N. Korea Holds Off On Reactor Pledge

By Edward Cody
Washington Post Foreign Service
Saturday, April 21, 2007

BEIJING, April 20 -- Despite assurances from U.S. and Macau officials, North Korea said Friday it is still negotiating over possession of $25 million in North Korean accounts frozen by Macau banking authorities for 21 months.

U.S. officials have repeatedly declared the complicated financial dispute resolved, but it has persisted in preventing implementation of an agreement Feb. 13 under which North Korea pledged to close its main nuclear reactor and allow verification by inspectors from the International Atomic Energy Agency.

That accord was hailed as a breakthrough in nearly four years of on-again, off-again multinational talks aimed at dismantling North Korea's nuclear weapons program. Under its terms, the U.S. Treasury was to free the funds within 30 days, and North Korea was to stop operations at the Yongbyon reactor within 60 days. Both deadlines were missed, leaving the six-nation nuclear talks stalled again.

The funds dispute centered on U.S. Treasury allegations that a number of accounts in the Macau-based Banco Delta Asia were being used to launder illicit North Korean earnings. After prolonged negotiations among U.S., Chinese, Macau and North Korean banking officials, the U.S. Treasury announced April 10 that Macau's Monetary Authority was ready to release the disputed money.

On the strength of that announcement, the chief U.S. negotiator, Assistant Secretary of State Christopher R. Hill, said North Korea had no further reason not to honor its pledge to shut down the reactor.

But the official Korean Central News Agency on Friday released a letter from Ri Je Son, head of the North Korean Atomic Energy Department, saying "brisk" negotiations are still underway on what to do about the money. The Macau Monetary Authority refused to explain why North Korea would say talks are continuing.

In Washington, a senior State Department official said North Korean officials had informed the United States that they are working to transfer the money. "My understanding is that it is going okay and they have not encountered any problems," he said, "but I don't know if they have succeeded in transferring anything."

The official, who requested anonymity in order to speak more freely, said the North Koreans are "very suspicious" and wanted to be sure they have the cash in hand before fulfilling their obligation to shut down their reactor. But he remained confident North Korea would freeze the reactor once it has the money, pointing to the statement issued Friday as a sign of good faith. "We have to wait until it actually happens," he said.

In his letter, Ri did not describe what the negotiations are about. Colin McAskill, a British banker, has asserted that $7 million of the total represents legitimate earnings from trade with North Korea and should remain in accounts held by his Daedong Credit Bank. Japanese press reports, meanwhile, have said a portion of the money has been transferred to North Korea while some of it remains in dispute.

The North "remains unchanged in its will to implement the Feb. 13 agreement," Ri wrote. "But what matters is that it cannot move as the issue of frozen funds has not yet been completely settled."

Ri's letter, addressed to Mohamed ElBaradei, head of the IAEA, was seen as an expression of continued goodwill despite the missed deadlines. In it, Ri repeated assurances that North Korea will invite agency inspectors to supervise the Yongbyon reactor's closing "the moment the actual unfreezing of the frozen fund in the bank has been confirmed."

Staff writer Glenn Kessler in Washington contributed to this report.

© 2007 The Washington Post Company