Category Archives: DPRK

Macao on BDA

The Monetary Authority of Macao issued a “press release”:http://www.amcm.gov.mo/Press_Release/BDA2007/BDA2007En.htm the other day in response to the US Treasury Dept’s “announcement”:http://www.treasury.gov/press/releases/hp315.htm RE: BDA.

Here’s the text:

The Monetary Authority of Macao (AMCM) is aware of the latest announcement on a final rule concerning Banco Delta Asia as a ‘primary money laundering concern’. Regarding the decision of the United States Department of the Treasury, AMCM expresses its deep regret. The MSAR Government will soon make an official response.

In response to the development, Banco Delta Asia will continue to be under the management of the MSAR Government. Under any circumstances, the MSAR Government will take necessary measures to protect the interests of depositors and safeguard the stability of the financial system.

Original post “here.”:http://www.totalwonkerr.net/1380/treasury-dept-and-bda

Treasury Dept and BDA

Jeffrey has a “post”:http://www.armscontrolwonk.com/1431/will-treasury-sanctions-scuttle-six-party-process summarizing the Nelson Report’s take on the potential implications of Treasury’s recent decision RE: Banco Delta Asia for the six party talks.

According to Treasury’s press release, which can be found “here”:http://www.treasury.gov/press/releases/hp315.htm,

The U.S. Department of the Treasury today finalized its rule against Banco Delta Asia SARL (BDA) under Section 311 of the USA PATRIOT Act. When the final rule takes effect in 30 days, U.S. financial institutions will be prohibited from opening or maintaining correspondent accounts for or on behalf of BDA. This action bars BDA from accessing the U.S. financial system, either directly or indirectly.

[snip]

The Treasury’s Financial Crimes Enforcement Network (FinCEN) in September 2005 found BDA to be of “primary money laundering concern” under Section 311 and issued its proposed rule, citing the bank’s systemic failures to safeguard against money laundering and other financial crimes.

The U.S. Treasury has since been engaged in an ongoing investigation of BDA with the cooperation of Macanese authorities. The information derived from that investigation and the failure of the bank to address adequately the full scope of concerns described in the proposed rule has laid the groundwork for today’s action.

Over the past 18 months, the Macanese authorities have taken substantial steps to strengthen Macau’s anti-money laundering and counter-terrorist financing regime, notably by passing a new law to strengthen these controls and standing up the jurisdiction’s first-ever Financial Intelligence Unit (FIU). Today’s regulatory action is targeted at BDA as an institution, not Macau as a jurisdiction.

“We are pleased that Macau has made important progress in strengthening its anti-money laundering controls and safeguarding the Macanese financial system. However, Banco Delta Asia’s grossly inadequate due diligence and systematic facilitation of deceptive financial practices have run too deep for the bank to be allowed access to the U.S. financial system,” said Levey.

A copy of the final rule can be found “here.”:http://www.fincen.gov/bda_final_rule.pdf

CIA and HEU, Nork Edition

Jeffrey recently took a break from listening to U2 and put up “a couple of”:http://www.armscontrolwonk.com/1415/the-incredible-shrinking-heu-programf “great posts”:http://www.armscontrolwonk.com/1418/size-matters about the North Korean HEU issue. Since he saved me a bunch of work, I can focus on another aspect of this, um, thing.

Following on Jeffrey’s discussion of unacknowledged reporting, Mark Hibbs (unsurprisingly) has turned out some excellent work on the subject. For example, in the 11/25/02 edition of _Nuclear Fuel_, Hibbs reported on the “November 2002 CIA assessment”:http://www.fas.org/nuke/guide/dprk/nuke/cia111902.html of North Korea’s nuclear capabilities.
[ *Update:* Full text is now in the comments.]

You will recall that, “according to the CIA,”:http://www.fas.org/nuke/guide/dprk/nuke/cia111902.html the United States

…did not obtain clear evidence indicating the North had begun constructing a centrifuge facility until recently. We assess that North Korea embarked on the effort to develop a centrifuge-based uranium enrichment program about two years ago.

