- The Washington Times - Saturday, June 9, 2007

SEOUL — Pyongyang”s recent missile tests are not raising tensions, South Korea”s leading policy-maker on North Korea said yesterday, adding that Seoul is working with concerned governments to resolve the issue of frozen funds that are delaying a nuclear disarmament deal.

With the continued holdup in the implementation of an agreement on North Korean nuclear dismantlement in the background, Unification Minister Lee Jae-joung told foreign reporters that Thursday”s missiles — fired into waters off the peninsula”s west coast — were routine annual tests.

“We don”t think this is anything out of the blue; we don”t think it increases tensions,” he said.

Washington has called the tests “not constructive.”

South Korean press, citing unnamed defense sources, said the North had fired two anti-ship missiles. These are less of a threat to regional security than ballistic missiles capable of reaching Japan and possibly the United States. However, in 1999 and 2002 there were fatal inter-Korean naval clashes on the west coast crab-fishing grounds.

On May 25, the North fired two missiles off the east coast on the same day that Seoul launched its first Aegis-equipped destroyer.

Missile tests are customarily a move by Pyongyang to call attention to itself. The latest volley may be an expression of frustration over the intractability of the funds issue.

North Korea has refused to implement the Feb. 13 agreement until funds frozen in Macao-based Banco Delta Asia are released. The deadline for implementation of the agreement was April 14.

While Washington insists it has “fulfilled all its obligations” on freeing the funds, the communist state reportedly is demanding the right to remit the $25 million through the international financial system.

International financial institutions are apparently unwilling to handle the transactions. The U.S. Treasury Department has said portions of the money are related to illicit activities including counterfeiting.

Mr. Lee said it is “just a matter of time” before the issue is resolved. Seoul is looking at “various alternatives” with China and the United States to deal with the dispute, which he described as “legal and technical.”

On Thursday, Foreign Minister Song Min-soon said Seoul was exploring “dramatic measures” to overcome the problem.

Mr. Lee also said that Seoul, which cooperates extensively with North Korea in the economic sphere and has a bank branch set up in the joint North-South industrial zone at Kaesong, would not use one of its own banks for the transfer.

“The issue is not just between the two Koreas; it involves the international finance system,” he said. “It should be resolved accordingly.”

Washington has repeatedly said its patience is not inexhaustible on the issue, but has refrained from making provocative statements, despite the continued delay.

Mr. Lee said that inter-Korean economic cooperation projects would continue, but added that Seoul was standing firm on withholding food aid. Ministerial-level talks broke off with no agreements last week after Seoul said it was holding promised rice aid until the North begins to implement the nuclear dismantlement agreement.

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