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      Global Research Feature Article

      URL of this article:
      http://www.globalresearch.ca/index.php?context=viewArticle&code=ELI20061029&articleId=3619

      www.GlobalResearch.ca



      Why Bush is seeking Confrontation with North Korea


      by Gregory Elich


      October 29, 2006
      GlobalResearch.ca

      North Korea’s nuclear test and UN sanctions have brought relations
      between the U.S. and North Korea to their lowest point since President
      Bush took office. Yet it was only little more than a year ago that for
      one brief moment hopes were kindled for a diplomatic settlement of the
      nuclear dispute. At the six-party talks on September 19, 2005, a
      statement of principles on nuclear disarmament was signed between the
      U.S. and the Democratic People’s Republic of Korea (DPRK – the formal
      name for North Korea). The Bush Administration, however, viewed its
      signature on the agreement as only a tactical delay. During negotiations
      it had firmly rejected the statement, and was brought around only when
      the Chinese delegation warned that it would announce that the U.S. was
      to blame were the six-party talks to collapse.

      The ink was barely dry on the document when the U.S. immediately
      violated one of its main points. Although the U.S. was required under
      the agreement to begin normalizing relations with North Korea, on
      literally the very next day it announced the imposition of sanctions on
      North Korean accounts held in the Macao-based Banco Delta Asia,
      allegedly because they were being used to circulate counterfeit
      currency.

      Whether there was any substance to the accusation or not has yet
      to be shown, but there are at least some grounds for skepticism. German
      counterfeit expert Klaus Bender believes that since U.S. currency is
      printed on specially made paper in Massachusetts, using ink based on a
      secret chemical formula, “it is unimaginable” that anyone other than
      Americans “could come by these materials.” The printing machines that
      North Korea obtained three decades ago, Bender says, are “outdated and
      not able to produce the USD supernote, a high tech product.” He strongly
      implied that the CIA could be the source of the counterfeit currency as
      it “runs a secret printing facility equipped with the sophisticated
      technology which is required for the production of the notes.” That the
      CIA has the capacity to print money does not prove that it has done so.
      It would, however, have a motive, and the source has not been traced.
      Wherever the counterfeit supernotes came from, the Bush Administration
      was ardently using the issue as a pretext to take action against North
      Korea. Despite that, Bender reports, “the opinion of experts” is that
      the U.S. allegation against North Korea “is not tenable.” (1)

      Banco Delta Asia was quick to deny the charge, saying that its
      business relations with North Korea were entirely legitimate and
      commercial. Over a year later, the U.S. has yet to complete its
      investigation. As long as the investigation remains unresolved, the U.S.
      can continue to freeze the DPRK’s funds. Russian Ambassador to South
      Korea Gleb Ivashentsov called for the U.S. to present evidence to back
      its accusation. Yet all the Russians received was “rumor-level talk.”
      U.S. Treasury officials met with a North Korean delegation in New York
      in March 2006, but provided nothing to back the charge. DPRK delegation
      head Ri Gun remarked afterwards, “There were neither comments nor
      discussion” about evidence. At that meeting, he proposed creating a
      joint U.S.-DPRK consultative body to “exchange information on financial
      crimes and prepare countermeasures.” The North Koreans said they would
      respond to evidence of counterfeiting by arresting those who were
      involved and seizing their equipment. “Both sides can have a dialogue at
      the consultative body through which they can build trust. It would have
      a very positive impact on addressing the nuclear issue on the Korean
      peninsula,” Ri said. The delegation also suggested that a North Korean
      settlement account be opened at a U.S. financial institution and placed
      under U.S. supervision, so as to allay suspicions. (2)

      Not surprisingly, the North Korean offers were rejected. By
      raising the issue of alleged counterfeiting, the Bush Administration
      sought to use this as a means to justify economic warfare against the
      DPRK. It was not an agreement with North Korea that the Bush
      Administration wanted, but regime change, and further action was soon to
      come. The U.S. went on to impose sanctions on several North Korean
      import-export firms, on the unsubstantiated charge that they were
      involved in the arms trade. Then more sanctions were announced, this
      time against several Indian and Russian firms doing business with the
      DPRK, along with yet more North Korean companies. (3)

