Pyongyang
Report

Vol 9 No 2 April
2007

In this issue-

n      The mysteries of US foreign policy, if there is one

n      The Banco Delta Asia
affair – another case of fabricated charges?

n      Joint venture pharmaceutical company seeks aid
business

n      More revelations about US Korean War massacres

Commentary

When the agreement ‘Initial Actions
for the Implementation of the Joint Statement’ was signed in Beijing on 13 February,
there was one strong possibility, and two near certainties.  It was very probable that the agreement
would not get far, and if that happened, it would be virtually certainly
because of the United States,
and just as certainly it would be blamed by most of the media on the DPRK. And
so it has come to pass.

The success of the agreement was unlikely
from the start.  There was the
underlying ambivalence of the US
towards peaceful coexistence towards the DPRK, for reasons of emotion and
domestic politics as well as strategic imperatives. The DPRK, for its part, is
very suspicious and wary of the US
but had every reason to want the agreement implemented, at least up to that
stage when it had to do something irreversible.  There were, in addition, two issues
which could trigger a collapse of the process.  The major one was the question of the
alleged DPRK heavy enriched uranium [HEU] weapons programme.  This had been the ostensible cause of the
Bush administration’s tearing up of the Agreed Framework signed by Clinton. There were indications
that the State Department was back-tracking on the allegations, especially the
statements by Christopher Hill and Joseph DeTrani expressing ‘doubts
about how much progress the uranium enrichment program has actually made’
(NY Times 1 March 2007). Although HEU had not been specifically mentioned in
either the latest agreement., or the Joint Statement of 19 September 2005 itself
(reportedly at Chinese insistence) it was clear that the administration was not
able to let the issue drop, though some might privately regret that it had been
raised in the first place.  It was
also clear that the issue was inherently liable to derail the peace
process.  The DPRK denied that it
had an HEU programme, but because of the nature of the technology, it would
never be able to prove that.

The second issue was the Banco Delta Asia
(BDA) affair and ‘financial sanctions’ and it is this which seems to
have brought things to a halt. At the time of writing Pyongyang is still deliberating whether
sanctions have been lifted and has accordingly refused to shut down the
Yongbyon reactor.  Resolution of the
BDA issue was always going to be problematical because even if the
administration thoroughly lifted its action against BDA the consequences were
less predictable.  The international
banking system is based on expectations of opportunity and risk, and
confidence, once lost, is difficult to restore.  However, we did not get that far.  The action against the BDA was only
partially lifted, and the far smaller part at that.  How and why this came about, the reasons
for instigating the action in the first place and the degree to which all this
is a reflection of infighting within the administration and ‘unintended consequences’
rather than some considered strategy is a curious mixture of ‘known
knowns’ and ‘known unknowns’, as Mr Rumsfeld once put it. No
doubt there are a few ‘unknown unknowns’ out there as well, perhaps
for history to discover.

The action against the BDA formally
commenced on 15 September 2005 when the US Treasury designated the bank as a
‘primary money laundering concern’ under Section 311 of the USA
Patriot Act.  This curious section
allows Treasury to impose restrictions on foreign banks or countries without
producing evidence.  By imposing US law on
foreign entities it embodies a claim to extraterritoriality which has the
Chinese, in particular, very concerned.
The timing was seen by many as a deliberate attempt to scuttle the Six
Party Talks and, intentionally or not, it kept the Joint Statement of that
month suspended until the real reopening of the talks in February 2007.

The Treasury’s press statement makes
interesting reading because it mixes the indisputably legitimate with
allegations of illegality in the same charge sheet.  The BDA has provided financial services
to DPRK companies for over 20 years and handles the bulk of the DPRK’s
precious metal sales we are told, as if there were something wrong with that.
This is combined with the accusation ‘that senior officials in Banco
Delta Asia are working with DPRK officials to accept large deposits of cash,
including counterfeit U.S. currency, and agreeing to place that currency into
circulation’. It is difficult to see why a bank accepting large amounts
of cash is considered improper, but counterfeit currency is another matter and
if the US had good reason to
think this, and some evidence, it should have been reported to the authorities
in Macau. This is not the route they took.

The designation of the bank caused a run
and the Macanese authorities were forced to step in and take over the bank,
freezing  $25 million in
DPRK-related accounts.

