U.S. financial sanctions seem to be hitting North hard

Pyongyang says release of its funds prerequisite to six-party talks

　

"We cannot return to the six-party talks unless the U.S. lifts its freeze on funds at the Macau bank."

The words are from New York-based top North Korean envoy Han Song-ryol, and they suggest the North is indeed feeling the effects of financial sanctions imposed by the United States as of last year.

The Bush administration has called sanctions the most effective way of dealing with the North.

Under the U.S.-imposed sanctions, exporters shipping products to the North, which would receive payment through their own banks, are having difficulty in doing business as most of those banks are reluctant to deal with North Korea-related transactions.

Even legal business transactions by the North have been affected, making it much tougher for the poverty-stricken country to develop its economy.

These financial sanctions started in May last year, when the U.S. began to crack down on counterfeiting of U.S. currency in the North, calling the operation government-sponsored. The U.S. said Pyongyang has racked up profits totaling 15 to 20 million USD in the scheme.

In September, when the fourth round of six-party talks was underway, the U.S. announced the results of its investigation into the counterfeiting and called into question the North’s deposits at Banco Delta Asia of Macao, barring U.S. transactions with the bank and prompting customers to withdraw 10 percent of the bank’s total deposits.

Three months later, the U.S. Treasury Department issued a warning against the North opening accounts at other banks. Banks in 20 countries, including Switzerland and Japan, followed suit and blocked any new North Korean accounts, with some South Korean banks such as the Korea Exchange Bank and Shinhan Bank joining the move.

Along with the financial restrictions, Washington has also designated eight North Korean companies as complicit in the spread of weapons of mass destruction and has frozen their assets in the United States.

The North seems to be feeling the pressure, thought it is taking several measures to minimize the impact on its overseas business. Egged on the economic pressure imposed by the U.S., Pyongyang has demanded Washington lift the sanctions as a precondition to return to the stalled six-party talks which involve the two Koreas, Russia, China, Japan, and the United States.

But the U.S. remains adamant in its stance that the six-party talks and the currency counterfeiting issue are separate agendas, rejecting the North’s demand.