U.S. and North Korean negotiators meeting in Geneva

The exact and up-to-the minute state of play between the U.S. and North Korea was described to journalists in Geneva, Switzerland on Friday by U.S. negotiator Christopher Hill (Assistant U.S. Secretary of State) speaking on the eve of a two-day round of direct talks hosted by the Swiss government.

Did Hill really mean it when he said [see below] that “nuclear weapons really need to be done away with”? (see below)

OK, the truth is, this is a selective and edited quote. Hill might have been suffering from jet lag, and boredom at some of the journalists questions … or maybe he really was choosing his words with precision, because what he said was actually: “these nuclear weapons really need to be done away with.”

Maybe he meant exactly what he said — that North Korean “nuclear weapons really need to be done away with”, and not all nuclear weapons (as called for by the Nuclear Non-Proliferation Treaty or NPT, to which the U.S. is a party, but from which North Korea withdrew).

That is, of course, if the North Koreans actually have nuclear weapons, as they have recently suggested, though perhaps only as a negotiating prod, during the dragged-out efforts to release frozen North Korean funds held in the Banco Delta Asia of Macao – a bank that is under China’s ultimate control.

Hill was speaking at the Hotel de la Paix in Geneva, Switzerland:

“This will be a two-day meeting of the U.S. – DPRK working group. This is in the fram ework of five working groups that are called for in the February ’07 agreement. For us it’s an important working group because it allows us to really prepare for the next plenary session, Six-Party plenary session, and I think it also allows the U.S. and DPRK to make progress on our relationship…

U.S. negotiator Hill continued:
“As President Bush said yesterday, there has been progress on the denuclearization of DPRK, but we have some unfinished business to do. Certainly the month of September will be an important month because, in addition to completing the working groups with the U.S.-DPRK working group this weekend and then the DPRK-Japan working group next week, we would hope to get back to a Six-Party plenary and figure out the sequencing of the next steps — which is the disablement of the nuclear facilities and the full declaration of all nuclear programs and facilities and materials that the DPRK has.

This is — I think I would call this phase two, with phase one having been the shutdown of the Yongbyon nuclear facilities there. So phase two, I think, is an ambitious task — but a very necessary task on the road toward complete denuclearization.

We are hopeful — and indeed we’ve had some very good working groups, especially the denuclearization working group that took place in Shenyang just a couple of weeks ago in China — we are hopeful that we can come up with an implementation arrangement for the disablement and declaration of facilities, that we could by the end of this year have accomplished this phase two. Then in the opening of ’08 we would begin what I would hope would be the final stage, which is the abandonment of the fissile material — that is, the nuclear material already produced — the abandonment of weapons in which the fissile material is, the convening of a peace conference with respect to the Korean Peninsula to turn the armistice into a genuine peace agreement; and finally the convening of the Northeast Asian peace and security mechanism, an effort to begin to create a sense of neighborhood in Northeast Asia. And all the while that we’re doing this, we would continue to make progress on the U.S.-DPRK normalization agreement, such that we could eventually have complete normalization in our relationship.

So all of that I think is going in the next 24 hours here in Geneva, so we’re looking forward to it …

[W]e’ve been meeting quite a lot, actually, since 2005. I can’t be the one to just describe the chemistry. I think you need two to describe the chemistry. From our point of view it’s been very businesslike. We have, I think, been able to have some clarity about our objectives here.

I think it’s very important that each party understands what the other party needs to get out of a process. So I think to do that you have to get to know each other and you have to I think have these face to face contacts, which we’ve done.

But what I want to stress is that we have embarked on a Six-Party process because this is not just a U.S. problem or a U.S.-DPRK bilateral problem. This is a problem for the region. And I think if you take an even wider angle view of it, you’ll see this is really, I think, a fundamental problem in the region that requires, I think, the building of a greater sense of neighborhood. And that involves building relations not only between the DPRK and the U.S., but also between the DPRK and other countries and between some of those other countries.

So that is why we are trying to address some of the underlying causes of tension in the region. And we hope that at the end of this process, with the creation of a Northeast Asian peace and security mechanism — which is one of our working groups and which the Russian Federation has been working very hard to organize and to ensure that it will be a success when it meets — I hope that at the end we will have not only dealt with the terrible problem of nuclear weapons, but also the problem of making sure that this neighborhood produces not only some of the world’s finest products but also Northeast Asia can produce also peace and security.

QUESTION: Are you going to raise the issue of the Japanese abduction case?

