de facto attempt to
cut off monetary flows in and out of the country.
As Under Secretary of the Treasury Stuart Levey
put it, "The US continues to encourage financial
institutions to carefully assess the risk of
holding any North Korea-related accounts." Levey
further argued that it was impossible to
distinguish between North Korea's licit and
illicit transactions, which threw all of North
Korea's economic interactions with the outside
world under suspicion.
Although it is
unclear how many countries have adopted such
restrictions on Pyongyang's financial
transactions, Tokyo is leading the pack by
limiting economic transactions with Pyongyang and
prohibiting North Korean ships from entering its
ports. China, too, placed restrictions on its
banks doing business with North Korea.
There is little evidence so far that the
financial restrictions have affected North Korea's
overall economic transactions with outsiders.
However, the $24 million frozen in the BDA has
clearly become the main stumbling block in efforts
to reduce tensions on the Korean Peninsula and
improve relations between the US and the DPRK.
Pyongyang is refusing to proceed with the
September 19 agreement because it views the
measures - termed "designations" by Washington
because they apply to a bank and not a country,
and considered "sanctions" by Pyongyang because of
their overall impact - to run counter to one of
the key bargains struck.
In that
agreement, Pyongyang pledged to "abandon all
nuclear weapons and existing nuclear programs" in
return for Washington's agreement that the US and
North Korea would "respect each other's
sovereignty, exist peacefully together and take
steps to normalize relations". In Pyongyang's
eyes, the financial sanctions infringe on its
sovereign right to engage in legal transactions,
raise doubts about Washington's will to co-exist
peacefully, and represent steps away from
normalizing relations.
US financial
auditors have reportedly been analyzing the
records seized from the BDA for more than a year
without making a formal charge. Bilateral
discussions between Treasury Department officials
and North Korean negotiators that took place in
parallel with the December round of six-party
talks also did not yield any breakthroughs.
Some commentators have suggested that the
Treasury Department release those BDA accounts not
involved in illegal counterfeit activities. The
North Koreans have offered to collaborate with US
authorities to allay their concerns. The Bush
administration's silence in the face of these
proposals adds to the perception that it remains
opposed to meaningful negotiations with Pyongyang.
Its refusal to respond has indeed given Pyongyang
the motivation to forge ahead with its nuclear
production.
Sanctions and war After North Korea's missile tests in July and
nuclear test in October, the US and Japan pushed
through UN resolutions that condemned Pyongyang's
acts and called for explicit economic sanctions.
The July resolution focused on limiting North
Korea's ballistic-missile program. The more
far-reaching October resolution attempts to shut
down all DPRK transactions connected to the
production and distribution of weapons of mass
destruction (WMD).
The most politically
challenging of the sanctions applies to the
regulation of trade in and out of North Korea
involving some aspect of WMD. The main instrument
for implementing this trade embargo - primarily
the inspection of North Korean cargo - is the
Proliferation Security Initiative. First announced
by Bush in 2003, the PSI is touted as a key
instrument of counter-proliferation. The
initiative supports the use of military means,
under such euphemisms as "interdiction" and
"active defense", to stop countries from
developing or proliferating nuclear weapons and
materials.
This reliance on military means
derives from the 2002 "National Strategy to Combat
Weapons of Mass Destruction" stipulating that the
US must have the capabilities, including
"preemptive measures", to "prevent the movement of
WMD" and "to detect and destroy an adversary's WMD
assets before these weapons are used".
The
PSI has grown in membership and operational scope.
Some member countries have already staged military
exercises to simulate the use of military ships to
stop, board and seize boats suspected of carrying
WMD in the high seas. This proposed use
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