- The Washington Times - Sunday, March 18, 2007

BEIJING (AP) - North Korea sent mixed signals on nuclear disarmament yesterday, saying it was preparing to shut down its main plutonium program but that no action would be taken unless frozen funds were released from a Macao bank.

Arriving from Pyongyang for follow-up meetings on a disarmament agreement reached last month, North Korean nuclear envoy Kim Kye-gwan told reporters that North Korea “will not stop its nuclear activity” until all of the $25 million in Banco Delta Asia was returned.

But later in the day at the talks, another North Korean diplomat, Kim Song-gi, said the regime has “begun preparations to shut down its Yongbyon nuclear facility” as part of a Feb. 13 agreement, South Korean nuclear envoy Chun Yung-woo told reporters afterward.

The diplomat also promised that North Korea will submit a list of its nuclear programs and disable its nuclear facility “as soon as the right conditions are created,” Mr. Chun said.

U.S. Assistant Secretary of State Christopher Hill, the top American envoy, said late yesterday that North Korea was still “fulfilling their obligations.”

The fate of the frozen funds, the result of a blacklisting by U.S. authorities, has become a central issue in the disarmament talks.

The United States promised to resolve the bank issue as an inducement to North Korea to disarm, but its solution an order in the past week to U.S. banks to sever ties with the Macao bank has been criticized by China and now North Korea’s envoy.

Under the Feb. 13 agreement which involves the United States, China, Japan and Russia as well as the two Koreas North Korea has 60 days to shutter the Yongbyon reactor and a plutonium processing plant, which have produced material for a nuclear weapons program.

U.N. monitors are supposed to be allowed into North Korea to verify the shutdown and, after they have confirmed it, North Korea is to receive energy and economic assistance.

The U.S. promise to resolve the Banco Delta Asia funds, which U.S. authorities suspect may be tainted by counterfeiting or money laundering, was part of a side agreement.

“We are on schedule for this first phase,” Mr. Hill told reporters after daylong meetings with delegates from the other five countries.

A senior U.S. Treasury Department official traveled to Macao yesterday to discuss the issue. The government of Macao a semiautonomous Chinese territory has the authority to decide whether to release any of the funds, which have been frozen since 2005.

“I think it is important to emphasize this was a Macanese action to freeze the funds, and it would be a Macanese process to determine” whether to release them, U.S. Deputy Assistant Treasury Secretary Daniel Glaser told reporters.

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