The authorities commissioned an audit of
the bank by the giant US accounting firm Ernst & Young.  Ernst & Young, which reported its
findings on 16 December 2005,  concluded that ‘the bank did not
introduce counterfeit U.S.
currency notes  into circulation
over the relevant period’.  Despite this, US Treasury still claims,
without producing evidence, that the bank helped the DPRK ‘launder
hundreds of millions of dollars’. It is inconceivable that, in the
circumstances, Ernst & Young would be less than rigorous in their audit,
and hundreds of millions passing through a small bank would be difficult to
overlook.  Moreover, it is unclear
why there was only $25 million in the accounts if so much money had been
sloshing through.

The BDA action not merely froze the DPRK
accounts but had a knock-on effect, which delighted Treasury, causing banks to
dissociate themselves from DPRK for fear of running foul of Section 311. The
DPRK boycotted the Six Party Talks and said it would not return until financial
sanctions were lifted.

For a variety of reasons, as discussed in
our last issue, Washington
appeared to backtrack in late 2006 and in the course of essentially bilateral
negotiations between Christopher Hill and Kim Kye-gwan it was agreed that the
BDA issue would be ‘resolved’. Exactly what was agreed has not been
made public; according to the US
press it was the subject of a ‘side agreement’ that stipulated that
the matter would be settled within 30 days of the agreement of 13
February.  The main provisions of
that agreement, mainly the shutting down of the Yongbyon reactor in exchange
for initial supplies of oil, were to come into effect ‘in parallel’
within 60 days. It is clear that for Pyongyang
resolution meant not just getting its money returned, but the restoration of
its linkage with the international banking system. There seems little reason to
suppose that Hill was not made quite aware of that.

Following the February agreement there was
a curiously semi-public battle between State and Treasury over the frozen
accounts.  Although Secretary Rice
said that she was working amicably with Treasury Secretary Paulson, there were reports
that State officials were complaining
that Treasury was sabotaging the Agreement by refusing to unfreeze all the
funds. Apparently Treasury was defeated on this, and was compelled to release
all the funds but, in a Parthian shot, blocked the BDA from the US banking system
ensuring that, in effect, the sanctions were not lifted. No banks were willing
to accept the funds for transfer, or to deal with BDA. At one stage in the
State/Treasury battle there was a scheme to transfer all the $25 million,
irrespective of ownership, to a DPRK account at the Bank of China, ‘to be
used for humanitarian purposes’. The British joint venture Daedong Credit
Bank threatened legal action if it lost its $7 million account.  We had the strange irony of the US government
stealing money from a British bank to give it to the North Korean government.

The accounts at the BDA were unfrozen on 10
April, just a few days before the 60 day deadline but nearly a month later than
it had promised.  Pyongyang responded by announcing that a ‘DPRK
financial institution concerned will confirm soon whether the measure is
valid.’  It reiterated that it
‘remains unchanged in its will to implement the Feb. 13 agreement and
will also move when the lifting of the sanction is proved to be a reality.’
The media generally blames the DPRK for ‘missing the deadline’.

The US is claiming that it has done all
that was required of it under the Agreement, but it seems unlikely that the
DPRK will concur.

The business raised worrying questions
about the conduct of US
foreign policy.  Did Hill know that
the charges against BDA were false?
Did he agree to lift the sanctions thinking he could, but was outflanked
by Treasury, or was he more devious than that? Is there a coherent foreign
policy, or are we seeing the result of conflicting domestic interests? If there
is a considered policy, what is really behind it? One of the architects of the
sanctions offensive, David Asher, has admitted that they chose BDA because it
was small and vulnerable but the real target was the Bank of China. “It's
about Macao, Macao's
government, China, the
Chinese government and their complicity and their accommodative behavior toward
North Korea's
illegal activities, proliferation activities and leadership financial
activities."(International Herald Tribune 11 April 2007). Is it really all
about the fear of China’s
rise, and an attempt to weaken the Chinese financial system with the
unsubstantiated allegations about the DPRK just a smokescreen?

China has already expressed ‘deep
regret’ over the Treasury’s blacklisting of BDA, and the release of
the Ernst & Young audit to the US press on 16 April by the Macanese
authorities may be an indication that Beijing is increasingly concerned at US actions.

