Special Briefing
Senior State Department Official
Washington, DC
July 8, 2009


MR. KELLY: Senior State Department Official it is.

SENIOR STATE DEPARTMENT OFFICIAL: How do you like that? We’re very cooperative here.

The delegation returned yesterday from an interagency trip to Beijing and Kuala Lumpur. The delegation included representatives from the Defense Department, Treasury, and the National Security Council.

I think it’s noteworthy that as North Korea was once again breaking its commitments over last weekend on the UN resolutions, we were busy discussing with the Chinese and Malaysian governments how to implement them.

We met with a Chinese interagency delegation led by the Foreign Ministry. It included their central bank, their customs officials, other agencies. This is noteworthy because it was formed very quickly on their side. It included the range of agencies and departments in the Chinese Government responsible for implementing Resolution 1874 and the earlier resolution. It followed contact from President Obama and Secretary Clinton on the importance of this issue. And so that in and of itself, the speed with which we went out and the interagency delegation we found there, were significant.

We shared information. We went through the new designations that the United States has made of Namchongang and Hong Kong Electronics, the general advisory from the Treasury Department on the way banks should deal with and be warned about activities related to North Korea, general information about the new UN resolution. The Under Secretary of the Treasury Stuart Levey is doing some follow-up on that. We had a representative, Deputy Assistant Secretary Glaser, who traveled with the delegation. And we have gone through this a couple of times now in Beijing. We went from Beijing to Malaysia. We met with the central bank, with the prime minister’s office. We found a willing – a great willingness to cooperate on implementing the resolution. Some people have asked: Why Malaysia? Malaysia is an important – in the first instance, an important ASEAN country. We wanted to touch base with ASEAN – an ASEAN country while we were on this trip. They also have a fairly advanced financial intelligence unit. In fact, the financial intelligence unit in Malaysia consults, offers technical advice within the region in Southeast Asia. They have extensive bank oversight capabilities. We met with the central bank there.

And as they’re going through the process of doing what we’ve done with our – within our banking system, it was helpful to share notes with them and to go through some of the information that we were able to discuss. In both Beijing and in Kuala Lumpur, we did do, and we were able to share some additional information on North Korean activities.

Our overall objective in all of this remains the same, which is to return to serious meaningful discussions within the Six-Party process on denuclearization and nonproliferation. We don’t see the UN resolutions or sanctions as a means to punish North – the North Korean people. We see them—the resolutions—as a means to get back to our original intention of convincing North Korea that there really is only one way forward. We hope to create through all of this a process, a sense of transparency, a sense of shining a light on North Korea’s activities, those related to their nuclear and missile proliferation.

We think that 1874 provides some new tools to do so and can be used as a way to shine that light to bring greater transparency to North Korean activities in inspections, which the new resolution talks to, as well as in the financial area.

Some of you may have questions about Kang Nam 1, the ship that has turned back and returned to port, its original port of departure. We see that as a good sign that sharing information, diplomatic activity, can have an impact.

So with that, why don’t I open it up to questions. Do you have a protocol?

QUESTION: Yeah. Arshad Mohammed of Reuters. Two things. One, the delegation was asked in Kuala Lumpur whether you could confirm media reports that a specific Malaysian entity was under scrutiny for possible transactions with North Korea, and you said you had not come for any specific matter. You’re on background – hopefully, you can be a little more forthcoming – but are there truly no specific Malaysian entities about which you have, or the U.S. Government have, some concerns about their dealings with North Korea?

And the second, slightly bigger question, as you will recall from the U.S. Government’s handling of BDA, after the Treasury Department designated it as a primary money laundering concern in ’05 – was it ’05 – it seemed to me that the Six-Party process completely ground to a halt until the U.S. Government found a way, via the Federal Reserve Bank of New York, to return the roughly $25 million. And I don’t understand why you believe that more designations, more actions against financial entities, will necessarily bring the North Koreans to the conclusion that they did not come to over BDA, which was with BDA they refused to meet until you gave them their money back.

SENIOR STATE DEPARTMENT OFFICIAL: On the Malaysia part, there was a specific story, I think in the South Korean press, that mentioned that we were in Malaysia for – to request an asset freeze. That was not correct, nor was the information that we shared about Malaysia. The information that we shared was about North Korea, and that is the information that we are concerned about at the moment. So when the delegation said it was not there for a particular matter, it was not to say, well, this particular bank on the Malaysian side is doing X, Y, or Z.

We do have information, which I’m not going to go into here, that we share with partners and other countries on these activities. And that’s what – that was the nature of what we were discussing in Malaysia.

