US squeeze on NKorea funds hurts reform -investor

Seoul, Feb 12: The US financial clampdown on North Korea is only making it harder for the country to open up its economy, one of the few foreign investors in the hermit-like communist state said.

Colin McAskill, chairman of Koryo Asia which is about to take full control of the North Korea-based Daedong Credit Bank, said the US squeeze on the North's offshore accounts since 2005 had made most international banks unwilling to deal with the country.

''The objective of the United States is to cripple them (North Korea) financially and deny them access to international financial markets,'' he told Reuters in Seoul late last week.

Much of the US focus has been on Macau's Banco Delta Asia, which Washington says helped launder illicit North Korean financial activities. The Macau authorities have frozen the accounts which total some million, including those of Daedong bank.

An angry North Korea has been pressing the United States to end the clampdown as part of a deal to end its nuclear weapons programme. Washington argues Pyongyang obtains hard currency through illicit activities such as drug running.

But in the latest round of international talks this week in Beijing, the finance issue has taken a back seat to haggling over North Korea's demands for huge energy aid in return for giving up nuclear arms.

McAskill said he had proof which he has made available to US, Macau and South Korean authorities showing that nearly all the blocked funds in the Macau bank were legal.

''A very small portion may well be illegal,'' he said ''In any such market, an illegal element in inevitable. To say it is state sponsored is ridiculous,'' he said.

''It is hurting (North Korea) because international banks are unwilling to deal with the country because of innuendo, coercion and threats by US authorities.'' That in turn was damaging chances of economic change, he said, in what is one of the world's most reclusive states.

''Close him (North Korean leader Kim Jong-il) down financially and he's forced to sell weapons,'' McAskill said.

''Take away the coercion and it (economic opening) could be successful.'' McAskill also dismissed US suggestions that charges that the North Korean government may have sponsored the printing of near-perfect dollar forgeries, so-called super notes.

''North Koreas can't print decent packaging for a box of ginseng. How can they produce super notes?'' he said.

Reuters