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Co-Director of Program on Science and Global Security, Princeton University
June 1, 2018
North Korea Misses Disarmament Deadline

Paul Kerr

North Korea has failed to meet an April 14 deadline for implementing its portion of a February agreement to eliminate its nuclear weapons program. Progress continues to be delayed by an unresolved dispute involving North Korean funds in the Macau-based Banco Delta Asia.

The United States maintains that the dispute has been resolved because the bank “un-blocked” the relevant accounts April 10, the Department of State said April 14. Similarly, South Korean Foreign Minister Song Min-soon said that the “door to resolving the problem is now open in the way the North wanted,” Reuters reported April 11. But North Korea said a resolution requires that the funds first be transferred.

The bank matter has been a persistent obstacle to progress in the six-party talks since September 2005 when the U.S. Department of the Treasury designated Banco Delta Asia as a “money laundering concern.” The bank subsequently froze North Korea’s accounts, and other financial institutions curtailed their dealings with Pyongyang. The United States has asserted that the bank provided financial services to North Korean government agencies and front companies engaged in illicit activities.

The United States pledged in February that the Banco Delta Asia dispute would be resolved within 30 days. Daniel Glaser, deputy assistant treasury secretary for terrorist financing and financial crimes, announced the next month that the two countries had “reached an understanding” regarding the frozen funds, but difficulty in transferring the funds has delayed resolution of the issue. (See ACT, April 2007.)

Kim Myong Gil, North Korea’s deputy chief of mission to the United Nations, told South Korea’s semi-official Yonhap News Agency April 24 that Pyongyang wants both the money to be released and the funds to be transferred to another bank. Chinese Foreign Ministry spokesperson Liu Jianchao told reporters the same day that the problem has “yet to be resolved completely.”

A North Korean bank is currently engaged in “negotiations” with Banco Delta Asia “to settle the issue,” Ri Je Son, director of North Korea’s General Department of Atomic Energy, reportedly said in an April 20 letter to the International Atomic Energy Agency (IAEA).

The six parties, which also include Japan and Russia, met in March to assess progress and discuss future work. But the talks recessed after four days because North Korean negotiators refused to engage in further discussions until Pyongyang received the disputed funds. At the time, the six parties agreed to resume the talks “at the earliest opportunity,” but no date has yet been set for another meeting.

Lack of Progress

Following a September 2005 joint statement, the February agreement called on North Korea to halt the operation of its nuclear facilities at Yongbyon within 60 days and “invite back IAEA personnel to conduct all necessary monitoring and verifications.” Pyongyang also agreed to “discuss with other parties a list of all its nuclear programs.” (See ACT, March 2007.) In the September 2005 joint statement, North Korea pledged to abandon its nuclear weapons and “existing nuclear programs” in exchange for a series of political and economic incentives. (See ACT, October 2005.)

As of the end of April, however, Pyongyang had not shut down any of its nuclear facilities or discussed its nuclear programs. North Korean officials met with IAEA Director-General Mohamed ElBaradei once in March for initial discussions about implementing the agreement. No further meetings have been held.

In addition, five working groups tasked with formulating specific plans for implementing the remaining portions of the September statement have not met since the March six-party meeting. Nor has North Korea received 50,000 metric tons of heavy fuel oil, which is to be provided by South Korea. The other five parties promised the fuel in return for Pyongyang shutting down its nuclear facilities.

North Korea will receive the fuel, however, if the government invites IAEA inspectors “immediately to begin shutting and sealing the Yongbyon nuclear facility,” according to the State Department’s April 14 statement. Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill told reporters in Beijing the next day that North Korea would not receive any fuel oil until it is “prepared to move ahead.”

Asked during an April 14 background briefing whether Pyongyang must complete shutting down its nuclear facilities before receiving the fuel oil, a senior State Department official replied, “I don’t think we’ve attached a great deal of specificity to that.”

The other five parties have not set a new deadline for North Korea to fulfill its obligations under the February agreement. State Department spokesperson Sean McCormack told reporters April 23 that “there’s not an infinite amount of time.” He had acknowledged four days earlier, however, that “the North Koreans probably will” determine when the Banco Delta Asia issue is resolved.

Neither Hill nor the senior State Department official would say what consequences there would be if North Korea’s lack of compliance persists.

Grounds for Optimism?

Despite the lack of progress, there may be reasons for optimism. For example, South Korea’s top nuclear negotiator, Chun Young-woo, said that the Banco Delta Asia issue “is reaching a final stage of resolution,” Yonhap reported April 26.

The news agency also reported the same day that Kim Seung-kyu, head of South Korea’s National Intelligence Service, told a National Assembly Committee that, although North Korea’s reactor is still in operation, the country has recently taken some steps that suggest that Pyongyang may be preparing to admit IAEA inspectors.

These activities, which include road maintenance, as well as “construction of a small building…behind the reactor,” could be “preparations to build convenient facilities and refurbish adjacent areas” in preparation for the inspectors, Kim said, according to a committee statement.

For its part, Pyongyang publicly remains committed to carrying out its obligations under the February agreement. For example, the North Korean Foreign Ministry stated April 13 that Pyongyang “remains unchanged in its will to implement” the February agreement and will “move” when the bank dispute is resolved.

Similarly, New Mexico Governor Bill Richardson (D) said on ABC’s This Week two days later that North Korean officials had said they would shut down the nuclear facilities and invite the IAEA inspectors after the funds were unfrozen. Richardson visited the country earlier in April as part of a larger delegation of current and former U.S. officials, including National Security Council official Victor Cha.

Ri’s letter, published by the state-run Korean Central News Agency, appeared to articulate a slightly different formulation. Although it asserted that Pyongyang will “invite” IAEA inspectors to North Korea “the moment the actual defreezing of the frozen fund[s] in the bank has been confirmed,” it added that the government will “discuss the issues of suspending the operation” of the Yongbyon facility. The letter said nothing about shutting down the nuclear facilities. Ri did, however, reiterate Pyongyang’s commitment to “implement” the February agreement.

Japan Renews Sanctions

Meanwhile, Japan extended for an additional six months sanctions that it imposed on North Korea last October, Foreign Minister Taro Aso told reporters April 10. (See ACT, November 2006.) Prime Minister Shinzo Abe told reporters six days later that Japan does not plan to impose additional sanctions, according to the Kyodo News Service.