U.S. and Macau (2006)

U.S. Department of State

Special Briefing
Office of the Spokesman
Kuala Lumpur, Malaysia
July 27, 2006

On-the-Record Briefing -- ASEAN Regional Forum

Christopher R. Hill, Assistant Secretary for East Asian and Pacific Affairs

AMBASSADOR HILL: How should I do this, just sort of run through the schedule? What do you need?

QUESTION: Are you going to have meetings tomorrow with -- party talks by the normal six parties and Canada, Malaysia and Australia?

AMBASSADOR HILL: Yeah. Alright. Well, let me just mention, first of all, as you know, this is the -- tomorrow is the ASEAN Regional Forum meeting. This is an annual event. The Secretary did not attend last year and is attending this year. We -- the ASEAN Regional Forum is kind of a set piece event. They'll discuss a lot of various confidence-building measures, usually things like seminars and what not. And that will be in the morning and then we will have a number of bilaterals. She'll be meeting with the Chinese Foreign Minister Li Xhaoxing, Korean Foreign Minister Ban Ki-Moon, Singaporean Foreign Minister George Yeo, Alexander Downer, and Indonesian Foreign Minister Wirajuda. I think she also has a meeting with the Pakistani.

And during the afternoon, there will be a multilateral event, which will deal with Northeast Asia. Now, while we were never hopeful and certainly you can't base policy on hope, there was some reason to believe that the North Koreans might want to come and so we're prepared to hold a six-party informal. Why informal? Because the formal sessions are held by the Chinese in Beijing and this was -- we were prepared to do a six-party informal here in Kuala Lumpur. We invited the North Koreans and they have evidently refused to attend, maintaining their view that they will not attend six-party events unless the sanctions on them are lifted, that is, the financial measures taken against the bank in Macau.

So rather than having a five-party meeting -- six-party minus the North Koreans, the Secretary decided to have a broader discussion and brought in some additional countries, namely, Canada, Australia and the host of the ASEAN meeting, Malaysia. And the purpose is to have a more general discussion of security issues in Northeast Asia. If you look at Southeast Asia, you see ASEAN is working very hard to develop various security structures; Northeast Asia, there's very little. So this is, I think, a first effort, really to sit down with a group of countries, all the players in Northeast Asia -- except for North Korea, which has excluded itself -- plus a couple of other players, including Canada for the first time. And the idea is to have sort of general discussion of what can be done to develop security structures in Northeast Asia. There's -- it's not intended to reach any conclusions. It's intended to be a good discussion. So why don't I stop and go to questions.

QUESTION: Can you walk us through what the Chinese have done (inaudible) Macau Bank?

AMBASSADOR HILL: Yeah. This is in respect to some steps that the Chinese took to protect their own banking system. China is very concerned about -- China generally has an interest in bringing its financial sector sort of up to world standards. After all, they're the, you know, world's biggest exporter at this point and they want to make sure they have a financial sector that meets the challenge of that. So they have tended to be rather strict when they're able to see problems in money laundering and that type of illicit activity. So we have found -- and this did not just begin with the UN Security Council resolution, we found over the months and even years that China does tend to take action when they see illicit activities in their banking sector. So I think what was announced or what was revealed the other day was actually steps that they've taken some months ago.

QUESTION: So this was not (inaudible) not in coordination with (inaudible)?

AMBASSADOR HILL: No, it was not. But I think it is indicative that the Chinese have an interest in protecting their financial sector. And I think it also demonstrates that this is -- the financial sector issues with respect to North Korea are not a bilateral issue with the U.S. I mean, there are a number of countries that are looking at this and China is one of them.

QUESTION: Can I have a follow-up?

AMBASSADOR HILL: Yeah.

QUESTION: (Inaudible) of any way coordination with us?