ASSISTANT SECRETARY HILL: The Japanese abduction issue, as I’ve said many times, is an issue of great importance to the Japanese government and the Japanese people. Anyone who has been in Japan knows that. But I want to stress it’s also an issue of great importance to the American Government and the American people. So I have raised it before, and I’ll continue to raise it. This is an issue that needs to be resolved, and I think it needs to be resolved in the context of addressing a DPRK-Japan relationship. And that’s what their working group is about.

So I have continued to be in very close contact with my counterpart, Mr. Kenichiro Sasae. And I look forward when I leave here to going to Sydney and briefing the Japanese delegation, who will be there in APEC, on aspects of our bilateral meeting that could be relevant to their bilateral meeting which I think comes up on Wednesday.

QUESTION: Why don’t you apply the same method that you’re applying to North Korea to the Middle East and start talks to denuclearize the region, especially that there you need also peace and security for all countries?

ASSISTANT SECRETARY HILL: I handle East Asia. I handle a number of situations in East Asia. I’m handling this one. I think in diplomacy you realize that rarely does one size fit all, that you have different situations, different historical antecedents to all these situations. And so you have to in many respects improvise in all these situations. So Im not prepared to say that the process we have going with the DPRK is one that’s applicable to every other situation in the world.

Let’s see how we do with this. Then let’s see if there are things in this process that can be used elsewhere. Believe me, we have a lot of unfinished business

[W]e have a tough situation in Northeast Asia. This nuclear issue is a tough one. We’re trying to solve it the best way we can. If there are lessons to be learned, if there are positive lessons, that’s excellent. But I would caution against people thinking that you can take one solution and use it everywhere.

The lesson I hope that people would take is that these nuclear weapons really need to be done away with. [emphasis added]

These are, as I’ve said many times, these are programs that are not helping the DPRK. In fact they’re driving the DPRK into a deeper sense of isolation, which we’re trying to reverse. And I hope other countries who have had aspirations in this regard would understand that nuclear weapons are not a security solution, and they certainly don’t help anyone’s future

QUESTION FROM A JOURNALIST: [C]ould [you]elaborate a bit on the expected burden-sharing from allies in the region on any economic compensation package for the North Koreans?

ASSISTANT SECRETARY HILL: As you know, we currently have a compensation package with respect to this heavy fuel oil. Four countries in the Six-Party process are participants in that – China, Russia, the U.S., and South Korea. Japan has said it will be a participant when its issues are addressed.

We have also kept the door open to other countries who may want to participate. So we are very interested in other countries joining in this. And for that reason we have really been very active in briefing other countries on the process and, in effect, seeing if other countries can make contributions to this — because we consider the Six-Party process not to be a sort of closed loop, but rather a platform in which we hope that all countries can see what we’re trying to do and can contribute to it.

So on the other part of your question, I think when you have a negotiation, each side likes to frontload the other side’s obligations. You know, we certainly do a little of that ourselves. I think that will just come out in the negotiating process. We basically have a principle of you do something, we’ll do something. That’s the fun and the burden of negotiation, figuring out the sequence of various obligations.

I don’t know why I said it’s fun, because it really isn’t. [Laughter].

QUESTION: You said the Japanese abduction issue is important also for the United States.


QUESTION: In what ways other than Japan just being a good ally, in what ways is it important to the United States, and do you think it’s going to affect the whole denuclearization? How do you think it’s going to affect the whole denuclearization?

HILL: Obviously it’s an impediment in any normalization of DPRK-Japan relations. So there are other impediments of course, but I think this abduction issue is an issue that the Japanese public is very keenly aware of. I think, fundamentally, this is a case of one state abducting the citizens of another state. That has sort of broader ramifications. And therefore I think any state that has engaged in that practice really needs to come clean and explain what precisely happened, what has happened to the individuals, a full explanation of it. I think any state that is engaged in this also needs to give pretty clear assurances this sort of thing won’t happen again.

So it does go beyond the question of DPRK-Japan. I think it goes to the very fundamental question of how states behave toward one another. But it’s certainly been an impediment here, but I hope that it can be addressed. I think everyone understands it needs to be addressed. So let’s see how we do in the next few weeks.

QUESTION: Is it possible to be discussed about uranium enrichment program program and light water reactor?

ASSISTANT SECRETARY HILL: Certainly we feel that we need to make progress on uranium enrichment. This came up in the denuclearization working group in Shenyang. Any declaration of nuclear programs has to involve all nuclear programs, and so uranium enrichment would be one of them.

With respect to the light water reactor issue, that’s addressed in the September ’05 agreement, and I think the position of my government is pretty well known on that — which is, we’re prepared to have a discussion on that when the DPRK returns to the Non-Proliferation Treaty.

