Negotiating with North Korea's RICO regime

James Rosen:

As they crossed the airport in Singapore that day in 2003, heading for the plane that would take them to Seoul -- and a new life of freedom -- North Korean defector Kim Kwang Jin and his wife and son all feared for their lives.

"My wife was very frightened," recalled Kim, a high-ranking banker for the North Korean regime who was stationed in Singapore at the time. "She told me afterwards that...every step through the airport was like walk[ing] to [her] slaughtering....It was not easy to make such a decision."

Now a visiting fellow with the Washington, D.C.-based Committee for Human Rights in North Korea, Kim is described by veteran analysts as the first English-proficient defector ever to escape the Hermit Kingdom.

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Kim Kwang Jin described a society in which bankers demand bribes from clients, doctors from patients, professors and teachers from students.

"Everybody tries to make use of their position, their authority...to survive," Kim said.

The former banker said the regime's largest source of hard currency comes from the clandestine manufacture and sale of weapons of mass destruction. After that comes the regime's multibillion-dollar insurance fraud business, in which the authorities stage arson and bogus accidents to collect multimillion-dollar payouts from international banks and insurers.

"The state -- Kim Jong Il himself -- controls all these funds," said Kim Kwang Jin. "It is funneled to him. And then he's using all these revenues according to his regime's priorities, which are now the missile program and nuclear weapons development."

Kim Kwang Jin believes the North Korean government has never negotiated in good faith with the United States and its allies at the Six-Party nuclear disarmament talks.

"The North Koreans are coming to the table not for negotiation; they are there for winning, for implementing their strategy," he said. To grant meaningful concessions at such negotiations, or to enact meaningful internal reforms toward democratization, would, Kim says, be tantamount to "suicide to the regime."

Yet Kim also believes financial sanctions can compel better behavior from Pyongyang, and cites as an example the Treasury Department's targeting from 2005 to 2008 of Banco Delta Asia: a bank in Macau, also known as "BDA," through which the North Korean regime once transferred large sums. It was during this period, when Banco Delta Asia faced international restrictions, that the North made its most far-reaching concessions in the Six-Party Talks, only to renege on them once the sanctions were lifted.

"The BDA case was a frightening thing to the regime," Kim said. "It was a blow to [Kim Jong Il's] personal funding, to the economic sector which is now supporting the regime. And even the national economy, the people's economy run by [the] Cabinet, is influenced by this BDA case.

"So it was a heavy blow to the regime....We have good leverage....The next regime will be weak, very weak; so I think they will need help and influence from the international community. So if we are prepared to exert that influence, I think we can have [a] better regime there, better policy, and better human rights there."

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There is much more. The vulnerability of the flow of funds through international banks is the real leverage that the US has. That is why it is important to reinstate the terrorism designation so that the cash flow can be cut off. That is our most effective lever to deal with the criminal conspiracy that leads North Korea. The other sanctions have not been effective because China continues to give the regime food and fuel.