Deadlock in N Korea funds talks

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Talks on releasing frozen North Korean funds have ended without agreement, casting doubt that a deadline in the disarmament process will be met.

US envoys were meeting Korean officials and banking experts in Beijing to try to facilitate the return of the funds.

Until it gets the money back, Pyongyang is refusing to take steps to implement a landmark deal signed in February.

Under the deal the North agreed to shut its main nuclear reactor in 60 days, which is now only eight days away.

Earlier this week China's nuclear negotiator Wu Dawei said the deadline was unlikely to be met because of the funding dispute.

Analysts say that now the latest negotiations on the issue have failed to find a solution, reaching this deadline looks even more uncertain.

But the US delegates at the Beijing discussions - led by senior US Treasury official Daniel Glaser - have not given up hope yet.

"We believe that it is possible to meet the 60-day deadline and are working with the other parties to accomplish that goal," said Susan Stevenson, a US Embassy spokeswoman in Beijing.

"Our discussions and common efforts with all parties continue," she said.

'Technical problems'

Under the landmark 13 February deal, the US, China, South Korea, Japan and Russia jointly agreed to supply energy aid and other incentives to North Korea if it "shut down and sealed" its main nuclear reactor at Yongbyon.

N KOREA NUCLEAR DEAL N Korea to 'shut down and seal' Yongbyon reactor, then disable all nuclear facilitiesIn return, will be given 1m tonnes of heavy fuel oilN Korea to invite IAEA back to monitor dealUnder earlier 2005 deal, N Korea agreed to end nuclear programme and return to non-proliferation treatyN Korea's demand for light water reactor to be discussed at "appropriate time" <a class="" href="/1/hi/world/asia-pacific/6357853.stm">End of confrontation?</a> <a class="" href="/1/hi/world/asia-pacific/2340405.stm">Q&A: Nuclear standoff</a> The agreement was designed as the first step in a wider deal that would lead eventually to North Korea completely giving up its nuclear activities.

But problems soon emerged over some $25m (£13m) of funds held in a Macau bank.

The US said on 14 March that it had completed an investigation into money-laundering allegations against the bank, allowing for the money to be transferred to a North Korean account in China.

But the transfer has still not taken place, and Pyongyang refuses to discuss the disarmament deal until it receives the funds.

Officials say "technical problems" are delaying the money transfer.