      The measures taken against Banco Delta Asia deprived North Korea
      of a major access point to foreign exchange, and served also as a
      mechanism for magnifying the effect of sanctions. By blacklisting Banco
      Delta Asia, the U.S. caused other financial institutions to curtail
      dealings with the bank, until it was forced to sever relations with
      North Korea. The campaign soon took on global significance. The U.S.
      Treasury Department sent warning letters to banks around the world,
      resulting in a worldwide wave of banks shutting down North Korean
      accounts. Fearing U.S. retaliation, banks felt it prudent to close North
      Korean accounts rather than risk being blacklisted and driven out of
      business. U.S. Treasury Under Secretary Stuart Levey observed that
      sanctions and U.S. threats had put “huge pressure” on the DPRK, leading
      to a “snowballing…avalanche effect.” U.S. actions were meant to
      undermine any prospect of a peaceful settlement. From now on, a senior
      Bush Administration official revealed, the strategy would be: “Squeeze
      them, but keep the negotiations going.” But talks, the official
      continued, would serve as nothing more than a means for accepting North
      Korea’s capitulation. A second U.S. official described the goal of talks
      as a “surrender mechanism.” Indeed, even before the signing of the
      September 19 agreement, the U.S. had already decided “to move toward
      more confrontational measures,” claims a former Bush Administration
      official. (4)

      As general manager of Daedong Credit Bank, a majority
      foreign-owned joint venture bank operating in Pyongyang and primarily
      serving importers, Nigel Cowie was in a position to witness the effect
      of the Treasury Department’s letters. “We have heard from foreign
      customers conducting legitimate business here, who have been told by
      their bankers overseas to stop receiving remittances from the DPRK,
      otherwise their accounts will be closed.” To illustrate the lengths to
      which U.S. officials were prepared to go, Cowie described an operation
      that involved his own firm, from which, he said, “you can draw your own
      conclusions.” An account was opened with a Mongolian bank. Arrangements
      were made for legal cash transactions. But when the Daedong Credit
      Bank’s couriers arrived in Mongolia, they were detained by Mongolian
      intelligence officials, and their money confiscated. Accusations were
      made that the couriers were transporting counterfeit currency from North
      Korea. A leak to the news media from an unidentified source led to
      reports charging that “North Korean diplomats” had been arrested for
      smuggling counterfeit currency. After two weeks, the Mongolian
      “intelligence officials in a meeting with us finally conceded that all
      the notes were genuine; the cash was released.” In the final meeting,
      Mongolian intelligence officials “appeared rather embarrassed that they
      had been given incorrect information.” It requires little imagination to
      guess the source of that incorrect information. (5)

      U.S. actions were meeting with resounding success. “For our part,”
      Cowie explains, “we are only conducting legitimate business, but have
      nonetheless been seriously affected by these measures. A large amount of
      our and our customers’ money – not just in USD, but in all currencies –
      has effectively been seized, with no indication of when they’ll give it
      back to us.” The fate of Banco Delta Asia served as an object lesson.
      “Banks with any kind of U.S. ties are just terrified to have anything to
      do with any North Korean bank,” Cowie said. After the majority interest
      in Daedong Credit Bank was purchased by British-owned Koryo Bank, the
      new owner, Colin McAskill, asked U.S. officials to examine the bank’s
      records in order to prove that its funds are legitimate and should be
      unfrozen. “We will take on the U.S. over the sanctions standoff,” he
      said. “They’ve had it much too much their own way without anyone
      questioning what they are putting out.” (6)