Meanwhile, US sanctions, financial and
material, impose a dreadful burden on the people of North Korea. The World Food
Programme reports that millions are going hungry. Although there are positive
signs – trade between the two Koreas
is up 40% in the first quarter of 2007- that situation is not likely to improve
until the US
allows the DPRK to participate in the global economy.

Tim Beal

DPRK to Move Only When Lifting of
Financial Sanction Proved to Be Reality

Pyongyang, April 13 (KCNA) -- A spokesman for the DPRK Foreign Ministry
Friday gave the following answer to a question put by KCNA as regards the U.S. and Macao
administrative authorities' announcement of the de-freezing of the fund of the
DPRK:

The DPRK took note of the announcement made
by the U.S. Department of Treasury and the Macao
administrative authorities on April 10 that they took a measure of de-freezing
the fund of the DPRK deposited in Banco Delta Asia in Macao.

A DPRK financial institution concerned will
confirm soon whether the measure is valid.

The DPRK remains unchanged in its will to
implement the Feb. 13 agreement and will also move when the lifting of the
sanction is proved to be a reality.

Source: KCNA, Pyongyang,
13 April 2007

Money laundering allegations by U.S.
false, report says

By Kevin G. Hall

WASHINGTON - The U.S. Treasury Department's charges that a small bank in Macau
knowingly laundered counterfeit U.S.
currency for North Korea
have no basis in fact, according to a confidential audit ordered by the
government of the Chinese enclave.

The audit, obtained by McClatchy
Newspapers, also suggests that the Treasury overstated claims that North Korea
laundered "hundreds of millions" of dollars in ill-gotten gains
through Banco Delta Asia.

On the basis of its allegations, the
Treasury Department in September 2005 blacklisted the family-controlled bank,
which went into government receivership, and effectively froze $25 million in
accounts linked to North
Korea. Last month, Treasury issued a final
ruling that prevented the bank from having any transactions with the U.S. banking
system and, in effect, the global financial system. ..//..

The dispute over the Macau bank accounts
led the Pyongyang
government to walk out of six-nation talks on dismantling its nuclear weapons
program. North Korea
agreed on Feb. 13 to dismantle its nuclear weapons program if the funds were
unfrozen. The Bush administration agreed, but regime leaders apparently haven't
received all of the funds, and this past weekend, North Korea failed to begin
dismantling its nuclear reactor as promised.

Now the release of the bank audit by the
giant Ernst & Young accounting firm raises broader questions, among them
the credibility of the Bush administration's charges against North Korea and
the Macau bank.

The allegation that North Korea was counterfeiting U.S. currency
was at the center of the U.S. Treasury's concerns when it first threatened to
blacklist the bank in 2005. It said then that "sources show that senior
officials at Banco Delta Asia are working with (North Korea) officials to accept
large deposits of cash, including counterfeit currency, and agreeing to place
that currency in circulation."

Last August, President Bush made a similar
allegation. Asked why he continued to focus on alleged money laundering instead
of nuclear arms reduction, he told reporters: "Well, counterfeiting U.S.
dollars is an issue that every president ought to be concerned about. And when
you catch people counterfeiting your money, you need to do something about
it."

But the audit showed that the bank, a
primary conduit for North Korea's
financial dealings with the rest of the world, played no obvious role in
laundering counterfeit U.S.
currency.

"From our investigations it is
apparent that ... the Bank did not introduce counterfeit U.S. currency notes into circulation," the
Ernst & Young audit said, noting that large cash deposits from North Korea were routinely screened for
counterfeits by the Hong Kong branch of an unidentified bank with U.S.
operations.

Moreover, the audit confirmed that the only
time Banco Delta knowingly handled counterfeit U.S. notes was in 1994 when its
inspectors discovered 100 counterfeit $100 bills and turned over the money to
local authorities. The $10,000 was far from the $15 million in counterfeit U.S. currency that the Bush administration said North Korea was
manufacturing annually.

The Treasury said front companies for North Korea were suspected of laundering
"hundreds of millions of dollars in cash" through the bank, the
proceeds of illicit trade in counterfeit U.S. currency, smuggled cigarettes
and narcotics.

But the audit found no evidence that this
was true…//..

Source: McClatchy
Newspapers, Washington, 16 April 2007

China regrets US move
on Macao bank

By Qin Jize and Zhu
Ping

China deeply regrets the US
decision to prohibit American financial institutions from dealing with a Macao
bank, which has been accused of laundering money for the Democratic People's
Republic of Korea (DPRK).

