Several people familiar with the debate said Hank Paulson, Treasury secretary, agreed to overrule officials responsible for terrorism financing, who objected to the move, after Beijing warned that a failure to return the North Korean funds would hurt the Sino-US strategic economic dialogue.
(This line also caught Daniel Drezner’s eye, as seen in this post; he wonders what is going on in the strategic dialogue that would give this linkage weight.)
In case anyone forgot, this agreement is in many ways China’s baby — so it shouldn’t be surprising to see China effectively using linkages to pressure the US to change course. I wonder if China has been applying similar pressure to Japan on the abductions issue behind the scenes, particularly as Premier Wen prepares to visit Japan next month.
Meanwhile, the FT article shows that the administration’s critics on North Korea policy are more or less powerless. The State Department — and Christopher Hill — are in the driver’s seat as far as the six-party talks are concerned.
I have to wonder, though, how the Bush administration’s turn on North Korea will affect the wide-open race for the 2008 Republican nomination. I have no doubt that the conservative movement agrees with the National Review’s assessment of diplomacy with North Korea. Will someone break from the field and secure the support by running against President Bush’s new approach to Pyongyang?