* Last year the North began seeking centrifuge-related materials in large quantities. It also obtained equipment suitable for use in uranium feed and withdrawal systems.

* We recently learned that *the North is constructing a plant that could produce enough weapons-grade uranium for two or more nuclear weapons per year when fully operational — which could be as soon as mid-decade.*

Hibbs’ reporting on the assumptions underlying that assessment makes for interesting reading.

p=. *GETTIN’ HELP*

According to the piece, the CIA estimate

…*presupposes [sic] that Pyongyang has obtained unprecedented assistance from foreign sources in building gas centrifuges, plus a complete design package for a proven subcritical centrifuge using aluminum,* Western government officials and enrichment experts told _Nuclear Fuel_.

U.S. officials have said assistance has been provided, and that they have identified its sources. For diplomatic reasons, the U.S. has not publicly revealed the sources.

*snip*

Western officials told _Nuclear Fuel_ last week that *the CIA assessment presumed that North Korea obtained a vast amount of outside help* and, said one, *with a very high probability the aid included the complete design package for a proven machine. The assessment has the DPRK beginning large-scale centrifuge production in 2001 and producing an HEU significant quantity by 2005.*

This strongly suggests to me that there mighta been some worst-case scenario assumptions that went into that estimate. Ditto for the assumption that the Norks were hella faster at mastering HEU production than a lot of their peers (to the extent that the DPRK has peers these days):

The description of the DPRK program as going from raw centrifuge-building materials to HEU production *in just six years would represent a _dramatic telescoping of the timeline_ for less-developed countries to obtain nuclear weapons material using twice as much time and expending far more financial resources.* [Emphasis mine.]

To be fair, there is evidence, according to Hibbs’ sources, that “individuals with years of experience inside Pakistan’s uranium enrichment program” gave North Korea a serious amount of assistance, including “the design package for an aluminum centrifuge, prototype components, and manufacturing and some diagnostic assistance, which might dramatically reduce the timeline for the DPRK to enrich uranium.”

p=. *CUTTIN’ CORNERS*

The CIA’s timeline apparently also assumed that North Korea would be willing to cut some corners by, for example, installing centrifuges that had been pre-assembled in Pakistan:

Western officials and experts said it would certainly be technically feasible for Pakistan to have manufactured a few thousand complete rotor assemblies and to have brought machines to the DPRK for assembly. However, for reasons of efficiency it is preferable to assemble machines on site. *The DPRK might have brought to the erection site centrifuges pre-assembled save for the positioning of the bottom bearing, experts said, but pre-assembly would imply that scoops inside the rotor tubes would be out of place, that many machines would fail initially, and that many more would crash prematurely during operation.*

Sources said that *because the DPRK wants to enrich uranium to weapons-grade as fast as possible, it probably would make such sacrifices.*

I’m not sure the US IC has evidence that Pakistan ever provided assistance on that scale. In any case, the estimate for the enrichment plant assumes that

bq. …the DPRK was willing to take decisions and shortcuts which would mean that the initial failure rate of the machines might be as high as 10% and that ”after two or three years of operation, a very large number of machines would crash.”

This scenario takes the Pakistani experience into account, according to Hibbs’ sources, who said that Islamabad had lots of centrifuges fail during the first five years of the enrichment program. However,

bq. ”…they had made enough HEU for a one or two weapons by then.” *Given that the DPRK’s priority would be to acquire nuclear weapons capability as fast as possible using U-235, Pyongyang would be expected to also go down that path,* experts said.

So it appears that the estimate has its origins in some procurement information, some evidence of foreign assistance, and a lot of supposin’.

Solid.

North Korea: Yet More on Disablement

Yonhap had an interesting “piece”:http://english.yna.co.kr/Engnews/20070305/630000000020070305224932E3.html the other day about North Korea’s thoughts RE: disabling the Yongbyon facilities.

