WASHINGTON -- For three years, the Bush administration has waged a campaign to choke off North Korea's access to the world's financial system, where U.S. officials say the Asian nation launders money from criminal enterprises to fuel its trade in missile technology and its plans to build a nuclear arsenal.
That effort has started to pay off.
U.S. pressure forced Macao to freeze North Korean assets in one of its banks this year, then foiled North Korea's panicky attempts to find friendly bankers in Vietnam, Mongolia, Singapore and Europe. And after North Korea's Oct. 9 nuclear test, China ordered some of its major banks to cease financial transactions with the country.
The cash crunch appears to have played a key role in North Korea's decision Tuesday to return to talks over its nuclear ambitions.
"They're not coming back because they want to give up nuclear weapons," said David L. Asher, the State Department's point man on North Korea until last year. "They are feeling the financial pressure and the cutoff from the international financial system, so they are trying to make nice."
But the U.S. effort still faces two enormous obstacles: Russia and China.
North Korea continues to have access to banks in both countries, according to current and former U.S. officials who say that without those countries' cooperation, the U.S. effort will be largely ineffective.
Both major powers have historically been more interested in protecting their strategic interests than in joining U.S. efforts to sanction their neighbor.
Stuart Levey, the U.S. Treasury undersecretary in charge of investigating terrorist financial webs, has traveled to Russia and China, including a trip to Moscow last week. Levey said he had "constructive discussions" with his Russian counterparts but declined to say whether they would act. A Russian Foreign Ministry official said they "agreed to further cooperation."
U.S. officials believe both countries will continue to balk at U.S. appeals for a further crackdown, in part because of their "historic ties to North Korea," said a senior counterterrorism official, who spoke about the sensitive U.S. campaign on the condition of anonymity.
For decades, Washington gathered evidence that North Korea had become what some U.S. officials call a "Soprano state." The regime used its embassies to coordinate illegal activities, its ships to move heroin and other contraband, and its factories to make counterfeit $100 bills and bogus brand-name cigarettes.
Kim Jong Il, the North Korean leader, used the profits to fund his nuclear program, U.S. officials say, but also to import Mercedes-Benzes, pricey cognacs and other luxury items to buy loyalty.
Washington fears that North Korea could decide to deploy its well-worn trafficking networks to sell Iran or others the hardware or know-how to make weapons of mass destruction.
So administration officials decided in 2003 to attack by unconventional means. They created the Illicit Activities Initiative, a classified multi-agency effort aimed at curbing North Korea's black-market networks.
A year ago, the United States moved on one of North Korea's bankers, officially designating the small Banco Delta Asia in Macao as a "primary money laundering concern" under the Patriot Act. Pyongyang banked much of its criminal proceeds in the former Portuguese colony, a freewheeling gambling haven, which became an autonomously governed Chinese territory in 1999.
Josh Meyer writes for the Los Angeles Times.