QUESTION: And they don’t – just so I’m clear, the information that you shared, you said it concerned North Korea. It does not concern specific entities in Malaysia, whether they are Malaysian or simply Malaysian-based?

SENIOR STATE DEPARTMENT OFFICIAL: There are concerns that other countries, including Malaysia, can be used by these entities, yes, for these activities. But it wasn’t about a specific bank doing X, Y, or Z, if that answers the question. It was yes, we were – we are concerned that it would use Malaysia or other countries, but Malaysia in this case specifically, to continue its activities.

QUESTION: So you didn’t raise specific entities or banks with them that are not North Korean?

SENIOR STATE DEPARTMENT OFFICIAL: We did not raise particular banks with them. We raised the activities of North Korea that could be used within their banks.

QUESTION: And I’m sorry, not to be persnickety, but did you deliberately exclude the word “entities” there?

SENIOR STATE DEPARTMENT OFFICIAL: No, I did not exclude it.

QUESTION: So you didn’t discuss specific banks or entities?

SENIOR STATE DEPARTMENT OFFICIAL: Meaning Malaysian entities?

QUESTION: Correct, on North Korea.

SENIOR STATE DEPARTMENT OFFICIAL: No, I didn’t refer specifically to banks on the Malaysian side, not to Malaysian entities. I was referring to entities in – for North Korea, not for Malaysia. But I think the general point would also pertain to Malaysian entities if they were being used. But we were talking to banking authorities who – so that’s their particular interest.

QUESTION: Okay. And then can you address the bigger picture question of why you think this is actually going to get the North Koreans to do what they manifestly didn’t do over BDA?

SENIOR STATE DEPARTMENT OFFICIAL: I think there’s a general consensus now, and this is why the Security Council adopted a new resolution, that North Korea’s continued flouting of the previous resolution, of its commitments within the Six-Party Talks, required additional steps by the world community, and that it is – if properly used, if properly implemented, one tool among others in getting North Korea back to the original discussion.

I think that what you can take from that is that a discussion of sanctions as the main point in the Six-Party Talks is not going to be the focus, but will be part of a process in that – or a part of the dialogue, not the whole dialogue. In other words, what I’m saying is that we believe that increased transparency, increased activity in demonstrating what North Korea is doing – if applied by all the people who voted for the resolution, will result in a better outcome.

We – and if you look at how we will deal with this issue, it is my belief that what we will do is to not use sanctions as the topic of discussion, but a return to the discussion about our original goals, which were and are nonproliferation and denuclearization. So these are means to an end. They’re not going – they’re not intended as an end in themselves. And therefore, the discussion won’t consider them an end in themselves.

They’re sort of – I guess you’d say the concept of Six-Party Talks and the UN resolutions are mutually reinforcing. They are not – they shouldn’t be seen in – at the moment, in isolation. And we are doing all we can to get back to that Six-Party process, a meaningful discussion of denuclearization and nonproliferation. And it’s that kind of steadiness of purpose that we hope to show in implementation.

QUESTION: I’m Lachlan Carmichael with AFP. I just wanted to follow up. Since you were dealing with financial transactions, did the ship Kang Nam turn around because the North Koreans had payments blocked for the shipment? Or was it because the U.S. Navy was shadowing it?

SENIOR STATE DEPARTMENT OFFICIAL: We can’t be – you can never be absolutely sure. What I can tell you is that there was constant diplomatic activity on the ship, and about the ship’s past activities and inspections and all of that. And what we found was that the ship went back. That was a good outcome in the sense that there seemed to be no place for it to go, or there – wherever it was originally going was no longer an option for some reason.

There are other possible explanations, and I wouldn’t deny that. But there is a good reason to think that they went back because of – for the reasons that I mentioned, the sort of diplomatic outreach that was done. I don’t – the fact that they knew they were being watched as well, and that was a good outcome.

QUESTION: Did Kuala Lumpur, the people there, shed any light on relations between Burma and North Korea about what kind of business dealings they have and what institutions are used?

SENIOR STATE DEPARTMENT OFFICIAL: We made the point throughout the trip that Burma was a destination in the past for North Korea, and that this was a particularly difficult issue given Burma’s own isolation and own problems with the international community, but that this was a focus for ASEAN, for the United States, for China, for India, for other countries with some sort of influence to persuade Burma not to participate in any way in North Korea’s illegal activities.