AMBASSADOR HILL: I think they have tended to cooperate with our bank regulators because they want their banking sector to have a clean bill of health and for that reason they work very closely with our Treasury Department people. And you'd have to check with Treasury to see the degree in which they've coordinated this with them. But my understanding is these measures were well before the UN Security Council resolution.

QUESTION: Were these measures in October or November when the U.S. (inaudible)?

AMBASSADOR HILL: Well, we brought to light some issues that we saw in this Banco Delta Asia. In the context of that, we talked about broader concerns we have. But it was the Chinese regulators who took action with respect to this -- the Bank of China accounts. It was not us.

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QUESTION: From the outside, it seems that China was putting some pressure at least on North Korea to attend some of these talks here and following -- the fact the North Koreans went ahead with the missile launches apart, you know, against China's (inaudible) -- is there any suggestion the idea of the leverage that China was supposed to have over the North Koreans is not perhaps as big as it was thought to be or is China just not applying that leverage as much as they could do?

AMBASSADOR HILL: Well, there's always been a question of -- or an issue of, first of all, how much leverage does it have. Secondly, how much is it applied? Thirdly, what is it going to take to get the North Koreans to respond to that type of leverage? I think the -- you know, the Chinese clearly have a lot of leverage with the North Koreans. China has preferred to use its auspices as the host of the six-party process. And their approach to North Korea in the past has tended to be friendly persuasion.

I think it's fair to say that the Chinese were, frankly, a little concerned at the fact that the North Koreans ignored their requests in respect to the missile launch and appear to have continued to ignore their efforts to get them to attend the six-party talks. I might add, though, that a number of other countries with relations with the North Koreans have also been encouraging them to come to the talks; the North Koreans have consistently refused.

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QUESTION: Do you think that the strong statements by the U.S. (inaudible) a long time and Europe has made ASEAN think perhaps that their relations with those two, the U.S. and Europe, could be at risk if they don't stop movement on Burma.

AMBASSADOR HILL: I wouldn't say relationships are at risk but I think what we have tried to do is to work intensively with ASEAN and it's not so much a question of making statements, it's a question of working with them on a common problem, after all, Burma is not just a problem for itself, Burma is a problem for the entire region. Burma used to be a major exporter of various tropical products and now it's an exporter of disease and refugees. So I think there's a great deal of concern about Burma's behavior and we have had intensive dialogue with ASEAN countries through traditional diplomatic channels. We've also engaged China on the subject of Burma, we've engaged India on the subject of Burma. We have made sure that Burma doesn't feel it can kind of pick and choose and play off one country against the other. And frankly, I think Burma's finding that there's an emerging consensus that Burma is way out of line.

Helene.

[ ...Intervening Text... ]

QUESTION: In the context, okay, (inaudible).

AMBASSADOR HILL: In the context and context is figurative, it doesn't mean on the room, it doesn't mean in the building, it just means in the context. But what we are not prepared to do is to allow them to essentially jettison the six-party process, make it moot while they carry out a bilateral negotiation with the U.S. for the purpose of dealing with the multilateral problem. And I've said this before, but it really bears repeating, that at the end of the day, when we get a solution, a number of countries are going to have to come forward and be part of that solution. And those countries happen to be the countries in the six-party process.

We cannot solve North Korea's energy by the U.S. We need South Korea involved in the energy solution. We cannot solve their economic problems by the U.S. We need Japan and China to be involved in that and frankly, Russia also has an important role to play in any energy solution and any dismantlement of their nuclear facilities, because Russians have a lot of experience with that. We need a multilateral process for this. And if they're prepared to continue that, that is, if they're prepared to implement the deal that they agreed to in Beijing -- and this one just didn't agree with us, this is an agreement with all their neighbors. If they're prepared to do that, sure, we are prepared to have bilateral meetings with them. And I did so in the past and I'll do so in the future, but we're just not prepared to let them have bilateral meetings as a substitute for multilateral meetings. So when will I meet them bilaterally? That's kind of up to them.

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2006/T19-10

Released on July 27, 2006