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Analysis: Stalled Again at Six-Party Talks

Council on Foreign Relations

Updated March 22, 2007
Prepared by: Carin Zissis

Even as a path is cleared to meet the requirements of the North Korean denuclearization agreement reached in February, another round of Six-Party Talks has stalled. The February deal, which requires Pyongyang to shut down its main nuclear reactor within sixty days in exchange for fuel oil, involves a series of bilateral talks, including U.S.-North Korea negotiations aimed at normalizing relations. On March 14, Washington broke through on one of the biggest obstacles in its relations with Pyongyang with a decision that allows the release of $25 million (LAT) in North Korean funds from a Macao-based bank.

The United States blacklisted Banco Delta Asia in 2005 over allegations the bank laundered North Korean money. The freeze prompted Pyongyang to walk away from negotiations and delayed the Six-Party Talks for over a year. The funds issue appears to be holding up progress again: When the funds didn’t make a quick arrival in North Korean accounts, Pyongyang’s chief nuclear negotiator walked away (BBC) from the latest round of talks in Beijing.

The move to release the funds marked a shift in Bush administration policy toward North Korea. As the Financial Times reports, Secretary of State Condoleezza Rice convinced the Treasury Department to unfreeze the funds in hopes of achieving the larger goal of getting Pyongyang to close its nuclear reactor. Initially, the double-edged nature of the U.S. Treasury Department’s ruling allowed for the unfreezing of funds by Chinese monetary authorities, but prohibited U.S. banks from dealing with Banco Delta. In advance of new Six-Party Talks, Washington reached an agreement with Pyongyang in which North Korea pledged to use the money “for humanitarian and educational purposes.”

Read the rest of this article on the cfr.org website.

Copyright 2007 by the Council on Foreign Relations. This material is republished on GlobalSecurity.org with specific permission from the cfr.org. Reprint and republication queries for this article should be directed to cfr.org.