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Another Failed North Korea Agreement By: Gordon Cucullu and Joshua Stanton
FrontPageMagazine.com | Friday, May 25, 2007

"We cannot have a situation where (North Korea) pretends to abandon their nuclear program and we pretend to believe them."

-- Deputy Secretary of State Christopher Hill


Sounds good and tough, doesn’t it? But does Christopher Hill defend his actions when he does exactly what he decries: promoting an agreement based on a naïve pretense? Here’s another question for discussion:  can anyone name the last – or first – time North Korea abided by any agreement to stop any aggressive actions, including WMD research, killing, counterfeiting, kidnapping, abducting, or threatening someone? 


In the 1953 Armistice Agreement that ended the Korean War, Kim Il Sung agreed to release all prisoners of war, American and South Korean alike. Yet nearly 60 years later South Korean POW’s are still escaping from North Korean captivity. The South Korean government thinks the North Koreans kept several thousand of its soldiers behind, 500 of whom may still live. It was known that more than 300 Americans were held captive when Operation Little Switch marked the end of POW exchanges. Their fate is unknown today.


In 1992, under growing international pressure over its 5-Megawatt plutonium reactor at Yongbyon, Kim Il Sung signed the International Atomic Energy Agency Safeguards Agreement. That same year, he signed an agreement with the South Koreans under which both Koreas and the United States pledged to keep the peninsula free of nuclear weapons.


The United States promptly and visibly removed its nuclear arsenal from South Korea, even as defectors reported that North Korea had disassembled a nuclear reactor and hid it in tunnels. U.S. satellites detected more suspicious tunnels near Yongbyon. And the CIA uncovered evidence that North Korea had bought electron beam furnaces from Germany for its nuclear weapons program. We’ve since found evidence that North Korea transferred nuclear technology and materials to Iran, Pakistan, Libya, and perhaps Syria.


In 1993, North Korea signed the Nuclear Non-Proliferation Treaty and committed itself to “the peaceful use of nuclear energy,” although its reactor has never been connected to the national electrical grid. In 1994, Jimmy Carter brokered the first ill-fated Agreed Framework, in which the North reaffirmed its agreement to “a nuclear-free Korean peninsula.”  That same year, reports began to emerge that North Korea also had an undisclosed uranium enrichment program.


In 1998, according to the New York Times, North Korea may actually have conducted its first nuclear test in the Pakistani desert. By 1999, a leaked Energy Department report concluded that North Korea was enriching uranium to build nuclear weapons. The Clinton Administration chose to ignore the uranium evidence during its final years in power, but in 2002, the North Koreans admitted their guilt to two U.S. diplomats and three State Department translators. Now they’re back to denying it again.


We should not be surprised that North Korea historically does not keep its word. We should be surprised that so many intelligent people expected anything else. If the definition of repeating the same activity and expecting a different result is “insanity,” then the Bush Administration and all the pundits who support this new agreement are candidates for psychotherapy.


Predictably, more than a month has passed since North Korea reneged on every promise it made in the February 13th denuclearization agreement:  to shut down the Yongbyon reactor; to invite U.N. inspectors back in; to “discuss” the full range of its nuclear programs; and to appear for another session of six-party talks. And yet wounded souls on the editorial pages of the Washington Post and the New York Times that for years advocated the same capitulation the Bush Administration inexplicably offered three months ago, now ask with breaking voices, why do they cheat us?


Why would they possibly be motivated to do otherwise? North Korea cheats us because it works! The North Koreans see negotiations with us as simply war by other means, and we always let them win. North Korea’s long record of success at gaining aid and other benefits from the United States in return for nothing could have ended in 2002, during the presidency of a nominal conservative, but it did not end because President Bush decided to preserve a living museum to the Clinton Administration within his State Department. Under two Secretaries of State who were neither conservative nor well-read on the North Koreans, men like Nicholas Burns, Richard Armitage, (initially) Jack Pritchard, and Christopher Hill set out to create a new Agreed Framework, based on the theory that it would turn out differently than the last one because Kim Jong Il would yield to their special powers of moral suasion.