"We deeply regret the United States' insistance on using American
domestic law to apply a ruling on Banco Delta Asia
(BDA)," Foreign Ministry spokesman Qin Gang said in a regular press
briefing yesterday.

The central government and the Macao
Special Administrative Region have repeatedly expressed their concerns over the
issue to the US,
he said.

China expects the US
to take action that would help the Six-Party Talks to progress and maintain the
financial and social stability of Macao.
"We believe both should be taken into full consideration," Qin said.

The US Treasury Department finalized its
rule against BDA yesterday, barring the bank from accessing the US financial
market directly or indirectly.

Stuart Levey, the department's Under
Secretary for Terrorism and Financial Intelligence, said the regulatory action
was targeted at BDA as an institution, not Macao as a jurisdiction…//..

Source: China
Daily, Beijing, 16 March 2007

Trail Led to Macao as Focus of
North Korean Corruption

By Donald Greenlees
and David Lague

HONG KONG, April 12 — For American
law enforcement agencies the smuggling investigations were among their most
elaborate, producing dozens of arrests and hard evidence that Chinese criminal
gangs had smuggled counterfeit United States currency, cigarettes and drugs
made in North Korea into the United States.

The investigations, concluded 20 months
ago, also produced a money trail that led to the Chinese gambling enclave of Macao, where American investigators concluded that
criminals linked to North
Korea were laundering their earnings.

This effort produced the hard evidence for
the United States to place
financial sanctions against Banco Delta Asia, a small, family-owned bank in Macao, near Hong Kong.
But those sanctions became a major sticking point in international efforts to
dismantle North Korea’s
nuclear weapons program.

The investigations “were just
incontrovertible proof of the role of Macao
banks, Macao gangsters, North Koreans in Macao,” said David Asher, an outspoken critic of North Korea who
at the time of the investigation was one of the most senior State Department
officials dealing with the country. ..//..

Yet Banco Delta Asia had never been the
main offender in Macao.
“The fact is that Banco Delta was an easy target in the sense that it was
not so large that its failure would bring down the financial system,”
said Mr. Asher, who is now a senior associate fellow with the Asian Studies
Center of the Heritage
Foundation.

“Banco Delta may be a sacrificial
lamb in some people’s minds, but it is not about Banco Delta,” he
said. “It’s about Macao, Macao’s government, China, the
Chinese government and their complicity and their accommodative behavior toward
North Korea’s illegal activities, proliferation activities and leadership
financial activities.”

Source: New York
Times, 13 April 2007

What is North Korea
seeking in the six-party stalemate?

The six-party talks came to an abrupt halt
in Beijing on Thursday as North Korea
boycotted negotiations until its US$25 million frozen at a Macau bank to be
transferred to its account. The U.S.
had agreed to unfreeze the money on March 19, and insisted that the delay was merely
due to issues of a bureaucratic nature.

However, Pyongyang may be trying to use the current
situation as an opportunity to get a guarantee from the international community
for normal financial status down the road.

Chun Young-woo, South Korea’s top
negotiator to the nuclear talks, said, "The North didn’t want to get
the money back in cash, nor have the money transferred to an account at its
banks in North Korea, but to one at a foreign bank [Bank of China]." These
comments could be interpreted as North Korea seeking not only the
funds in question but a general return to normalized relations within the
international financial community, as it has requested the funds be transferred
into a foreign bank.

Though the U.S.
announcement that it would unfreeze the North Korean funds - which had been
held at Macau-based Banco Delta Asia since September 2005 - represents the
resolution of a major rift between the U.S.
and North Korea, Pyongyang is still not
able to gain access to most international financial institutions because it is
still "blacklisted."

The Bank of China, which said it was
willing to handle the $25 million and was accepted by both North Korea and the
U.S., refused to place the money in an already existing North Korean account
there, instead agreeing only to transfer the money to a third bank that has not
yet been decided upon. The Bank of China, which is already listed on the
Shanghai and Hong Kong stock markets as of last year and plans to list on the
New York Stock Exchange, is reportedly worried about the potential
disadvantages it would face in the international financial community if it
accepted the money into one of its accounts.

