To commemorate Stuart Levey’s resignation from Treasury, I send him off into the sunset with an affectionate slap on the rump in the Asia Times article, Good-bye Mr Insubordination.
I’ve been an interested observer of Mr. Levey’s activities as Assistant Secretary of State for the Office of Terrorism and Financial Intelligence ever since the OTFI’s designation of Macau’s Banco Delta Asia as an institution “of money laundering concern” froze $25 million in North Korean deposits in 2005.
After the North Koreans detonated their atomic bomb in October 2006, the U.S. State Department said it would “resolve” the issue so the denuclearization talks could resume.
After Secretary of State Rice and Under Secretary Christopher Hill announced the agreement in February 2007, there was a concerted effort to sabotage the unfreezing of the BDA funds by John Bolton and hard-liners in the House of Representatives.
Amazingly, the effort was abetted by Stuart Levey’s office, which found myriad reasons not to “git ‘er done”. It took four months (instead of the promised thirty days) and a Rube Goldberg arrangement involving the Fed, the Russian central bank, and a Russian commercial bank to return North Korea’s ill-gotten gains to Pyongyang.
Literally, ill-gotten. Something I don’t get to in the article is the fact that half of the money were deposits of irreproachable provenance belonging to North Korean joint ventures of British American Tobacco and a European banking operation that had nothing to do with Kim Jung Il and his alleged forex shenanigans and shouldn’t have ended up in the DPRK’s coffers.
Unless you read China Matters at the time, you were probably unaware of this, since the general reporting on the issue was pretty craptacular.
The Asia Times piece provides a neat and persuasive summary of the whole fiasco.
One thing that always puzzled me was that there was no reckoning for Stuart Levey. Nobody called him out for defying the State Department; he not only kept his job under Bush, he continued to do the same job under Obama.
Which leads me to believe that there was more going on in sabotaging the BDA transaction than a last ditch effort to torpedo engagement with North Korea by unrepentant hardliners (many of whom had left the Bush administration by 2007) acting under the aegis of Vice President Cheney as part of his war against the Condoleezza Rice’s State Department.
(Dick Cheney, it is probably forgotten, was at the time trolling through Asia at the time trying undercut State Department diplomacy by cobbling together an anti-China united front out of Australia, India, and Japan; I reproduce a post on the issue below as a matter of historical interest.)
However, for the BDA travesty to drag on as long as it did, thereby revealing President Bush’s favorite cabinet officer, Secretary Rice, as a powerless cipher, I would have to think that President Bush acquiesced to Vice President Cheney’s insistence that the humiliating BDA agreement wither and, if possible, die, taking the restart of the Six Party Talks with it.
There would be persuasive geopolitical reasons for doing so.
The left-leaning regime of President Roh was an unwilling partner to American diplomacy, especially of the confrontational type traditionally espoused by the Bush administration.
It was very likely that the conservative and actively pro-US Grand National Party would be in the saddle come December 2007.
So killing or at the very least slowwalking the BDA affair pending a re-set in 2008 might have enjoyed the tacit approval and back channel encouragement of a broad range of executive and national security opinion in the Bush administration.
And Stuart Levey, instead of being Mr Insubordination was actually Mr Virtuous Conspirator, working with the informal network of Bush era foreign policy enthusiasts that trampled over the chain of command and institutional checks and balances to execute policies whose success they considered to be of paramount importance—at least more important than the niceties of fact-based decision-making or consideration of the possibly catastrophic consequences of reckless adventurism.
As to why President Obama decided to keep Mr. Levey on, he had ample reasons starting with the Obama administration’s fondness for smart power and the strong support Mr. Levey enjoyed in hardline constituencies on North Korea and Iran.
Perhaps it was also thought that Mr. Levey’s demonstrated independence of State Department diplomacy contributed to the intimidating aura of OTFI’s activities.
I am rather skeptical of Mr. Levey’s achievements.
It seems to me that the sanctions campaign against North Korea, beyond denying Western energy and fuel aid to North Korea that might be exploited by its army (or possibly find its way to North Korea’s citizens), and driving Pyongyong into Beijing’s arms, has little to show after five years of effort.
As Lee Myung-bak enters the last years of his term, it appears that China, North Korea, and factions within South Korea itself are positioning themselves for a shift to a policy with a bigger dose of engagement and less emphasis on sanctions.
So, as I say in the article, this might be the best time for Mr. Levey to depart with his legend intact.
