KAI RYSSDAL: When the subject is negotiations with North Korea, having the Secretary of State say she’s “cautiously optimistic” is practically a rave review. Condoleezza Rice weighed in today on the six-party talks that are going on in Beijing. The Chinese circulated a draft agreement today. The North Koreans say they’re willing to talk about their nuclear program. And the U.S. is hinting it might back off a key financial sanction against them. Marketplace’s Scott Tong’s been following the talks from Shanghai.
SCOTT TONG: Hi, Kai. How are you?
RYSSDAL: I’m all right. Listen, remind us what is at the root of this — the U.S. banking sanctions. And then what seems to be happening at the talks.
TONG: Well, there’s a bank in Macao that’s at the center of all this, called Banco Delta Asia. And the U.S. has long-suspected that North Korean leaders have been using this bank to finance a bunch of underground economic activity — money laundering, printing counterfeit currency, etc. So a year-and-a-half ago, Washington blacklisted this bank, which got embarrassed, and then the bank froze the assets of these leaders in Pyongyang — about $24 million worth of assets. And what happened was a lot of banks in Asia suddenly saw this and got scared off. And they decided, you know, we’re not going to do any business with North Korea either. What’s happening at these talks is there are rumors that the United States may ease some of these banking sanctions as part of the negotiations.
I spoke today to professor Brian Bridges at Lingnan University in Hong Kong. He said the whole idea here is for the U.S. to rope the North Koreans back to the table.
BRIAN BRIDGES: Probably the Americans may be willing to declare part of that funding clean, as it were, or unfreeze it as part of a package of concessions. Provided, of course, that something comes from the North Korean side in return.
So, what that would involve is North Korea shutting down its weapons program and allowing United Nations inspectors back in. And you may recall that in 2002 they got kicked out of North Korea.
RYSSDAL: Now the difference, of course, between this time and last time is that, in the interim, North Korea has become a nuclear power. So what price do you suppose the United States is willing to pay to get the North to give all this up?
TONG: Well, the outlines of the price tag, as it were, from the United States point of view, are familiar. There’s a lot of talk of going back and implementing a deal that was cut in 2005. The U.S. would provide energy assistance and other economic assistance; perhaps take North Korea off the list of state sponsors of terrorism; and lift these bank sanctions we talked about; and work together to get other U.N. economic sanctions lifted. Now, to get all this going, each side has to make kind of an initial commitment in these talks. And one former U.S. official said Washington may be willing to take a smaller downpayment. Professor Bridges in Hong Kong says that’s the political calculation that’s facing U.S. diplomats.
BRIDGES: The question, I guess, is whether they’re willing to sort of compromise in the short run now that North Korea is effectively a nuclear power. How far they’re willing to go in terms of saying, “Well, that’s something we want to achieve further down the line, but for the moment let’s try and do it step by step.”
So, the question is why would the U.S. take a smaller downpayment? Well, some say the Bush administration needs a political victory somewhere in the world. Others say, as you’ve mentioned, that North Korea is now considered a nuclear power — partial nuclear power. And others say the time is ripe inside of North Korea. That there’s a debate going on there, whether they should really shift gears economically and pursue China-style market reforms. And we all know how much buying and selling is going on here in China.
RYSSDAL: We do, indeed. Marketplace’s Scott Tong in China. Thank you, Scott.
TONG: Thanks, Kai.
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