For North Korea, just being guaranteed
its money back may not be enough to ensure it that it will quickly be welcomed
again as a member of the international financial community. The countries party
to the talks could not have surmised that the U.S.-led sanctions, which were
announced in September 2005, would lead to the North being so strongly shunned
by the international financial community. Given the situation, it would come as
no surprise if the North, through insisting upon a foreign bank as the
destination of its fund, is placing less emphasis on whether it can get its
money back than on whether all of its financial capabilities return to normal
in the international sphere.

If the North does in fact demand a return
to full status in the international financial community, the current stalemate
would escalate into something that would be a tall order to tackle. ..//..

Source: Hankyoreh,
Seoul, 24 March 2007

China Ends North Korea
Talks Amid Delay in Return of Funds

By David Lague

BEIJING, March 22 — Talks here aimed
at dismantling North Korea’s nuclear weapons program were halted by China
late Thursday after they stalled over the failure to release from a Macao bank
up to $25 million that North Korea had demanded be returned before it continued
negotiations. ..//..

Accounts controlled by about 50 North
Korean banks, trading companies and people were frozen in Banco Delta Asia with
$7 million in the account of Daedong Credit Bank, the North’s only
foreign-managed bank.

After an 18-month investigation, the United
States Treasury Department on March 14 banned American banks from dealing with
Banco Delta Asia, effectively isolating it from the American financial system.
The Treasury Department’s action has angered North Korea and become a
major sticking point in nuclear disarmament efforts…//..

However, banking analysts said it was
unlikely that all account holders would agree to have their money transferred
to an account they could not control in the Bank of China. They also questioned
whether the Chinese bank would be comfortable accepting money without question
from a bank that the United
States had accused of crimes.

Daedong has said it can prove that the
sources of the money frozen in its account are legitimate and has been lobbying
officials in Macao and Washington to have the money released. Colin
McAskill, a British businessman who is buying the bank, was unavailable for
comment.

Soon after the United
States moved against the bank in September 2005, North Korea
boycotted the six-nation talks with protests reported by its state-controlled
news media. It consented to return to the talks only when the United States
agreed late last year to hold separate negotiations on Banco Delta Asia.

The United
States announced Monday that the frozen money would be
returned to the North via the Bank of China after North Korea pledged that the money
would be used for humanitarian purposes and education.

Source: New York
Times, 23 March 2007

Owner of Macau bank
denies illegal dealings with N. Korea

By Tim Johnson and
Kevin G. Hall

BEIJING - The owner of the bank at the
center of a dispute that's threatening to derail nuclear talks with North Korea
has denied the U.S. Treasury Department's allegations that his bank handled
counterfeit American currency and laundered illicit earnings for the isolated
communist regime in Pyongyang.

In a four-page statement delivered to
McClatchy Newspapers on Tuesday, Stanley Au, the founder of Banco Delta Asia in
Macau, said U.S. officials had provided "no evidence or proof" that
account holders had links to North Korean groups that dealt in bogus dollars,
counterfeit cigarettes or narcotics.

Au said that when Washington
accused his bank in September 2005, none of the bank's clients was on any
international "black list" for unlawful activity, and he denied the
American charges that North
Korea funneled bogus bills through his bank.

The Treasury leveled those charges under an
obscure provision of the USA Patriot Act that now threatens to backfire against
the Bush administration's efforts to dismantle North Korea's nuclear program and
to combat terrorism, counterfeiting, drug trafficking and human rights abuses.

Section 311 of the Patriot Act allows the
Treasury to lock any foreign bank out of the U.S. financial system without
allowing the bank to defend itself or even to see the evidence against it. ..//..

The Bank of China and other banks, however,
have refused to accept money that the United
States has declared tainted, fearing they could be
targeted under the same Patriot Act provision, and North Korea says it won't proceed
with the nuclear accord until the money is in hand.

China
demands assurances that the Treasury won't target its financial sector if it
takes North Korean money..//..

Bankers around the world express growing
unease about the Patriot Act's global reach, its presumption of guilt and its
lack of due process.

"They do not like the unilateral
nature of our sanctions ... so when we suddenly waive those sanctions, as in
the case in North Korea, it
causes us ... credibility problems," said Bruce Zagaris, a lawyer based in
Washington, D.C., who specializes in complex
international tax and finance enforcement issues. ..//..

