Russia to help end stalemate over N.Korea funds

Updated: 2007-06-11 08:46
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SEOUL, South Korea - Russia has accepted a US request that a Russian bank help end a stalemate over frozen North Korean funds that has halted progress in the North's nuclear disarmament, a news report said.

Moscow agreed to the US request that a Russian bank accept the North Korean funds via a US financial institution before they are moved to North Korea, South Korea's Yonhap news agency reported Sunday, citing an unidentified South Korean government official.

North Korea has refused to move on its pledge to shut down its nuclear reactor until it receives US$25 million (euro18.4 million) in funds that were frozen in a Macau bank.

The money has been freed for release, but North Korea has not withdrawn it, apparently seeking to prove the funds are now clean by receiving them through an electronic bank transfer.

But other banks apparently have balked at touching the funds, which the US alleged were tied to money laundering and counterfeiting by North Korea, throwing the disarmament process into limbo for months.

South Korean Foreign Ministry spokesman Cho Hee-yong said close consultations were under way among parties involved in the disarmament talks on various ways to resolve the financial dispute, but he declined to confirm the Yonhap report.

Russian Embassy officials in Seoul could not immediately be reached for comment Sunday.

To carry out the international money transfers, the US is expected to temporarily suspend its rules banning American banks from dealing with the Macau-based Banco Delta Asia, Yonhap said, quoting another unidentified South Korean official.

The name of the US bank that would play the intermediary role would not be disclosed to help smooth the process, Yonhap said.

South Korea's chief nuclear negotiator, Chun Yung-woo, said Sunday he expects some form of resolution of the impasse this week when he heads to the US.

Chun was to leave for Washington on Monday for talks with his US counterpart, Christopher Hill, on how to advance the aid-for-disarmament agreement reached in February.

"The talks will be mainly focused on mapping out strategies in implementing the February 13 agreement," Chun told The Associated Press, referring to the deal in which North Korea agreed to disarm in return for aid and other political concessions.

"I expect a breakthrough to be made this week," Chun said, without elaborating.

Conditions have improved for a resolution of the row following recent talks among foreign ministers of South Korea, China and Russia on the sidelines of a regional security meeting in Seoul, Chun said.

Chun did not comment on the Yonhap report but warned that no one could guarantee a resolution of the impasse.

South Korea, the US and their regional partners are seeking ways to resolve the financial dispute in a way that "poses no legal problems and all parties can accept," Chun said.

Chun plans to return home Friday.