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Diplomacy in Action

Background Briefing On North Korea


Special Briefing
Bureau of Public Affairs
Background Briefing by Two Senior Administration Officials
Washington, DC
July 15, 2009

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MR. CROWLEY: Good afternoon from the State Department. I’m P.J. Crowley, the Assistant Secretary of State for Public Affairs. And we have an interagency briefing for you today. And we also have a multi-press communal briefing today, because joining us by conference call will be other press delegations from the White House, the Treasury Department, the UN. We’ll have two Senior Administration Officials who will give opening comments on our current approach to the situation in North Korea. But we also have other representatives from the White House here as well, but we can – we’ll be happy to take your questions.

What we’ll do from a process standpoint, after the opening statements, we’ll take a couple of questions from here in the State Department briefing room, then we’ll open it up to questions from those who are calling in on the conference call from other locations. And we’ll just go back and forth for as long as our Senior Administration Officials are available.

QUESTION: P.J., I’d like to make an objection for this briefing being done on background. Could you explain why it can’t be done on the record?

MR. CROWLEY: Your objections are noted. But we – again, as was done a few weeks ago, we’ve kept you up to date on our progress with implementation of sanctions, and we think this is the best format to bring you this information.

We’ll start with Senior Administration Official Number One.

SENIOR ADMINISTRATION OFFICIAL ONE: Well, thank you, everybody, both here and out in the Ethernet. The way you can tell this is on background, as Charlie has observed, is that I don’t have my suit coat on.

I want to bring you up to date on our efforts to deal with the North Korean nuclear program, and in particular, the really remarkable international effort focused on implementing the UN Resolution 1874, which was adopted after North Korea’s most recent nuclear test. The resolution, as we’ve made clear from the time it was adopted, is a very powerful tool and important statement, not only because it gives the international community a strong basis for imposing significant measures against North Korea and its missile and nuclear programs, but also because it reflects an extraordinary convergence and a consensus in the international community about the impact of North Korea’s program and the strong commitment of the international community to have North Korea reverse that program and to eliminate the nuclear program.

We’ve seen this not only in the resolution itself, but in a variety of fora since that time, including statements that came out of a meeting between the South Koreans and ASEAN following the adoption of 1874, and the most recent G-8 summit, which made clear the strong international views about the necessity of North Korea returning to talks and abandoning its nuclear program.

We’ve been very actively engaged with all of the key countries in terms of both reinforcing that consensus and also the very important work of implementing the resolution. As you undoubtedly know, but just to review some of the activities, Ambassador Phil Goldberg, who was appointed by the Secretary and President to take the lead in sanctions implementation, has traveled to China and Malaysia to discuss with counterparts our efforts – our combined efforts to implement the resolution. We’ve had visits by [Senior Administration Official Two] that he’ll talk to you about to the region, to talk about coordination on sanctions enforcement.

I met just this past weekend with a South Korean foreign minister in Lisbon to talk about our combined efforts. Assistant Secretary Kurt Campbell is now in the region conferring with countries in Northeast Asia. In addition to the G-8 meeting, the President discussed this with the Russians in Moscow. The Chinese Vice Foreign Minister Wu Dawei was not only here in Washington to discuss these issues, but also consulting with counterparts in the region. We met with the Russian Six-Party Talk Representative Losyukov here in Washington a couple of weeks ago as well. So it’s a very active effort to make sure that we’re all coordinated and pursuing the same line.

And the key to our efforts is full implementation of 1874, but also a clear message to the North Koreans that if and when they’re ready to engage and reaffirm and act on their commitments made in 2005 to eliminate their nuclear program, that we’re ready to achieve that. And it is clear by all the parties, and very clear both in our public statements and in the private discussions, that there’s a consensus that given what’s happened up till now, that we’re not really interested in halfway measures, that what we need to see from North Korea is complete denuclearization and for them to take irreversible steps towards that goal.

I mean, I think it’s – as I say, there’s a very strong consensus among all of the countries, particularly South Korea, Japan, China, and Russia, about that goal. As I said, we are clearly prepared to reengage with the North Koreans, but they need to understand the strong intention and will of all the parties that we’re not going to repeat the process last time of simply engaging in talks that don’t lead to irreversible steps.

