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U.S. Envoy to North Korea Talks Defends Action on Pyongyang’s Alleged Financial Crimes By Marina Malenic WASHINGTON — The chief U.S. envoy to stalled North Korea nuclear disarmament talks said yesterday that he has no control over the timing of a Treasury Department probe of Pyongyang’s suspected illicit financial activities (see GSN, Feb. 1). “As a negotiator on a diplomatic matter on a security matter, I’m in no position … to go to law enforcement and say, ‘Please halt the law enforcement effort. I have a diplomatic process under way,’” Assistant Secretary of State Christopher Hill said in a speech here at the American Enterprise Institute. In September, the Treasury Department announced its investigation of Macau-based Banco Delta Asia and two other regional banks, which Washington accused of laundering counterfeit U.S. currency on behalf of Pyongyang (see GSN, Sept. 9). While Hill said his team had “good communications” with Treasury officials involved in the probe, he insisted that the timing of department’s action was not coordinated with the September round of six-country talks, where Pyongyang agreed in principle to dismantle its nuclear programs in exchange for energy assistance, economic cooperation and security guarantees (see GSN, Sept. 19). Hill characterized the probe as an ongoing law enforcement matter under the U.S. Patriot Act. He reiterated the Bush administration’s position that “financial regulatory action” by the Treasury Department is a matter entirely separate from the six-party nuclear talks. “The best way to end the counterfeiting investigation is to end the counterfeiting,” he said. Pyongyang has said it plans to boycott further nuclear negotiations until the United States lifts financial restrictions it instituted in retaliation for alleged North Korean weapons proliferation and illicit financial activities. In October, the Treasury Department froze the U.S.-based assets of eight North Korean entities the White House accused of WMD proliferation-related activity (see GSN, Oct. 24). U.S. Deputy Assistant Treasury Secretary Daniel Glaser, having returned from a trip to brief China, Japan and South Korea on his department’s investigation, said yesterday that North Korea’s neighbors “acknowledged that it’s perfectly appropriate” for the United States to protect its financial system. The U.S. Secret Service has found $48 million in counterfeit U.S. $100 notes produced by Pyongyang over the past 16 years, Glaser told the Associated Press. The Associated Press also reported today that South Korea’s National Intelligence Service does not believe North Korea is presently involved in currency counterfeiting. While North Koreans were arrested in the 1990s for counterfeiting, there was no indication of continued activity after 1998, agency officials told lawmakers during a closed session of parliament’s intelligence committee. “North Korea circulated counterfeit currency in the 1990s,” National Intelligence Service spokesman Choi Jae-keun said after the briefing. “The government has serious concerns regarding the issue of the North’s counterfeiting and is closely following the situation.” Meanwhile, the International Crisis Group said in a report released yesterday that China has less influence in North Korea than is widely believed. “China’s influence on North Korea is more than it is willing to admit but far less than outsiders tend to believe,” says the report. “The most important implication of this analysis for policy-makers is that China cannot be relied upon either to bring a more cooperative North Korea to the (nuclear-negotiating) table or to enforce whatever is agreed there,” it says. “Expecting China to compel North Korean compliance will only waste more time and give Pyongyang longer to develop its nuclear stockpile.” “China currently holds the biggest potential carrot and stick with the North,” said Peter Beck, the group’s North East Asia project director and co-author of the report. “The carrot is the $2 billion economic assistance rumored to have been offered by (Chinese President) Hu (Jintao) during his visit to Pyongyang last October,” Beck told Reuters. “The stick is in the form of American pressure to crack down on the North’s remaining banking activities in China.”
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