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5th Round (Stage 2) Talks

Outline

Outline
Time and Place December 18 ~ 22, 2006 in Beijing, China
Representatives
  • Chun Yung-woo
    Special Representative for Korean Peninsula Peace and Security Affairs
  • Kim Gye-gwan
    Vice-Minister of Foreign Affairs
  • Christopher Hill
    Assistant State Secretary for East Asian and Pacific Affairs
  • Wu Dawei
    Vice-Minister of Foreign Affairs
  • Kenichiro Sasae
    Director-General of Asian and Oceanian Affairs Bureau, Ministry of Foreign Affairs
  • Sergei Razov
    Ambassador to China

Outcomes

Overall, the Parties neither achieved notable progress nor agreed on the dates for the next round despite a bilateral working-level meeting between North Korea and the United States on frozen North Korean accounts at Macao's Banco Delta Asia as requested by Pyongyang.

Summary of Chairman’s Statement

1. The Parties reaffirmed their will to achieve peaceful denuclearization.
2. The Parties reaffirmed their commitment to carrying out the Joint Statement of September 19, 2005 and agreed to take “coordinated steps.”
3. The parties held useful discussions on so-called "starting phase actions" to be taken.
4. The Parties agreed to reconvene at the earliest opportunity.

< Full Text of Chairman’s Statement >

The Second Session of the Fifth Round of the Six-Party Talks was held in Beijing from December 18 to 22, 2006.

The Parties reviewed changes and developments in the situation of the Six-Party Talks and reaffirmed their common goal and will to achieve the peaceful denuclearization of the Korean Peninsula through dialogue. They reiterated that they would earnestly carry out their commitments in the Joint Statement of 19 September 2005, and agreed to take coordinated steps to implement the Joint Statement as soon as possible in a phased manner in line with the principle of "action for action."

The Parties held useful discussions on measures to implement the Joint Statement and on actions to be taken by the Parties in the starting phase and put forward some initial ideas. The Parties, through intensive bilateral consultations, had candid and in-depth exchange of views to address their concerns.

The Parties agreed to recess to report to capitals and to reconvene at the earliest opportunity.

Course of the Talks

Since the talks resumed for the first time after North Korea took the “aggravating measures” of test-firing missiles and conducting a nuclear test, much attention was focused on whether the parties would be able to produce a breakthrough. However, North Korea and the United States drew a line on the BDA issue as the North stuck to the issue while the U.S. considered it separate from the talks. The parties did not make much progress other than exchanging fundamental “initial ideas.” Meanwhile, a separate working-level meeting on the BDA issue between Pyongyang and Washington raised hopes but did not yield progress.

Course of the Talks

  • North Korea
    said it could only discuss the nuclear issue after resolving the matter of its frozen assets at the Macao-based bank, Banco Delta Asia.
  • The United States
    proposed an “early harvest” that would allow the North to receive various incentives in return for taking initial steps to prove its intention to denuclearize. According to the U.S. proposal, the next step measures would be discussed while the North takes the initial steps. Washington made the proposal at a trilateral meeting with Pyongyang and Beijing at the end of November, but the North did not immediately respond.
  • South Korea
    suggested a “package deal,” which reflected its efforts to mediate between the United States and North Korea. The deal, albeit similar to the U.S. “early harvest” proposal, was a deviation from the principle of “action for action” as it urged the parties to discuss disarmament steps and corresponding measures in packages in accordance with a general road map.

Main Issues

  • BDA
    The United States froze about 24-million dollars in fifty North Korean accounts at Macao's Banco Delta Asia, alleging that the accounts were used for counterfeiting and money-laundering. North Korea protested the freeze, calling it a financial sanction, and linked resolution of the issue with progress in the multilateral disarmament talks while the United States maintained that it was a legal matter outside the scope of the six-party talks. Thus, it gave the North a cause to refuse the six-party talks for 13 months and perform its first-ever nuclear test. The issue held back the recent session as Pyongyang focused on the BDA issue while the United States stuck to its previous stance. The parties were not able to raise any other issues.
  • Working-Level Meeting on BDA
    As North Korea demanded resolution of the BDA issue as a precondition for resuming the six-party talks, North Korean and U.S. top working-level officials met in Beijing on December 19-20 in parallel with the six-party talks.

