The United States and the Democratic People's Republic of Korea (DPRK) have resolved a dispute over the latter's funds frozen in a Macao bank, Xinhua News Agency reported yesterday.

State Councilor Tang Jiaxuan told a group of visiting Japanese lawmakers about the US-DPRK deal, Xinhua said, without providing details.

The news came on the eve of the new round of Six-Party Talks, which starts today.

Some $25 million in DPRK deposits have been frozen in Banco Delta Asia (BDA) since Washington blacklisted the tiny, privately-run Macao-based bank in 2005 on suspicion the funds were connected to money-laundering or counterfeiting.

Washington promised to resolve the issue by mid-March as part of an agreement last month on DPRK nuclear disarmament.

In a related development, US Deputy Assistant Treasury Secretary Daniel Glaser said after his arrival in Beijing yesterday afternoon: "We had a good meeting in Macao with the Macao monitoring authorities."

The chief negotiator of the Republic of Korea Chun Yung-woo also said yesterday that the issue of the frozen funds was expected to be resolved soon.

Chun made the remarks in Beijing after an hour-long meeting of the denuclearization working group, which started its first meeting on Saturday at Diaoyutai State Guesthouse.

The issue of frozen funds has the potential to derail the agreement reached last month by the six parties to make the Korean Peninsula nuclear free.

On Saturday, DPRK nuclear envoy Kim Kye-gwan said Pyongyang would not shut down its main nuclear reactor until the funds were released.

He said the DPRK had already fulfilled its obligations including inviting the UN nuclear watchdog to visit Pyongyang and holding separate working group meetings with the United States and Japan.

Analyst say the mistrust between the US and the DPRK is still the core of the problem.

"As long as this mistrust remains, it is going to be a very slow process but it is encouraging that the US is now engaged in active diplomacy," said Derek Mitchell, senior fellow with Center for Strategic & International Studies.

Shi Yinhong, professor at Renmin University of China, noted that fulfilling its commitments is in Pyongyang's interest and there is so far no signal that the DPRK would break its promises in the initial action period.

Xinhua and agencies contributed to the story

(China Daily 03/19/2007 page1)