According to an unnamed “ranking South Korean official:”

Kim Kye-gwan, the North’s chief nuclear negotiator, has reaffirmed that disabling the communist country’s nuclear facilities will be an “irreversible process,” after which the facilities cannot be restarted for use, the official told reporters while speaking on condition of anonymity.

The North Korean made his remarks during a meeting with his South Korean counterpart, Chun Yung-woo, in New York on Saturday, according to the official.

These comments are enlightening, given that a Feb. 13 “KCNA statement”:http://www.totalwonkerr.net/1354/kcna-on-six-party-statement
said that North Korea had agreed to the “_temporary suspension_ of the operation of its nuclear facilities.”

According to the South Korean official

bq. “Kim said his country only used the expression ‘temporary suspension’ because the facilities can be restarted at any time until they are completely disabled,” the official said, adding there was “absolutely no difference of opinion between North Korea and the other countries on what ‘disabling’ means.”

It’ll be interesting to see how this plays out.

[ Via “Andreas Persbo.”:http://verificationthoughts.blogspot.com/2007/03/denuking-north-korea.html ]

Previous disablement post “here.”:http://www.totalwonkerr.net/1371/doe-on-disablement

DOE on Disablement

Jeffrey has “a great post”:http://www.armscontrolwonk.com/1419/more-on-disablement featuring a DOE report discussing the “disablement” of the DPRK’s Yongbyon reactor.

The report’s argument for dismantling the mechanism that lowers the control rods into the reactor core reminded me of an RIA Novosti article that I cited in “this post.”:http://www.totalwonkerr.net/1360/north-korea-and-disablement

According to that piece:

bq. North Korea is ready to remove graphite rods from its nuclear reactor in Yongbyon in exchange for greater energy assistance…

[ *Point of clarification:* I misunderstood the DOE report and the RIA Novosti story. The two solutions described aren’t the same, though the article may well be describing what the North Koreans agreed to – which illustrates the potential difficulties that the denuclearization WG will face.

I should also point out that the phrase “graphite rods” doesn’t make any sense…it almost certainly means fuel rods. Graphite is the moderator for the reactor and is not in rod form. Given the arrangements under the Agreed Framework for monitoring the ~8,000 spent fuel rods, it’s not surprising that the North Koreans might agree to remove them and put them in a pond or something.]

Incidentally, when I was working on the North Korea story for the latest issue of _ACT_, a former Clinton administration official told me that various ways of “dismanlting” the Yongbyon reactor were kicked around back when the thing was still shut down. Apparently, one of the ideas involved pouring cement into the reactor. There were also some more complex proposals floated, needless to say.

BTW, if you are still feeling sluggish, “watch some Converge.”:http://www.youtube.com/watch?v=rNhwKYBwF1c

More On Ignatius

This is worse than I “first thought.”:http://www.totalwonkerr.net/1363/shorter-david-ignatius

Can anyone think of any events at all concerning North Korea that have been left out of this little narrative? Like, say, the ones Philip Z “glossed over”:http://www.totalwonkerr.net/1364/shorter-philip-zelikow?

Treasury *applied the new tools to North Korea in September 2005,* when it put a bank in Macao called Banco Delta Asia on the blacklist. There was no legal proceeding — just a notice in the Federal Register summarizing the evidence: Banco Delta Asia had been providing illicit financial services to North Korean government agencies and front companies for more than 20 years, according to the Treasury notice.

*snip*

Wham! [Pow! KaBlammo!] The international payments window shut almost instantly on Pyongyang’s pet bank. Transactions with U.S. entities stopped, but the Treasury announcement also put other countries on notice to beware of Banco Delta Asia. The Macao banking authorities, realizing that they needed the oxygen of the international financial system to survive, took regulatory action on their own and froze the bank’s roughly $24 million in North Korean assets. And around Asia, banks began looking for possible links to North Korean front companies — and shutting them down.

