BEIJING - There were signs of progress Sunday on the thorny issue of U.S. financial sanctions that have frozen some $25 million in North Korean funds, as envoys met to discuss a schedule for the communist nation's to dismantle its nuclear programs.
A senior Chinese official said that the U.S. and North Korea devised a solution on the funds, now frozen in a Macau bank, China's state-run Xinhua News Agency reported.
State Councilor Tang Jiaxuan, the Chinese government's most senior official in charge of foreign policy, told a group of visiting Japanese lawmakers about the U.S.-North Korean deal, Xinhua said. The brief report did not provide details on the agreement.
The North Korean deposits have been frozen in the Banco Delta Asia since Washington blacklisted the small, privately run Macau-based bank 19 months ago on suspicion the funds were connected to money-laundering or counterfeiting.
Washington promised to resolve the issue by mid-March as part of an agreement on North Korea's nuclear disarmament last month.
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.
"We have the sense that they understood the position much better. So we'll see," Hill told reporters at his hotel Sunday before leaving for meetings ahead of a formal resumption of six-party nuclear talks on Monday.
On Saturday, North Korean nuclear envoy Kim Kye Gwan told reporters that North Korea "will not stop its nuclear activity" until the entire $25 million in the frozen accounts is released.
But later in the day, another North Korean diplomat, Kim Song Gi, said the regime had "begun preparations to shut down its Yongbyon nuclear facility" as agreed under the Feb. 13 pact. Kim's comments were relayed by South Korean nuclear envoy Chun Yung-woo.
Kim also promised that North Korea would 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 those conditions were.
Chun did not independently confirm if shutdown preparations had begun.
Meanwhile, a former South Korean lawmaker, Jang Sung-min, said Sunday that North Korea has proposed speeding up the process of dismantling and destroying its nuclear facilities and weapons in exchange for U.S. concessions.
Jang said Kim Kye Gwan told Hill in New York earlier this month that North Korea would be willing to simultaneously destroy all its nuclear facilities, nuclear programs and nuclear weapons through safe and controlled explosions.
Jang, an aide to former South Korean President Kim Dae-jung, said he was informed of the North's overture by a diplomatic official in Beijing who is well-versed in North Korean affairs. Jang declined to identify the official, citing the sensitivity of the issue.
Under the February agreement, which involves the two Koreas, the U.S., China, Japan and Russia, North Korea has 60 days to shutter the Yongbyon reactor and a plutonium processing plant and allow U.N. monitors to verify the shutdown.
In return, North Korea would receive energy and economic assistance.
The U.S. promise to resolve the frozen funds, some of which U.S. authorities suspect may be linked to counterfeiting or money laundering, had become a key issue in the talks.
Washington promised to settle the issue as an inducement to North Korea to disarm. But its solution announced last week - an order to U.S. banks to sever ties with the Macau - has been criticized by China and North Korea.
U.S. Deputy Assistant Treasury Secretary Daniel Glaser was to arrive in Beijing Sunday night following meetings in Macau to discuss the issue with government officials, who have the authority to release the funds. Macau is a semiautonomous Chinese territory that maintains its own legal and financial systems.
The Treasury Department is expected to help Macau bank regulators identify accounts connected to North Korea that are not tainted by alleged links to nuclear proliferation or other crimes, possibly resulting in the release of about $20 million, one U.S. official has said on condition of anonymity in accordance with policy.
Hill said he would push North Korea to disclose all its nuclear programs, including an alleged uranium enrichment program.
U.S. allegations in 2002 that North Korea has a secret uranium enrichment program prompted the North to expel U.N. inspectors and eventually led to North Korea exploding its first nuclear device in October last year.
North Korea has never publicly acknowledged having a uranium program, although Kim Kye Gwan indicated the North was willing to discuss the issue with Washington.
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Associated Press writer Christopher Bodeen in Beijing contributed to this report.
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