By KWANG-TAE KIM
The Associated Press
Thursday, April 19, 2007; 11:38 AM
SEOUL, South Korea -- North Korea's chief envoy stormed out of economic talks with South Korea on Thursday after the South urged its neighbor to honor its nuclear disarmament pledge.
South Korea had wanted to use this week's meetings in Pyongyang to press the communist country to implement a Feb. 13 agreement to start dismantling its atomic weapons programs, possibly using rice aid as leverage.
The North failed to meet a Saturday deadline under the pact to shut down its sole operating nuclear reactor, saying it wanted to make sure a separate financial dispute was resolved first.
South Korea's chief delegate, Chin Dong-soo, urged North Korea to quickly implement the nuclear deal, saying it would be "a shortcut to draw firm support from the international community on inter-Korean economic cooperation," South Korean spokesman Kim Jung-tae said, according to pool reports.
The North's chief delegate, Ju Dong Chan, made unspecified angry comments to South Korean officials and walked out, the reports said.
Ju objected to tying the nuclear deal to inter-Korean economic cooperation, Kim said.
The North also rejected calls from a Washington lawmaker to return a U.S. warship captured in 1968 while on an intelligence-gathering mission off the North Korean coast.
"Return? What do you mean by return? (The ship) is such an important thing," Ju told Chin, who asked about the USS Pueblo during a lunch meeting that preceded the economic talks.
"As we already decided not to do that, that's it," Ju said, shaking his head.
The Pueblo is now on display beside a Pyongyang river, the only active-duty U.S. warship in the hands of a foreign power.
In Washington, Sen. Wayne Allard, R-Colo., reintroduced a resolution Wednesday demanding that North Korea return the ship and sent a letter to Secretary of State Condoleezza Rice suggesting she look into the matter.
The economic talks had been delayed nearly eight hours after North Korea demanded to see a draft statement in which South Korea pledged to provide rice aid to the North even before negotiations began, pool reports said. The North later withdrew the demand.
Seoul has agreed to discuss the North's request for 400,000 tons of rice at this week's talks _ the 13th such session _ but it was not clear if it would go ahead with shipping the food due to the lack of progress on the disarmament agreement.
Following the February nuclear deal, South Korea restarted most aid shipments to the North that had been suspended amid tensions over the North's missile and nuclear tests last year.
But Seoul has continued to withhold food assistance in a symbolic gesture to put pressure on the North to carry through with its nuclear obligations.
The North has said it is waiting for a separate financial dispute to be resolved involving $25 million in funds frozen in a Macau bank that Washington blacklisted for alleged complicity in North Korean money laundering and counterfeiting.
At the economic talks, Ju proposed setting up a branch of a North Korean bank in an industrial zone jointly run with South Korea in the North's border city of Kaesong. Twenty-two South Korean firms operate factories in the enclave, funneling $740,000 to the communist regime every month in unmonitored transactions that could be potentially diverted to weapons programs.
On Wednesday, South Korean President Roh Moo-hyun said the delay in moving on the nuclear agreement had been due to a "technical glitch" but that the problem was almost solved.
A Japanese news report Thursday said North Korea has begun transferring some of its funds from Macau to an unidentified bank in Southeast Asia.
The Yomiuri newspaper said it would take more than a month for the transfer of all 52 accounts to be completed. The paper quoted unidentified officials related to North Korean banks holding accounts in the Macau bank, Banco Delta Asia.
A Banco Delta Asia spokesman did not immediately return a reporter's call. Spokeswoman Wendy Au at the Monetary Authority of Macau declined comment.
The Macau bank had among its clients a North Korean bank blacklisted in June 2005 by the U.S. Treasury as a "weapons of mass destruction proliferator and supporter," an audit report by the accounting firm Ernst & Young said. The name of the North Korean bank was blacked out in the audit, a copy of which was obtained by The Associated Press.
The North Korean bank's account at Banco Delta Asia was closed in September 2005.
In a response included in the audit report, the Macau bank said it didn't take action against the client because it didn't know it was on a blacklist.
The audit, which covers Banco Delta Asia's activities from Jan. 1, 2002, to Sept. 17, 2005, also said the bank did not keep sufficient records of business with its North Korean clients and did not follow anti-money laundering guidelines issued by Macau monetary authorities.
Banco Delta Asia said in the audit that it trusted its North Korean customers were legitimate because the government had total control in the country.
The report said the bank bought gold from North Korean clients, helped handle foreign exchange margin trading for them and provided them with letters of credit.