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China proposes transferring N. Korean funds via S. Korean bank

RIA Novosti

22/03/2007 15:07 BEIJING, March 22 (RIA Novosti) - Chinese negotiators at nuclear disarmament talks with North Korea proposed Thursday transferring Pyongyang's unfrozen funds from a Macao bank to a South Korean bank in the Communist nation.

The sixth round of talks hosted by China ended abruptly earlier Thursday over a delay in the transfer of the North's $25 million unblocked by the U.S. as a precondition for Pyongyang to drop its nuclear program.

"South Korea has a bank branch in North Korea, in the city of Kaesong," Wu Dawei, China's deputy foreign minister, said referring to the city close to the demilitarized zone dividing the North and South, which are technically still at war. "I would like to propose our North Korean colleagues consider this option," he said.

Earlier reports said the Bank of China had refused to receive the funds from the Macao bank and banks in other countries could also fear possible sanctions for the transfer.

Washington unfroze the North's accounts, banned U.S. financial organizations from dealing with the BDA Macao Bank, which it suspects of laundering North Korea's money.

The Bank of China denied comments Thursday, saying it had not been approached with the issue.

"Nobody has asked us to take part in the transfer of money from North Korea's accounts in Banco Delta Asia, therefore we cannot say anything on the matter," Bank of China Vice President Li Lihui said.

The Chinese diplomat said the sixth round was still a success, adding the delegations of the United States, China, North and South Koreas, Russia and Japan had pledged to resume talks shortly.

"The heads of the delegations reached an agreement to resume efforts to advance the six-party talks and reaffirmed their commitment to fulfill their obligations at the initial stage of the Korean Peninsula's denuclearization," Dawei said.

The current round of talks, which began Monday and was designed to push ahead with disarmament steps in 60 days for aid and security guarantees, stalled the next day, when the impoverished nation demanded confirmation that its money in a Macao bank has been released.

Pyongyang returned to the table last December after conducting its first nuclear bomb test in October and subsequent U.N. sanctions. The six countries reached a breakthrough deal February 13.