I guess the last thing I should mention is, in terms of the implementation of 1874, is that we are in the final stages right now of completing the discussions around designating persons and entities under Resolution 1874, which is an important step, a practical step in the implementation of the sanctions which allow us to identify specific companies and individuals involved in the transactions that will allow us to take the next step in terms of implementing these sanctions.

To anticipate what is undoubtedly going to be one of your questions, as you know, recently we had some concerns about a North Korean ship, and we are encouraged by the fact that the particular ship left North Korea, sailed south for a while, turned around and returned. And one of the things that was important to us about this episode is in the context of that ship sailing, we had intensive discussions with all of the countries in the region and had firm statements and very good cooperation from all countries, making clear, both publicly and privately, that they intended to fully implement 1874.

And more important, that they would insist on full transparency in their dealings with North Korea so that the North Koreans understand that if they intend to engage in commerce, they’re going to have to show the world that whatever commerce they seek to undertake will have to be in conformance with 1874.

So let me turn it over to [Senior Administration Official Two] to talk about his efforts.

SENIOR ADMINISTRATION OFFICAL TWO: Thanks. Well, as my colleague pointed out, we are not only making progress on the coalition building that goes along with this kind of diplomacy, but also on implementing the resolution, and particularly the financial portions of the resolution, which I think are particularly important.

We have been working with our partners around the world to protect the integrity of the financial system, prevent North Korea from abusing it for its nuclear missile activities, and for other criminal and illicit conduct. This effort involves both governments, but also importantly, the private sector, as I’ll explain in a moment.

There are a number of very powerful tools available to us in this context. We, of course, have the Resolution 1718 that was passed in 2006, which has asset-freezing provisions in it and some very important designations that were done after the April launch of key North Korean entities involved in their missile program. We have, since that time, also done our own designations under our own domestic authorities in Executive Order 13382 that – of other North Korean entities –Nam Chon Gang, a nuclear entity, and Hong Kong Electronics, a missile entity.

And then of course, we are working, as my colleague indicated, on further designations under 1874 pursuant to the new resolution. But in addition to the asset-freezing provisions of those resolutions, I want to point out a critical provision that I think is very powerful, which is paragraph 18 in Resolution 1874, which calls upon, in addition to freezing the assets of designated entities, that all member-states should prevent any financial services from being provided that could benefit North Korea’s nuclear missile or WMD program-related activities.

That is a very powerful provision, even on its face, but particularly powerful in the context of North Korea, because North Korea engages in a variety of deceptive financial practices that are intended to obscure the true nature of their transactions. We put out an advisory to this effect on June 18th. It’s on the Treasury Department website if you’d like to see it. And this is consistent with a long pattern of North Korean deceptive conduct that we detail in that advisory that goes to our financial institutions here, but of course is paid close attention to by financial institutions around the world.

The bottom line is that because of this kind of deceptive conduct that North Korea engages in that obscures the nature of their transactions, it’s virtually impossible to distinguish between legitimate and illegitimate North Korean business. In the financial world, transparency is a fundamental value. And as my colleague indicated, that’s also a fundamental principle that we’re pursuing in our overall activities with respect to North Korea. But transparency in the financial system is something we always talk about in terms of needing integrity in the financial system so that people know the nature of transactions. And North Korea acts in a way that is intended to be opaque.

And so it’s for that reason that this has a powerful effect not only with governments, but with the private sector, and particularly banks around the world who have every incentive to protect themselves from this kind of illicit activity. They don’t want to get involved in illicit transactions, whether it’s a nuclear transaction, a missile transaction, whether it’s a transaction that involves the provision of luxury goods to North Korea, which is a violation of the Security Council resolutions. They don’t want to get involved in those transactions, both because they’re good corporate citizens, but also because they are very protective of their own reputations.

And I have found, as my colleague pointed out, we have done a lot of travel, even before and after 1874 being passed. We participated in Ambassador Goldberg’s trip to China and Malaysia. Deputy Assistant Secretary Glaser traveled with him, who is one of the world’s foremost experts on this illicit financial activity. And then I traveled last week to Beijing and Hong Kong. And what we found is exactly what I laid out, which is that governments and the private sector are taking this extremely seriously, they are grappling with exactly how they can avoid this illicit activity, and we think that it’ll have precisely the desired effect on North Korea.