Conservatives, like John Bolton who wanted to hasten the regime’s terminal disease by undermining it economically and politically firmly opposed this appeasement-oriented policy. For several years, the result was gridlock. No bold new policy initiative could survive the objections of the appeasement wing, on one hand, or the regime change wing, on the other. Instead, the United States rounded up three other nations in the region (China, South Korea, Russia) to work together to undermine our interests – and Japan , which was the lone exception – to construct the infamous Six Party Talks. But all the meeting and all the talking never inspired the North Koreans to do anything but stall, obfuscate, and make absurd demands at which the diplomats would cluck their tongues and cable Washington for the authority to agree.


For a brief moment, we seemed to have gotten wise. It began in August of 2005, with a news story about a garish Chinese mob wedding in America, with dozens of the dons and captains in attendance. This “wedding” ended with most of the guests in federal custody and $5 million in high-quality North Korean $100 “supernotes” seized, their origin later confirmed by the sworn testimony of a cooperating witness. In October, the feds indicted Sean Garland, the leader of a far-left IRA splinter faction, for conspiring to circulate large amounts of North Korean “supernotes” in England. News reports, fed by leaks from knowledgeable officials, began describing North Korea’s operation in extraordinary detail:  its procurement of special intaglio printing presses and color-shifting ink, and even the location of Printing House Number Six in the city of Pyongsong, where the notes are believed to be printed. These revelations embarrassed Kim Jong Il, but mere shame has never harmed him.


But on September 7th, the Treasury Department’s Web site published a notice of intent to designate the Macau-based Banco Delta Asia as an “entity of special concern” for money laundering under Section 311 of the USA PATRIOT Act. For at least a decade, Banco Delta was the most important link between Kim Jong Il and his foreign income and assets, and this designation would essentially deny Banco Delta access to the international finance system. Treasury suspected that North Korea was using Banco Delta to launder money earned through criminal enterprises such as counterfeiting, and as a financial clearinghouse for monies received from its WMD proliferation operations.


That week, perhaps not coincidentally, the North Koreans finally decided - after a long absence - to return to Six-Party nuclear talks. On September 19, 2005, they even agreed in principle to dismantling their nuclear programs, although the deal contained few specifics and the North Koreans still denied having a uranium program. In any event, they renounced its terms within 24 hours. The following day, to save itself from financial ruin, Banco Delta Asia blocked $25 in North Korean funds, where they had been trapped ever since. This sum, by itself, was not large, but the action’s downstream effects were immense.


By December of 2005, North Korean front companies, with no means to recoup their often-illegal earnings, began fleeing Macau en masse. Many reportedly went to the Chinese mainland. The following February, Kim Jong Il reportedly told Chinese President Hu Jintao that he feared the collapse of his government. The Asian Wall Street Journal reported that Treasury’s action had “dealt a severe blow to the secretive country,” “dried up its financial system,” and “brought foreign trade virtually to an end.”


In April, Treasury claimed that the designation of Banco Delta was having a “snowballing … avalanche effect” on North Korea as other banks sought to cut their ties, creating “huge pressure” on the regime. Treasury pursued North Korea’s assets to banks in Japan, Singapore, Vietnam, South Korea, and elsewhere. Banks in all of these countries also closed or blocked North Korean accounts. Pressure mounted. Kim Jong Il even began selling off his nation’s gold reserves, much of it mined in his slave labor camps, particularly Camp 15 (Yodok) and Camp 77 (Dancheon). Still, North Korea had effectively lost most of its access to international finance.


Kim Jong Il’s regime might not have survived 2006 without massive aid from China and from America’s nominal ally South Korea, currently led by the leftist President Roh Moo Hyun. South Korean opposition lawmakers recently leaked figures showing that the South has given the North nearly $7 billion in aid since 1994. By its own admission, South Korea has little idea where or for what North Korea spent that money. Noting that monies are fungible, during that same period, Kim Jong Il bought 18 new submarines, 1,000 artillery pieces, dozens of MiGs, and, of course, expended his nuclear capability.


