Post a Comment On: China Matters

I once read a review of the glacial, demanding pace of Robert Bresson’s French films about misery, moral cowardice, and redemption, which described watching them as “taking a whipping when you can see every blow coming”.

That’s how I’m starting to feel about the BDA saga.

Covering it is an exercise in masochism.

I’m sure I’m not alone in this feeling.

Now, to today’s news, starting with an unsubstantiated and apparently incorrect rumor demonstrating that crappy reporting on BDA is not a Western monopoly:

The Macao-based newspaper Aomen Ribao reported Thursday that BDA dispatched a $13 million tranche to several banks in Russia and Italy, and that the transfer would take two to three days. However, the paper did not name any of the foreign banking organizations supposedly participating in the transaction, nor did it specify where the remaining $12 million would go.

A Russian deputy foreign minister was also unable to confirm that the North Korean funds were being transferred to Russia and Italy after being unfrozen by Washington.

"I do not know how reliable that information is," Alexander Losyukov said.

Not very reliable, as a subsequent report, Russian and Italian Banks refuse North Korean Money indicates.

Later on, the Aomen Ribao a.k.a. Macao Daily, retreated and offered a rehash of reporting from AP, the Washington Post, et. al. concerning the bewildering question of What’s Goin’ On? but also offering the interesting nugget I hadn’t seemed elsewhere that SecDef Gates apparently just wants to get this thing over with.

The South Korean media weighs in with a more mainstream version:

U.S. 'to Let American Bank Handle N.Korea's Money'

North Korea’s immediate banking troubles will likely be resolved this week, as chances are high that the U.S. will accept the North’s demand to transfer its assets in Macau to a third country via a U.S. bank. Diplomatic sources on Wednesday said the U.S. is inclined to allow a U.S. bank to play an intermediary role in transferring the recently unfrozen US$25 million. Quoting a U.S. official, AP reported the U.S. Treasury was expected to make a decision by as early as Thursday. The official told the news agency, “The North Koreans want to use an American bank because they think the transaction would help secure their continued access to the global financial system.”

The matter has been delayed because no international bank wanted to touch the money after the Treasury identified some of it as coming from illicit activities.

In Sean McCormack’s press briefing at the State Department, he certainly didn’t rule out the involvement of a US bank.

QUESTION: Thanks. North Korea insisted to have the North Korea funding in BDA be transferred to an American banking institution. Is it agreeable to the United States?

MR. MCCORMACK: They're still working with their bankers and if there's any requirement for an opinion from the Treasury Department as to whether or not this is a transaction that the financial institutions involved would feel comfortable doing, then the Treasury Department will take a look at that and see what it is that they can do.

You can speak to my colleagues over at Treasury as to whether or not they're looking at that or working on anything.

The Treasury Department ain't sayin' nuttin':

But Molly Millerwise, Treasury's spokesperson, denied the report."The U.S. Treasury Department is not aware of any such request from North Korea to use a U.S. bank to transfer funds," she said in an e-mail to Yonhap.

It looks like the South Koreans—who looked like they were going to step up, albeit grudgingly and handle the transaction through their ExIm bank to get the ball rolling—decided to get uninvolved:

Per Yonhap:

Press reports over the weekend said a South Korean bank may serve as an intermediary in delivering US$25 million from Macau to a third country. Some said North Korea initially asked a New York bank to play that role but that was rejected by the U.S.A State Department official, speaking on condition of anonymity, did not flatly reject either of the possibilities.

He said the use of a South Korean bank "could well end up being a solution," but added "at this point, I wouldn't focus too heavily on it." Asked if a New York bank remains an option, he only said there were a "lot of different options people are looking at."

Maybe Seoul developed qualms because the Treasury Department wasn’t prepared to give an unambiguous assurance to a foreign bank that their credit rating wouldn’t get dinged by handling BDA funds.

Maybe only a US bank can receive an ironclad legal waiver from Treasury that completely sanitizes the BDA remittances and lets them vanish into the world financial system.

According to the Russians:

Russian Deputy Foreign Minister Alexander Losyukov, head of the Russian negotiating team at the six-party negotiations with North Korea, said in Beijing that there would be no problem transferring the money if the U.S. guaranteed in writing that no consequences would befall the bank accepting the funds.

Maybe this is just North Korean brinksmanship, trying to squeeze additional concessions out of the United States that it can spin as a return to the international financial system.

But it looks like the problems are genuine.

At least, no banks have stepped up (including any in Japan, which hates the agreement and would love to call a North Korean bluff) and said, Hey, you crazy North Koreans! I’ll take your dirty money!

This is getting pretty tiresome and it seems that somebody should step in and instruct the Treasury Department to stop noodging on this deal.

Am I the only one who’s wondering why our Commander in Chief a.k.a. the Decider a.k.a. the Commander Guy can’t issue an Executive Order instructing the Treasury Department to knock off the BDA funds vendetta so the Six Party show can get on the road?

After all, Patriot Act Section 311 sanctions require a finding that they won’t harm the international financial system.

Surely the boredom and exasperation surrounding this ridiculous transaction rates as sufficiently harmful to pull the plug on the BDA final rule, in part if not in entirety.