I think we’ll take questions.

MR. CROWLEY: What we’ll do, we’ll take a couple of questions here from the State Department briefing room and then we’ll go to the conference call. The first question, go.

QUESTION: Foster Klug. I work for the Associated Press. I was hoping to ask Official Number Two, in your meetings with the private sector, with the banks, with executives, with banking associations, whoever else you were meeting with, what’s the result? What do you want them to do? Do you want them to freeze North Korean accounts? Do you want them to investigate? Do you hope to cause a ripple effect, as was caused with BDA? What’s --

SENIOR ADMINISTRATION OFFICIAL TWO: I’m glad you asked that because the point is not to go in there and ask them to do specific things. The point is to go and talk to them, share information with them about the nature of the conduct that’s involved, about the ways in which North Korea acts to get them involved in transactions that they wouldn’t get involved in if they knew the whole story, if they knew the whole truth about them. And then I let them decide for themselves.

I mean, it’s an important part of their business to assess risk, decide which business they want to handle and which business is too risky for them to handle. And I think just by sharing the information, treating them as the allies they are on this, this is a situation where we work with banks around the world to protect the integrity of the financial system, and that’s how we approach them, and we find that that sort of approach tends to be the most fruitful. Once they have this information, they can make their own decisions.

I can tell you that the decisions that they tend to make are that they often will say that doing business with North Korea is too risky given the possibility of being involved in illicit activity.

QUESTION: Can you say what countries you’ve been to and – to meet with the private sector, I mean, what countries you plan to go to? I know you’ve been to Malaysia and China and Hong Kong and --

SENIOR ADMINISTRATION OFFICIAL TWO: Well, as we’re just getting started on this, it really is a global effort. I think we will be reaching out broadly, but – and of course, we also talked to – we have lots of opportunities to engage on this sort of thing, even in the United States, because people travel here. So I think I’d just leave it at that and say that this is going to be a global outreach.

MR. CROWLEY: Libby.

QUESTION: For Senior Administration Official Number One, actually going off sanctions for a bit, I wanted to ask you about reports this week from South Korean and Chinese media that Kim Jong-il is suffering from pancreatic cancer. I’m wondering if you had anything to add on that. And also, on the two American journalists that are still in North Korea, have your calls for amnesty changed their calculus at all as far as you understand?

SENIOR ADMINISTRATION OFFICIAL ONE: Well, on the first, I think we need to be appropriately cautious in trying to guess what is exactly going on generally in North Korea, and specifically with Kim Jong-il’s health. There’s a lot of speculation. I think this is the kind of thing where hard information is difficult to come by. And so we’re certainly aware of the reports, but we don’t have anything specific in our own that would lead us to draw a conclusion one way or the other.

With respect to the journalists, we’ve made clear as much as we can, through as many avenues as we can think of, that we really believe that it would be important for the North Koreans to allow the two journalists to return home. We’re not interested at this stage in debating whether they did or didn’t violate the law, but we are interested in getting them back.

We haven’t had any specific information from them or specific response from the North Koreans since then, but we have continued to make clear to them publicly and through others that we would welcome a response and the return of the two journalists.

QUESTION: Let me clarify – you said “since then.” You mean since you’ve sort of used the amnesty language?

SENIOR ADMINISTRATION OFFICIAL ONE: Since the Secretary’s last statement, we’ve not had any specific information from them, but we continue to hope that they will respond appropriately.

MR. CROWLEY: I’ll tell you what. Kathy*, if you’ll cue up a couple of questions from the conference call, we’ll broaden this to other journalists in other locations.

I’ll tell you what. While we’re working on that, we’ll take time with Charlie and we’ll take another one and we’ll keep trying.

QUESTION: For Official Number One, can you give us any information about what was on the ship that did turn around, or what you thought was on the ship that did turn around?

SENIOR ADMINISTRATION OFFICIAL ONE: The only thing I would say, Charlie, on this is that just given the nature of the country that it was coming from and past shipping activities by North Korea, we were naturally concerned about what might be on the ship. We expressed our concern to all of the countries in the region and stressed the importance of making sure that 1874 was fully implemented and that people insist on complete transparency in their dealings with North Korea.

