- The Washington Times - Sunday, April 1, 2007

Bank in Macao

The U.S. Treasury Department’s decision to act against an obscure bank in Macao was first mentioned in this newspaper in a September 2005 article by national security reporter Bill Gertz.

In the bottom half of a long article about North Korean counterfeiting activities, Mr. Gertz wrote that the Bush administration a week earlier had designated the Banco Delta Asia as a “primary money-laundering concern” for its role in helping North Koreans distribute counterfeit currency and engage in illegal activities.

The action completely escaped my notice until a senior South Korean official, interviewed in our offices a few weeks later, complained off the record that the move had infuriated the North Koreans — whose funds in the bank had been frozen as a result — and halted progress in the six-party nuclear talks with the North.

We finally found a way to get the South Korean concerns into the paper the following January, when Treasury officials traveled to Seoul to brief their South Korean counterparts.

“The U.S. Embassy widely publicized the meeting, possibly hoping to allay suspicions in South Korea that hawks within the Bush administration … were seeking to frustrate improvement of North-South ties,” freelance correspondent Andrew Salmon reported at the time.

Over the ensuing months, it became increasingly clear that there would be no real progress in the six-party talks until the Banco Delta Asia issue was resolved. That point was finally made explicit in the flurry of activity — including several days of direct talks in Berlin — that led to a breakthrough agreement on Feb. 13 calling for North Korea to shut down and eventually dismantle its nuclear reactor at Yongbyon.

Included in the deal was a promise that the Macao bank issue would be resolved within 30 days. So, when Treasury came out with an announcement concerning the bank on March 14 — the 30th day — it seemed pretty clear that this was to be the expected resolution.

Treasury curveball

But Treasury threw us a curve. Instead of arranging for North Korea’s money to be released, it announced it was going ahead with long-threatened action to cut the bank off from the U.S. banking system. And when our reporters called for an explanation, Treasury officials would not acknowledge any link between their action and the nuclear talks.

The only way this response made sense was if the Treasury had decided it would not bend on principle, even to secure an end to North Korea’s nuclear program, but had calculated that, with nothing left to lose, the bank would have no further incentive to withhold Pyongyang’s money. While unable to say as much without a source, we tried in our article that day to lead readers toward that conclusion.

Whatever the calculation, things went a bit awry, and the next round of six-party talks — expected simply to iron out details of the Feb. 13 agreement — ended in failure because the North Koreans still hadn’t received their money.

Our reporters in Beijing, Seoul and Washington went back to the drawing board and slowly pieced together what had happened. As Nicholas Kralev reported on Wednesday, the United States still wants to keep some control over the money, making sure it can be used only for humanitarian purposes.

To do that, it wants the money deposited in a bank in a third country, preferably China. But after the Treasury action against Banco Delta Asia, the administration has been unable to find any bank willing to touch the funds.

The machinations concerning the bank have been so complicated, and the number of readers concerned about the issue so limited, that most American news organizations have not bothered to try to penetrate it.

But for this paper, with a Washington-based readership that includes many policy-makers and analysts, this is exactly the kind of story we relish.

David W. Jones is the foreign editor of The Washington Times. His e-mail address is djones@washingtontimes.com.

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