Concomitant with this economic bail-out from South Korea and huge arms buy by the North, between 1 million and 2.5 million North Koreans died from famine. Among survivors the percentage who are chronically malnourished doubled, to about 35%. Since Roh’s 2002 inauguration, South Korea has increased its aid to the North at a geometric rate. One report claims that the South is now providing a staggering 46% of the North’s foreign exchange. This year, South Korea will funnel approximately $1 billion to Kim Jong Il; in contrast, it will contribute just $780 million, or 38%, of the cost U.S. taxpayers will pay to keep 29,500 troops in South Korea. This means that U.S. taxpayers may indirectly be paying for the same North Korean weapons they’re also paying to deter. Kafka could not have written such an absurdity. Yet the United States could have dealt with this problem if it had the will to do so.


The same financial measures that destroyed Banco Delta, combined with tools like Executive Orders 13,224 and 13,382, could also have been employed against the Kaesong Industrial Park and the Kumgang Tourist Project, South Korea’s two main vehicles for funneling cash directly to Kim Jong Il’s regime. America could also have made the South’s support for North Korea a condition of keeping US troops on South Korean soil. (That presence, though economically beneficial to South Korea, is a strategic anachronism, as well as a great risk and a massive political liability for the United States. Roh used South Korean hostility against our soldiers to win election, and members of his cabinet and party frequently and quite deliberately use heated anti-American rhetoric to bolster their own popularity among their extreme left constituents and to harden South Korea’s position in its negotiations with the United States. For more on that, start at page 58 of this document.) 


Still, the growing effect of Treasury’s effort must have caused Kim Jong Il considerable desperation, if one judges by his reaction. Provocations like his July 2006 missile tests and his technically unsuccessful October 2006 nuclear test brought down U.N. Security Council Resolutions 1695 and 1718. These remarkably strong resolutions outlawed several more important sources of foreign exchange for North Korea, including arms sales. Japan and Australia soon imposed their own sanctions. Oddly, however, the United States never imposed significant sanctions of its own. It did not even re-impose the sanctions President Clinton eased in exchange for North Korea’s moratorium on missile launches. This marked a failure or abandonment of the vaunted Six Party approach – or was it merely a diplomatic convenience for capitulation?


North Korea’s belligerence and the impact of our financial pressure on the regime ought to have broken the factional gridlock within the Bush Administration, but it was the elections of November 2006 that appear to have broken it instead. This is a strange development, given the near-absence of North Korea as an election issue and the fact that North Korea was emerging as an ideal example of effective pressure on a genocidal tyrant through multilateral “soft power,” with even the U.N. playing a constructive role for once (thanks to pressure from then- UN Ambassador John Bolton). It was almost as if the election loss so shocked the Bush administration  that it caved on every initiative across the board, including Korea.


You may ask what, if not denuclearization, we have gained from this extraordinary surrender of effective leverage. The good news is that Kim Jong Il will stop laundering the proceeds of counterfeiting and drug dealing. The bad news is that we’ve agreed to launder it for him. At section 1957 of the United States Criminal Code is one of the two main laws that our prosecutors use to prosecute money laundering. It prohibits transactions in criminally derived property:

Whoever [in the United States or in the special maritime and territorial jurisdiction of the United States] knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished as provided in subsection (b). 

Author Josh Stanton was present on February 27th to hear Christopher Hill tell Congress that “law enforcement will not be compromised,” but if diplomacy is the art of being disingenuous without crossing the line to perjury, and if Mr. Hill did not perjure himself, then he certainly is an excellent diplomat. Senior officials of our State Department have just about concluded a more-or-less open conspiracy, hammered out with the North Koreans in New York that would land any of us in a federal penitentiary for international money laundering. Another statute, section 1956, contains a list of “specified unlawful activities,” of which counterfeiting is one, and drug dealing another. A detailed Treasury Department report has dispelled most doubt that these funds are largely “criminally derived property,” or, as one unnamed U.S. official said last fall, “It is all one big criminal enterprise. You can’t separate it out.” 

