North Korea | Show us the money

Show us the money
Mar 22nd 2007 | BEIJING
From The Economist print edition

After a brief period of amiability, North Korea spits out the dummy, throws a tantrum and toddles off from talks on its nuclear-weapons programme

“A HEADACHE and a hard-to-understand group.” Thus South Korea’s foreign minister, Song Min-soon, on the topic of North Korea’s delegation to six-country talks that resumed in Beijing at the beginning of the week. Nothing new there, and his frustration was shared by officials from America, China, Japan and Russia, the other countries trying to persuade North Korea to abandon its nuclear-weapons programme. Despite signing a breakthrough agreement last month, on Thursday March 22nd the North Koreans went home.

Meeting in Beijing for the first time since the agreement was signed on February 13th, officials started off in upbeat mood. America had just announced that one of the biggest obstacles to progress had been removed. It had agreed that $25m held at a bank in Macau, Banco Delta Asia, could be transferred to a North Korean account at the Bank of China. The funds had been frozen in 2005 because of American accusations that they were linked to illicit dealings. Now, the Americans said, North Korea had agreed to use them for humanitarian and educational purposes.

But said Christopher Hill, America’s man at the talks, “If something can go wrong, it often does go wrong.” The money from Banco Delta Asia had yet to be credited to North Korea’s account. Chinese and American officials tried to persuade North Korea's leader, Kim Jong Il that this was merely a bureaucratic hitch and that he should get on with discussions about the nuclear problem. But Mr Kim refused to join the six-party talks until the money arrived. The other parties hope to reconvene when North Korea has calmed down.

The tiff was about a lot more than $25m. The North Koreans are sure to be angry that a senior American Treasury official, announcing the end of an investigation into the Macau bank, accused it of turning a “blind eye” to illicit activity by North Korean-related clients. American financial institutions were barred from dealing with the bank, which has collapsed as a result of the investigation. American sanctions against the bank will continue to scare other banks around the world away from doing business with North Korea.

This might deter North Korea from fulfilling its promises: to “shut down and seal” its nuclear facilities at Yongbyon; to invite International Atomic Energy Agency inspectors to verify this by April 14th; and by the same date to produce a list of all its nuclear projects. But there are other reasons for compliance. After floods last year and severe cutbacks in food aid from the country’s two biggest donors, China and South Korea, North Korea’s perennial food shortages have been worsening in the past few months. South Korea suspended its humanitarian aid in response to missile tests by North Korea last July. Despite an offer this week to restart shipments of fertiliser to the North, Seoul has indicated that aid will not be fully resumed without progress on the nuclear issue.

North Korea has toughed out hard times before. Jean-Pierre de Margerie, the head of the UN’s World Food Programme (WFP) in Pyongyang, says that “food crises” could emerge in parts of the country this year. However, he says the country is still “pretty far away” from the famine of the mid-1990s that killed hundreds of thousands of people. North Korea has shown no sign of eagerness for the WFP to expand its activities, which it was forced to curtail massively after North Korea announced in 2005 that it no longer needed international food aid. The WFP is now denied access to the hunger-stricken north-east.

Even if North Korea gets its frozen funds back soon, there are still plenty more hurdles on the way to fulfilling the first part of the February 13th accord—the sealing of the Yongbyon facilities—let alone the rest of the agreement, which calls for the complete “disablement” of all nuclear projects. The Americans say North Korea must account for the alleged uranium-enrichment programme that led to the current crisis. North Korea still denies it has one. It will be difficult to prove that North Korea is definitely lying about the uranium. As a Japanese official says, “we can’t prove it with PowerPoints”. Especially not, he might have added, to an empty chair.