Deal on Funds Removes Hurdle To N. Korea Talks

Assistant Secretary of State Christopher R. Hill, center, arrives with other U.S. officials for the resumption of six-party talks in Beijing on dismantling North Korea's nuclear program.
Assistant Secretary of State Christopher R. Hill, center, arrives with other U.S. officials for the resumption of six-party talks in Beijing on dismantling North Korea's nuclear program. (Pool Photo By Greg Baker -- Getty Images)
By Maureen Fan
Washington Post Foreign Service
Monday, March 19, 2007

BEIJING, March 19 -- The United States has agreed to release $25 million in North Korean funds frozen in a Macau bank, removing an obstacle that had threatened to again stall disarmament negotiations with North Korea that began Monday.

"North Korea has pledged within the framework of the six-party talks that these funds will be used solely for the betterment of the North Korean people, including for humanitarian and education purposes," U.S. Treasury official Daniel Glaser told reporters in Beijing.

The Treasury announcement was a turnabout for the administration. Last week, Stuart Levey, undersecretary for terrorism and financial intelligence, told reporters that Treasury had uncovered "systemic failures by Banco Delta Asia to apply appropriate standards and due diligence" and a "gamut of illicit activities that the bank facilitated on behalf of North Korean-related clients."

But the six-nation talks aimed at ending North Korea's nuclear program were deemed more important. U.S. officials said they decided they would not allow a dispute over such a relatively small amount of money to harm the process. So the Treasury, despite the misgivings of some top officials, agreed to back down on a point of principle.

The four-year-old talks had been previously blocked for more than a year because North Korea insisted on resolving the Banco Delta Asia matter before cooperating. North Korea will now need to work out legal and technical details with Macau monetary authorities, Glaser said.

The Treasury Department's final rule against Banco Delta Asia, which was accused of laundering illicit money from North Korea, remains in place, he said.

The time frame for the return of the money will be conducted under Macanese law. "It's not going to happen overnight," Glaser said.

"But I want to add from the U.S. perspective, we want it to happen as soon as possible," interjected the chief U.S. negotiator, Assistant Secretary of State Christopher R. Hill.

Hill said much work remained to be done, with a deadline for shutting down and sealing the North Korean reactor at Yongbyon coming up in mid-April. There are also upcoming deadlines for delivering fuel oil to North Korea and for other steps in disabling North Korea's nuclear program in return for economic assistance.

Staff writer Glenn Kessler in Washington contributed to this report.


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