Envoys Hash Out Details on N. Korea Deal

BEIJING - Envoys met Sunday to hammer out the details of a landmark agreement on disarming North Korea ahead of fresh talks, while it remained unclear whether a dispute over frozen North Korean funds in a Macau bank would block further progress.

Top U.S. nuclear envoy Christopher Hill said he had explained the U.S. position on the Macau funds to North Korea's envoys on Saturday, but indicated he'd yet to receive a clear response.

"We have the sense that they understood the position much better. So we'll see," Hill told reporters before more meetings to prepare for Monday's start of follow-up talks on a disarmament agreement reached last month.

On Saturday, North Korea sent mixed signals on its nuclear disarmament, saying it was preparing to shut down its main plutonium program but that no action would be taken unless frozen funds were released from the Macau bank.

Arriving in Beijing from Pyongyang, North Korean nuclear envoy Kim Kye Gwan told reporters that North Korea "will not stop its nuclear activity" until all of the $25 million in Banco Delta Asia was returned.

But later in the day at the talks, another North Korean diplomat, Kim Song Gi, said the regime has "begun preparations to shut down its Yongbyon nuclear facility" as part of a Feb. 13 agreement, South Korean nuclear envoy Chun Yung-woo told reporters afterward.

In addition, the diplomat promised that North Korea will submit a list of its nuclear programs and disable its nuclear facility "as soon as the right conditions are created," Chun said, without explaining what the conditions were.

Chun did not independently confirm that shutdown preparations had begun.

Hill said Sunday he didn't think the funds issue would be an obstacle to talks.

"I'm pretty confident because I think we have a pretty reasonable position and I think it meets everyone's interests so I'm pretty confident we can resolve it," Hill said. "I mean we've resolved it from our point of view and now we have to explain it to everyone's satisfaction."

The fate of the frozen funds, the result of a blacklisting by U.S. authorities, has become a central issue in the disarmament talks.

The United States promised to resolve the bank issue as an inducement to North Korea to disarm, but its solution - an order this past week to U.S. banks to sever ties with the Macau bank - has been criticized by China and now North Korea's envoy.

Under the Feb. 13 agreement, which involves the United States, China, Japan and Russia as well as the two Koreas, North Korea has 60 days to shutter the Yongbyon reactor and a plutonium processing plant which have produced material for a nuclear weapons program.

U.N. monitors are supposed to be allowed in North Korea to verify the shutdown, and once confirmed North Korea is to receive energy and economic assistance.

The U.S. promise to resolve the Banco Delta Asia funds, which U.S. authorities suspect may be tainted by counterfeiting or money laundering, was part of a side agreement.

"We are on schedule for this first phase," Hill told reporters after daylong meetings with delegates in the other five countries.

A senior U.S. Treasury Department official traveled to Macau on Saturday to discuss the issue. The government of Macau - a semiautonomous Chinese territory - has the authority to decide whether to release any of the funds, which have been frozen since 2005.

"I think it is important to emphasize this was a Macanese action to freeze the funds, and it would be a Macanese process to determine" whether to release them, U.S. Deputy Assistant Treasury Secretary Daniel Glaser told reporters.

The Treasury Department is expected to help Macau's regulators identify accounts connected to North Korea that are not tainted by links to alleged nuclear proliferation or counterfeiting, smuggling and other crimes.

That is expected to prompt bank regulators to unfreeze between $8 million and $12 million, one U.S. official has said on condition of anonymity in accordance with policy.

Hill said he expected "the money to be moving very quickly in terms of completing this whole case and finally resolving it" but gave no details.

As part of the disarmament meetings in Beijing, Hill said he would push North Korea to disclose all its nuclear programs, including an alleged uranium enrichment program.

"It's very important to resolve the uranium enrichment matter," he said. "We need to know what this program was, we need to account for what their equipment was. ... We need clarity on what they have been doing with this equipment."

U.S. allegations that North Korea has a secret uranium enrichment program brought on a nuclear crisis in 2002 that led the country to expel U.N. inspectors and eventually led to North Korea exploding its first nuclear device in October.

North Korea has never publicly acknowledged having a uranium program, although nuclear negotiator Kim indicated the North was willing to discuss the issue.

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Associated Press writers Bo-mi Lim and Mari Yamaguchi in Beijing contributed to this report.