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Pying-Pyong Diplomacy

Prepared by: Carin Zissis
Updated June 22, 2007


The Bush administration’s policy of no direct talks with Pyongyang is no more. Christopher R. Hill, the chief U.S. envoy in North Korean denuclearization talks, made a surprise visit (KTimes) to the isolated country Thursday. With this trip, Hill aimed to breathe life into a February denuclearization deal that gave Pyongyang sixty days to shut down its main nuclear reactor at Yongbyon and allow inspectors to return to the country. In exchange, Pyongyang would receive desperately needed food and energy supplies from members of the Six-Party Talks. But the April deadline came and went with Pyongyang refusing to hold up its part of the bargain until it received $25 million in funds, which the United States says were connected to North Korean counterfeiting and money laundering, frozen in a Macao bank. After meetings in Pyongyang, Hill said North Korean officials were prepared to move past the funds issue and shut down Yongbyon (BBC).

Hill lobbied with the Bush administration to allow him to make such a trip, arguing the visit would give him insight (WashPost) into the reclusive state. The White House resisted giving in to North Korean demands for one-on-one talks after President Bush famously included North Korea in the “Axis of Evil” in his 2002 State of the Union address. Since then, Pyongyang restarted Yongbyon and produced enough plutonium for as many as twelve weapons, according to a report by the Institute for Science and International Security. This Crisis Guide examines the North Korean nuclear issue.

Months after North Korea joined the nuclear club when it conducted a nuclear test in October 2006, the Bush administration signaled the first steps in an evolving stance toward Pyongyang when Hill met with his North Korean counterpart Kim Kye-Gwan, first in Berlin and then in New York shortly after the February agreement was reached. But by March, the stop-and-go progress halted again because of the holdup of North Korean accounts in the Macao-based Banco Delta Asia.

The money has served as a thorn in the side of denuclearization talks since 2005, when the U.S. Treasury Department blacklisted the bank. North Korea subsequently walked away from the Six-Party negotiating table, months after the talks produced a September 2005 statement in which Pyongyang promised to end its nuclear program. With efforts to get the denuclearization process going again this spring, Treasury paved the way to release the funds in March, but also forbade U.S. banks from dealing with the Macao bank. This rendered the $25 million “the financial equivalent of radioactive funds,” explains John S. Park of the United States Institute for Peace in a podcast. Even after a Russian bank agreed to accept the money this week, North Korea said it would not allow nuclear monitors into the country until it received assurances they funds had arrived in the Russian accounts (Reuters).

Bruce Klingner, a Northeast Asia expert at the Heritage Foundation, writes that the Bush administration played into North Korea’s hands and “needlessly undermined U.S. diplomatic efforts” by linking the Macao bank funds issue to Six-Party Talks. Even if the February pact moves ahead, the agreement is a “sweet deal” for North Korea, writes CFR’s Gary Samore in a satirical memo for Global Asia, as closing down Yongbyon still leaves North Korea with a plutonium stock to serve as a nuclear deterrent. In an interview with, Don Oberdorfer, a leading Korea expert, says “important progress has been made toward normalization” of U.S.-North Korea relations, yet warns that “like anything with North Korea, nothing is simple.”

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