North Korea’s financial officials visited the U.S. for the first time in order to learn about the international financial circulation system. <\/p>\n
Ki Gwang Ho, the Foreign Finance Chief of the Ministry of Finance and a representative of the six-person delegation, participated in a seminar sponsored by the National Committee on American Foreign Policy (NCAFP) and the Korea Society on the 16th (local time). After meeting U.S. monetary experts, he met with related parties of Wall Street financial institutions on the 17th. <\/p>\n
Donald Gregg, the Director of the Korea Society, spoke with reporters following the seminar about the reasons behind the North Korean delegation\u2019s visit to New York, “They came to learn about ways to access the international financial system\u201d (i.e., World Bank). <\/p>\n
The North Korean delegation\u2019s visit to the U.S., along with progress in the Six-Party Talks, seems to have been done in an effort to join the international financial system at a time when the U.S. is negotiating the removal of North Korea from its list of state sponsors of terrorism and the termination of the application of its Trading with the Enemy Act.<\/p>\n
Having carried out the explosion of a KAL airline in 1987, North Korea was already listed as a Terrorism-Sponsoring State when it began to face various restrictions imposed by the international community regarding the financial circulation issue. Once designated as a terrorist-sponsoring nation by the U.S. government, states are subject to sanctions owing to the International Financial Institutes Act, Foreign Assistance Law, Trading with the Enemy Act, and others.<\/p>\n
When a terrorist-sponsoring state asks for loans and support from the International Monetary Fund (IMF) or the International Bank for Reconstruction and Development (IBRD), the U.S. directors of these organizations are supposed to propose not to approve the loan. The Foreign Assistance Act prevents the lending of credit by export-import banks, and the Trading with the Enemy Act prevents financial transactions and exchanges with designated countries. <\/p>\n
North Korea, through the North Korean nuclear Six-Party Talks, has consistently demanded their removal from the U.S. list of terrorism-sponsoring nations. In accordance with that request, the “October 3rd Agreement” has reciprocally linked the disablement of North Korea\u2019s Yongbyon nuclear facility with its removal from the list of terrorism-sponsoring nations. <\/p>\n
Kim Jong Il told a South Korean media delegation visiting the North in August 2000, “If you remove the terrorist-sponsoring nation designation, we will build friendly relations with the U.S.”<\/p>\n
Most socialist nations such as China, Vietnam, and Eastern Europe have received support from international financial organizations and have been able to enter the global economy. North Korea’s entry under the direct supervision of international financial organizations can improve North Korea’s economic confidence, promote private investment and may encourage support from the international society. <\/p>\n
However, even if North Korea is removed from the list of terrorism-sponsoring countries, it will not be at liberty to immediately borrow money from international financial organizations, nor will it have immediate access to the international financial network. Acquiring assistance from World Bank or IMF is contingent upon the nation\u2019s active pursuit of market-friendly economic reform.<\/p>\n
As confirmed in the last Inter-Korea Summit Talks, the Kim Jong Il regime has maintained a strong resistance against opening and reform. However, this is necessary for economic revitalization. The Vietnam model, in which Kim Jong Il has shown interest, paradoxically exemplifies the impossibility of preparing a foundation for economic reconstruction without opening and reform.<\/p>\n
With minimal change to the political system, Kim Jong Il can allow for limited reform in economic areas, as did China and Vietnam. However, if even that poses a threat to maintaining the system, North Korea will always return to its original position. Therefore, it is yet to be determined whether North Korea\u2019s entry into the international financial system will have the desired effect. <\/p>\n
Sean McCormack, Assistant Secretary of State for Public Affairs, said at a briefing on the 14th, “This is an opportunity to familiarize the North Koreans with accepted international banking practices and problems that have restricted North Korea\u2019s access to the international financial system.\u201d<\/p>\n
The talks were centered on normalizing financial relations as a whole between the U.S. and North Korea. In accordance with the progress made toward North Korea’s nuclear cooperation, means by which North Korea can participate in international society as a legitimate member and the liquidation of past illegal activity was discussed. <\/p>\n
In particular, the U.S.’ utmost concern was North Korea’s illegal financial activity and the eradication of forged currency. <\/p>\n