BEIJING - North Korea expects the United States to lift financial sanctions as part of a nuclear disarmament deal and will retaliate if it fails to do so, a senior North Korean official said Saturday.

In this file picture, Chinese Ambassador to the United Nations Wang Guangya and the rest of the UN Security Council vote unanimously to impose financial and weapons sanctions on North Korea, in New York, October 14, 2006. [Reuters]

Kim Kye Gwan, the North's envoy to the disarmament talks, said Pyongyang is carefully watching to see if the US fulfills its pledge to end the restrictions on Banco Delta Asia. The Macau-based bank, accused of abetting North Korean counterfeiting and money-laundering, is holding $24 million that Pyongyang is unable to access.

"The US has promised the North it would scrap financial sanctions on the Banco Delta Asia," Kim told South Korean and Japanese reporters at Beijing's Capital Airport before taking a plane to Pyongyang. If Washington fails to do so, Kim said, North Korea "will be forced to take corresponding steps."

Kim did not elaborate on Pyongyang's options. But North Korea could delay implementation of the disarmament deal should it feel that the US or other parties - China, Japan, Russia and South Korea, were not meeting their commitments.

The agreement, reached last month, sets out a schedule for North Korea's phased disarmament in return for inducements along the way. One of the first commitments was the US pledge to resolve the fate of the frozen North Korean funds within 30 days of the agreement. That deadline falls next Thursday.

Kim and Assistant Secretary of State Christopher Hill met in New York for two days this past week, and discussed how North Korea would dismantle its one known working nuclear reactor and on moving toward eventual diplomatic relations, according to Hill.

Though Hill said the Banco Delta Asia issue did not come up, he told reporters afterward that he expected the Treasury Department would meet the 30-day deadline.

Washington's blacklisting of Banco Delta Asia in September 2005 scared banks worldwide from dealing with North Korea, effectively deepening the country's economic isolation.