We had good conversations with virtually every country that might be in the path of this ship. I think many, both publicly and privately, made clear that they intended to scrupulously enforce 1874, and so we were encouraged when the ship turned around and went home.

MR. CROWLEY: Kathy, are there any questions in the queue? (Pause.)

Okay. I’ll tell you what, we’ll keep going here, then --

QUESTION: For Official Number Two, Paul Eckert of Reuters News Agency. Can you give some basic examples of the kind of behavior that North Korea does to mask this transaction? Is it sort of like forged letters of credit or bills of lading, that kind of thing? And what percentage of North Korean commerce around the world do you reckon that you can eventually touch or contaminate or block off through these measures?

SENIOR ADMINISTRATION OFFICIAL TWO: Well, the kinds of things – actually, I’d refer you, for a really detailed discussion, to the advisory – actually, I have a copy I can give you at the end of the briefing – that we put out on June 18th. But the kinds of things they do are the kinds of things that we see illicit actors do around the world.

They use cutouts and front companies. They suppress the identity of the true parties to the transaction. They try to use cash couriers and large amounts of cash in situations where there’s no legitimate reason to use large amounts of cash, and similar sorts of behaviors, using companies that, from the names of them, you can’t tell what the true nature of what they do is and obscures their North Korean contacts altogether. Of course, the cash issue even raises a second concern that we historically have about North Korean counterfeiting of our currency.

So those are the sorts of things that we’re concerned about. It’s not our goal to stop all interaction with North Korea; particularly, it’s not our goal to do anything that would harm North Korea from a humanitarian perspective. The problem is it’s quite difficult to separate out whether these transactions are legitimate or illegitimate, and they do do a significant amount of activity that’s designed to generate revenue through these illicit activities, including by selling missile parts and missile technology. And now, of course, the new resolution makes even conventional arms transactions with North Korea a violation of the Security Council resolution.

MR. CROWLEY: Jill.

QUESTION: Thank you. Jill Dougherty from CNN. With this apparent success in having the ship turn around, is there a similar success that you could point to in the financial realm, something that you have prevented from happening? And is there any requirement for reporting that, let’s say, a company or anybody else would have to report back to the UN to say what they’ve been doing?

SENIOR ADMINISTRATION OFFICIAL TWO: You’re talking about on the financial side now?

QUESTION: Yes.

SENIOR ADMINISTRATION OFFICIAL TWO: Actually, as I recall the resolution, it does require reporting to the UN if there’s any arms – there’s the exception for light arms and I think there is the requirement to report to the UN before those transactions occur, but that’s not in the financial sense. That’s in reporting the transactions.

This resolution sort of sits on top of an existing set of international obligations in the financial world where suspicious transactions, which would include transactions that violate the UN Security Council resolutions, are generally under almost every country’s laws required to be reported to authorities in those countries. We have in the United States suspicious transaction reporting requirements, and others have similar rules in their countries.

QUESTION: But the question was: Is there anything at this point that you can point to as a success, anything that was stopped, with commerce, with --

SENIOR ADMINISTRATION OFFICIAL TWO: I can’t tell you about particular transactions that would have occurred, that didn’t occur because of the resolution, because that wouldn’t – that sort of information is generally hard to come by. What I can tell you is that everyone we’ve talked to, whether it’s government or private sector, recognizes the risk that they face in doing business with North Korea if they’re going to do it, the difficulty of separating out legitimate from illegitimate business, and the challenge that that poses if they’re going to continue the business.

QUESTION: (inaudible) Korean American News. Even if the United States (inaudible) the economic sanctions to North Korea, the United States will still provide humanitarian aid to North Korea. Why does the United States provide the humanitarian aid to North Korea?

SENIOR ADMINISTRATION OFFICIAL ONE: Actually, the North Koreans have – had declined to accept humanitarian aid from the United States, and we were forced to pull out our humanitarian assistance, and we think that’s unfortunate. It’s a reflection of the way the regime treats its own people. But we’re very clear that our quarrel is not with the North Korean people. We are not seeking to cause a humanitarian tragedy in North Korea. We’re seeking to get the regime to end its nuclear program.