    At the meeting, the president of North Korea's Foreign Trade Bank O Kwang-chol and the U.S. Treasury's Deputy Assistant Secretary for Terrorist Financing and Financial Crimes Daniel Glaser represented their respective countries. The U.S. side outlined legal procedures in the U.S. Treasury Department’s probe into the Macao bank and disclosed some of its investigation results as the North viewed positively the U.S. attitude. However, Pyongyang reiterated its view that the U.S. freeze was a financial sanction, an example of hostile U.S. policy against the communist state. Washington, for its part, stressed that the freeze was in accordance with U.S. law and was not subject to political negotiation. At the same time, it is said that the U.S. financial representatives did not present evidence for the alleged illegitimacy of North Korean funds at Banco Delta Asia. In the end, while the December bilateral meeting proved fruitless, a shred of hope remained in the fact that the two sides agreed to resume talks in January 2007 in New York.
  • “Starting Phase Actions”
    The United States proposed at its trilateral meeting with North Korea and China in November several initial phase measures that would confirm North Korea’s intention to give up its nuclear program. The resolution of the North Korean nuclear issue would begin with North Korea's announcement that it would give up its nuclear program, followed by steps that it would take to carry out the announcement. In response, the other parties would take the so-called “corresponding measures” to provide incentives for Pyongyang.

    The United States proposed starting phase measures without dividing them into stages in an effort to facilitate the negotiations. The starting phase actions included clauses requiring North Korea to stop operating its experimental nuclear reactor in Yongbyon, to accept the resumption of International Atomic Energy Agency inspections of its nuclear facilities, to report its nuclear facilities and materials and to close down its nuclear test sites. In turn, the United States would unfreeze the North’s legitimate accounts and provide various forms of economic assistance. In particular, before the recent six-party talks, Washington mentioned it was willing to give a written security guarantee.

Assessment

  • Changes in N. Korean Tactics
    In the recent six-party talks, North Korea changed its negotiation tactics, separating its nuclear weapons from its nuclear program in order to catch a bigger fish. The U.S. “early harvest” proposal and South Korea’s “package deal” were to respond to such changes.
  • N. Korea’s Persistence on the BDA Issue
    North Korea stuck to the BDA issue, blocking the overall progress of the talks. It showed inconsistency on suggesting a nuclear freeze or dismantlement measures. After hinting that it could not give up its nuclear weapons, the North Korean side said it could carry out nuclear disarmament measures if the BDA issue is resolved and other conditions were met. Hence, the United States offered its deal. But the North did not respond except to reiterate its stance on the BDA issue. As a result, the talks stalled.
  • Mistrust Between the U.S. and N. Korea
    From the outside, the talks appeared ineffective because of the North’s clinging to the BDA issue. However, a more fundamental problem was the mutual lack of trust between the United States and North Korea. Because of such mistrust, Washington asked Pyongyang for proof of its intention to disarm its nuclear program, while Pyongyang continued to press for resolution of the BDA issue as a precondition.

Each Party's Gains and Losses

Country Gains and Losses
South Korea took on a role as mediator as well as one of the main parties concerned in the North Korean nuclear issue by proposing its “package deal.” However, the proposal's failure to bear fruit displayed its limits as a mediator and further complicated inter-Korean relations.
North Korea succeeded in holding a bilateral meeting with the United States and in raising such issues as the freeze on its Macao accounts. But because it clung to the BDA issue, Pyongyang failed to secure practical gains (while dimming prospects for Chinese and South Korean economic assistance).
The United States was able to clearly identify where North Korea stood, but lack of progress pushed it to the limits of its patience. Later, it may strengthen sanctions against the North.
China was able to fortify its diplomatic position on the international stage thanks to its brokering of the talks' resumption, but its influence on North Korea was questioned after it failed to persuade Pyongyang further.
Japan did not make significant gains. It failed to raise the Japanese abductee issue and to hold bilateral talks with the North. This may result in further deterioration of Pyongyang-Tokyo relations.
Russia served as a quiet mediator between the United States and North Korea. However, its failure to contribute to notable results might curb its influence in Northeast Asia.

Prospects

  • To Reconvene at the “Earliest Opportunity”
    The Chairman’s Statement said that the talks would reconvene at the “earliest opportunity,” language more vague than the wording “at the earliest possible date” used in the previous statement following the first session of the fifth round of the six-party talks. Simply put, the second session was worse than the first one. Thus, some declared the multilateral framework useless and others predicted that the next round was unlikely to take place any time soon.
  • Working-Level Meeting on BDA
    The recent talks displayed that, without overcoming the BDA issue due to Pyongyang’s stubbornness, the six-party talks could not expect to make any progress. Therefore, the bilateral working-level meeting between the United States and North Korea, slated for January 2007, holds the key to the next round of talks. However, recent reports suggesting that Pyongyang wanted to change the meeting location from New York to Beijing or another city cast doubts on prospects for the working-level discussions.

Recess

As the six-party talks are officially in recess, the parties will actively seek their resumption. However, most believe the talks are unlikely to resume any earlier than February 2007. As voices dismissing the talks as useless are on the rise, hardliners will gain momentum. This will put the concerned parties who called for dialogue, especially North Korea, in an unfavorable position. If the parties succeed in harnessing a driving force for the talks, they may yet be able to achieve a breakthrough.