[Analysis] Signs of change in U.S. policy toward North?

U.S. State Department spokesman Sean McCormack said on October 31, Washington time, that the U.S. does not want the next round of six-party talks to be merely talk: if the talks resume in earnest, McCormack suggested, North Korea will have a chance to access its frozen bank accounts overseas.

But at stake is that North Korea stay out of illegal activities including counterfeiting, McCormack added, signaling that the ball is squarely in North Korea’s court.

For now, a level-headed assessment is needed as to how to deal with the about 50 frozen accounts worth US$24 million at Macao-based Banco Delta Asia, accounts which are still under investigation by U.S. authorities. Some say the next step may be to separate out legal funds from illegal ones; currently, all North Korean accounts have been frozen at the bank since September 2005 after the U.S. named the bank as dealing with illegal North Korean funds. The U.S. may also inform China to lift its freeze on accounts at the bank. Experts say such discussions are likely to begin shortly, but it is still uncertain when the U.S. will end its investigation into Banco Delta Asia.

However, slight signs of change from the U.S. side are being felt. On October 10, one day after North Korea’s nuclear test, Deputy U.S. Treasury Secretary Stuart Levey said that banks around the world should carefully consider dealing with North Korea because it is difficult for the U.S. to determine which North Korean accounts are legal. Compared with this remark, talk about separating out legal accounts from illegal ones could be a sign of change in the U.S.

In fact, U.S. Deputy National Security Advisor Jack Crouch said on October 24 that if it is certain that North Korea will not participate in illegal activities in the future, a reassessment of the financial sanctions against the communist nation will be needed.

Don Oberdorfer, adjunct professor of International Relations at Johns Hopkins University, has told South Korean media that the U.S. may inform China that out of the US$24 million, $8 million is legal money.

However, if the talks are substantive, this would be a natural concession for the U.S. to give North Korea. While the amount of legal versus illegal money has not exactly been clarified, the $8 million mentioned by Oberdorfer has been confirmed to be legal: About $6 million is said to be money belonging to Pyongyang-based Daedong Credit Bank, North Korea’s only joint venture with a foreign partner. The remaining $2 million is said to be money belonging to British American Tobacco, which sells cigarettes to North Korea.

Others have agreed that the U.S. indiscriminately classified North Korean accounts in Banco Delta Asia as illegal. Nigel Cowie, chief executive of Daedong Credit Bank, accused the U.S. of having no tool to accurately classify illegal accounts. In fact, a Hong Kong-based investment advisory company, Koryo Asia, one of major shareholders in Daedong Credit Bank, has said it would take legal action against the U.S. financial sanctions, citing the bank has no reason to be sanctioned by the U.S.

If the arguments are fact, the U.S. will stand accused of halting legitimate business. The U.S. has been probing Banco Delta Asia for over a year. South Korean President Roh Moo-hyun told U.S. Treasury Secretary Henry Paulson that "If South Korean prosecutors investigate, the results would come earlier." For the U.S. Treasury Department, it is time to reveal the result of investigation, but it is still too early to ascertain for certain that the U.S. is considering lifting financial sanctions against Banco Delta Asia in an attempt to expedite North Korea’s abandonment of its nuclear weapons.