US still confident on North Korea disarmament process

A U.S. Embassy spokeswoman said Friday that a mid-April is deadline to begin North Korea's disarmament process can still be met. But nearly two weeks of talks to resolve a dispute over frozen Pyongyang funds failed.

The standoff over the US$25 million (EUR18.7 million) being held in a Macau bank has threatened the next step in a February agreement committing North Korea to shut down its main nuclear facility by April 14 in return for economic aid and political concessions.

A U.S. government negotiating team led by Daniel Glaser, U.S. deputy assistant treasury secretary for terrorist financing and financial crimes, held 13 days of talks in Beijing with officials from China, North Korea, South Korea and the Bank of China on the issue.

Glaser and his delegation left for Washington Friday afternoon with no apparent breakthrough.

"Our discussions and common efforts with all parties continue," said Susan Stevenson, a U.S. Embassy spokeswoman in Beijing.

"We believe that it is possible to meet the 60-day deadline and are working with the other parties to accomplish that goal," she said.

Stevenson did not say when the parties would meet again, or what had stalled the talks.

The funds were frozen after Washington blacklisted the small Banco Delta Asia for alleged complicity in money laundering and other illicit activities by North Korea.

Pyongyang said the freeze showed Washington's hostile intentions toward it and refused to return to international talks on its nuclear program for more than a year.

It returned to the negotiating table late 2006, after it tested a nuclear bomb, and agreed in February to a landmark disarmament agreement after Washington promised to resolve the financial row.

But that has not happened and Pyongyang refused discussions on disarmament until it received the funds. Officials have said "technical problems" were delaying the money transfer.

A news report in Seoul on Friday said the money will be returned to Pyongyang via a bank in Hong Kong.

South Korea's JoongAng Ilbo newspaper, citing an unidentified high-level government official, said the United States, China and Banco Delta Asia came to the agreement during the Beijing talks.

Stevenson would not comment on the report and a U.S. official in Beijing, who refused to be identified because of the sensitivity of the talks, said the report was false. The South Korean Foreign Ministry declined to comment , and calls to the Macau bank and Macau's monetary authority went unanswered Friday.

The report said the Bank of China in Hong Kong would be the likely intermediary. Officials at the bank did not immediately respond to messages left by The Associated Press.

The problems holding up the transfer of the money are believed to be related to difficulties finding a bank willing to accept the allegedly tainted North Korean funds.

The Feb. 13 deal calls for North Korea to shut down its main nuclear reactor by mid-April in exchange for energy aid. But officials voiced growing skepticism this week that the deadline would be met as the financial dispute dragged on.

The nuclear talks involve China, Japan, the two Koreas, Russia and the United States.