[Viewpoint]Standard aspirations

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[Viewpoint]Standard aspirations

The working-level financial talks between North Korea and the United States came to an end yesterday in New York.
With Pyongyang stepping up its diplomacy, Washington paid special attention to the talks; the two sides met at the North’s request.
North Korea is carrying out steps to disable its nuclear facilities and is preparing to declare related programs, aiming to improve its relations with the United States.
Moreover, the North expressed a strong will for inter-Korean economic cooperation at the inter-Korean summit meeting. North Korean Premier Kim Yong-il visited Vietnam to study the effects of the Doi Moi economic reform policy.
Recently, the prime ministers of the two Koreas reached many agreements about economic cooperation. The series of actions gives us hope that Pyongyang is making a sincere effort to become a member of international society.
The U.S.-North Korea financial talks can be interpreted as an extension of Pyongyang’s efforts.
Why did Pyongyang suggest the financial talks? In a bigger picture, the object was, as the North Korean delegate described, to “seek access to the international financial system.”
More specifically, Pyongyang wants to prevent a repeat of the Banco Delta Asia case. Washington’s head delegate Daniel Glaser, the U.S. Treasury Department’s deputy assistant secretary for terrorist financing and financial crimes, mentioned the counterfeiting issue. He said they discussed the basic norms and conduct North Korea needs to understand and follow to be completely integrated into the international financial system.
While Pyongyang works to improve its relations with the United States, it also seems to have prepared for possible obstacles, such as the counterfeit issue, in advance.
There has been a great deal of suspicion about North Korea’s production and distribution of counterfeit money. By raising the issue first, North Korea seems to want to get rid of the obstacle early on.
Furthermore, aiming to be excluded from the list of state sponsors of terrorism, Pyongyang is in the process of entering the international financial system through international financial organizations, such as the World Bank.
After it bombed Korean Air flight 858 in 1987, North Korea was added to the list of terrorism sponsor states. Since then, the North has been sanctioned under the International Financial Institutions Act, Foreign Assistance Act and Trading with the Enemy Act.
Through the International Financial Institutions Act, a board member representing the United States always opposes any country listed as a sponsor of terrorism, such as North Korea, when it bids to join an international financial institution or requests a loan or assistance from the International Monetary Fund or International Bank for Reconstruction and Development.
In other words, if North Korea is removed from the list, it will be able to get access to international financial institutions.
When that happens, North Korea will face more serious challenges.
The chains on them based on the International Financial Institutions Act will be lifted, but North Korea will have to meet other required conditions to get access to the international financial institutions.
When China started reforming and opening its markets in the late 1970s, China had accumulated wealth domestically and was greatly helped by funding from Hong Kong and overseas Chinese.
For those reasons, China’s dependency on funding of the international community was relatively low and it was able to maintain policy independence from the international community.
On the other hand, Vietnam’s Doi Moi policy began producing results after its relations with the United States improved in the early 1990s and international capital started to fly in.
North Korea probably wants to maintain its policy independence, like China, while benefiting from international capital, like Vietnam.
However, international society will make various demands of North Korea in return for allowing it to join the international financial system and receive funds, including making its flow of capital and certain economic policies transparent.
It is not a matter that can be resolved by simply not committing illicit activities. North Korea has to open up and make its policies more efficient. That must be accompanied by reform and opening.
North Korea needs to acknowledge that the international community makes various demands, not to make its system unstable but to verify whether the borrower is capable and willing to pay back a loan.
The time for North Korea to follow international financial system standards is fast approaching.

*The writer is a research fellow in the Global Studies Department, Samsung Economic Research Institute.

by Dong Yong-sueng
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