      Warning letters to banks were often followed by personal visits
      from U.S. officials. Bankers and American officials say that the
      messages contained a mix of implicit threats and explicit actions.
      Consequently, it was not long before nearly all of North Korea’s
      accounts held in foreign banks were closed, with a deleterious effect on
      the DPRK’s international trade. U.S. officials were inflicting serious
      economic harm on North Korea, but planned to do much more. “We’re just
      starting,” said Treasury Under Secretary Stuart Levey several months
      ago. In many cases, no pretense was made that the actions were related
      to illegal financial transactions. U.S. officials were now openly
      pressing financial institutions to sever all economic relations with the
      DPRK. “The U.S. government is urging financial institutions around the
      world to think carefully about the risks of doing any North
      Korea-related business,” Levey said. By September 2006, the U.S. had
      sent official dispatches to each UN member state, detailing plans for
      harsher economic sanctions. The planned measures were so strong that
      several European nations expressed concern, and it was said that the
      plans aimed at nothing less than a total blockade on all North Korean
      trade and financial transactions. (7)

      Concerned over the direction events were heading, Selig Harrison,
      director of the Asia Program at the Center for International Policy,
      visited the DPRK and reported on what he saw. “I found instances in
      North Korea authenticated by foreign businessmen and foreign embassies
      in which legitimate imports of industrial equipment for light industries
      making consumer goods have been blocked. The North Koreans
      understandably see this as a regime change policy designed to bring
      about the collapse of their regime through economic pressure.” Harrison
      said the message he heard from North Korean officials was essentially,
      “We want the U.S. to show us it is ready to move toward normal relations
      in accordance with the September 19 agreement. If the U.S. won’t lift
      all of the financial sanctions, all at once, then it should show us in
      other ways that it has got its act together and is giving up the regime
      change policy.” (8)

      North Korean officials were understandably miffed at the Bush
      Administration’s immediate violation of the September 19 agreement on
      principles. As the U.S. continued to tighten the screws, North Korea
      announced that it would not return to the six-party talks until the U.S.
      honored the agreement it had signed. Sanctions would have to be lifted.
      At a minimum, dialogue should take place on resolving any questions
      surrounding the accusation of counterfeiting. U.S. officials said the
      sanctions were not up for discussion, and demanded North Korea’s return
      to the six-party talks. The image presented to the American public was
      of North Korean obdurate behavior and refusal to negotiate. Unmentioned
      was how the Bush Administration had deliberately torpedoed the talks.

      South Korean President Roh Moo-Hyun visited Washington in
      September 2006, asking for the U.S. investigation into Banco Delta Asia
      to be brought to a speedy conclusion. Roh said it was also important
      that the U.S. refrain from imposing further sanctions since such actions
      made the resumption of six-party talks impossible. (9) Predictably, his
      requests were rebuffed. Instead, the U.S. State Department allocated $1
      million to three radio stations to broadcast hostile programs into the
      DPRK. (10) “I think our sanctions have had real impact,” Stuart Levey
      claimed in a speech before the American Enterprise Institute just one
      month before the DPRK’s nuclear test, “but the real goal, I think, is to
      see a real change in North Korea. So we are not satisfied with what has
      happened so far.” (11)

      Any hope for a resumption of the six-party talks had vanished. The
      Bush Administration wanted regime change in North Korea and could be
      expected to increase tensions. The North Koreans had earned a reputation
      for their proclivity for responding in kind: by negotiating when
      approached diplomatically, and with toughness when threatened. North
      Korea decided to proceed with a nuclear test so as to discourage any
      thoughts in Washington of military action. A statement was issued by the
      DPRK Foreign Ministry, in which it was said that the U.S. was trying to
      “internationalize the sanctions and blockade against the DPRK.” A
      nuclear test would be a countermeasure “to defend the sovereignty of the
      country” against the Bush Administration’s “hostile actions.” (12)

      The nuclear test took place on October 9. There is still some
      mystery about the nature of the test. The yield was surprisingly small,
      estimated to be in the half kiloton to 0.9-kiloton range. The North
      Koreans had notified Chinese officials beforehand of an impending
      4-kiloton test, far below the yields of other nations when they
      conducted their first tests. It could be that the DPRK was trying to
      conserve its limited supply of plutonium and to reduce the extent of
      radioactive emissions. The test is widely thought to have been a partial
      failure, due to an incomplete detonation of the nuclear charge. U.S.
      intelligence officials and weapons analysts believe that either a
      nuclear device (not a bomb) was tested and malfunctioned, or that a test
      was done only on a nuclear component. The DPRK still has far to go
      before it is capable of developing a functioning nuclear weapon. If the
      DPRK wanted to signal the U.S. that it had a nuclear deterrent, then it
      had accomplished the opposite, with the test revealing that its nuclear
      program was still in the early stages. (13)

