Six-Party Talks Break Down As N. Korea Balks on Funds

By Maureen Fan
Washington Post Foreign Service
Friday, March 23, 2007

BEIJING, March 22 -- The six-nation talks aimed at dismantling North Korea's nuclear program broke down in Beijing on Thursday as top envoys from Russia and North Korea flew home and the Chinese hosts called a recess.

Delegates from Pyongyang, North Korea's capital, had been refusing since Tuesday to take part in joint sessions until $25 million in frozen North Korean funds was transferred. Their departure followed repeated public assurances by Assistant Secretary of State Christopher R. Hill, the chief U.S. negotiator, that the funds issue would not derail the talks.

Chinese Vice Foreign Minister Wu Dawei had convened the negotiations based on U.S. assurances that the banking issue had been resolved and had argued that diplomacy, rather than sanctions, would be most effective in dealing with North Korea.

The goal of the talks is to persuade the secretive communist state to give up its nuclear program in return for aid and diplomatic recognition. The breakdown underscored a fundamental lack of trust that makes it easy for an ostensibly minor issue to suspend the difficult process of nuclear disarmament.

Although all six parties reaffirmed their commitment to agreements made so far, some officials conceded privately that the suspension of talks suggested North Korea might hold up future negotiations over other technical issues.

"The breakdown raises the question as to whether the North is really serious about denuclearization," said Peter M. Beck, a Seoul-based analyst with the International Crisis Group. "It's clearly not a question of if they're getting their money back or how much of it."

Officials said there had been no discussions about the next steps toward ending the nuclear program.

North Korean negotiator Kim Gye Gwan and Russian envoy Alexander Losyukov caught planes home Thursday at about the same time. A North Korean government source in Beijing told Reuters news agency, "Our delegation went home because there was no progress on the promised transfer of the funds."

The Pyongyang government is waiting for the return of $25 million from dozens of accounts at Banco Delta Asia, a bank in Macau that U.S. regulators have accused of laundering money for North Korea.

Treasury Department officials last week agreed to the return of about half the money, saying that a lengthy investigation had shown that the rest was connected with illicit transactions. But they did an abrupt about-face this week, agreeing to return all the money.

The turnabout, aimed at moving the nuclear discussions forward, came without any preparations for transferring the funds. North Korea, which ended the last round of six-party talks over the frozen accounts issue, refused to take U.S. officials' word that the transfer would soon take place, demanding to see the money first.

The decision to return all the money has sparked controversy inside and outside the U.S. government. On Thursday, the North Koreans' blocking of the talks heightened the criticism.

"It is embarrassing," said David Asher, who headed a task force examining North Korean criminal activities during President Bush's first term. He likened the U.S. move to giving money back to a thief and said it would simply encourage North Korea to test the limits. "We are trying to pay them to act good," he said. "But they think they are getting paid because they acted bad."

Michael J. Green, formerly the top Asia specialist at the White House, approves of the nuclear agreement reached in February but warned, "We have to be careful not to expend all of our chits at this stage and not let North Korea regain the initiative."

Wu said the main cause of the delay was difficulty finding a bank willing to transfer the funds.

Despite the breakdown, diplomats said they remained confident that all parties were still committed to the Feb. 13 agreement to dismantle North Korea's reactor at Yongbyon and that discussions on subsequent steps would continue later. "All six parties are now in the same boat, and the boat has already started its voyage," Wu said. "No one can get off the boat. We have to work together to make progress."

Staff writer Glenn Kessler in Washington and news researcher Jin Ling contributed to this report.

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