N. Korea Says Funds Issue Is Resolved

BEIJING, June 25 -- North Korea announced Monday that a prolonged dispute over $25 million frozen in Macau bank accounts has finally been resolved, opening the way for closure of its main nuclear reactor.

The declaration, by a Foreign Ministry spokesman on the official Korean Central News Agency, said North Korea is now ready to carry out an agreement reached in Beijing on Feb. 13 to shut down the reactor and allow inspections by the International Atomic Energy Agency to make sure it does not resume operation.

Olli Heinonen, the agency's deputy director general for safeguards, was scheduled to arrive Tuesday in Pyongyang, the North Korean capital, for discussions on closing the reactor, in nearby Yongbyon, and setting up regular inspections by IAEA experts.

The closure -- the first step in an orchestrated schedule aimed at complete denuclearization -- was delayed for months because North Korea insisted the disputed funds be returned before it would act. A bank in the Russian Far East, Dalcombank, said the money was deposited Monday in an account belonging to the North Korea Foreign Trade Bank, ending the long standoff.

"As the funds that had been frozen at Macau's Banco Delta Asia have been transferred as we demanded, the troublesome issue of the frozen funds is finally resolved," the Foreign Ministry statement said.

The ministry spokesman said the way is open for "action-for-action" steps, meaning North Korea will carry out its obligations under the Feb. 13 agreement in tandem with action by others, including the United States, to provide economic aid and improve diplomatic relations with the isolated Communist government in Pyongyang.

"As part of that, there will be discussions with delegates on June 26 in Pyongyang on shutting down nuclear facilities and inspections and monitoring," the agency quoted the spokesman as saying, referring to the IAEA inspectors.

Assistant Secretary of State Christopher R. Hill, the chief U.S. nuclear negotiator who was in Pyongyang for two days last week, told reporters in Tokyo that he expected the reactor to be closed down and sealed by mid-July. He has called for swift resumption of the six-nation denuclearization negotiations -- which involve North and South Korea, Japan, Russia, China and the United States -- and renewed focus on the next steps agreed to in February, which include providing more aid for North Korea and dismantling of the Yongbyon reactor.

The $25 million in North Korea money was frozen by Macau's monetary authorities in 2005 after the U.S. Treasury alleged part of it was connected to money laundering and counterfeiting, leading to North Korea's long boycott of the denuclearization talks. North Korea returned to the talks and signed on to the Feb. 13 agreement only after Hill pledged to get the funds liberated. For months, diplomats and bankers from a half-dozen nations wrangled over how to make that happen, while North Korea watched and waited.

The back-and-forth -- with no bank wanting to be seen handling tainted money -- eventually resulted in transfer of about $23 million 10 days ago to the Federal Reserve Bank of New York. From there it was transferred to the Russian central bank and, after still more discussions, on to Dalcombank for deposit in the North Korean account. The rest of the money remained in Macau pending settlement of disputed ownership claims.