The envoy for North Korea abruptly broke off talks today over the slowness of the transfer of $25 million locked up in an investigation into a North Korea counterfeiting operation. Kim Jong-Il’s representative flew home from Beijing rather than complete the final two days of the scheduled negotiations, leading to angry denunciations from the other participants:
Six-nation talks on North Korea’s nuclear programme have ended without progress after its chief negotiator flew home amid a row over money.
The Beijing talks stalled after Pyongyang refused to discuss a deal to disable its nuclear facilities until it recovers $25m held in a Macau bank. …
A statement from the hosts, China, said the talks had been suspended with no date set for a resumption.
“The parties agreed to recess and will resume the talks at the earliest opportunity,” a Chinese government statement said.
North Korea’s chief negotiator Kim Kye-gwan made no comment as he arrived at Beijing’s airport. An Air Koryo flight bound for the North Korean capital Pyongyang left soon afterwards.
The money has sat in the Macau bank ever since the US froze it out of the international network for money laundering in connection with Kim’s counterfeiting operation. North Korea has produced high-quality fakes of American $100 notes, and may have dumped as much as a billion dollars’ worth of them into the global markets. It provided hard currency for a regime on the brink of starvation, and the Macau bank was the only outlet for the ring. The US agreed to free the money and transfer it to China, but Pyongyang got impatient with the process and quit over it.
That has not set well with the other nations at the table. China has not made any statements about it, probably hoping to keep Pyongyang involved. The Japanese, who have had to allow their issues to get back-burnered by this process, called Kim’s withdrawal a “shame” and a “waste”, considering the fact that everyone had gathered to resolve their issues. Christopher Hill, who brokered the deal mainly through back-channel negotiations, spoke more bluntly. “The day I’m able to explain to you North Korean thinking is probably the day I’ve been in this process too long,” he told reporters.
Who gets hurt by this? One has to think that the big loser is North Korea. Not only do they not get their money — the US will surely not transfer the funds nor lift the sanctions on Kim’s bank now — but they don’t get their oil, either. Their nuclear program is already a bust, and they face increased sanctions from this process, especially given the anger they left at the table.
The big winner of a North Korean bug-out could be George Bush, depending on how the US handles this. No one here had much confidence in the agreement reached with the Kim regime, considering it another version of the Agreed Framework with only incremental improvements in verification. It left wide gaps on the nuclear issue, including the disposition of extant nuclear weapons and any highly-enriched-uranium work the regime had done. Now, with North Korea reneging on their initial agreement, the Bush administration can say that they tried to reach a peaceful settlement with Kim, bending over backwards to meet his concerns — but that Kim will not negotiate in good faith under any conditions.
Unless Kim returns quickly to the table, expect Japan and the US to start putting even more economic and military pressure on Pyongyang in the coming weeks.