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Last Updated: Saturday, 7 April 2007, 00:35 GMT 01:35 UK
N Korea fund row 'solution found'
North Korean flag flies at the embassy in Beijing, China
North Korea says progress depends on the return of the money
The US says it has found a way to return North Korean funds frozen in a Macau bank, possibly ending a row that has stalled progress on a nuclear deal.

A State Department spokesman said banking officials had agreed a "pathway" for transferring the $25m (12.7m) back to North Korea.

Pyongyang has insisted on the return of the money before moving ahead.

Diplomats are concerned the row means North Korea will miss an imminent deadline to close a key nuclear plant.

Under the 13 February agreement, North Korea agreed to shut down and seal its Yongbyon nuclear plant within 60 days in return for energy aide and other incentives from its dialogue partners - the US, China, Russia, South Korea and Japan.

But progress on implementing the landmark deal has been delayed because of the financial dispute.

'Technical pathway'

US negotiators have been holding talks in Beijing for several days on resolving the row.

The US announced on 14 March that it had completed an investigation into money-laundering allegations against Macau's Banco Delta Asia.

This paved the way for money frozen since September 2005 to be transferred to a North Korean account in China.

But the transfer has still not taken place, amid reports Chinese banks do not want to receive the money in case it damages their credit ratings.

However, State Department spokesman Sean McCormack said officials had now identified "the technical pathway by which these funds may be returned".

He said it was now up to the authorities in Macau to handle the transfer of the money.

Mr McCormack also said that US nuclear negotiator Christopher Hill would be returning to the region on Sunday, in an indication that the implementation of the deal could be getting back on track.

Mr Hill will visit Tokyo, Seoul and Beijing for talks, he said.

Under the deal, North Korea must close its nuclear plant on 14 April.

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