      It was always the goal of the Bush Administration to win
      international backing for UN sanctions against North Korea. There were
      those in the Bush Administrations who admitted that they were hoping
      that the North Koreans would conduct a nuclear test. Having maneuvered
      the DPRK into carrying out the only option it had, the U.S. swiftly
      seized its opportunity. (14)

      The U.S. won approval in the UN Security Council for international
      sanctions against the DPRK. China and Russia did succeed in eliminating
      any phraseology that could lead to military action, but there are still
      inherent dangers in the UN resolution. For example, UN member states are
      called upon to take “cooperative action including through inspections of
      cargo to and from the DPRK.” Both the Security Council and the sanctions
      committee were given the right to expand the list of goods and
      technology that can be blocked, and the committee is to meet every 90
      days to recommend “ways to strengthen the effectiveness of the
      measures.” (15) It can be expected that the U.S. will press for more
      draconian measures. U.S. officials were quick to point out that UN
      sanctions allowed the inspection of North Korean ships, and gave the
      go-ahead for a more aggressive campaign to force financial institutions
      to cut ties with the DPRK. The Bush Administration regards the
      Proliferation Security Initiative (PSI), a program said to be aimed at
      limiting the flow of nuclear, biological and chemical weapons, as the
      centerpiece of enforcement. (16)

      Soon after the passage of the UN resolution, U.S. Ambassador
      Alexander Vershbow and Assistant Secretary of State Christopher Hill
      asked South Korea to review its economic relations with the North, with
      an eye to limiting contact. This was followed by a visit from Secretary
      of State Condoleezza Rice, who was there to reinforce the message. In
      particular, the U.S. wanted South Korea to halt cooperative projects in
      the North at the Kaesong industrial park and the Mount Kumgang tourist
      resort. (17) To its credit, South Korea refused to abandon the projects,
      as both are essential to long-range plans for the reunification of the
      Korean peninsula. “The decision is South Korea’s to make,” stressed
      South Korean security aide Song Min-soon. (18)

      Condoleezza Rice’s trip also took her to Tokyo, Beijing and
      Moscow, where she urged officials to implement measures that would
      sharpen the effect of sanctions. Russian Foreign Minister Sergei Lavrov
      felt that Rice went too far in her demands, and afterwards commented,
      “Everyone should demonstrate realism and avoid extreme, uncompromising
      positions.” (19) Predictably, U.S. officials met with more success in
      Japan, which had recently imposed a total ban on trade with the DPRK.
      Japanese officials talked of submitting a new resolution to the UN if
      North Korea were to conduct a second test. The new resolution as
      envisaged by Japan would require UN member nations to block nearly all
      trade with the DPRK. More alarmingly, Article 42 would be invoked so as
      to permit military action. (20)

      The furor over the partial failure of North Korea’s single, rather
      puny nuclear test made for an interesting contrast with the indifference
      that has greeted other nations’ nuclear arsenals. The U.S., of course,
      has a massive arsenal of nuclear arms at its disposal. There is no
      suggestion that the established nuclear states should disarm, nor have
      there been calls for sanctions against the newer nuclear states, India,
      Pakistan and Israel. The U.S. has even recently signed a nuclear deal
      with India. In all of these cases, the nuclear programs dwarfed that of
      North Korea’s. Yet only North Korea has been singled out for punishment
      and outrage. The basis for such a glaringly obvious double standard is
      that none of the other nuclear powers are potential targets for U.S.
      military forces. The operative principle is that no nation the U.S.
      seeks to crush can be allowed the means of thwarting an attack.