QUESTION: So they gave you some commitments about how to select these transactions --

SENIOR STATE DEPARTMENT OFFICIAL: I think ASEAN --

QUESTION: -- through ASEAN or --

SENIOR STATE DEPARTMENT OFFICIAL: ASEAN, as a whole, and the individual countries have all pledged their commitment to the resolutions, and therefore, by extension, to preventing the use of Burma or any other country as a conduit for North Korea’s illegal activities.

QUESTION: Foster Klug with the Associated Press. I had a question about the Administration’s use of informational sessions with private institutions, with bankers, with companies, with business executives. Could you explain what that means, what you’re saying to these groups, who’s doing the talking to these groups? Is it a warning? Is it just sort of an explanation of what the North has done in the past? And then if you’re doing it specifically, or if Mr. Levey is doing it or Mr. Glaser – who’s doing the talking?

SENIOR STATE DEPARTMENT OFFICIAL: The – in terms of our own banks, there was a Treasury Department advisory that was sent around that was shared with banks. And insofar as there are contacts with banks and information sharing, that would be done with our knowledge and concurrence, but by Treasury, I mean, as part of this interagency process. But it would be the Treasury Department that would do it. It’s under their usual --

QUESTION: This is in the region, in Asia, right?

SENIOR STATE DEPARTMENT OFFICIAL: In both, in the United States and in Asia. Insofar as there are contacts with private entities, with the knowledge, obviously, of the host government, we would – it would be the Treasury Department person on the interagency team that would have the lead.

QUESTION: And is that going on now? And what are you telling – what’s the information you’re sharing with these folks?

SENIOR STATE DEPARTMENT OFFICIAL: Well, we have information that’s been developed. There are already designations at the UN from the past on North Korean entities. There are more designations being prepared. There are discussions at the UN in the so-called 1718 Committee to further designate North Korean entities and individuals. It’s that kind of information that we share.

Even the names of some North Korean banks are obscure to some countries, or changing names of entities, and that sort of thing. But the specific information, clearly, I can’t get into all of that.

QUESTION: Can I just – last thing. What’s the goal? I mean, do you want them to cut off these accounts and sort of isolate the North on the ground?

SENIOR STATE DEPARTMENT OFFICIAL: What we believe is that every transaction with North Korea or these North Korean entities that are designated clearly have a legal connotation now that the UN has taken action, and through designations at the UN, countries have available to them the ability to take action under national law as well. And clearly, national law has to, in some cases, catch up with obligations in the resolutions.

But the idea is to show that North Korea’s activities, whether in the financial sector or in shipments, is going to be subjected to a heightened sense of scrutiny. It’s not very – not a very difficult concept to understand. It all has to be done in this multilateral context in what was agreed at the UN, but that is the – 1874 gives us some more tools to do that. It describes a tougher regime for inspecting. It goes into the financial area and what we can do.

So if we use the resolutions properly and share information and show the North Koreans that they are under a greater level of scrutiny, that will, I think, help in circumscribing their activities.

QUESTION: Thank you.

SENIOR STATE DEPARTMENT OFFICIAL: I think he was first.

QUESTION: Yes. Do you see the emergence of a nexus between North Korea, Burma, and Iran on nuclear nonproliferation issues? In the past, there has been increased cooperation between North Korea and Burma on nuclear issues.

SENIOR STATE DEPARTMENT OFFICIAL: I think we’re concerned about trade and cooperation between countries that have undertaken nuclear programs, but I don’t want to go much further than that.

QUESTION: Yes, Glenn Kessler with The Washington Post. Just to follow up on a couple of things, reading between the lines of what you were saying before, is it correct to say that this ship was essentially headed towards Burma, but because of diplomatic pressure placed on Rangoon, or whatever its new capital is called, that that ship was turned back, that they – the Burmese realized that it would not be an appropriate moment to accept that ship? Is that a correct way to --

SENIOR STATE DEPARTMENT OFFICIAL: I don’t think – I think that’s taking it one step beyond where I want to go with it. What I do want to say is that a combination of sharing information with many of the countries in the region about their obligations and our collective obligations to inspect, to warn ships, to what maritimers call hail and query, that all of those things combined convinced or played a role perhaps in convincing the North Koreans to turn the ship around.

In the specific instance with Burma, that too could have played a role. But I don’t know that it was – that that was the definitive reason. That’s why I don’t want to – I want to warn you off from any one particular --

QUESTION: That was the impression I got. And then just to follow up on what Arshad was saying – or asking, I’m still having trouble figuring out where you hope to go with this policy, because the last time around, nothing happened with the Six-Party Talks as long as the BDA situation was out there. And the North Koreans went ahead and did a nuclear test. There was a interagency task force formed by the Bush Administration to deal with implementation of that – the resolutions resulting from that test. They didn’t get very far necessarily with – particularly with the Chinese. And then they dropped the whole thing, kit and caboodle, in order to start up negotiations again; and the North Koreans sat there and said we’re not going to get – sit at the Six-Party Talks until we get back our $25 million, and we saw that spectacle play out over six months.

