U.S. Says Technical Hitch Resolved In N. Korea Funds Standoff

Friday, April 6th 2007, 6:45 am

By: News On 6

WASHINGTON (AP) _ Negotiators have agreed on a method to release $25 million in North Korean funds that are frozen in an Asian bank, clearing up a hitch that has stalled nuclear disarmament efforts.

After two weeks of talks in Beijing, banking officials from the United States, China, North and South Korea and the Bank of China have agreed on a ``pathway'' for the money to be returned to Pyongyang, the State Department said Friday.

``We support the release of all the funds. It is now a matter of technical implementation,'' spokesman Sean McCormack told reporters, adding that the actual return of the money would be up to China and North Korea.

Previously, U.S. officials had suggested privately that some of the $25 million held in the blacklisted and now-shuttered Banco Delta Asia in the Chinese territory of Macau might be tainted and not released.

In a separate statement, the Treasury Department said Friday its negotiators at the talks in China had worked to ensure the release of the money was consistent with international money laundering and other financial regulations.

``We stand ready to assist the Macanese authorities in their efforts to release the funds and with all parties to effectuate the North Korean pledge that any money received by them would be used for humanitarian purposes of benefit to the North Korean people,'' it said.

McCormack declined to comment on South Korean reports the money would be transferred to North Korea through the Bank of China in Hong Kong. He referred questions about specifics to authorities in China and Macau. A U.S. official in Beijing, however, denied the reports.

McCormack refused to predict if, or even when, the ``pathway'' would actually be employed but said the money returned must be used for the ``betterment of the North Korean people and for humanitarian purposes.''

He also announced that Washington's top East Asia diplomat, Christopher Hill, would travel to the region on Sunday for talks with officials there on North Korea's progress in shutting down its main nuclear facility by a mid-April deadline.

Hill will travel to Tokyo, Seoul and Beijing to discuss the six-party process between North and South Korea, the United States, China, Russia and Japan aimed at getting Pyongyang to halt its nuclear weapons program.

Hill's visit will coincide with a trip to North Korea by New Mexico Governor Bill Richardson and former Veterans Affairs Secretary Anthony Principi that will focus on the repatriation of the remains of U.S. servicemen killed in the Korean War.

The standoff over the money has threatened the next step in a February agreement committing North Korea to shut down its Yongbyon nuclear facility by April 14 in return for economic aid and political concessions.

The funds were frozen after Washington blacklisted the small Banco Delta Asia for alleged complicity in money laundering and other illicit activities by North Korea.

Pyongyang said the freeze showed Washington's hostile intentions toward it and refused to return to international talks on its nuclear program for more than a year.

The problems holding up the transfer of the money were believed to be related to difficulties finding a bank willing to accept the North Korean funds.

A top U.S. Treasury official, Daniel Glaser, had been in Beijing for 13 days trying to sort out the matter. He and his delegation left China on Friday without commenting on the resolution of the hitch.