And I think this is something that all of the countries in the region have agreed, is that our goal is not to create suffering or destabilize the country. Our goal is to make clear that for the leadership, that they are not going to be able to achieve their objectives of somehow advancing the interests of North Korea by pursuing their nuclear program or their missile program.

QUESTION: Are you --

MR. CROWLEY: Indira.

QUESTION: One moment. Are you still provide food aid to North Korea?

SENIOR ADMINISTRATION OFFICIAL ONE: We do not directly provide food aid to North Korea now because they have not been willing to provide the kind of assurance and transparency that we require to make sure that the food is actually getting to people. So we pulled out our – the people involved in our assistance program there.

MR. CROWLEY: Indira.

QUESTION: Thank you. Indira Lakshmanan from Bloomberg News. Can one of the officials tell us the names of and confirm the number of the North Korean officials who are going to be subject to a travel ban and have their foreign assets frozen as a result of the UN sanction --

SENIOR ADMINISTRATION OFFICIAL ONE: We’re just finalizing action in the UN now, and under kind of UN rules, I can’t jump the gun on that. But we’re quite confident in the very near future there will be a completion of that, and we’re very satisfied with the entities and the individuals who are going to be included on that list.

MR. CROWLEY: Michael.

QUESTION: Michael Vallee from TBS. One question for Official Number One and one for Official Number Two: Official Number One, the – after the initial barrage of activity by North Korea, both verbal and physical with the missiles and everything else, it’s been pretty quiet recently. They haven’t – they’ve really pulled back. How do you assess this? Do you think that they are reviewing that policy? Do you think that there is – they’re now starting to question about the route they were taking? What’s your assessment of the recent pullback?

SENIOR ADMINISTRATION OFFICIAL ONE: I think it’s very perilous to speculate what might be going on in the mind of the leadership in North Korea. And I think to try to make decisions based on that kind of speculation is very difficult. So we’re looking to see what they do, whether they’re prepared to indicate what they’re prepared – what steps they’re prepared to take to restore the implementation of the commitment they made in 2005 to dismantle their nuclear program.

So I think at this point, rather than try to guess what they’re up to, we’ve just made clear to them that there are various avenues that they can take to indicate their willingness to reengage and discuss the serious concerns that we’ve all put on the table for them.

QUESTION: And there haven’t been any – there hasn’t been any feedback to your suggestions to the North Koreans about the avenues they’re --

SENIOR ADMINISTRATION OFFICIAL ONE: Let’s just say at this point, we don’t have anything that we would consider to be definitive to suggest that they’re prepared to get back to a process that would really lead to the dismantlement of their program. But we’re open to that.

QUESTION: And my question for Official Number Two: I know you have been working on the sanctions and everything else, but one of the concerns seems to be that whence the North Koreans decide to come back to the table, are you looking at the sanctions in a way that they can be tweaked to be used as a tool in the negotiations, or is this something that the pressure is just going to continue to stay on North Korea even if they decide to come back to the table?

SENIOR ADMINISTRATION OFFICIAL TWO: Well, I’m glad you asked that. I mean, as my colleague pointed out at the beginning, what we’re focused on now is getting irreversible and verifiable conduct change from North Korea. If and when that happens, then – if the conduct changes, then it’s quite easy to have financial institutions and others reverse the kinds of pressures that will occur from protecting themselves against the illicit activity. If there’s not illicit activity to protect oneself against, then it’s quite easy to have that pressure removed. And that’s something which is really critical to the success of the whole enterprise. But as long as the conduct continues, then the pressures inevitably will remain.

SENIOR ADMINISTRATION OFFICIAL ONE: Just to reinforce that, I think that our view is that we don’t intend to reward the North just for returning to talks, but if they are actually prepared to do the kinds of things that we’ve suggested that they need to do, then obviously, we’ll be prepared to reciprocate.

MR. CROWLEY: We’re going to give our outside callers another shot. Kathy*, are you there?

OPERATOR: I am here. Can you hear me, sir?

MR. CROWLEY: I can.

OPERATOR: Great.

MR. CROWLEY: Do you have any questions in the queue?

