N. Korea Again Links Assets to Nuclear Deal

By Maureen Fan
Washington Post Foreign Service
Sunday, March 18, 2007

BEIJING, March 17 -- North Korea will not stop its nuclear activity until all of its money frozen in a Macau bank has been released, the lead North Korean negotiator said as he arrived in Beijing for disarmament talks.

The comments from Kim Gye Gwan, the North Korean vice foreign minister, came just before the chief U.S. negotiator, Assistant Secretary of State Christopher R. Hill, briefed a North Korean delegation in Beijing on the matter. Meanwhile, U.S. Treasury officials met with monetary authorities in Macau to discuss Banco Delta Asia, which has been accused of laundering illicit money from North Korea.

Negotiations aimed at shutting down North Korea's reactor at Yongbyon are set to resume Monday. The four-year-old talks were blocked for more than a year because North Korea insisted on resolving the Banco Delta Asia matter before discussing any nuclear issues.

While U.S. officials have said previously that as much as a third of the $25 million would be unfrozen, Hill on Saturday said only that he did not believe the bank issue was a problem with respect to the talks.

"I think we would expect money to be moving very quickly in terms of completing this case and finally resolving it," Hill said. "I think we have a way forward, which we briefed them on, which I think should meet their needs."

The U.S. Treasury on Wednesday formally ordered U.S. banks to stop doing business with the bank, saying it laundered money for North Korea and "turned a blind eye to illicit activity." China said through a Foreign Ministry spokesman that it "deeply regretted" the move, which essentially cripples the bank.

Peter M. Beck, a Seoul-based analyst with the International Crisis Group, said the situation remained murky.

"It's really not clear if the Treasury and State departments are on the same page yet," Beck said, "and it's not clear what the North Koreans are willing to accept, if they're going to insist on the full amount as they said today, or get roughly half back and declare victory."

Meanwhile, North Korea said it had begun to make preparations to shut down the nuclear facility as part of a Feb. 13 agreement that was hailed as a milestone in the six-party talks, which involve North and South Korea, Japan, Russia, China and the United States.

As part of the agreement, the United States pledged to resolve the bank dispute within 30 days, leading to the announcement this week that it had concluded its probe. In return, the North Koreans agreed to shut down its main nuclear facility within 60 days, or by mid-April, and seal it under monitoring by the International Atomic Energy Agency.

The closure would trigger delivery of the first fuel oil that is a major component of promised economic aid for the energy-starved North Korea.

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