The Foreign Service Journal, July-August 2007

understanding that was the basis of the Feb. 13, 2007, joint agreement. The North pledged to shut down and seal its Yongbyon facilities within 60 days and readmit IAEA inspectors to conduct “all necessary monitoring,” in return for a U.S. promise to resolve the financial issue within 30 days and supply 50,000 tons of heavy fuel oil. Some in Tokyo likened the abrupt turn of events to the “Nixon shock” of 1971, when President Nixon announced he would visit China and then took the United States off the gold standard without advance warning. When Japan balked at contributing its share of heavy fuel oil without progress on the issue of the DPRK’s abduction of Japanese citizens in the 1970s, South Korea agreed to sup- ply all of the first tranche. It remains to be seen whether Prime Minister Abe Shinzo will stick to his tough stance, using the North Korea threat to justify new assertiveness abroad and placate right-wingers in his own party who insist that “Japan can say no” — to the United States, as well as China. It also remains to be seen whether or not Japanese voters will support his new direction. Resolution of the Banco Delta Asia issue delayed implementation of the Feb. 13 joint agreement until late June. The Treasury Department’s insistence on barring the bank from transactions with U.S. financial institutions irritated Beijing and made bankers everywhere reluctant to accept transfers of North Korean funds from BDA or unfreeze its accounts without Washington’s okay. Treasury’s effort to save face by getting Pyongyang’s pledge to use the funds “solely for the betterment of the North Korean people, including humanitarian and edu- cational purposes” proved a further embarrassment when Western firms objected, arguing that some of the funds were theirs and not the North’s to disburse. The Next Phase To Pyongyang the dispute was not about money, but about Washington’s failure, once again, to keep its word. If the United States could not even resolve the financial issue, how would it ever provide more convincing proof of its non-hostile intent? F O C U S J U LY- A U G U S T 2 0 0 7 / F O R E I G N S E R V I C E J O U R N A L 33