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Bank rift blights nuclear talks Seoul to resume North Korea aid
(about 5 hours later)
Negotiators in Beijing are continuing to discuss a nuclear disarmament deal with North Korea, despite growing rifts over a Macau-based bank. South Korea is to resume shipments of fertiliser aid to the North later this month in a further sign of progress after a recently-agreed nuclear deal.
The row stems from a US decision to order US firms to sever ties with Banco Delta Asia (BDA), which is linked to North Korea money-laundering claims. The South Korean Red Cross said the first of some 50 shipments would be sent on 27 March.
China has expressed regret at the decision, and BDA denies it ever intentionally handled illicit funds. Seoul had suspended humanitarian aid to its secretive Communist neighbour after Pyongyang's nuclear and missile tests.
A US nuclear envoy insisted the dispute would not affect ongoing nuclear talks. Separately, the ending of a US probe into a bank linked to North Korea has been welcomed by a pro-Pyongyang paper.
"I think [the North Koreans] want assurances that the financial issue is resolved," said chief nuclear negotiator Christopher Hill. "Frankly I think it has been resolved." The Japan-based Choson Sinbo described as a "very positive sign" the US Treasury's announcement that it had ended its 18-month investigation into the Macau bank Banco Delta Asia (BDA).
But North Korea's position on the issue is still unclear. The US found the BDA complicit in alleged North Korean money-laundering and counterfeiting activities and has barred the bank from accessing the US banking system.
As part of a nuclear deal agreed during six-nation discussions last month, Pyongyang demanded that a freeze on its assets held by BDA be lifted. It will take about three months to complete the whole process, which will consist of about 50 separate shipments Han Wang-sangSouth Korean Red Cross
This may now take place, due to the fact that the investigation into the bank has been completed, but analysts say the outcome of the inquiry is unlikely to be what the North Koreans had wished for. But the Treasury decision does mean the Macau authorities could now remove the bank from receivership and return some of North Korea's money.
For the other nations involved in the deal - South Korea, the US, Japan, Russia and China - the most important part of the agreement is that the North has pledged to "shut down and seal" its Yongbyon nuclear reactor in exchange for energy aid. North Korea had insisted the freeze on its assets - estimated to be up to $25m (£13m) - be lifted as part of any agreement on ending its nuclear programme.
Various bilateral meetings have taken place since the 13 February agreement, to iron out the fine details of the accord, and delegates are currently in Beijing for preparatory discussions ahead of more high-level talks next week. "We can call this a truly epochal event because the most arrogant and violent regime ever in the United States did so as if it knelt before a small country in the east," the Choson Sinbo said.
Bank's denial While North Korea itself has yet to comment on the US Treasury decision, China on Thursday said it "deeply regretted" the move.
In September 2005, the US accused the BDA of acting as a conduit for money earned by Pyongyang from counterfeit currency and drug smuggling. The BDA denies it ever intentionally handled illicit funds.
Soon after this, the Macau authorities took control of the bank and froze accounts linked to North Korean clients - said to be worth $25m (£13m). 'Fully committed'
Nuclear negotiators are in Beijing for preparatory discussions ahead of more high-level talks next week.
BANCO DELTA ASIA In September 2005, US labels BDA a "primary money-laundering concern"Alleges links to N Korean trade in counterfeit US currency, cigarettes and drugsAlleges front companies laundered millions in cash through the bankClaims led Macau to freeze some $24m in N Korean-linked accountsBDA, described as a small, family-run firm, denies any wrongdoingThe bank says it had a dated computer system and lacked the technology to check for counterfeit money Will N Korea keep its vow? Q&A: Nuclear standoffBANCO DELTA ASIA In September 2005, US labels BDA a "primary money-laundering concern"Alleges links to N Korean trade in counterfeit US currency, cigarettes and drugsAlleges front companies laundered millions in cash through the bankClaims led Macau to freeze some $24m in N Korean-linked accountsBDA, described as a small, family-run firm, denies any wrongdoingThe bank says it had a dated computer system and lacked the technology to check for counterfeit money Will N Korea keep its vow? Q&A: Nuclear standoff
The US decision led North Korea to boycott talks on ending its nuclear programme - only returning to the negotiating table in December amid mounting international pressure over its decision to test a series of missiles and a nuclear weapon. They will discuss progress on the agreement of 13 February, which was reached during talks involving the two Koreas, China, the US, Japan and Russia.
US Treasury Under-Secretary Stuart Levey said on Wednesday that the 18-month American probe had confirmed BDA's "willingness to turn a blind eye to illicit activity, notably by its North Korean-related clients". Under the deal, the North has pledged to "shut down and seal" its Yongbyon nuclear reactor within 60 days in exchange for energy aid.
The ruling finally allows Macau's authorities to remove the bank from receivership and return some of North Korea's money. The UN nuclear chief, Mohamed ElBaradei, travelled to North Korea earlier this week to discuss the resumption of international inspections.
But it also ruling bars the BDA from accessing the US financial system - something which the bank says it will challenge. He said Pyongyang was still "fully committed" to giving up its nuclear programme.
Stanley Au, the chairman of Delta Asia Group - the parent company to BDA - insisted the bank neither "knew or suspected" its North Korean customers were engaged in money laundering. Since 13 February various bilateral meetings have been taking place.
The Chinese authorities have also reacted angrily to the US ruling. The two Koreas held their first talks in several months soon after the nuclear deal was reached, and discussed a number of issues including the resumption of reunions for families split since the division of the Korean peninsula.
China's foreign ministry spokesman Qin Gang spoke of his "deep regret" at the move, and said the US handling of the BDA case should be "conducive to the handling of the six-party talks" and benefit the stability of Macau - a Chinese territory. But Seoul had linked the resumption of deliveries of rice and fertiliser to North Korean progress on dismantling its nuclear programme in accordance with the February deal.
South Korea's Red Cross chief Han Wang-sang said the organisation would send its first shipment of 300,000 tonnes of fertiliser on 27 March.
"It will take about three months to complete the whole process, which will consist of about 50 separate shipments," he said.
The fertiliser shipments will arrive in time for the impoverished North's spring planting season.