A Financial Link in that AQ Khan-North Korea-Libya UF6 Daisy Chain?

David Sanger and Bill Broad have a summary of the North Korea UF6 story based on recent interviews with administration officials and foreign diplomats.

The big revelation: Libyan officials have surrendered financial ledgers that reveal front companies for the AQ Khan network and may link North Korea directly to the shipment of UF6 that turned up in Libya.

Sanger and Broad summarize how US intelligence came to suspect a link:

The story began in late 2003, when Libya surrendered its nuclear program and led American, British and I.A.E.A. officials to the cask of uranium. It was flown to Washington in early 2004. In February 2004, Malaysia published a report – based on interviews with Buhari Sayed Abu Tahir , the chief operating officer of Mr. Khan’s network – that the uranium hexafluoride had been flown to Libya aboard a Pakistani airplane in 2001. The findings of the Malaysian report, and the involvement of the Khan network in the uranium shipment, were widely reported.

News of a possible North Korean link to the shipment emerged last spring when European investigators, quoted in The New York Times, said their interviews with members of the Khan network had pointed them in that direction.

In late May, the International Atomic Energy Agency reported that Libya’s receipt of 1.87 American tons of uranium hexafluoride was a down payment on an order for 20 metric tons, equivalent to 22 American tons. That amount was never delivered because Libya had abandoned its program, but experts said that was roughly enough to make 10 small nuclear warheads.

Meanwhile, American officials also began to suspect North Korea was the source, partly because chemical traces on the outside of the cask indicated that it had been at the North’s main nuclear site, Yongbyon. The United States had plutonium samples from that site. But as one American official said, “proving the container had been there is different from proving that the uranium inside it” also came from North Korea.

[snip]

Similar questions in Washington touched off a months-long scientific study last year at the Oak Ridge National Laboratory to determine whether the uranium hexafluoride was truly of North Korean origin. The results of that study are classified, officials say. They are also short of definitive.

American officials apparently did not have a sample of North Korean uranium to compare with the uranium from Libya. Instead, through a process of elimination, they ruled out Pakistan as a source and eventually concluded that there was no other logical answer.

Some experts have questioned that conclusion, saying it is unclear whether North Korea made the uranium hexafluoride itself, or merely supplied the raw uranium to Pakistan, which then made the highly toxic chemical.

[snip]

More recently, United States officials have tried to follow the money trail. They argue that Libyan funds made it to companies or banks linked to North Korea. One foreign diplomat said I.A.E.A. investigators were digging through the same financial records that the United States had examined, and traced the money flow through money launderers to Khan front companies and “various bank accounts all over the world.”

But banking secrecy, he added, had impeded making firm links to North Korea despite “a couple places pointing to the D.P.R.K.,” or the Democratic People’s Republic of Korea, but gave no further details.

The conservative South Korean newspaper Dong A Ilbo reported last week that Washington informed Seoul of the financial link—presumably to add credibility to North Korea’s proliferation activity.

But the Korea Times reports that a South Korea spokesperson denied that Washington has briefed Seoul on the financial transaction:

“We have not been informed about transaction details,” a government spokesman said in response to reporters’ question. “We are not in a stage where we can conclude there was a financial transaction between North Korea and Libya.”

Whether Mike Green and Will Tobey accurately briefed the development of the intelligence—as the White House argued in an unusual letter to the Washington Post—remains a matter of argument.

Photo note: High-speed centrifuges from Libya on display at Oak Ridge National Laboratory in Tennessee. From the New York Times.

Paul Adds:

Even if Libya was transferring cash to North Korea, the money may well have been for missile components, etc., rather than nuclear material. Libya was obtaining ballistic missile program assistance from North Korea as recently as the first half of 2003.

Indeed, Bolton showed up at a State Dept press briefing last spring to tell reporters that Libya had agreed to halt its military cooperation with North Korea. He noted that “North Korea…uses its exports of military technology to finance other dangerous activities.”

He also indicated that Libya was paying a considerable amount of cash for Pyongyang’s services:

QUESTION: How much business do you believe Libya was doing with these three countries? How big a provider was it, or an importer, either way?

UNDER SECRETARY BOLTON: Well, North Korea had been the provider of Libya’s Scud Missile arsenal, which included five Scud C’s, which have been removed from Libya pursuant to the Libyan December declaration, and several hundred Scud B’s, a lower range ballistic missile which Libya has agreed to, as part of its general commitment not to have missiles that go beyond the MTCR parameters, 500 kilograms, over 300 kilometers, to bring those missiles within those constraints or to eliminate them.