- The Washington Times - Thursday, April 19, 2007

The U.S. special envoy on North Korean human rights said yesterday he had little hope that Pyongyang will use $25 million in a disputed Macao bank account to help its suffering people, while North Korea continued to resist a pledge to turn off its nuclear reactor.

Envoy Jay Lefkowitz said he was “not very confident at all” that the North would devote the money to humanitarian and relief projects, despite efforts from the Bush administration to extract such a pledge when it lifted an order effectively freezing the money in the Macao-based Banco Delta Asia (BDA).

“Given their record, we certainly don’t expect any transparency from the North on how they would spend the money,” Mr. Lefkowitz said after an address at the Heritage Foundation think tank.

The fate of the BDA accounts emerged as the major snag of a landmark Feb. 13 deal signed in Beijing to begin dismantling the North’s nuclear weapons program. The North was to start the process by closing its nuclear reactor at Yongbyon by last Saturday, but it has yet to do so.

In Pyongyang, a bilateral meeting between the North and South got off to a rocky start when the chief South Korean on hand called on Pyongyang to turn off the reactor, the source of plutonium for its nuclear weapons program.

North Korean delegates abruptly left the session, although they returned later and the negotiations began eight hours late.

The Treasury Department had blacklisted the Macao bank over concerns that the North was using the accounts for money laundering and handling counterfeit currency.

Deputy Assistant Treasury Secretary Daniel Glaser told a congressional panel Wednesday that Washington still had deep concerns about some of the BDA account holders, but agreed to lift its order to expedite the nuclear agreement.

Asked whether the resolution of the bank dispute was “on [the North’s] timetable,” State Department spokesman Sean McCormack said yesterday, “I guess you can say that it is.”

But he added that other benefits to the North of the nuclear deal — including promised deliveries of fuel oil — will not come if Pyongyang fails to move toward dismantling its nuclear programs.

The South cut off rice shipments in July when Pyongyang undertook a series of missile tests, followed four months later by the test of a small nuclear device. Seoul was set to resume the aid shipments at the meeting, but held off after the North missed Saturday’s deadline to suspend operations at Yongbyon.

Financial analysts say the Macao bank dispute was damaging for Pyongyang because it threatened to cut off the isolated government and its state-controlled enterprises from the international financial system entirely.

But Michael Green, a top National Security Council aide on Asia in President Bush’s first term, said North Korean leader Kim Jong-il needs the $25 million, not to feed his people but to buy off potential rivals.

“Twenty-five million dollars is a lot of walk-around money for Kim Jong-il to distribute to the elite,” said Mr. Green, now a senior adviser at the Center for Strategic and International Studies.

Lacking the charisma and personality cult of his father, former North leader Kim Il-sung, Mr. Kim “compensates with nice packages of cognac and Mercedes-Benzes and so forth” for the North’s ruling class.

Mr. Lefkowitz said the international donors should insist on tight strings and oversight of humanitarian aid given to the North to block its diversion to top bureaucrats and military officials. But he said it was hard for the United States to impose conditions when donors such as South Korea and China did not go along.

He added the U.S. government is considering a plan to offer the North people-to-people cultural exchanges, similar to the “pingpong diplomacy” that preceded the opening of ties to China in the early 1970s. It is not known whether the North would be open to such exchanges, he said.

Nicholas Kralev contributed to this report.

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