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N. Korea nuke deal locked by frozen funds

Marketplace Staff Apr 13, 2007

N. Korea nuke deal locked by frozen funds

Marketplace Staff Apr 13, 2007

KAI RYSSDAL: Tomorrow is the deadline for North Korea to shut down its nuclear reactor if it wants to get its hands on some sorely-needed foreign oil.

Pyongyang claims it’s ready to let inspectors in to verify the shut down. The hitch in the deal is $25 million sitting in a bank in Macao. We think.

From Washington, Ramy Inocencio explains what’s been happening to the money the U.S. had denied the North Koreans access to.

RAMY INOCENCIO: The real question is where is the money, and why isn’t it moving?

John Park, Korean affairs expert at the U.S. Institute of Peace, says he’s got a plausible explanation: the North Koreans still haven’t withdrawn their $25 million from Banco Delta Asia, because they can’t. Macau has said only “authorized” account holders can pick up the money. And if you look at the breakdown of those funds:

JOHN PARK: Thirteen million dollars of the 25 million has been claimed to be clean. And the 12 million remaining is reputed to be derived from illicit activities.

Which means half of it may belong to other people. Or is just plain illegal.

To move that money from Macau to North Korea, the main proposed pathway is through China. But China says the funds issue has actually not yet been resolved, despite U.S. claims to the contrary.

PARK: The Bank of China has stated on the record that they are uncomfortable handling money that has been officially designated as having been derived from illicit activity.

There’s another reason China is leery of handling tainted money:

PARK: Their credit rating would take a significant hit, which would make their access to international capital markets that much more expensive.

And Bruce Bennett, North Korea analyst with the Rand Corporation, says even if the check cleared right now, Yongbyon couldn’t be turned off suddenly.

BRUCE BENNETT: No, the experts are saying that because shutdown has not begun already, it would be almost impossible to achieve that by the 14th.

But if North Korea does get its money, the country would then get a total of one million tons of heavy fuel oil.

In Washington, I’m Ramy Inocencio for Marketplace.

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