- The Washington Times - Tuesday, June 12, 2007

North Korea purchased some two dozen centrifuges from the Pakistani nuclear supplier network headed by A.Q. Khan and must account for the equipment as part of the stalled nuclear agreement, said a senior Bush administration official.

The Feb. 13 nuclear accord reached by six nations in Beijing is being held up by $24 million in North Korean funds frozen in Macao”s Banco Delta Asia because of money-laundering concerns.

However, the senior official said the money is expected to be released soon and that the administration is set to promise not to prosecute the bank that agrees to handle the transfer, the senior official said.

“Any entity that is going to be moving that money is going to have to have some assurances because of the permanent 311 that”s been put on Banco Delta Asia,” said the senior official, who specializes in North Korean issues and who spoke to The Washington Times on the condition of anonymity.

The assurances are likely to be in the form of a Treasury Department “no action” letter that promises not to prosecute the bank under the USA Patriot Act money-laundering provision known as Section 311, which bars U.S. banks from conducting transactions with banks engaged in money laundering.

Treasury Department spokeswoman Mollie Millerwise declined to comment on the letter but said yesterday that the department is working with Russian authorities on the funds transfer from Macao.

The senior official said Washington fulfilled its part of the February agreement by not opposing the release of the funds, but Pyongyang “moved the goal posts” by demanding that the U.S. government facilitate the transfer.

“We”ve agreed not to interpose any objections to the release of that money, although some of that was obtained through illicit means,” the official said. “Now we’re going to look at how we can facilitate the transfer of that money.”

The funds could be shifted in the near future, the official said.

Of the centrifuges and uranium-enrichment goods that are the “central” issue of North Korean denuclearization, the senior official said, Pyongyang must account for the equipment.

“We know they acquired … close to two dozen centrifuges, P-1 and P-2 design, with P-2s being the most sophisticated,” the senior official said.

The P-1 and P-2 designs were sold by the Khan network to Libya, Iran and North Korea. Large numbers of the machines are needed to spin uranium hexafluoride gas to produce highly enriched uranium, the fuel for nuclear bombs.

Additionally, North Korean purchasing agents bought special aluminum tubing used for centrifuges and uranium enrichment.

“When you put all those pieces together, it spoke to a clear intent to have basically a production-scale capability to enrich uranium,” the official said.

Under the first phase of the February nuclear accord, North Korea must shut down its plutonium-fueled reactor and related facilities at Yongbyon and allow International Atomic Energy Agency inspectors back into the country to monitor the program. The second phase calls for dismantling all nuclear programs, including the uranium-enrichment facilities.

The senior official said U.S. intelligence agencies assess that the first phase of the accord can be completed and that “the North Koreans would abide by that commitment.”

However, U.S. intelligence assessments indicate problems in getting North Korea to abide by the second phase of the accord.

“When you talk about then looking at all nuclear programs, disabling and eventually dismantling all those nuclear programs in a verifiable comprehensive way, I think that’s where the assessment is less concrete,” the official said. “I think there are a number of people who say it’s going to be very heavy lifting and it will be somewhat arduous.”

The official sought to clarify public statements about U.S. intelligence agencies’ confidence in the North Korean uranium program. No change has been made in 2002 U.S. intelligence assessments about the existence of the equipment for the uranium-enrichment program, and Pyongyang had been “going full-speed ahead based on everything we were seeing,” the official said.

What changed was the intelligence community’s confidence level about the pace of the uranium program.

“At the end of 2006, because we were seeing less transactions, the confidence level went from high confidence to moderate confidence that the program to acquire a capability to enrich uranium was still in existence,” the official said. “But that is a central issue.”

Further complicating the matter, North Korea’s government admitted in October 2002 that it had the covert uranium-enrichment program but later denied having any such program, a position it holds today.

The senior official said the North Koreans have to resolve the issue whatever the case.

“We don’t know if they kept it in the box. The point is, there’s lack of clarity as to what they did with the significant amount of acquisition that spoke to a production-scale uranium-enrichment capability,” the official said.

North Korea tested cruise missiles during military exercises and undermined the nuclear talks by raising tensions in the region, the official said.

Christopher Hill, the assistant secretary of state for East Asia, said in a C-SPAN interview Wednesday that the North Koreans may have reverse-engineered 12 to 20 centrifuges in setting up a series of a few hundred to a few thousand machines.

“And they’ve got to stop it,” Mr. Hill said. “And they’ve got to abandon the program. And get rid of all the equipment. And we’ll work with them on that.”

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