The Foreign Service Journal, July-August 2007

ty”— diplomatic code for renouncing military attacks and regime change — administration officials began sounding their old refrain: “All options remain on the table.” Worst of all, instead of going for the jugular by test- ing Pyongyang’s stated willingness to abandon nuclear arms, Washington’s irreconcilables showed an unerring instinct for the capillaries. They capitalized on a Treasury Department investigation of money-launder- ing at the Banco Delta Asia in Macao to pressure North Korea. The Treasury Department was right to stop North Korean counterfeiting of U.S. currency and other illicit activities; but its action convinced skittish bankers to freeze North Korean hard currency accounts around the globe — some containing ill-got- ten gains from illicit activities, but many with proceeds from legitimate foreign trade. How much that curtailed trade is unclear, but even if it did, it was a strange way to encourage economic reform. To Pyongyang it looked a lot like regime change. North Korea Retaliates Far from giving Washington leverage, the financial measures provoked Pyongyang to retaliate. For over a year it refused to return to the Six-Party Talks while seeking to resolve the BDA issue bilaterally. When Amb. Hill tried to pursue direct talks in November 2005, he was kept from going to Pyongyang unless the North shut down its reactor first, which assured that no talks took place. On March 7, 2006, in New York, North Korea proposed a U.S.-DPRK bilateral mecha- nism to resolve the banking and money-laundering issues, but Hill was kept from pursuing the offer. He was also kept from direct talks with the North’s Kim Gye- gwan in Tokyo on April 11-12. Kim was blunt at a press briefing afterward. “Now we know what the U.S. posi- tion is,” he said, adding: “There is nothing wrong with delaying the resumption of Six-Party Talks. In the mean- time, we can make more deterrents.” Besides warning Washington, Pyongyang opened talks with Tokyo. Instead of sustaining the talks, how- ever, Japan’s ruling coalition introduced legislation on April 28, 2006, to implement the sanctions that the Diet had previously authorized. Within days, Pyongyang began preparations for mis- sile tests. When Beijing sent a high-level mission to Pyongyang to press the North to call them off or face sanctions, Kim Jong-il made the Chinese cool their heels for three days before seeing them, then went ahead and tested anyhow, knowing it would affront its ally. The tests of seven missiles, including the Taepo-dong 2, on July 4, 2006, did just that, prompting China to vote for a U.S.- backed resolution in the U.N. Security Council con- demning the tests and threatening sanctions. Undaunted, North Korea immediately began prepara- tions for a nuclear test, which it conducted on Oct. 9, 2006. It was demonstrating in no uncertain terms that it would not bow to pressure — from the United States or China. Only U.S willingness to end enmity could get it to change course. That message was lost on most, but not all, of Washington. The United States reacted by pushing a resolution in the U.N. Security Council authorizing sanctions. Having warned the North in July 2006, Security Council mem- bers (China included) had little choice but to impose some sanctions, lest they undermine their own credibility. After years of huffing and puffing but failing to blow Kim Jong-il’s house down, U.S. irreconcilables claimed that with China’s support for sanctions, they finally had Pyongyang where they wanted it. But when the Bush administration took office in 2001, the North had stopped testing longer-range missiles, had one or two bombs’ worth of plutonium and was verifiably not mak- ing more. Six years later it had between seven and nine bombs’ worth, had resumed testing missiles, and had lit- tle reason to restrain itself from nuclear testing or, worse, generating more plutonium. Is that where the hardliners wanted North Korea? It was not where President Bush wanted the DPRK. He was ready to negotiate in earnest and settle for shut- ting down the nuclear facilities at Yongbyon as a first step. He authorized Hill to hold a series of direct meetings with Kim Gye-gwan. The Turnaround At the first meeting, on Oct. 31, 2006, in Beijing, Hill agreed that “we will find a mechanism within the six-party process to address these financial measures.” That led the North to announce it would return to the Six-Party Talks. On Nov. 28-29, Amb. Hill met Kim again in Beijing to lay out what he would seek in the talks, but the first meeting of the Financial Working Group made no progress. Neither did the December round of talks a few days later. The turning point came at the third bilateral, in Berlin, when Hill and Kim concluded a memorandum of F O C U S 32 F O R E I G N S E R V I C E J O U R N A L / J U LY- A U G U S T 2 0 0 7