Sunday, March 18, 2007
Circular Gratification: Vice President Cheney’s Most Recent Effort to Contain China
Vice President Cheney recently visited Asia to lend his prestige and power—two increasingly devalued commodities--to two faithful and embattled allies in his global campaign of confrontation and containment, Japan and Australia.
Japan, in particular, needed bucking up, since the Abe regime is reeling from the perfunctory US abandonment of the abductee issue in the rush to conclude the Six Party Agreement on North Korea.
The abductee issue was at the core of Abe’s North Korea policy and, indeed, Abe’s entire political identity as a principled and valued core member of the US effort to assert its interests and agendas in North Asia through confrontation-based diplomacy.
With realists in ascendance at the State Department and negotiation, conciliation, and compromise at the heart of U.S. Asia policy, Vice President Cheney brought with him a rather contrarian and dubious gift—an effort to singlehandedly will into existence another coalition of the willing, centered on Japan, Australia, and India, to take on the unenviable and almost impossible task of presenting an effective, united front against China.
The Marmot’s Hole looks at a proposal for an anti-Chinese alliance midwifed by Dick Cheney and sees an iron ring of democracies containing China.
I look at the vision of an American, Japanese, Australian, and Indian security quadrilateral and see a regional circle j**k characterized by shared press conferences, private fantasies, and shamefacedly selfish gratification.
Australia is blundering through its self-made neocolonial quagmires in Papua New Guinea, the Solomon Islands, Tonga, and Fiji. It can’t even handle its back yard (where China is cautiously but productively fishing), let alone contribute effectively to the Ant-Chinese Superhero League that’s supposed to take the fight to the Yellow Peril.
All India wants is to play off the United States, China, and Russia against each other and reap concessions and aid from each while it concentrates on its economic development and energy security.
Indeed, Mr. Cheney's hasty initiatives in ad hoc coalition building are probably a direct response to a conspicuous piece of footsie between New Delhi and America's strategic competitors: the Russian/Chinese/Indian mini-summit in Delhi in February.
Which leaves the United States and Japan...well, maybe just Japan.
The money grafs in the story in the Australian:
The Japanese Government and US Vice-President Dick Cheney are keen to include the growing economic and military power of India in the already enhanced "trilateral" security arrangements, locking together the three most powerful democracies of the Asia-Pacific region.
Mr Cheney gave the Japanese proposal new life on his recent visit to Japan and Australia after sections of the Bush administration rebuffed the plan.
Ah, yes...emphasis added.
With the neocons in retreat on Washington and on the North Korean issue, it seems that Japan provides the vital function to Dick Cheney of providing political cover and scope for strategic initiatives that are foreclosed at home.
In this context, I am tempted to describe Japan as our “Israel in the Pacific”, exploiting relationships inside the US government to develop foreign and domestic policitical synergies that go beyond US official policy, in a manner similar to Tel Aviv's.
Now more than ever, Israel is openly and unapologetically working with elements in the Bush administration to advance a particular policy toward the Middle East—and elements within the US national security establishment are utilizing allies within the Israeli government to assist them in promoting their preferred agenda in the policy battles inside the U.S. government.
The estimable Laura Rozen, in profiling Secretary Condileezza Rice’s yearlong struggle to gain control over the Bush administration’s Iran policy, related a similar kind of back-channel initiative that, if it didn’t involve the politically sacrosanct state of Israel, might be unkindly regarded as colluding with a foreign power against the policy of the United States:
Rice knows how the system works. In February, she traveled to Jerusalem to attempt to restart the Middle East peace process. But while she was en route the neoconservative NSC adviser Elliott Abrams was, according to news reports, using contacts in the office of Israeli Prime Minister Ehud Olmert to arrange a phone call between Olmert and Bush. After the call, Olmert announced that Israel would not recognize the Palestinian unity government as a legitimate negotiating partner—an essential precondition for productive talks—and that Bush supported Israel’s stance. Her position fatally undercut, Rice returned to Washington empty-handed.
It’s one thing for a small-time erstwhile felon like Elliott Abrams to use a foreign government to promote his virtuous conspiracy against the Palestinian peace process.
But when Big Time, America’s shadow president, has to outsource his anti-China agenda to Japan and two weak and/or unenthusiastic partners in South Asia and rely on them to whipsaw the State Department, that’s a sure sign that it’s going nowhere.
Or better yet, in circles.
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