North Korea Talks With US Set For Next Week

Wednesday, February 28th 2007, 10:34 am

By: News On 6

WASHINGTON (AP) _ The lead U.S. envoy in nuclear talks with North Korea told lawmakers Wednesday that U.S. financial restrictions connected with North Korean money laundering and counterfeiting had forced banks around the world to question their business dealings with Kim Jong Il's government.

Assistant Secretary of State Christopher Hill said the measures, which the United States is working to resolve as part of a recent disarmament agreement with Pyongyang, had hurt the communist government by hindering its access to the international financial system.

Hill spoke as the State Department announced that he will meet with his negotiating counterpart, North Korean Vice Foreign Minister Kim Kye Gwan, in New York on March 5-6 to discuss first steps toward establishing normal ties after decades of hostility that followed the 1950-53 Korean War.

The bilateral meeting emerged from a Feb. 13 six-nation agreement in which North Korea agreed to shutter its main nuclear reactor at Yongbyon within 60 days in exchange for aid. That accord has sparked strong criticism in Washington, especially among conservatives who see it as rewarding the North for years of bad behavior.

Hill assured lawmakers at a House Foreign Affairs Committee hearing that the agreement ``begins to lay out a path to complete denuclearization, not just a temporary shutdown of the reactor at Yongbyon.''

Although the United States was working to settle its financial restrictions against the Macau bank quickly, Hill said in prepared testimony, ``This will not solve all of North Korea's problems with the international financial system. It must stop its illicit conduct and improve its international financial reputation in order to do that.''

Resolving the issue was a crucial condition in the North's nuclear agreement.

Washington's restrictions against Banco Delta Asia in September 2005 prompted Macau to freeze about $24 million in North Korean money at the bank. An angry North Korea boycotted the nuclear negotiations for more than a year.

Hill suggested that once the U.S. Treasury Department concludes its regulatory action against the bank, it will be Macau's responsibility to deal with the North's frozen funds.

Kim Kye Gwan, North Korea's envoy to the talks, was scheduled to stop Thursday in San Francisco for talks with nongovernmental organizations on his way to New York. He was to arrive in New York on Friday for internal consultations before his meetings with Hill, the State Department said.

Spokesman Sean McCormack cautioned against high expectations for what probably would be more of an organizational meeting between the countries.

``Don't expect anybody to come out the front door on March 6 waving a piece of paper with breakthrough agreements,'' McCormack told reporters. ``That's just not the kind of meeting that this is going to be.''

On Tuesday, U.S. intelligence officials told lawmakers at another hearing that North Korea appears to have started complying with the disarmament agreement, although they said they would continue to watch the country's actions closely.