OPERATOR: We do. We have one. Peter Spiegel with Wall Street Journal, your line is open.

QUESTION: Thanks for taking me. I apologize, it’s a big cover – I’ve been trying desperately to get my phone to work, so just to cover – please excuse me. But I wanted to talk specifically about China and their cooperation in terms of implementing the sanction proceeding. I’m more interested in interdiction efforts in terms of arms shipments as opposed to financial, but I’m curious how cooperative they’ve been, because obviously, implementation on their part is pretty key.

Also, shortly after (inaudible) passed, there was some talk at the Pentagon, at least, of the discussions with the South Koreans and the Japanese about possibly ramping up some defensive measures, be it missile defense or whatnot, if these talks do not go well. Can you give us an update of any of those – the status of those negotiations?

SENIOR ADMINISTRATION OFFICIAL ONE: Sure, on both, and then I’ll ask my colleague on the first one. But let me try to answer both first and then have him come in.

With respect to China, I think we’ve had – and Ambassador Goldberg had very good and far-ranging discussions that were then complemented by the Chinese representative’s visit here. And we discussed in very practical terms the different dimensions of the concerns we have about how North Korea might engage in activities that violate 1874 – shipments over land, shipments by air, shipments by sea. And we’re in the process now, and I think all of the countries are now looking at what we see as the pattern and practice of trade and transshipment by North Korea to see what we need to do to make sure the resolution is implemented.

And while, again, we’re in early days, I think my own impression from the conversations with the Chinese is that they understand each of these elements of it, they understand that they themselves, in the context of their commitment to the resolution, need to look at each of these elements as well as the financial transactions that my colleague talked about. And there’s no sort of pushback on the idea that we have to watch each of these ways in which the North Koreans do business. So we’ll see. In the event we want to exchange views on this, each country is going to implement it by its own terms, but there’s no suggestion on their side that somehow that there are parts of the trade or transactions that are off limits to our discussions on exchange of views.

With respect to the defensive measures, I think both we – each of us individually and as part of our treaty alliances both with Japan and with South Korea have to take seriously the developing capabilities of North Korea and adjust our responses accordingly. We have seen the North Koreans attempt to develop missile technology, both short and medium range. Those are potentially a threat to the United States and immediately a threat to South Korea and Japan at the range that they have already tested.

And so we have ongoing cooperation. We have, obviously, our troops present as part of the U.S. Forces and the Unified Command in Korea. We continue to take steps to look at the evolving threat and to adapt our defenses to that, similarly with Japan. That includes things like missile defense, given precisely the nature of the threat that North Korea poses and seems to be seeking to advertise. We have to, individually and together, take steps to strengthen our defenses. And the more that threat develops, the more defensive measures that we will all feel obliged to take, as I said, both individually and in connection with our alliances. And I think that’s well understood by all the countries in the region and should be well understood by the North Koreans. We’re not going to sit idly by while they develop threats to us and to our allies without developing the measures we need to respond to that.

QUESTION: Can I follow up on that point? I mean, it sounds like there’s still evaluation, discussion going on between – with the Japanese and South Koreans. Have any actual specific measures been taken in the last few weeks to adjust the defensive posture?

SENIOR ADMINISTRATION OFFICIAL TWO: Again, I mean, this is – it’s a continuum, in the sense that as the North Koreans over time have increased their capability, we have worked together. So for example, the United States and Japan, over a number of years, have been strengthening our cooperation on missile defense, and that’s something that we continue to do. We all took appropriate defensive precautions in light of the threat from the North Koreans, and we continue to evaluate, in light of this recent barrage of shorter-range missiles, what we’ve learned about the nature of that threat and what we need to do to enhance our defenses. So it’s an ongoing process that really, each and every day, we look at what we need to do as we learn more about what the North Koreans are up to to enhance our defense.

MR. CROWLEY: Kathy, is there another question in the queue?

OPERATOR: We have no further questions in queue, sir.

QUESTION: Can I ask another one on Burma? This ship aside, do you believe that Burma is pursuing a nuclear program, and what’s North Korea’s role in that? Are they helping them with that program?