      North Korea’s nuclear test was driven by the perceived need to
      reduce the risk of attack by the U.S., a real enough consideration given
      the fate of conventionally armed Iraq, Afghanistan and Yugoslavia. At
      the same time, the test played into the Bush Administration’s hands. The
      U.S. military is tied up to a large extent in the occupations of Iraq
      and Afghanistan, but UN sanctions are a cost-effective alternative for
      bringing ruin to North Korea and its people. How the Bush Administration
      interprets what the sanctions allow it to do is a question with
      potentially profound consequences. There have already been indications
      that the U.S. may go well beyond the letter of the resolution and
      implement measures that represent a real menace to peace. The UN
      resolution gives nations the legal backing to stop North Korean ships in
      foreign ports and waters. But U.S. Ambassador to the UN John Bolton has
      hinted at the possibility of stopping and searching North Korean ships
      in international waters, an act lacking in any legal basis. If the U.S.
      decides to pursue that course of action, it risks inviting a military
      clash at sea. Japan is considering contributing destroyers and patrol
      aircraft to the U.S. plan to harass North Korean shipping. (21) This
      would be seen as an especially provocative act, given the bitter
      memories associated with the many years Korea spent under harsh Japanese
      colonial rule.

      But then, confrontation is surely what the Bush Administration
      wants, viewing it as an opportunity for further punishment of the DPRK.
      Since demolishing the 1994 Agreed Framework, the Bush Administration has
      gone on to do everything in its power to worsen tensions. “The U.S.
      never intended to honor the Agreed Framework and did not fully fulfill
      any of its provisions,” points out Alexander Zhebin of Russia’s
      Institute of the Far East. “The U.S. would love to place a bursting
      boiler at Russia’s doorstep. Americans would sit back and watch it
      explode on TV, and let Russians, Chinese and Koreans sort out the
      consequences.” (22)

      Gregory Elich is the author of Strange Liberators: Militarism, Mayhem,
      and the Pursuit of Profit

      http://www.amazon.com/Strange-Liberators-Militarism-Mayhem-Pursuit/dp/1595265708

      NOTES

      “Sharply Increased US Sanctions are Based on the USD Supernote
      Accusation against North Korea. But Counterfeit Experts Say the
      Accusation is Baseless,” European Business Association (European
      Chamber of Commerce in Pyongyang), April 2006. “An der
      ‘Supernote’ Stimmt Fast Alles,” Associated Press, April 19,
      2006.
      “NKorea Nuke Talks Uncertain,” UPI, December 6, 2005. “No US
      Evidence on Counterfeiting: NKorean Diplomat,” Agence
      France-Presse, March 9, 2006. “N.K. Proposes Separate
      Negotiations to Discuss U.S. Sanctions,” Yonhap (Seoul), March
      8, 2006. Lee Chi-dong, “Russia Urges U.S. to Present Evidence of
      N. Korean Counterfeiting,” Yonhap (Seoul), March 7, 2006.
      Jeannine Aversa, “White House Targets N. Korean Companies,”
      Associated Press, October 21, 2005. “US Slaps Sanctions on
      N.Korea, Russian Firms,” Reuters, August 4, 2006. “U.S. Slaps
      Sanctions on Two N.Korean Firms,” Chosun Ilbo (Seoul), August 7,
      2006.
      Christian Caryl, “Pocketbook Policing,” Newsweek, April 10-17,
      2006. Joel Brinkley, “U.S. Squeezes North Korea’s Money Flow,”
      New York Times, March 10, 2006.
      Nigel Cowie, “US Financial Allegations – What They Mean,”
      Nautilus Institute, May 4, 2006.

      Nigel Cowie, “US Financial Allegations – What They Mean,”
      Nautilus Institute, May 4, 2006. “North Korea’s Nuclear Push May
      be Stymied by U.S. Banking Rules,” Bloomberg, March 7, 2006.
      Anna Fifield, “Bankers Challenge US Sanctions on North Korea,”
      Financial Times (London), September 5, 2006.
      Steven R. Weisman, “U.S. Pursues Tactic of Financial Isolation,”
      New York Times, October 16, 2006. “N.Korean Regime Feeling Pinch
      from Sanctions: U.S.,” Chosun Ilbo (Seoul), April 3, 2006.
      “North Funds Lose Havens in Sanctions,” JoongAng Ilbo (Seoul),
      August 24, 2006. “US Targets Business with North Korea,”
      Associated Press, September 9, 2006. “US Reportedly Asks for
      Cooperation with Sanctions on DPRK from UN Member States,”
      Chosun Ilbo (Seoul), September 13, 2006.