So why does anyone think that this approach – maybe a little more tougher sanctions, a little more pressure here and there – is necessarily going to result in the North Koreans coming back to the Six-Party Talks? Instead, you actually see today where the North Koreans may be responding by targeting various government agencies with cyber attacks.

SENIOR STATE DEPARTMENT OFFICIAL: What I can tell you is that our view is that the Six-Party Talks and talks about the original goals of the Six-Party Talks are what is important and what is on offer, and that that should be done without preconditions. These sanctions and implementation of them are not meant as an end in themselves. You’re correct that you can question why it is that – what will motivate North Korea to return to these talks. But I think you can also assume that nobody can be sure what will convince North Korea what is in its best interest if they feel otherwise. I mean, there is some unpredictable – there have been some unpredictable activities, or activities that we wouldn’t necessarily consider rational or productive steps.

What we’re trying to do is to show that there is only one offer, and that that offer is from the UN and from the community of nations, not just the United States. Will it convince them? We hope so. It will be a consistent message, and that’s our intention. But of course, it remains to be seen whether it will have the desired effect. Will it have the effect in a week? No. Will it have an effect in a month? Maybe not. But we’re talking about getting back to the original purpose here, and so it may take some time before we know the results, but we’re a couple of weeks into this.

QUESTION: But so the – but the bottom line is the sanctions aren’t going to be dropped or adjusted or the implementation of these resolutions because suddenly they agree that they’re willing to get back to the talks? That’s correct?

SENIOR STATE DEPARTMENT OFFICIAL: I don’t believe that – the resolutions will not be rescinded as a result of just going back to talks. But I don’t – I’m not – it’s not my job to, quite frankly, make that decision or the decision about at what point they are no longer needed. My job is to coordinate their implementation, and I – that’s as far as my decision-making goes on that.

QUESTION: And --

QUESTION: One quick one?

SENIOR STATE DEPARTMENT OFFICIAL: Yeah.

QUESTION: Can you talk about – Stuart Levey is the follow-up apparently to the trip, or a follow-up. What’s your next step in your interagency? And just out of curiosity, at the top, you mentioned the other government agencies, but you didn’t mention anything related to intelligence gathering. There was no --

SENIOR STATE DEPARTMENT OFFICIAL: And we never do.

QUESTION: And you never do. And you won’t now, even at that?

SENIOR STATE DEPARTMENT OFFICIAL: No.

(Laughter.)

QUESTION: Okay. So what’s the next step? After the Stuart Levey, what do you do next?

SENIOR STATE DEPARTMENT OFFICIAL: We continue to share information as it becomes available. The Chinese are in the process of developing their own implementation measures. We’ll check back in with them as they continue to do so. We will probably hit some other countries in the region and Six-Party members to share ideas. We will also look within our own interagency about what we are and what we are not doing to fully implement. So that’s basically the process. We’re meeting on a regular basis, interagency, and discussing the way forward.

QUESTION: Actually, to follow up on this, first of all, am I correct that this is for you now a full-time job?

SENIOR STATE DEPARTMENT OFFICIAL: Yes.

QUESTION: Okay. I wonder why the Secretary and you think that there is so much work on this that it has to be a full-time job for a Senior Foreign Service Officer given that the chief envoy to North Korea is a part-time job. We also have Sung Kim, who is supposed to be the representative to the Six-Party Talks. So I’m just wondering, in this whole picture, do you coordinate with the sanctions committee of the UN? Is the U.S. going around the world policing the world, making sure that this one resolution is implemented? Because it’s very unusual for this to be happening, for an American diplomat to have the full-time job of implementing one resolution, while there is a whole committee in the UN who --

SENIOR STATE DEPARTMENT OFFICIAL: It’s not so unusual. Glenn just pointed out it’s happened a couple of times before.

QUESTION: Well, maybe a couple, but it doesn’t happen every month or every year, so it’s an interesting concept and an interesting way of working, so --

SENIOR STATE DEPARTMENT OFFICIAL: I think what it shows is a couple of things. One is that it is a multilateral commitment; it is a UN commitment that countries are now under. We have a special role and have within the Six-Party process, within the UN, for that matter. And what it shows is the Secretary’s determination and the Administration’s determination to show that this is serious, and that we, as prime sharers of information, can play a role in that regard.

