The State Department yields (again) to North Korea

Source: Opinion Journal Online.
April 13, 2007.

Tomorrow is the 60-day deadline for North Korea to come clean about its nuclear program, and it will be fascinating to see how much it admits. On the evidence of the last week, however, don't be surprised if Kim Jong Il concludes that the Bush Administration will accept whatever he declares.

The U.S. has sent precisely that signal by succumbing to the dictator's demands that the U.S. release $25 million gained by North Korea's criminal enterprises. The money comes from 52 North Korean accounts at Banco Delta Asia, a little bank in the Chinese territory of Macau. Macau froze the funds 18 months ago at the behest of the U.S. Treasury.

The U.S. had originally agreed to release half of the money in return for North Korea's February promise to give up its nuclear weapons program. But Treasury initially said it would not release some $12.5 million that was the clear product of such illegal activity as drug trafficking, money laundering, missile proliferation and a huge counterfeiting operation in hundred-dollar U.S. bills. The money was to go into a fund for humanitarian use in North Korea.

In its report on the Macau bank released last month, Treasury cited the "routine use" of couriers to ferry huge sums of currency in and out of the bank, to the tune of $50 million by a single depositor in 2002. It said individuals and entities with ties to North Korea have been linked to "trade in counterfeit U.S. currency, counterfeit cigarettes, and narcotics." That includes companies suspected of laundering "hundreds of millions of dollars in cash" through Banco Delta Asia.

Not surprisingly, North Korea immediately declared that it would refuse any further negotiation until the U.S. turned over the entire $25 million. Also not surprisingly, the State Department argued that the U.S. should do so lest the nuclear talks fall apart. President Bush agreed with State, and Macau lifted its hold on the money this week.

The Bush Administration is selling this dirty-money deal as a requirement of diplomatic realism and a price that must be paid for the larger strategic goal of getting North Korea to cooperate. But it's also true that the U.S. is allowing Kim to get away with his ill-gotten gains. Only weeks after the Treasury laid out a detailed rap sheet, the U.S. says never mind.

The bigger issue is the message this sends about the "arms control" process now under way. Under the February deal, Kim is obliged to shut down the nuclear facility at Yongbyon and disclose all of his nuclear programs and weapons. He is also obliged to open all of those to international inspection before the U.S. and other countries give him any more aid or money. But Pyongyang's pattern has long been to admit as little as possible every step of the way, and then insist that the U.S. must make further concessions at every instance. By caving on the $25 million, the U.S. is telling Kim he can keep playing this game.

Japan has the better idea. This week it extended its sanctions for another six months--no imports of North Korean products, no port visits by North Korean ships. Last month it testified at the U.N. Commission on Narcotic Drugs about the North's illegal trade in amphetamines. Under the February nuclear deal, it is refusing aid to the North until Pyongyang provides information on the Japanese citizens it abducted and may still be holding.

Meanwhile, life for the 23 million North Koreans is, if anything, grimmer than ever. There were reports of famine this winter. The authorities are cracking down harder on Koreans who flee to China seeking food or work and are caught and repatriated, according to a new report by Human Rights Watch. The South Korean press reports that Pyongyang has ordered its diplomats stationed abroad to send their children home, apparently to help prevent defections. The return of the $25 million will only help Kim reinforce his control.

Assuming Pyongyang even meets tomorrow's deadline, the U.S. will have to decide how much it can believe the North Korean declaration. The goal should be dismantling North Korea's entire nuclear program, not continuing arms-control negotiation for its own sake.