Thank goodness for prosecutorial discretion, because we seem to have struck the outlines of a deal under which the $25 million will be transferred to an American bank – Wachovia Bank, according to several press reports – which will then give Kim Jong Il the free use of that money. One can only speculate on how he would spend it, although the millions of his people who struggle each day to feed their children on starvation rations shouldn’t expect to see any of it.

Along with America’s own money laundering laws, the bureaucrats are also shredding two U.N. resolutions for whose passage America presumably expended considerable political capital less than a year ago. Resolution 1695 required those transferring funds to North Korea to “exercise vigilance” to assure that Kim Jong Il could not use those funds for WMD programs. Resolution 1718, passed in October after North Korea’s nuclear test, required those funding North Korea to “ensure” that their money would not go for those banned purposes, for major weapons systems, or for luxury goods for Kim Jong Il’s elite. In April of 2007, hardly anyone noticed when the State Department tacitly green-lighted a large North Korean arms deal with the Ethiopians, something that was undeniably a violation of 1718. Proponents of multilateral diplomacy have just lowered the bar for a U.N. resolution’s shelf life to six months.

After six years of internecine struggle between the State Department establishment and conservatives over the course of George W. Bush’s Korea policy, the establishment finally prevailed in 2007. Yes, it’s likely that the North Koreas will shut down Yongbyon in due course. According to diplomatic chatter, “shut down” may mean something as superficial as putting yellow tape over the front door so that the diplomats can claim victory. The reactor, built in the 1960’s, is a decrepit wreck anyway, and the North Koreans are building a much larger one.


Yes, they may even let in U.N. inspectors. After all, they’ve thrown them out. But when it comes to key tests of good faith like admitting its uranium program and agreeing to an aggressive inspections program, the February 13th Agreed Framework buries those details in “working groups” to be carried out by low-level working groups that seem designed to attract little attention from the press.


Any discussion of human rights, demanded by the 2005 North Korea Human Righs Act, including North Korea’s infamous concentration camps and Kim’s use of food as a weapon of political cleansing, will be buried in yet another anonymous working group whose actual function will be to smooth the way for full normalization of U.S.-North Korean relations. The State Department seems to be counting on having these discussions below the media radar, preferably buried amid reporting about Iraq or the 2008 elections.

By the time the North Koreans make their intention to renege plain to those who still refuse to see it, President Bush will be at the end of his tenure. Bush will likely try to exit office under the cover of an illusion that he has “solved” the North Korea problem, while the professional diplomatic class will pray that the next president will be even more deferential.


What about the State Department’s “realists,” who have invested their credibility in an arms control agreement grounded on Kim Jong Il’s honesty, China’s good faith, and South Korea’s loyalty? They will continue to skate through their careers unchallenged by outside authority and confident that the combined mechanism of the protective Foreign Service Officers Union and a short public attention span will allow them to obfuscate their tracks.


America will be a loser, having sacrificed even more of its influence and power in East Asia, and having been publicly tricked by a two-bit, huckster state led by a buffoonish dictator. Those who see the waning of American power will be heartened by this agreement.


The big losers will be as usual – the North Korean people, particularly the concentration camp inmates whose plight Bush once famously discussed with Bob Woodward in 2001 and for whom he appeared to be concerned when he highlighted their plight with an oval office visit for a defector four years later.


That was then, this is now, and the new North Korean agreement boldly illustrates how a presidency in disarray can be manipulated by a committed enemy, a disloyal bureaucracy, a do-nothing Congress, and a spiteful media.

Lt. Col. Gordon Cucullu is a former Special Forces lieutenant colonel and author of the best-selling book Separated at Birth. Joshua Stanton practices law in Washington, D.C., and blogs at One Free Korea.

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