Plunge Pontificates

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Thursday, April 06, 2006

Pyongyang feels the Squeeze

Slowly but surely, North Korea is getting squeezed tighter and tighter. They have now basically been kicked out of Macao.

"Macao had to clean up its act," said David L. Asher, a former State Department official who specialized in North Korea and was one of the architects of the action against the Macao bank. "There are $5 billion in annual gaming revenues at stake. They have to work with the United States."

The freezing of the $25 million in the Banco Delta Asia has been a particularly big blow for a government scraping by for lack of hard currency. North Korean banks kept large sums of money in the Macao bank. Now, with those accounts suspended and other banks frightened off by the Treasury Department action, North Korea has been largely cut off from international trade.

"The impact is severe," said Nigel Cowie, a British banker based in Pyongyang who is general manager of the Daedong Credit Bank, serving mostly the tiny foreign community in the North Korean capital.

In a telephone interview from Pyongyang, Cowie said that North Korea, because it had no credit and a weak banking system, dealt almost exclusively in cash, which might have created the appearance that it was laundering money when it was not.

"I can't speak for what everybody was doing, but I can say that in our case, a lot of legitimate business has been hurt," Cowie said.

The North Koreans blame the U.S. for their woes in Macao. A senior North Korean diplomat, Li Gun, visited Washington last month on what appeared to have been a futile attempt to get the Macao freeze lifted. He left angry, declaring that North Korea would boycott negotiations on its nuclear program until the banking situation was resolved.
Just keep squeezing and we'll see what pops our.