Relations between North and South Korea have warmed in recent months with new promises of food aid from the South and nuclear de-escalation in the North. Headway, however, has been slow to develop as North Korea angst over the slow release of frozen funds in an overseas bank, and demands new boundary recognition in the Yellow Sea.

With the resumption of discussions between the two nations, the outlook for the Korean peninsula is more upbeat than it has been in the past and a United Nations (UN) brokered détente is more possible than at any time in the last sixty years.

Slow Rolling Money

In February 2007 the United States Treasury froze US $25 million at the Banco Delta Asia in Macau, China. Authorities suspected the bank of laundering funds for North Korea which were allegedly intended for an illicit nuclear program. Although the transfer ban was formally lifted in March 2007, the money is still in limbo while bank officials try to validate the funds as legitimate.

Banco Delta Asia has a history of suspect activity with the United States. In 1994, for example, the bank quietly informed officials that one of its North Korean clients had made a sizeable deposit of counterfeit US dollars. US agents advised the bank to continue dealing with the client while the claim was examined. In September of 2005, however, the Macau bank was designated by the US Treasury for engaging in money laundering and counterfeiting for the North Korean government. Nevertheless, sanctions against the financial institution have been relaxed since North Korea began cooperating with international demands to terminate and dismantle its nuclear weapons program.

Rail, Missiles and Rice

Last week North and South Korean military diplomats approved the connection of two defunct, cross-border railroads. Running north to south on both sides of the peninsula, travelers will be able to make their way from Kaesong and Kumgang in the North to the southern stations in Munsan and Jejin, respectively. Initiating commercial travel between the two countries signifies a new step in an otherwise frosty relationship that could set the stage for more widespread paring down of bilateral restrictions.

After Kim Jong Il’s government tested a nuclear capable missile in July 2006, the South immediately suspended its vital shipments of rice to the poverty-stricken North. Until recently, North Korea disregarded the missing shipments, subjecting its population to starvation and disease. Agreeing on May 13, 2007 to provide the North with 400,000 tons of rice, however, the South hinted at developments in talks with North Korea, but did not directly reference nuclear disarmament in its official 10-point statement.

A Positive Outlook

Although North and South Korea are still in the preliminary stages of developing interaction, the ice upon which the relationship progresses is very thin. A US garrison on the peninsula coupled with intensified fortifications on the 38th Parallel and almost nonexistent cross-border communication has blunted North Korea’s annexation of the south, and increased regional influence. Deconstructing the Korean War mentality along with a nuclear weapons program is no easy task. However, with continued North-South discussion the possibility can be realized in the long term. At present, a willingness for interaction on both sides of the table along with international cooperation is a good first step.