Pyongyang is still facing a Saturday deadline to begin shutting down its Yongbyon nuclear reactor, after bank officials in Macau unblocked funds in previously-frozen North Korean accounts. The North Korean regime had insisted that it would only close the reactor when $25 million in funds were released by Macau’s Banco Delta Asia. The accounts were frozen in 2005, after the U.S. accused the Macau bank of being involved in money laundering.
At first blush, it seems difficult to believe that the fate of a six-nation nuclear agreement could hinge on the release of a relatively small sum (at least, by international finance standards). But dealing with North Korea has never been easy, and the Macau accounts hold a special interest for Pyongyang. By some accounts, the money used in the Macau bank is used to buy premium goods for senior members of the regime, and launder funds earned in various state-run, illegal enterprises, including counterfeiting and drug trafficking.
With the accounts now accessible, senior DPRK officials are now (presumably) free to purchase consumer goods that are virtually non-existent in their country, or simply move more money to their accounts in Switzerland and the Caribbean. As for the Great/Dear Leader himself (Kim Jong-il), it’s doubtful that the frozen accounts in Macau caused much of a financial pinch. According to some intelligence estimates, Kim and his family have a net worth in excess of $1 billion, and North Korea maintains a team of financial experts in Switzerland to handle the dictator’s accounts.
But even Mr. Kim has to keep his senior officials happy, and those accounts in Macau can buy luxuries–electronics, gourmet foods, western clothing–that are virtually non-existent in The Worker’s Paradise. It’s a common tactic in totalitarian regimes. Almost a decade ago, western intelligence agencies were concerned that Saddam’s mass purchase of Sony PlayStations was some sort of attempt to build a crude super-computer, by linking the devices together. In reality, the PlayStations were nothing more than rewards for the children of Saddam’s henchmen. A little gift at Ramadan was simply one more way to ensure loyalty in the ranks. Similarly, Kim Jong-il understands the lure of consumerism, even among hard-core Marxists. That’s one reason that release of the $25 million became a condition for implementation of the Six Party agreement.
Still, the fracas over those accounts in Macau served other purposes as well. As we’ve noted in the past, Pyongyang is the master of diplomatic rope-a-dope, delaying the implementation of agreements (or simply breaking them), to suit its purposes. Resolution of the banking matter took two months, enough time for North Korea to crank out more plutonium, move equipment to a different site, or engage in other, nefarious activity. And, as the AP correctly points out, North Korea not yet begun shutdown operations at Yongbyon, and there’s genuine concern over whether the original deadline can be met.
It doesn’t take a genius to figure out that a shutdown timetable will become the next stumbling block in this process. That ought to be good for a few more weeks (or months), testing western patience even more. While Secretary of State Condolezza Rice and the Bush Administration clearly want the agreement to work, they must avoid being too charitable toward the DPRK. That’s why Japan’s recent decision to extend its sanctions against North Korea is encouraging. Admittedly, Tokyo’s extension is aimed at achieving a different goal–determining the fate of Japanese citizens kidnapped by Pyongyang over the past three decades. However, Japan is one of North Korea’s key trading partners, and the loss of that market for clams, crabs and mushrooms will hurt Kim Jong-il’s moribund economy.
It’s an approach the U.S. should keep in mind when North Korea offers its next “excuse” for failing to meet conditions of the nuclear agreement.