"We have certainly voiced concerns
about the extraterritoriality of the Patriot Act," said Florence Ranson, a
spokeswoman for the European Banking Federation in Brussels, Belgium,
which represents almost 5,000 banks in 29 countries. ..//..

Source: McClatchy
Newspapers, Washington, 27 March 2007

North
Korea's $25 Million and Banco
Delta Asia

Another abuse under the U.S. Patriot Act

by Ronda Hauben

A little known provision in the U.S.
Patriot Act (2001) has been used by the Bush administration against North Korea to
freeze $25 million dollars of its funds and to deny it access to the
international banking system and to hard currency. Actions under this provision
of the Patriot Act effectively stymied progress in disarmament talks between
the U.S., North Korea, South
Korea, China,
Russia and Japan for over
18 months. North Korea
says that only when the seized $25 million and access to the international
banking system are restored is it willing to continue negotiations under the
six-party-agreement concerning security and denuclearization of the Korean
peninsula.

The little known provision of the Patriot
Act 2001 is Section 311. It is also known as the "International Money
Laundering Abatement and Financial Anti-Terrorism Act of 2001."

The original purpose was allegedly related
to the prevention, detection and prosecution of money laundering connected to
the financing of terrorism. The law has rarely been used for its original
purpose. Instead it has been used by the Bush administration as a means of
unchecked political power against financial institutions like the Banco Delta
Asia. This case has an impact on those nations or institutions who used the
bank, like North Korea…//..

Section 311 has been called by its
supporters "a diplomatic sledgehammer that gets results" and by its
critics a provision that denies the accused "due process and presumes
guilt."

This provision gives the U.S. Treasury the
ability to use an Executive Branch administrative procedure rather than a legal
proceeding as a way to accuse a financial institution that is part of another
nation's regulatory system of wrong doing, and then to find them guilty. Under
this provision of the Patriot Act, the accused is denied knowledge of the
evidence against them and is denied the right to speak in their own defense…//..

Invoking Section 311 against the BDA
effectively sabotaged the implementation of the six-party-agreement of
September 2005 for 18 months as BDA did not have a process to challenge the
Treasury Department action, nor did those whose accounts at the bank had been
frozen, like North Korea.
It was only after North
Korea conducted a missile test in July 2006
and the test of a nuclear device in October 2006, that the Bush administration
was willing to agree to negotiations over the Treasury action…//..

The critical difference that has been
overlooked, however, is that a requirement of the Feb. 13 agreement was that
the U.S.
restore the funds that were frozen by the actions of the U.S. Treasury
Department. Also North Korea's
access to the international financial system was to be restored.

These requirements caused "intense
friction" in Washington between officials in the State Department and
"officials in the Treasury Department and in the Office of Vice President
Dick Cheney who were said to favor maintaining maximum pressure" on North
Korea..//..

Source: Hankyoreh,
Seoul, 21 March 2007

Cleaning Up the 20th
Century

By Jim Yardley

FOR more than three years, the grinding,
often exasperating negotiations over North Korea’s nuclear weapons
program have been about taking the bomb away from Kim Jong-il. As if that were
not complicated enough, the agenda is now becoming more ambitious. One new goal
could be loosely described as cleaning up the 20th century…//..

The process might accomplish far more than
denuclearization — a formal peace treaty ending the Korean War could be
one dramatic possibility. Or it could just as easily collapse under the weight
of so many moveable pieces and kill a nuclear deal, too.

“This process, not unlike a video
game, gets more and more difficult as you go into more and more levels,”
Christopher R. Hill, the assistant secretary of state for East Asian and
Pacific affairs and chief American envoy, said earlier this month in New York.

History can be omnipresent or repressed in
northeast Asia, but nearly everyone agrees it
is festering and unresolved…//.. North Korea is a bit like the crazy
uncle whose refusal to stay locked and quiet in the region’s attic has
forced everyone to the same table, with historic baggage and contemporary
rivalries in tow. The North’s demands for economic and energy aid nearly
derailed the last round of talks, and now negotiations are being separated into
working groups to tackle decades-old issues like normalizing relations between
North Korea and both Japan and the United States. Discussions over a peace
treaty to end the Korean War will be held in a “separate forum”
that has yet to be named.

“These are the precise issues that North Korea really wants to address,” said
Bates Gill, a China
specialist at the Center for Strategic and International Studies in Washington. “They
want a peace treaty. They want a normal relationship with the United
States.”..//..