SENIOR ADMINISTRATION OFFICIAL ONE : I’m not, for reasons that you’ll guess, going to comment on intelligence stuff, and I don’t want that to be viewed as either confirming or not confirming the specifics of the interactions between North Korea and Burma. I will say, however, that there have been military hardware related activities that have been of concern to us between South Korea and between – excuse me --

QUESTION: North Korea.

SENIOR ADMINISTRATION OFFICIAL ONE: -- North Korea – I was good – (laughter) – that’s okay, and – no problems with South Korea – and Burma.

We’ve made clear our concerns to the Government of Burma, and they’ve made – they’ve certainly stated publicly that they intend to implement scrupulously 1874. We’re very encouraged by that statement, and we certainly hope and will be looking for them to implement it.

QUESTION: But is Burma pursuing a nuclear program?

SENIOR ADMINISTRATION OFFICIAL ONE: Again, I’m not going to comment on intelligence-related matters. And certainly, I don’t want that to be seen as a confirmation one way or the other. It’s something – we obviously – anytime that a country does business with North Korea, we’re going to watch to see what that is. So I don’t want to assume anything, but I also don’t want to imply that we have specific information.

QUESTION: For ASEAN next week, are you anticipating that any North Korean representative will attend? And if they did, regardless of what level, would the U.S. participate in any group discussions with them?

SENIOR ADMINISTRATION OFFICIAL ONE: Yeah. To the best of my knowledge, they have been invited by the Thais, who chair this particular meeting of the ASEAN Regional Forum. And to my knowledge, and this is fairly recent, as of earlier today, they haven’t responded. So we don’t know whether they’re going to participate or not, and so at this point, I just wouldn’t want to speculate on a hypothetical as to what would happen if they did.

QUESTION: A question for Official Number One and another question for Official Number Two.

Number one, have the U.S. side been told directly or indirectly about exactly who the North Korean side is expecting as special envoy to get the two journalists – get released?

And question number two – (cell phone rings).

SENIOR ADMINISTRATION OFFICIAL ONE: That’s the message coming in with the answer to your question. (Laughter.)

QUESTION: And question number two is: Could you a little bit more characterize how North Korea abused the financial – international financial system, specifically in dealing with the China side, their business with China? (Cell phone rings.) (Laughter.)

QUESTION: North Korean officials are (inaudible). (Laughter.)

SENIOR ADMINISTRATION OFFICIAL ONE: I think at this point, we’re continuing to try to get a better understanding from North Korea what might facilitate the release of the two journalists. But beyond that, I think it would probably not be helpful for me to comment at this stage.

SENIOR ADMINISTRATION OFFICIAL TWO: I might be similarly disappointing to you. The activities that we’ve seen are – occur regardless of where North Korea has relationships that it can exploit, and so I don’t want to say anything that says it’s particular to China in any way. Our advisory that we put out, which I can give you a copy of, does also reference prior advisories and regulatory actions that we’ve taken. They do lay out in really expansive detail the kinds of illicit financial activities that they’ve engaged in, including with the Bank of Macau, that we acted against in 2005 and 2006.

But again, this is activity that we’ve seen regardless of where the relationships are, and I don’t want to say it’s particular to China. But obviously, since there is commerce between China and North Korea, it’s a concern that they have to deal with.

MR. CROWLEY: Before we wrap up, Kathy, are there any more questions in the queue?

OPERATOR: We have no questions in the queue.

MR. CROWLEY: We’ll make the last question David Gollust.

QUESTION: I was just wondering, given the vigorous reaction that they had to the BDA issue, whether you’re concerned at all that if they perceive that their financial dealings are kind of under a generalized assault, that they might become more intractable, they might lash out even more. Is that a risk that you (inaudible)?

SENIOR ADMINISTRATION OFFICIAL ONE: I think it’s – one of the things that I think we take as a positive sign is the fact that there’s a broad consensus, including by China, frankly, that this is the right way to go. And I don’t think the Chinese would take this step lightly, or if they believe that it wasn’t important in terms of securing North Koreans’ compliance. And that consensus, I think, really both indicates very strongly how deeply concerned the international community is about the nuclear program, and the strong unanimous view, basically, that this is the best chance we have to influence their calculation.

MR. CROWLEY: Thank you.



PRN: 2009/741



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