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Last Updated: Monday, 19 March 2007, 11:44 GMT
US 'resolves N Korea funds row'
Spent nuclear fuel rods at Yongbyon facility in North Korea
The North last month agreed to shut down the Yongbyon reactor
The US says it has resolved a financial row with North Korea, as talks on Pyongyang's nuclear programme resume.

The US said $25m of North Korean funds, which were frozen in a Macau bank amid money laundering allegations, would be transferred to an account in Beijing.

The North has not yet officially commented, but had warned it would not proceed with a deal to shut its nuclear reactor at Yongbyon without the money.

Delegates from the six nations involved in the deal are meeting in Beijing.

They are discussing progress on the 13 February agreement, in which Pyongyang agreed to "shut down and seal" the Yongbyon reactor within 60 days in return for substantial fuel aid.

'Assurances'

Last week the US ended an inquiry into the bank affair, opening the door for Macau to free the frozen North Korean funds.

US Deputy Assistant Treasury Secretary Daniel Glaser said the $25m, held in the Banco Delta Asia in Macau, would be transferred to a Bank of China account in Beijing.

Chief US negotiator Christopher Hill
We can now move on, said chief US negotiator Christopher Hill

Mr Glaser said the US had received "assurances" that the funds would then be used for educational and humanitarian programmes in the North.

The issue of the frozen North Korean assets has long been seen as a stumbling block to negotiations.

North Korean envoy Kim Kye-gwan reiterated his country's position again at the start of Monday's talks, officials quoted him as saying.

He told his fellow envoys from China, South Korea, the US, Japan and Russia that the North would close Yongbyon once the financial sanctions were fully lifted.

Mr Kim also "questioned [Japan's] qualifications to remain participants" of the talks, Tokyo's chief envoy said after the meeting.

Recent bilateral talks in Vietnam collapsed after the North reportedly objected to Japan's insistence on discussing the abductions of Japanese citizens to train North Korean spies in the 1970s and 80s.

Japan has refused to fund any part of the fuel aid pledged as part of the 13 February nuclear deal, until the issue of the abductions is resolved.

'High price'

The BBC's Charles Scanlon in Seoul says the US decision to hand back all the funds frozen in Macao looks like a humiliating climb-down after the Bush administration had long rejected any negotiation over what it called the North's criminal activities.

But following Pyongyang's missile and nuclear tests last year, Washington badly wants a deal to stop the North from adding to its arsenal.

The bank deal is a reminder of the high price North Korea will demand for any further steps to curtail its nuclear activities, our correspondent says.

The meeting in Beijing, which is due to last two days, is expected to look at how North Korea plans to fulfil its promise to shut down its reactor and allow international inspectors into the country for the first time in four years.

But there is still a long way to go. Ahead of Monday's resumption, Pyongyang condemned joint US-South Korean military exercises set for this month, saying they were intended to "poison the atmosphere of the talks".

The state run Rodong Sinmun newspaper said the North was ready "for both war and talks".




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Background to the financial dispute





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