Days after an agreed deadline to shut down its Yongbyon nuclear reactor and invite International Atomic Energy Agency inspectors back in, North Korea had yet to comply as of Tuesday. While there are conflicting reports of satellite imagery showing "unusual activity" around the Yongbyon site — suggesting Pyongyang is about to comply — The United States has made it clear it has yet to be notified of concrete action by North Korea. Despite the delays, there is little sense of urgency — and a general acceptance that North Korea will be late, but will ultimately shut down the site. The sense of crisis surrounding North Korea's nuclear program has faded to near-ennui. In February, months after North Korea tested a nuclear device, representatives from North Korea, the United States, China, South Korea, Russia and Japan signed an agreement laying out a phased process to shut down North Korea's nuclear program and start down the path of economic cooperation and international diplomatic engagement with Pyongyang. The agreement marked a breakthrough in negotiations that had been dragging since September 2005, when, just after the six parties issued a common statement on the goals of the nuclear negotiations, the U.S. Treasury Department took action against the Macau-based Banco Delta Asia (BDA) — accusing the bank of assisting North Korea in laundering counterfeit money, and freezing some $25 million in North Korean-related funds. The BDA freeze hit North Korea in three ways. First, BDA was a key bank through which the North Korean government and businesses conducted international transactions in dollars, euros, yen and yuan. Shutting down the BDA accounts not only closed off this avenue of foreign exchange, but also triggered other banks dealing with North Korean-related accounts to cease working with Pyongyang. North Korea's international transactions, small though they are, were significantly hindered. Second, the freeze was a strike against North Korea's pride. The punitive action was seen as a slap against the North Korean regime, and coupled with the accusations of counterfeiting and money laundering, besmirched the North Korean name (not that it was especially clean to begin with). For Pyongyang, this was a direct insult to the regime and leadership — and North Korean negotiators have been known to walk out of meetings over much-less-significant slights, such as when foreign negotiators failed to greet them at the door. The third aspect, and perhaps the most significant, was that the BDA action, coming just days after the September joint statement of principals, convinced North Korea that the U.S. administration with which it was dealing was untrustworthy. From Pyongyang's perspective, if Washington would strike out at North Korea (albeit economically) immediately after agreeing to work toward consensus, the talk of cooperation obviously was false. Pyongyang refused to re-engage in the six-party process until Washington freed up the BDA accounts. But as time went on, and Pyongyang kept stalling, it also noted something more in the seemingly bipolar attitude of the United States — a clear lack of policy unity. This was something the North Koreans knew how to deal with, and they soon started raising the stakes, leading to a series of missile launches in July 2006 and a nuclear test in October 2006. Through these provocative actions, North Korea sought to exploit the factional rift inside the U.S. government — just as Pyongyang had skillfully played off rifts between Washington and Seoul to gain additional leverage. The U.S. position had been that it would in no way unfreeze the money; the reason for freezing the funds was Pyongyang's illicit activity, and Washington could not let that go without setting a bad precedent, not only for North Korea but also for other countries. But now, elements in the U.S. State Department and elsewhere pushed to re-engage North Korea, saying the BDA issue had stalled dialogue and led to the nuclear test — and that re-engagement, rather than isolation and punishment, was the only way to defuse the crisis (shy of the last resort of military action). And as the Bush administration grew more focused on Iraq and Iran, and saw its Republican majority slip away in the House and Senate, it finally conceded, allowing a resolution of the BDA issue and thus re-engagement with North Korea. This was a major victory for Pyongyang: the United States completely reversed its earlier stance. Even though Washington released its hold on the funds shortly after the February agreement, few banks were willing to accept the money for fear of U.S. action against them for touching tainted money — and it took almost the entire two months of the first phase of the agreement for Washington finally to work out a deal whereby North Korea could simply withdraw the money directly from BDA. Pyongyang is now probing just how much weakness there is in the U.S. position. The accession to North Korean demands, and the U.S. delay in fulfillment — coming on top of the West's rather restrained reaction to North Korea's nuclear test — gave Pyongyang both the confidence and the justification to delay its own action. North Korea will shut down Yongbyon, and likely within a few days, but Pyongyang feels that it has once again taken the driver's seat, and is seeing just how far it can go before reaching a U.S. break point. And it is now much less trusting that a lasting deal with the Bush administration would be meaningful.