Little U.S. flexibility seen on N.Korea sanctions
Source: Reuters
By Carol Giacomo and Arshad Mohammed WASHINGTON, Nov 1 (Reuters) - Details of a U.S. offer to discuss financial sanctions with North Korea in six-party talks are not yet decided, but there is little flexibility for soon easing the pressure, U.S. officials said on Wednesday. Three weeks after its first nuclear test, North Korea said it was returning to the talks because Washington agreed to discuss a U.S.-led crackdown on financial assets that Pyongyang says drove it from the negotiating table to start with. Some administration hard-liners, believing the crackdown had a major impact in forcing Pyongyang back to bargaining, have argued in internal discussions against compromise proposals and fretted that talks would inevitably force Washington to weaken the penalties. Asked if the administration agreed on ideas for resolving the financial issue in negotiations with the North, a senior U.S. official said he did not know how all officials felt, but "there is very little ... wiggle room when you have laws and you have various investigations that are ongoing." Another senior official told Reuters: "I think we're going in with a noncompromising position on this, but there is a willingness to talk about these issues." The last round of six-party talks broke off in November 2005 after Washington squeezed Pyongyang's access to the world financial system to punish it for illicit activities, including printing fake U.S. banknotes, worth about $550 million per year. About $24 million was frozen in accounts held by Macau's Banco Delta Asia after the U.S. Treasury Department described the bank as a "willing pawn" in Pyongyang's counterfeiting, cigarette and drug smuggling and money laundering schemes. After the North conducted its first nuclear test on Oct. 9, creating a new dynamic in Asia and giving North Korea new standing as a nuclear-capable state, the U.N. Security Council imposed international sanctions on Pyongyang. N. KOREAN LEADERS' ACCESS TO CURRENCY AFFECTED? In mid-October, China -- Pyongyang's main energy and food benefactor -- ordered banks to begin shutting down financial operations with the North, a third senior administration official said. He was unable to put a value on the interruption but said Washington is "quite confident" that U.S., Chinese and other international moves "have shut down a major portion of the banking world to those involved in North Korean illicit and illegal behaviors." Officials claim this affected North Korean leaders' access to hard currency in ways not previously experienced. The United States initially refused to discuss the assets freeze with Pyongyang, saying the isolated Communist government needed to first end illicit activities. State Department spokesman Sean McCormack told reporters that in agreeing to establish a "working group" within the six-party format, chief U.S. negotiator Chris Hill had not given the North Koreans any proposals on how the issue might be resolved. Creation of the working group is a face-saving way for the two sides to come together. Hill returns to Washington late Wednesday for high-level administration discussions before two other senior State Department officials head for Asia to discuss strategy for getting the six-party talks underway and to ensure U.N. sanctions are enforced. U.S. officials said the administration would press Pyongyang to end all illicit activities and set up a transparent banking system. "The heart of this discussion is that North Korean companies and diplomats have engaged in clearly illicit activities and if (Pyongyang) wants to see its situation improve, then here are the things you'll need to accomplish," a senior U.S. official said. In addition to the United States and North Korea, the six-party talks -- which aim to persuade Pyongyang to forgo nuclear weapons -- include China, Japan, South Korea and Russia.
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