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Last Updated: Tuesday, 12 June 2007, 07:58 GMT 08:58 UK
Russia to help N Korea funds row
Satellite view of North Korean nuclear reactor at Yongbyon - file photo 2002
Pyongyang will not dismantle its programme until it has its funds
Russia is to help resolve a banking row with North Korea that is blocking progress on a deal over Pyongyang's nuclear programme, US officials say.

Russia is working with the US on how to transfer $25m (12.7m) in North Korean funds currently frozen in a bank in Macau, a US Treasury official said.

North Korea has insisted it receives the funds before it begins shutting down a key nuclear reactor.

The move could help restart momentum on the stalled 13 February deal.

Under the agreement, North Korea agreed to shut down and seal its Yongbyon nuclear reactor within 60 days in return for aid.

But the deadline came and went as the row over the funds rumbled on.

'Towards critical mass'

US Treasury spokeswoman Molly Millerwise confirmed that Washington was working with Russia on how to transfer the funds.

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"We appreciate the willingness of the Russian government to facilitate this transaction and the good cooperation of the Macanese authorities," she said, but gave no further details.

The money has been frozen in Macau's Banco Delta Asia since 2005, when the US accused it of acting as a conduit for money earned by Pyongyang from illegal activities.

The US blacklisted the bank, but since the February deal has unblocked Pyongyang's funds for transfer. But banks have balked at handling the money.

Russia's Far East Commercial Bank is now seen as a likely conduit, The Wall Street Journal reported on Monday.

South Korean negotiator Chun Yung-woo, in Washington for talks with US counterpart Christopher Hill, said that all parties were committed to resolving the banking dispute.

"I think the energy to get this behind us is moving towards a critical mass," Yonhap news agency quoted him as saying.

North Korea has said in the past that it will begin the process of closing its reactor once it has received its funds.

The latest move comes a week after the North carried out short-range missile tests off its west coast. It carried out a similar test off its east coast at the end of May.

The US described the launches as "not constructive".

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