      8 Selig S. Harrison, “N.K. Nuclear Test Depends on U.S.,” Hankyoreh
      (Seoul), October 2, 2006.

      “South Korea Asked U.S. to Suspend Further North Korea
      Sanctions: Source,” Yonhap (Seoul), September 18, 2006.
      “US Funds Radiocasts Aimed at North,” Dong-A Ilbo (Seoul),
      September 28, 2006.
      “U.S. Not Yet Satisfied with Impact of N.K. Sanctions: Levey,”
      Yonhap (Seoul), September 9, 2006.
      “DPRK Foreign Ministry Clarifies Stand on New Measure to Bolster
      War Deterrent,” KCNA (Pyongyang), October 3, 2006.
      Jungmin Kang and Peter Hayes, “Technical Analysis of the DPRK
      Nuclear Test,” Nautilus Institute, October 20, 2006. Ivan
      Oelrich, “North Korea’s Bomb: A Technical Assessment,” Strategic
      Security Blog (a Project of the Federation of American
      Scientists,” October 13, 2006. Ludwig De Braeckeleer, “N. K.
      Nuclear Test: Evidence and Unknowns,” Ohmy News (Seoul), October
      12, 2006. “Alleged Radioactive Debris from N.K. Nuclear Test
      Detected,” Yonhap (Seoul), October 14, 2006. Greg Miller and
      Karen Kaplan, “Even if Device was Flawed, Test Crossed a
      Threshold,” Los Angeles Times, October 10, 2006.
      Interview with Selig S. Harrison, “Harrison Faults Bush
      Administration for Rejecting Step-by-Step Accords to Halt North
      Korea’s Nuclear Program,” Council on Foreign Relations, May 10,
      2004. Glenn Kessler, “Rice Sees Bright Spot in China’s New Role
      Since N. Korean Test,” Washington Post, October 22, 2006.
      “Text of U.N. Resolution on N. Korea Sanctions,” CNN, October
      14, 2006.
      Warren Hoge, “Security Council Backs Sanctions on North Korea,”
      New York Times, October 15, 2006. “U.S. Achieves Key Objectives
      in U.N. Resolution, with PSI as Centerpiece,” Yonhap (Seoul),
      October 15, 2006.
      Park Song-wu, “Vershbow Wants Seoul to Cut Economic Ties with
      N.Korea,” Korea Times (Seoul), October 18, 2006. Richard Lloyd
      Parry, “US Demands the Closure of ‘Cash Cow’ Projects for Kim,”
      The Times (London), October 19, 2006. Lee Joo-hee, “Seoul Urged
      to Get Tough on N. Korea,” Korea Herald (Seoul), October 19,
      2006.
      Chun Su-jin, “Testy Official Snaps Back at U.S. Sanctions
      Pressure,” JoongAng Ilbo (Seoul), October 19, 2006. Kim Ji-hyun,
      “Seoul Digs in Over Projects with N. Korea,” Korea Herald
      (Seoul), October 20, 2006.
      Adrian Blomfield, “Russian Rebuke for Rice over N Korea,” Daily
      Telegraph (London), October 21, 2006.
      Ewen MacAskill and Jonathan Watts, “Japan Bans All Trade with
      North Korea,” The Guardian (London), October 12, 2006. “Japan
      Eyes Tougher N. Korea Resolution,” Kyodo News Service (Tokyo),
      October 22, 2006.
      “MSDF Set to Monitor 2 Sea-Lanes to Check Ships Near Okinawa,
      Tsushima Strait,” Yomiuri Shimbun, October 22, 2006.

      Vladimir Radyuhin, “U.S. Provoked N. Korea: Russia,” The Hindu,
      Chennai, October 22, 2006.

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