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Glaser thus made it clear that the U.S. will not pretend the country’s financial crimes were the work of individual firms or organization to lure Pyongyang back to six-nation talks on its nuclear program. Washington also insists that steps it has taken against the Macau-based Banco Delta Asia, which it has fingered as the North’s main money-laundering channel, do not constitute sanctions but are a self-protective measure.

The Korean government has put priority on the resumption of the six-party talks and has tried to gloss over the dollar-counterfeiting issue by saying it was North Korean organizations rather than the Kim Jong-il regime that made the fakes. North Korea insists the accusations are a ploy and has warned it will stay away from the talks until the sanctions are lifted. But now the U.S. has redefined the sanctions as defensive, the issue is bound to rear its ugly head even if efforts to reconvene the talks bear fruit - with the result that participating nations must address the whole package, nuclear and criminal, if any progress is to be made.

A South Korean government official denied Glaser asked anything of the government the previous day, in blunt contradiction to the embassy press release, which twice says the U.S. asked Seoul to join in efforts to combat the North’s illegal activities. The fact that the embassy took the rare step of distributing its own statement and bypassing the host government smacks of fears in Washington that the South Korean government would present a substantially different version from the U.S.’ own.

Seoul will need to take a cold look at the situation that may well shatter its perception that it plays a key role in resolving the North Korea issue.