Post a Comment On: China Matters

...after this morning’s post, here’s confirmation that Seoul is impatient to cut the Gordian knot and resolve the BDA funds issue so it can get on with the business of rapprochement.

Yes, it looks like South Korean expressions of frustration with the US strategy of ostracizing North Korea are becoming ever more explicit.

First, the leak:

A senior South Korean government official on Monday admitted that Seoul is reviewing the option of letting the state-run Export-Import Bank handle North Korea’s funds in a Macau bank.

...

[An unnamed “senior South Korean government official”, maybe the guy who handles the Unification portfolio—ed] hinted the government is prepared to take the flak if the EXIM Bank’s credit rating suffers from handling what the U.S. Treasury says is money from North Korea’s illicit activities. “What’s wrong with considering anything we can do? We can’t sit by and just watch (U.S.-North Korea negotiations) without taking any steps of our own,” he said.

Then the pissy editorial:

All banks around the world must go through a depository bank in New York when it comes to dollar transfers. And the U.S. Treasury Department regulates this process. If that’s the case, then it would only be proper for the U.S. government to handle the matter transparently through an American bank, rather than trying to dump that responsibility on an unwilling country and an unwilling bank.

And finally the news, with some more interesting detail about a meeting attended by just about every key South Korean government official, sending a public message that Seoul doesn’t want to see the BDA farce go on a moment longer:

Thursday’s meeting discussed enabling North Korea to open an account with an overseas branch of EXIM so it can withdraw its funds from BDA and move them to an Italian or Russian bank via the bank. A senior security source said the government proposed the measure since North Korea insists on having the money transferred rather than withdrawing it in cash. According to the source, the U.S. has agreed to Seoul’s suggestion and promised not to take issue with the bank over what would by Washington’s own earlier determination amount to abetting money-laundering.

According to a diplomatic source, North Korea is nearly done combining the money from its 52 accounts in BDA into a single one ready for transfer. The epic issue hit the latest snag when, after the U.S. gave the green light to unfreezing the funds, no bank in the world proved willing to receive the funds. That problem would be resolved if EXIM plays the intermediary role. The U.S. has already reassured countries concerned that the transfer will be an exception from its blanket ban on transactions with BDA. [emphasis added]

So it looks like the United States has finally capitulated 100% and issued the waiver on accepting BDA money that, as I wrote on April 8, Daniel Glaser should have granted during the ten days he spent in Beijing in late March--early April accomplishing, apparently, nothing.

This involves more than seven weeks and counting of wasted time (from March 14, the date that the BDA matter was supposed to be "resolved").

The belated concession makes us look foolish. More disturbingly, it makes our diplomacy look at best unreliable and at worst duplicitous.