Source: New
York Times, 18 March 2007

For Pyongyang talks are a way to make friends

Getting off Washington’s terror list is the
North’s priority in talks.

By Brian Lee

Establishing diplomatic relations with Washington is at the heart of Pyongyang’s wish list in current talks
over its nuclear program. Bitterly estranged since the Korean War, for the two
countries normalization of relations is again in the air, but it is going to
take a lot of talking. ..//..

For Pyongyang,
gaining diplomatic recognition in Washington
is seen as a way of addressing its economic collapse, according to a South
Korean government official. “It makes sense,” said the official.
“You get diplomatic recognition, sanctions are lifted and business will
follow.”

Falling short of that goal at the end of
the Clinton
administration, the North is now eager to capitalize on the latest opportunity.

But in order to gain diplomatic status,
Pyongyang first needs to get off Washington’s list of countries
designated as state sponsors of terrorism, a status that currently restricts
trade and has led to layers of economic sanctions that Pyongyang views as proof
of Washington’s hostility.

Being designated a state sponsor of
terrorism subjects the country to various sections of three laws: the Export
Administration Act, the Arms Export Control Act and the Foreign Assistance Act.
Under the laws, U.S.
foreign assistance is restricted, defense materiel cannot be sold, and exports
of dual use items are banned. Financial restrictions mean the United States automatically opposes loans by the
World Bank and other international financial institutions to North Korea. ..//..

Source: JoongAng
Ilbo 13 March 2007

No Quick Removal From U.S. Terror
List for N.Korea

North Korea will not be easily removed from the U.S. list of states that sponsor
terrorism. U.S. State Department spokesman Tom Casey said that taking North Korea off
the terrorism blacklist is a process that will require a lot of time and
careful reviews. He also made it clear that the process to normalize diplomatic
ties between the U.S. and North Korea can move forward only when the North
takes steps to make the Korean
Peninsula nuclear-free. ..//..

The six-nation agreement reached in Beijing on Feb. 13 requires the U.S. to start the process to remove
the North from the terror list in the initial 60-day stage.

Source: Chosun
Ilbo, Seoul, 14 March 2007

N.K. drug company urges aid donors
to 'buy local'

By Chris Gelken

"Its not just about making money, at
least not from our perspective as a producer," declared Felix Abt,
president of the Pyongyang-based pharmaceutical company PyongSu Pharma.
"The profit margins are very small. It is more about supplying a necessary
and quality product at a price people can afford."

Abt was in Seoul earlier this week meeting with South
Korean pharmaceutical companies and aid organizations. On the table was a
unique opportunity that would allow them to expand their existing humanitarian
work, while at the same time helping to lay a solid foundation for the future
of the pharmaceutical sector in North
Korea.

"One of the main purposes of my visit
here is to meet with the people who donate drugs and medicines to North Korea, or
their agents who are based here," Abt told The Korea Herald. The
"frontier-businessman" believes substantial savings could be realized
if the donor had the drugs produced locally, in North Korea, rather than purchasing
them here in the South or overseas and then having them shipped in. ..//..

PyongSu recently underwent an international
inspection and has been approved as a producer that meets the highest standards
of pharmaceutical producers worldwide.

The company was launched in the summer of
2004 in a joint venture between the Ministry of Public Health and a group of
foreign investors. By the end of 2006, PyongSu was producing a range of
medications including painkillers and antibiotics among others.

The company's mission was to reach and
maintain production quality and service standards comparable to any
pharmaceutical producer elsewhere in the world.

"We are making a direct contribution
to the improvement of the local pharmaceutical sector," Abt said,
"through training, education, and our sharing of knowledge with medical
professionals and staff at all levels throughout the DPRK." ..//..

Abt said PyongSu has its finger on the
pulse of the medical sector in the DPRK, and is in a unique position to serve
humanitarian and aid organizations by producing drugs on their behalf and
distributing them, "to those who are in need of them."

Source:
Korea Herald, Seoul, 30 March 2007

The Massacre at No Gun
Ri: Army Letter reveals U.S.
intent

By Charles J.
Hanley and Martha Mendoza (Associated Press)

Six years after declaring the U.S. killing of Korean War refugees at No Gun Ri
was "not deliberate," the Army has acknowledged it found but did not
divulge that a high-level document said the U.S.
military had a policy of shooting approaching civilians in South Korea.

