April 10, 2007 / 4:46 PM / 12 years ago

N.Korea funds freed as nuclear deadline nears

SEOUL (Reuters) - The United States said on Tuesday Macau had unblocked about $25 million (12.7 million pounds) in frozen North Korean funds and urged Pyongyang to take steps to shut down its Yongbyon nuclear plant by a weekend deadline.

Christopher Hill, U.S. Assistant Secretary of State and chief negotiator in the six-party talks on North Korea's nuclear program, is surrounded by reporters after meeting Japanese Vice Foreign Minister Shotaro Yachi at the Foreign Ministry in Tokyo April 10, 2007. REUTERS/Yuriko Nakao

The reclusive state has insisted it will only close the reactor, which supplies it with weapons-grade plutonium, once the funds linked to North Korean interests and frozen since 2005 in Macau’s Banco Delta Asia were freed.

Under an international deal agreed two months ago, North Korea has until Saturday to shut down its Yongbyon atomic plant as a first step toward ending its nuclear weapons program.

“The bottom line is that they have unblocked these accounts and the ... authorised account holders can withdraw the funds from those accounts,” U.S. State Department spokesman Sean McCormack said in Washington.

The Monetary Authority of Macau issued a written statement that made no mention of unblocking the accounts, but Japan’s Kyodo news agency quoted an authority spokeswoman as saying account holders could now withdraw or transfer the funds.

A Banco Delta Asia spokesperson also said the relevant account holders were free to do as they wished with the money.

The funds were frozen after Washington accused the Macau bank of being involved in money laundering, a step that greatly complicated diplomatic efforts to persuade North Korea to abandon its pursuit of nuclear weapons.

Pyongyang agreed in September 2005 to give up its nuclear programs in talks that include the two Koreas, China, Japan, Russia and the United States but then refused to come to the talks for more than a year because of the financial dispute.

After conducting its first nuclear test on October 9, North Korea resumed talks that produced a February 13 agreement giving Pyongyang 60 days to shut Yongbyon in return for energy aid.

Furious that the money still had not been freed, North Korea in March walked out of a round of six-country talks.

‘CONCERN’ ABOUT SATURDAY DEADLINE

It was unclear how North Korea would react to the availability of the funds and whether it would meet the Saturday deadline. The United States said there may not be enough time to close down the nuclear reactor safely by then.

“We welcome the step (by Macau authorities), we think it’s a fair step and we think it’s now time to get back on denuclearization,” Christopher Hill, chief U.S. negotiator with North Korea, told reporters in Seoul. “This is precisely what they wanted, which was to have the accounts in BDA made available to the authorised account holders.”

The State Department stopped short of demanding outright that North Korea meet the deadline and suggested it might not be possible to shut Yongbyon safely by Saturday.

“I know that you are bumping up against the technical ability to do that safely,” McCormack said. “We’ll see where we are on Saturday. We think that ... everybody should act in such a way that they intend to meet the 60-day deadline.”

Asked if he thought the deadline will be missed, Chinese nuclear envoy Wu Dawei, speaking after he met Hill in Seoul, told reporters: “There is that concern.”

Hill is scheduled to discuss the nuclear issue in Beijing on Thursday and Friday and to return to the United States on Saturday. The State Department said members of the six-party talks may consult over the weekend about whether the deadline had been met but said there was no meeting scheduled.

Hill is also expected to meet in Seoul on Wednesday with New Mexico Gov. Bill Richardson, who was in North Korea this week to receive the remains of six U.S. soldiers killed during the 1950-53 Korean War.

NBC television reported North Korean officials had told Richardson that once the money was released, U.N. nuclear inspectors, expelled in 2002, would be allowed back in.

Additional reporting by Arshad Mohammed and Paul Eckert in Washington, Chisa Fujioka and Elaine Lies in Tokyo, Jack Kim and Jon Herskovitz in Seoul, Ben Blanchard in Beijing and James Pomfret in Hong Kong

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