QUESTION: The North Koreans maintain they will not disable or declare unless U.S. lifts the sanctions and remove them from the list. Are you ready to sequence those issues with their obligations?

ASSISTANT SECRETARY HILL: We’re going to have some discussions about all of those things, but I’m not prepared to tell you precisely what we’re prepared to do.”


China Hand reported on 20 July in a post — worth quoting at length — on his (her? no, I think it is his) blog, Chinamatters.blogspot.com, that:

“In Case Any More Proof Was Needed That Patriot Act Section 311 Are Politically-Motivated Nonsense…

A propos the Patriot Act Section 311 investigation against Banco Delta Asia in Macau that caused so much heartburn for the Six Party Agreement, I described an apparent worldwide campaign of financial warfare against North Korea and wrote :

‘A general picture emerges. The December 2005 Advisory [warning banks away from North Korea] appears to represent an overt politicization of Patriot Act Section 311 actions.Instead of targeting individual banks or jurisdictions for derelictions in their anti-money laundering controls, Treasury appeared to overstep its Patriot Act Section 311 mandate by telling banks overseas—in the absence of international or national sanctions or local enforcement actions—not to do business with any North Korean account holders or else suffer under the U.S. assumption that they are money laundering’.

I’m speculating –and I don’t think I’m out of line here — that there were sticks brandished (i.e. threats of Patriot Act Section 311 actions)…

Well, speculate no more. Reuters delivers a crate of smoking guns in its reporting on another hardliner bugbear — Cuba.

International banks shun Cuba under U.S. scrutiny

By Anthony Boadle

HAVANA (Reuters) – Heightened scrutiny of banking transactions by the United States since the September 11 attacks has led European and Canadian banks to curtail dealings with Cuba, bankers and businesses say.

The result — perhaps intended — is that Western businessmen in Havana are having nightmares moving funds in dollars to and from Cuba because banks are increasingly refusing their business.

HSBC , Barclays , Credit Suisse , Royal Bank of Canada and the Bank of Nova Scotia, also known as Scotiabank , have closed accounts of Cuban companies or reduced business tied to Cuba since last year to comply with U.S. regulations.

ING Groep NV , the first big Western bank to set up business in Communist Cuba, doing so in 1994, said two weeks ago that it will close its Havana office.

ING said it was purely a business decision, but it followed the blacklisting last year by the United States of its banking joint venture with Cuba.

“The banks don’t want to risk a fine by the Federal Reserve. Banks like ING and HSBC have much bigger fish to fry than Cuba,” said Simonato.

Scotiabank last year ended dollar transactions by the Cuban embassy in Jamaica and was criticized for bowing to U.S. rules.

The move to comply with U.S. regulations came in the wake of the heaviest penalty in banking history.

In 2004, Switzerland’s largest bank, UBS AG , was fined an unprecedented $100 million by the U.S. Federal Reserve for helping Cuba, Iran, Libya and the former Yugoslavia swap old dollar banknotes for new currency.

UBS said it had ‘substantially completed’ its exit from dealings with Cuba, Iran, North Korea, Myanmar, Sudan and Syria by the end of last year.

Shunned by Swiss banks, Cuba has had trouble funding its U.N mission in Geneva, a European diplomat in Havana said.

Last month, Cuba complained that UBS and Panama-based Banistmo, owned by HSBC, had refused to process the payment of its annual membership fee in the Latin American parliament.

The U.S. Securities and Exchange Commission last month posted a list of companies whose annual reports contain any references to Iran, Sudan, Syria, North Korea and Cuba.

The online tool is meant to allow investors to search for businesses with ties to state sponsors of terrorism. Companies on the list were outraged because it did not make clear what were their exact ties with the five countries.

‘The Patriot Act gave U.S. authorities a tool to do what they could not do before: chase foreign banks to comply with U.S. sanctions’, he said.

A note on that $100 million fine. Apparently it was related to the discovery of $650 million in brand-new US bills in one of Saddam’s stashes after the invasion — which he apparently acquired by dealing through Cuba, Libya, and the former Yugoslavia, who had got the greenbacks through UBS and traded them onward.

Presumably, Saddam was understandably nervous about his foreign bank accounts getting locked up by future UN action. So he cashed out.

Ironically, Saddam un-laundered his money, removing it from the world financial system and piling it in neat stacks in his hidey-hole to be discovered by the U.S. Army. So I’m not sure what laws were violated here…

See the full post on China matters.

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