[imText1]A report was recently made informing that the South Korean government was investigating measures to mediate the transfer of North Korea’s $25mn funds caught in BDA through a South Korean government-run bank, “Korea EximBank (KEXIM).”
The Chosun Ilbo first reported the news on the 7th, “Banks throughout the world are unwilling to receive North Korea’s illegal funds as they are concerned that they may face a decline in trust, yet our government may be planning to enable the ‘launder’ of North Korea’s funds through KEXIM.”
On the 3rd, the Blue House held a conciliation meeting for the security policy and discussed on the BDA issue with Baek Jong Chun, the manager of the Security Team of the Blue House, Moon Jae In, the secretary of the President and additional members from the Ministry of Finance and Economy and the Ministry of Justice attending the meeting.
According to the report, in the meeting, they discussed the idea of opening a North Korea account at a KEXIM located outside of Korea and receiving North Korea’s $25mn for tossing it to the North Korean accounts in Italy or Russia.
There have been no recent updates from the Blue House regarding the meeting nor announcements to suggest that a verdict had been made to mediate North Korea’s funds through KEXIM.
If the government hasn’t made any final decisions, it would be better for the government to come right out into the open and report that proposals were merely being deliberated, or quickly close the matter as if nothing ever happened.
Until now, North Korea has requested for the funds to be transferred through a bank in the U.S. The claim is that if the U.S. does consent to this request, then North Korea will be able to transact with other banks throughout the world. However, as the U.S. Treasury states, no U.S. bank can become involved under U.S. law as long as it is considered to be affiliated with counterfeit money. The Bank of China has also refused to intervene in the BDA funds.
Why then, has KEXIM suddenly appeared as a potential candidate?
The report claims, “Our government became involved because the U.S. told North Korea, ‘Go, redeem the money since we have released the funds frozen in BDA,’ while North Korea said, ‘We will not cash in the funds but transfer it.’” Furthermore, “The U.S. seems to agree with the (South Korean) government’s proposal and relayed that there should be no problem for KEXIM to cooperate with the funds in BDA” said an anonymous source.
Does this make any sense?
Even a child knows that the U.S. and China are unwilling to receive North Korea’s “hot potato,” the illegal funds. Hence, from a U.S. and China perspective, “it would be good if South Korea dealt with the matter.” In other words, the problem that has become annoying and troublesome has just been dumped on South Korea.
What would happen if a South Korean bank did intervene and receive the illegal funds? Undoubtedly, if the U.S and China did provide a warrant and counsel from the international financial market as said, it is possible that no major problems would arise.
Nonetheless, it is difficult to say that the issue surrounding North Korea’s illegal funds is focused only in one country and BDA alone. It is reasonable and even common sense to think that North Korean authorities maintain accounts in unknown European neutral countries and Russia. In that case, what would happen if North Korea acquired more funds for the purchase of additional weapons of mass destruction? The first to receive a doubtful eye from the international financial market would be the “ex-accomplice” KEXIM. No matter how much reasoning was made to argue that the bank was merely a mediator with good intentions, the fact would remain that archives proved its affiliation with the transfer of illegal funds. During times likes these, it is childish to believe that paternalism would exist.
The most important thing to possess on the international financial market is “trust.” It takes a long time to gain trust but once trust is slightly fractured, that trust is difficult to restore. This is the nature of financial transactions. If by any chance, problems were to arise amongst North Korea’s illegal funds, would foreign financers continue with new deals and investments with KEXIM? Basically, in a nutshell, China and the U.S. are currently asking an unreasonable request.
More specifically, China is making an irrational assumption. Even Confucius said, “What you do not want done to yourself, do not do to others.” Is it acceptable to place the burden on Korea by incorporating it in the “three cushions” just because U.S. remains firm and it doesn’t want to deal with it?
The proper way to resolve this issue is for North Korea to stop being obstinate and collect the funds in cash. Then, according to the regulations of the international financial market, North Korea needs to find a new bank and open a new account with an identifiable account-holder. Afterward, North Korea needs to restore its “trust” by engaging in unambiguous transactions.
Furthermore, it is for China’s own benefit as an ally to assist North Korea in making this accomplishment. Is this not the role of an ally to experience both the upturns and downfalls together.
South Korea getting involved, especially through a government-run bank is undeniably setting the trap for the return of a boomerang.
Can KEXIM be so certain that North Korea’s illegal funds for the use of missiles and illegal weapon trade is only in one bank, BDA? Even if the government does receive a warrant, if KEXIM has even the slightest doubt, it should politely refuse the proposal.
