CONFIDENTIAL

The United States has been asked for its position on inviting North Korea as an observer to the ADB annual meeting, May 4-6 in Hong Kong. We would like to inform your Government of our position and seek your support for it.

-- The United States does not support issuing such an invitation to the DPRK at this time. We would be willing to reconsider this position if the DPRK maintains progress toward fully accepting its NPT obligations.

The U.S. Undersecretary of state for Political Affairs recently met with the Director for International Affairs of the North Korean Workers Party, primarily to discuss nuclear safeguards and non-proliferation. We hope this contact will bear fruit in the near future and enhance global and regional security. However, we must evaluate the success of our efforts in terms of North Korea's actions, not its words.

Allowing closer relations between North Korea and the international financial institutions is a valuable incentive the international community has in motivating DPRK action on nuclear and other issues of concern.

Permitting the DPRK to observe the ADB annual meeting might be misinterpreted by the DPRK to mean that the international community will make concessions without DPRK action on these issues. The USG believes any such perception must be avoided.

The DPRK representative to the IAEA recently stated at a press conference in Vienna that his Government would ratify its IAEA safeguards agreement in April.

If the DPRK ratifies its nuclear safeguards agreement, signed January 30, the United States would be willing to reconsider the observership question.

The United States understands that Hong Kong, in its capacity as Chairman of the Board of Governors, has the authority to invite observers to the annual meeting. We further understand that while the Board of Directors should be consulted on this issue, there is no provision for a formal Board of Directors vote

on it.

We hope your Government agrees with the U.S. view that no invitation should be issued to North Korea at this time and will so inform the President of the ADB. The USG will be in close contact in the coming weeks as we assess whether DPRK actions have allowed us to reconsider our position.

In recent months there have been press and other reports that The USG North Korea might soon apply for membership in the ADB. is aware of no formal application to date. Our current or future attitude toward observership at the annual meeting does not prejudge a USG position on any future DPRK application for membership in the ADB.

CONFIDENTIAL

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