Asia-Pacific

N. Korea talks stall over frozen funds

(Reuters)
Updated: 2007-03-20 18:35

North Korean nuclear envoy Kim Kye-gwan speaks to the media upon his arrival at the airport in Beijing March 17, 2007, for a new session of six-party talks opening on Monday. North Korea is refusing to participate in six-party talks on dismantling its nuclear programs before all of its funds frozen at a Macau bank have been released, a diplomatic source said on Tuesday. [Reuters]

BEIJING - Six-party talks aimed at ending North Korea's nuclear threat stalled unexpectedly on Tuesday, hampered by a lingering row over frozen funds and denting hopes of turning the focus to disabling Pyongyang's main reactor.

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The United States said on Monday that $25 million frozen at Macau's Banco Delta Asia (BDA), which Washington said was complicit in North Korea's illegal financial dealings, would be released and turned over to Pyongyang for humanitarian use as soon as possible.

But the timing of the release was still contingent on talks between North Korea and Macau, and in the meantime, North Korea was refusing to attend a planned chief delegates meeting at six-party talks in Beijing.

"According to host China, North Korea is saying that it will not take part in talks unless it confirms the funds at BDA are transferred to its account in China," Japan's chief negotiator, Kenichiro Sasae, told reporters.

"China urged North Korea to come forward, but North Korea did not do so. There was no progress at all today."

A spokesman at the media center for China, which chairs the talks that also group the two Koreas, the United States, Japan and Russia, said the chief delegates meeting had been canceled.

"After the bilateral talks, there was not enough time left," the spokesman said.

US envoy Christopher Hill said earlier he hoped the day's talks could focus on how to see through North Korea's pledge to shut down its Yongbyon nuclear reactor by a mid-April deadline in exchange for economic aid and security assurances.

He also wanted to begin mapping out future disarmament steps agreed in the breakthrough February 13 deal.

"Clearly we have to meet all the 60-day milestones. That's why we're here -- to review that, and we'll be doing that today," Hill told reporters, referring to the April date.

Tasks for the six parties after the deadline involve disabling the shut reactor and require North Korea to report other nuclear activities.

But the talks are still shadowed by the Macau banking issue, which caused North Korea to boycott the negotiations for more than a year.

It came back to the table in December, months after conducting its first nuclear test, which drew international condemnation and UN financial and weapons sanctions.

South Korea's Yonhap news agency cited Macau banking sources as saying that the Macau government would transfer the funds on Wednesday morning.

Even if the frozen funds are released, the talks, scheduled to run through Wednesday, still face issues likely to test the wary and mercurial North.

Those include North Korea's obligation under the February deal to report a full list of its nuclear activities, which will raise the question of highly enriched uranium.

North Korea has denied enriching uranium, which can be used to make the fissile material in nuclear weapons. US officials have recently steered away from the Bush administration's earlier claims that Pyongyang was close to mastering the process.

US allegations that North Korea was pursuing a highly enriched uranium program caused a previous disarmament deal to collapse in 2002.