N. Korea's frozen $20M on the move

Source: CNN, June 15, 2007.

SEOUL, South Korea (AP) -- Money at the heart of a dispute that caused North Korea to delay its nuclear disarmament was finally making its way Friday to the communist nation after months of delay.

The transfer of funds previously frozen in a Macau bank could lead North Korea to start shutting down its nuclear weapons program. But the North is certain to want to count every last penny of its $25 million before fulfilling a February pledge to stop making atomic bombs.

"The transfer is in progress," South Korea's chief nuclear envoy, Chun Yung-woo, told reporters Friday. "Let's wait and see how long it takes for North Korea to confirm it."

Chun, arriving from Washington where he met his U.S. counterpart over the nuclear standoff, did not provide further details of the transfer. He said resolving the bank dispute constitutes "removing the first obstacle to implementing" the February disarmament deal.

"The future task of denuclearization is much more difficult than the (banking) issue," he said.

The money had been frozen at Macau's Banco Delta Asia since 2005, when the U.S. blacklisted the bank for allegedly helping the Pyongyang regime pass fake US$100 bills and launder money from weapons sales.

The North made the money's release its main condition for disarmament and boycotted international nuclear talks for more than a year, during which it conducted its first-ever bomb test in October.

But to win the North's promise to start dismantling its nuclear program, the U.S. agreed to give its blessing for the money to be freed and said it would happen within 30 days. The transfer has instead taken more than four months as the North insisted that it be sent electronically to another bank, apparently to prove the money is now clean.

Macau's secretary of economy and finance said Thursday the money has been transferred, but it remained unclear if it was the entire amount or whether it had reached its destination.

"Banco Delta Asia transferred more than $20 million out of the bank this afternoon in accordance with the client's instruction," Francis Tam told reporters on the sidelines of a business gathering.

North Korea could seize on any shortage of funds to hold off on disarmament. Since the latest nuclear standoff began in late 2002, Pyongyang has repeatedly displayed its profound lack of trust of the U.S. and blamed any sign of American hostility as a reason to stall arms talks.

The North did not yet comment on the transfer.

Japan's Chief Cabinet Secretary Yasuhisa Shiozaki on Friday pressed Pyongyang to take concrete action regardless of the fund issue.

"We strongly urge North Korea to carry out the measures they have committed to as early as possible regardless of the" bank issue, he said.

Japanese Foreign Minister Taro Aso expressed skepticism that the money transfer would immediately resolve the deadlock, Kyodo News agency reported.

"Even though the fund transfer problem is resolved, North Korea could come up with more demands," Aso said. "There is no guarantee we can resume the six-party talks right away."

Negotiators from China, Japan, Russia, the U.S. and the two Koreas last all met for arms talks in March.