For years Bush’s North Korea policy been called a failure, particularly for not continuing Clinton’s policy of engagement and “diplomacy” (although this turned out to largely be sweeping the problem under the rug for whoever followed, i.e., ignoring HEU activities). It is safe to say at this point that the Bush administration has bent over backwards (and just bent over, some might say) to extend a full measure of “engagement” and “diplomacy” to North Korea.

The 13 February agreement (DOC) was not the “Agreed Framework 2.0” as some have called it, but the first phase of what would be the next iteration. Although not in the 13 February deal (though agreed to on the side, it seems), the U.S. also unfroze North Korea’s Banco Delta Asia funds ($25 million). Perceptions are changing, slowly for some, and has raised some issues that many apparently overlook.

At first the delay in the Yongbyon nuclear reactor shutdown was attributed to the BDA funds not being released soon enough, even though that was not a valid excuse. Now the funds are in fact completely unfrozen and only waiting for North Korea to pick them up and shutdown the reactor; but North Korea refuses to do either:

North Korea has not taken possession of money snagging a six-country nuclear agreement apparently because it wants the funds transferred to a reputable bank to guarantee access to the international financial system, current and former U.S. officials say.

[…]

North Korea has said it would not start shutting down its Soviet-era Yongbyon reactor or invite U.N. nuclear inspectors back into the secretive state, until about $25 million in funds frozen at a Macau bank for suspected use in Pyongyang’s illicit activities have been freed.

The United States insists it has done all it could do to make the funds, held by Banco Delta Asia, or BDA, available, but so far there is no indication Pyongyang has claimed them.

The North Koreans “want access to their money, and would rather not withdraw it (as cash) in wheelbarrows in front of a gaggle of South Korean and Japanese press now staking out BDA,” one senior U.S. official told Reuters.

[…]

U.S. officials this week said they still believe Pyongyang is engaged in these activities and that North Korea’s BDA accounts contain tainted funds. The bank has challenged the U.S. ruling as politically motivated and lacking evidence.

“The Chinese wanted the Treasury Department to pledge that they would not sanction any bank that took this money ($25 million) but Treasury wasn’t willing to do that. Our law won’t allow us to do that, to give that kind of ‘get out of jail free card,’” Green told a briefing at the Center for Strategic and International Studies where he is a senior adviser.

[…]

The impact of the Treasury Department’s action against BDA goes far beyond the $25 million because by raising concerns about North Korean accounts, U.S. officials have forced all banks to question whether, by dealing with Pyongyang, they could compromise their integrity and become liable to sanctions.

As a result, U.S. officials say they have severely limited Pyongyang’s ability to do business as part of a strategy designed to pressure Pyongyang into abandoning its nuclear weapons program.

Washington has gone to great lengths to explain to the North Koreans the process for releasing the funds and that the only way it can clear its reputation is by halting illicit activities and establishing a financial system that complies with international standards, U.S. officials say.

This was the main focus of six meetings that the White House’s top Asia expert, Victor Cha, had with North Korean negotiator Kim Gae Gwan when Cha was in Pyongyang for three and a half days recently.

Some North Korea apologists and useful idiots will either ignore this or blame it on the U.S., but more engagement proponents should begin to see the light; the administration is taking their medicine, the problem is it’s snake oil. If enough policy makers come around to the reality of this situation, something might be done.