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S Korea, US to hold talks on N Korea bank row solution

world Updated: Jun 11, 2007 08:29 IST

South Korea's top nuclear negotiator left for Washington on Monday for talks with his US counterpart on a proposed new solution to a long-running banking dispute blocking North Korea's nuclear disarmament.

Chun Yung-Woo will hold talks with US Assistant Secretary of State Christopher Hill after arriving in the US capital on Monday Washington time, the foreign ministry said.

A spokesman said Chun would return Wednesday or Thursday after talks with Hill on the nuclear issue. He did not elaborate but other officials have said the two envoys would discuss a new way to resolve the banking deadlock.

Under a February 13 six-nation agreement, the nuclear-armed North agreed to disable its atomic programmes in return for aid and diplomatic benefits.

The first stage, the shutdown of the Yongbyon reactor, was to have been completed by April 14. But the North refuses to make a start until it receives 25 million dollars which had been frozen in Macau's Banco Delta Asia (BDA) since 2005 at US instigation.

The US Treasury says it blacklisted BDA on suspicion it was handling the proceeds of North Korean money-laundering and counterfeiting.
It says the North's funds have now been freed but Pyongyang has been unable to find a foreign bank willing to transfer money seen as tainted.

It insists on a transfer rather than a withdrawal to prove it has regained access to the international banking system.

Yonhap news agency reported on Sunday that Russia had agreed to help wire the funds to North Korea.

"The US requested, on condition that one of its banks play a role of relaying the money, that Russia take the North Korean funds. Russia accepted it," a source told Yonhap.

To make the money transfer possible, Washington also agreed to make "a temporary exception" to its ban on US banks' trade with BDA, another source said.

The US bank would remain unidentified.

"With the new idea backed by the US, China and Russia being pushed in a positive atmosphere, the chances of the transfer of North Korean funds in the near future are getting higher," the source was quoted as saying.

Hill had also said in an interview Friday that Russia could help in the process.