Wham! indeed. Not just a shitty 80s band, I guess.

Tony Snow Ain’t No Lawyer…

…even if he does play a “mean jazz flute.”:http://www.youtube.com/watch?v=z1PEyzk4ADU

About a week or so ago, Snow “falsely asserted”:http://www.whitehouse.gov/news/releases/2007/02/20070216-3.html that someone in the administration broke the law by leaking the shocking news that some in the administration (meaning Elliott Abrams) don’t like the “new deal”:http://www.totalwonkerr.net/1353/six-party-joint-statement with North Korea.

Snow argued that, despite the _WP_’s “report”:http://www.washingtonpost.com/wp-dyn/content/article/2007/02/14/AR2007021401695.html that Abrams sent some emails around expressing his displeasure with the agreement, Elliott A actually supports it.

A reporter then asked, “why do his emails — his inquiries, wind up in the newspaper, then?”

TSnow replied:”Because somebody broke the law.*”

Now, that asterisk is indeed found in the original transcript. If you scroll to the bottom, you find this clarification:

bq. The Press Secretary was in error. This instance was not a violation of the law.

Nice.

!/images/10.jpg!

Snow has too much in common with this guy, though I doubt he has as many leather-bound books.

[Snow, FYI, talked about the Abrams issue “the day before as well].”:http://www.whitehouse.gov/news/releases/2007/02/20070215-4.html

Also of note: Newsweek had “a piece”:http://www.msnbc.msn.com/id/17202125/site/newsweek/ which speaks to the question of hardliners’ influence on the North Korea:

bq. Administration hard-liners appear to have been unable to thwart diplomacy. Former officials close to Vice President Dick Cheney, who asked not to be identified characterizing his views, suggest he does not like the deal but believes there are enough get-out clauses to ensure either that Pyongyang complies or the whole bargain collapses. *Cheney had long influenced North Korea policy through powerful bureaucratic allies who battled what they viewed as State Department appeasers. But Bolton, a leading hawk on North Korea, left the administration when Congress refused to confirm him as permanent U.N. ambassador. Robert Joseph, another key hard-liner, is soon to leave his job as State Department under secretary for arms control.* Cheney himself may be the last hard-liner. But White House aides, along with the veep’s allies (anonymous when discussing the men’s relationship), acknowledge that Bush relies far less on Cheney’s judgment now than he did earlier in his presidency.

North Korea and “Disablement”

Jeffrey has “a post”:http://www.armscontrolwonk.com/1403/disablement about the recent North Korea “nuclear agreement’s”:http://www.totalwonkerr.net/1353/six-party-joint-statement use of the term “disablement.”

As you’ll recall, the joint statement says that the next phase of the denuclearization process is to include

bq. …provision by the DPRK of a complete declaration of all nuclear programs and disablement of all existing nuclear facilities…

I’m sure the term could well be deliberately vague, but given how much time has been spent finding suitable diplomatic language for this thing (you might recall that North Korea “objected”:http://www.armscontrol.org/act/2004_07-08/NKtalks.asp to the term “CVID”), I would be surprised if the word meant nothing at all in Korean. But I dunno.

Anyway, RIA Novosti “provided a clue”:http://en.rian.ru/world/20070212/60561063.html regarding the term’s meaning the day before the joint statement:

bq. North Korea is ready to remove graphite rods from its nuclear reactor in Yongbyon in exchange for greater energy assistance, a RIA Novosti correspondent reported Monday.

Interestingly, former Clinton NSC official Gary Samore “said about a week before”:http://www.cfr.org/publication/12558/samore.html that

bq. Ideally, he [Chris Hill] would convince the North Koreans to take some step *_to disable_* the five-megawatt reactor so it couldn’t quickly be turned back on to resume production of plutonium.

Makes me wonder how long the “disablement” idea has been around.