Funds are unfrozen, but mood remains icy
The brinkmanship and manoeuvring over North Korea's frozen millions in Macau's Banco Delta Asia is extraordinary. Quite how the saga is going to end is not yet clear.
On the one hand is the wider cause of disarming North Korea of its nuclear weapons. On the other is the US$25 million frozen under US Treasury Department pressure in September 2005 - more than a year before Pyongyang tested its first nuclear weapon.
Treasury officials admitted this week the Macau funds have been a bargaining chip in negotiations on denuclearising North Korea, despite the department's claim that Banco Delta Asia had aided crimes by North Korean state enterprises. The bank was North Korea's window to the international banking world, and the squeeze has hurt.
This week's announcement from the department that Macau was now free to release the funds, including money considered illicit, showed Washington was trying to walk away from the table to concentrate on the bigger game - the six-party agreement to denuclearise North Korea.
North Korea appears to be using the money as its own bargaining chip. It wants it back before it will meet today's deadline for shutting down its nuclear reactor at Yongbyon. The trouble is that it wants it back on its own terms - legally routed through the banking system to ensure future access to the banking network - having seen Banco Delta Asia treated as a pariah by international banks since the freeze.
The US and Macau authorities say the money is unfrozen, but they do not say whether agreement has been reached on how to move it. So far, North Korea has not acted to collect the funds, despite the deadline.
Another deadline - a Treasury Department threat to bar Banco Delta Asia from dealing with US banks - expires next week, further complicating matters.
The holders of the 50-plus North Korean accounts - one of them a Hong Kong-registered foreign investor - are equally unsure how to move the money.
Confused? Don't worry, so are many people on the inside as they try to cope with the habitual North Korean secrecy and hardball US diplomacy as back-room talks continue.
The problem is the competing interests at work. The US wants to force action on the nuclear issue, as well as punish the bank for what the Treasury says was three decades of acting as a 'willing pawn' for North Korean state malfeasance. North Korea wants the best possible deal in return for nuclear disarmament, including, possibly, aid to update its financial system, among other things.
China has taken a lead in the six-party talks and has worked closely with the US, but has not been happy at the Banco Delta Asia situation.
Then there is the bank itself. A private, family-owned institution now in the hands of government-appointed receivers, its leading shareholder is Chinese People's Political Consultative Committee member Stanley Au Chong-kit.
Mr Au, a one-time candidate to become Macau's first chief executive, has been quietly active in pushing for protection from Macau and Beijing. Ultimately he wants to ensure his family's 'crown jewel' survives in some form.
A blacklisting under the US Patriot Act would effectively wreck the group's chances of selling the bank.
Then there are the foreign entities with money frozen at the bank - among them British American Tobacco, which has US$2.6 million in Banco Delta Asia linked to its North Korean factory.
'This one is not going to be over until it is over,' said a senior Asian diplomat involved in the process. 'I think there will be a few more twists and turns yet. The money will move, but not quite so soon. What happens before it does will be very interesting to watch.'