John S. Park, head of the Korea working group at the United States Institute of Peace, discusses the controversy over $25 million in North Korean funds holding up a February 2007 denuclearization deal. Although the U.S. State Department pledged to release the money from Banco Delta Asia (BDA) in Macao, banks around the world consider the funds tainted by a U.S. Treasury Department ruling that connects the $25 million with illicit activities.
“The $25 million is the financial equivalent of radioactive funds,” explains Park, who says the time has come “to start thinking out of the box of having governments approach third party banks.” He suggests a private sector solution to the current stalemate and that Asia’s experience with troubled banks during the 1997 financial crisis provides a model for resolving the issue. Monetary authorities in Macao could declare BDA a distressed bank and put it up for sale, explains Park. He says the BDA banking license in a recapitalized format could result in a “lucrative sale” in which the proceeds “can be used for the clean transfer of $25 million to a bank designated by North Korea.”