There are – Ambassador Bosworth is the Special Representative for North Korea. Sung Kim is an ambassador for the Six-Party Talks. So the diplomatic side is covered. I think --

QUESTION: But nothing’s happening on that front. Couldn’t they do what you’re doing? That’s my point.

SENIOR STATE DEPARTMENT OFFICIAL: They --

QUESTION: Because nothing’s happening on what they do, so I’m just wondering.

SENIOR STATE DEPARTMENT OFFICIAL: Well, I think that we see it as a division of responsibility in a sense, that the diplomatic track in six parties is not necessarily the same as enforcing the sanctions. They’re two different jobs – as I said, mutually reinforcing, but they’re different. And they maintain contact. They had – we had a visit earlier this week by the senior Chinese representative in the Six-Party process. They continue to be in touch with their colleagues.

And while – I mentioned the Chinese visit that we had. It’s not their Six-Party people who are doing the implementation of the sanctions. It’s a different objective – not a different objective – it’s the same objective, but a different work description. And my – someone said that the Administration wanted somebody who did nothing but thought about sanctions and the strategy for implementing the resolutions. And as long as I have this job full time, that’s what I’ll think about.

Yes.

QUESTION: Hi, Janine Zacharia with Bloomberg. Two questions – I apologize if one is a little naïve, I just came back from leave. But could you remind me what the U.S. suspected was on the ship that they were tracking headed towards Burma? And secondly, I just want to be clear on --

SENIOR STATE DEPARTMENT OFFICIAL: I’m sorry, what the -- what was?

QUESTION: The ship, what was – what did the U.S. think was on the ship.

Secondly, you said that you were concerned that the North Koreans would use Malaysia or other countries to continue those activities. Does that mean that you suspect that Malaysian banks are processing accounts of people who are on the designated list at the UN and they shouldn’t be doing it? Could you just spell out specifically what that meant? Thank you.

SENIOR STATE DEPARTMENT OFFICIAL: The ship involved had been engaged previously in these kinds of activities. So there was a heightened suspicion that it could be used again for such activities.

QUESTION: Meaning arms shipments, specifically?

SENIOR STATE DEPARTMENT OFFICIAL: Activities that were prohibited by previous resolutions, and which includes arms or nuclear-related activities, missile technology, missile activities. I guess weapons would fit within that.

QUESTION: So there was no real-time intelligence? It was just based on the past?

SENIOR STATE DEPARTMENT OFFICIAL: No. I can’t get into intelligence matters and information we had. But again, it was – it was to us a commonsensical conclusion, in addition to whatever information that we had.

QUESTION: And on the bank question, it’s that the Malaysian banks are processing accounts of people who are designated that you shouldn’t process their accounts?

SENIOR STATE DEPARTMENT OFFICIAL: If there are people – certainly, if there are designated entities or individuals that they are – they should not be processed, if there is other information that comes to light that non-designated activity or non-designated entities and individuals are doing things that are prohibited by the resolutions, that that information should be acted on as well.

Maybe we could take one more.

QUESTION: I mean, in the past, North Korea has – Jay Solomon with the Wall Street Journal. In the past, North Korea has often escalated in response to U.S. actions. Are you concerned that we’re on some sort of escalatory path, and are there any signs that these cyber attacks that a lot of people are linking to North Korea are somehow, you know, a response to what the sanctions or some of the other actions that were taken in the past couple of weeks?

SENIOR STATE DEPARTMENT OFFICIAL: First of all, I’m not making that link to the cyber attacks. But secondly, I think that as I mentioned earlier, North Korea’s activities have been highly unpredictable. In certain ways, July 4th might have been predictable given past activities. So there’s a certain predictable in their unpredictability.

And what I think is important is in keeping a consistent and steady position on what we’re doing in implementation, and not going back – and people have asked about why this attempt is different than other attempts. What it is is a more united international reaction to irresponsible activity and illegal activity, with a goal that remains the same. And let’s give it some time to sink in.

I can’t, with a hundred percent certainty, tell you that this is – with an unpredictable and sometimes irrational country – say that this is going to have instant success. But we believe, and especially after talking in China and Malaysia with some of our partners in implementation, this has certainly been the case in our contacts with the ASEAN countries, that they recognize a heightened sense of concern, not just from us, but from each other, about these activities. And they want to impress, as best we can, on North Korea that the issue is denuclearization and nonproliferation, and not the sanctions or not some other issue which are simply means towards an end.

QUESTION: Thanks.

MR. KELLY: Thanks very much.




PRN: 2009/695