{{European aid groups said their banks in Europe had stopped sending money to North Korea in the wake of U.S. sanctions on Pyongyang’s main foreign exchange bank, leaving them scrambling for a solution short of hand-carrying cash into the impoverished country.}}
Aid groups said if it became impossible to send enough money to operate, donors might withdraw support for their programs.
“This could eventually reduce our ability to carry out projects or even force a complete close down,” Mathias Mogge, director of programs for German aid group Welthungerhilfe, told media.
“If all the agencies had to pull out, it would affect millions of people,” said Mogge, who has just returned from the reclusive state.
The biggest problem had been the Bank of China’s recent decision to shut the account of the North’s Foreign Trade Bank, EU officials and non-governmental organizations said. Money to North Korea was routed through China’s biggest foreign exchange bank, they said.
Chinese firms doing business in North Korea said they were also finding it difficult because Chinese banks were becoming increasingly reluctant to deal with their North Korean counterparts, whether it was the Foreign Trade Bank or other banks.
Washington imposed sanctions on the Foreign Trade Bank in March after accusing it of helping fund Pyongyang’s banned nuclear weapons program. The measures prohibit any transactions between U.S. entities or individuals and the bank.
Experts have said Washington’s move was designed to make international banks that do business in the United States think twice about dealing with North Korea, in much the same way banks have become wary about having ties with financial institutions in sanctions-hit Iran.
All NGOs, U.N. agencies and embassies in Pyongyang have to use the Foreign Trade Bank, aid workers and other officials have said.
One EU source said there were indications some European embassies in Pyongyang were having similar difficulties with transferring funds. A representative for U.N. agencies in Pyongyang did not have any immediate comment.
U.S. officials have urged the European Union to put sanctions on the bank. EU diplomats have discussed the issue but are worried about the impact.
“We are concerned regarding possible unintended effects of certain sanctions such as the designation of the FTB, in particular with regard to humanitarian assistance, and we are looking into possible means to overcome the unintended effects,” said a spokeswoman for EU foreign policy chief Catherine Ashton.
One source familiar with the matter said a possibility being examined by EU officials was to issue a so-called “letter of comfort” which would explicitly say funding was for humanitarian and development use.
The idea is this would provide cover for a bank to make a transaction, said the source, who declined to be identified because of the sensitivity of the issue.
{reuters}
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