The document, a letter from the U.S. ambassador in South
Korea to the State Department in Washington,
is dated the day in 1950 when U.S.
troops began the No Gun Ri shootings, in which survivors say hundreds, mostly
women and children, were killed.

Exclusion of the embassy letter from the
Army's 2001 investigative report is the most significant among numerous omissions
of documents and testimony pointing to a policy of firing on refugee groups
— undisclosed evidence uncovered by Associated Press archival research
and Freedom of Information Act requests.

South Korean petitioners say hundreds more
refugees died later in 1950 as a result of the U.S. practice. The Seoul
government is investigating one such large-scale killing, of refugees stranded
on a beach, newly confirmed via U.S.
archives.

No Gun Ri survivors, who call the Army's
2001 investigation a "whitewash," are demanding a reopened
investigation, compensation and a U.S. apology…//..

But Muccio's message to Assistant Secretary
of State Dean Rusk states unambiguously that "decisions made" at a
high-level U.S.-South Korean meeting in Taegu,
South Korea, on
July 25, 1950, included a policy to shoot approaching refugees. The reason:
American commanders feared that disguised North Korean enemy troops were
infiltrating their lines via refugee groups.

"If refugees do appear from north of
US lines they will receive warning shots, and if they then persist in advancing
they will be shot," the ambassador told Rusk, cautioning that these
shootings might cause "repercussions in the United States." Deliberately
attacking noncombatants is a war crime…//..

The killings remained hidden from history
until an AP report in 1999 cited a dozen ex-soldiers who corroborated the
Korean survivors' accounts, prompting the Pentagon to open its inquiry after
years of dismissing the allegations.

The Army veterans' estimates of dead ranged
from under 100 to "hundreds." Korean survivors say they believe about
400 were killed. Korean authorities have certified the identities of at least
163 dead or missing.

No Gun Ri, where no evidence emerged of
enemy infiltrators, was not the only such incident. As 1950 wore on, U.S.
commanders repeatedly ordered refugees shot, according to declassified
documents obtained by the AP…//..

Source: Japan Focus, 15 April 2007

North-South trade jumps

The Inter-Korean Trade Volume during the
First Quarter Increased by 40 percent.

Vice-Minister Shin said the inter-Korean
trade volume during the first quarter recorded

260.94 million dollars, rose by 40percent
than the same period of the previous year.

He also said this increasing trend would be
maintained during the second quarter thanks to the recovery of the inter-Korean
relations. The increase would be affected by the rise of domestic demand for
North Korean steel and mineral products, increase in the number of enterprises
operated in Gaeseong [Kaesong Industrial Complex], and public and private aid
toward the North, he said.

Source: ROK
Ministry of Unification, Seoul, 5 April 2007

Call for New Zealand to declare Peace with
the DPRK

At its April meeting the Wellington Presbytery of the Presbyterian
Church of Aotearoa New Zealand unanimously
resolved to call on the NZ Government to enter into a Peace Agreement with the
DPRK, and to invite other denominations to support the resolution.

Members expressed shock when they learnt that 60 years after the
cessation of hostilities NZ was still supporting a Ceasefire Agreement as
declared by the Korean Armistice Agreement.

Letter

NZ-DPRK Peace
Treaty proposal

NZ-DPRK Society Aid and Development Appeal

Donations are being
sought to cover the cost of a Farm Truck for the Haksan NZ Friendship Farm; and
a three month teaching assignment in Pyongyang by
Christchurch Primary school teacher Tim Kearns. Both
projects are part of a continuing support relationship between citizens
of New Zealand and North Korea.

In the near future
it is hoped that two Korean women will be sponsored to come to New Zealand for
three months for English training and professional development.

If you wish to contribute financially, or
otherwise, or would like some more information, please contact Stuart Vogel at [email-masked]...

Further information may be
obtained from:
http://www.vuw.ac.nz/~caplabtb/dprk/

Dr Tim Beal

19 Devon Street, Kelburn Wellington, NZ

Tel: +64 4 463 5080
(day);+64 4 934 5133 (evening)

Fax: +64 4 934
5134; Email: [email-masked]

Rev Don Borrie

7 Thornley St., Titahi
Bay, Porirua, NZ

Tel/fax: +64 4 236 6422

Email: [email-masked]