( Latwp ) - The Bush administration removed a key stumbling block to the nuclear disarmament of North Korea by agreeing to the release of North Korean funds frozen in a Macao bank linked to illicit weapons and money laundering.
The decision by the Treasury Department clears the way for Chinese monetary authorities in Macao to return to North Korea as much as $25 million in funds held at the Banco Delta Asia.
The freeze, imposed after U.S. authorities blacklisted the bank in September 2005 as a ``primary money laundering concern,'' so angered the North Korean regime that it refused to participate in nuclear arms talks for more than a year.
North Korea agreed last month to shut its Yongbyon reactor, which produces plutonium suitable for nuclear weapons, as part of a deal that included a U.S. promise to resolve the dispute over the frozen funds within 30 days.
The U.S. ruling is doubled-edged. While it satisfies North Korea's demands, it also formally cuts off Banco Delta Asia from U.S. banking and financial systems because of its illicit activities.
Stuart Levey, U.S. undersecretary of Treasury for terrorism and financial intelligence, said the investigation uncovered evidence that North Korean companies used the bank for transactions related to North Korea's nuclear program.
In addition, Levey said, numerous account holders were involved in North Korea's ``trade in counterfeit U.S. currency, counterfeit cigarettes, narcotics trafficking'' and with front companies that used the bank to launder hundreds of millions of dollars. North Korean officials and Banco Delta Asia have denied the U.S. charges.
Daniel Glaser, who headed the Treasury Department probe, said no U.S. banks currently do business with the bank. Macao, a former Portuguese colony near Hong Kong, is a semiautonomous province of China.
The announcement came as the director of the International Atomic Energy Agency, Mohammed ElBaradei, wrapped up a one-day trip to Pyongyang, North Korea's capital, aimed at restoring international supervision of the regime's nuclear program.
Speaking to reporters in Beijing, ElBaradei called his trip ``quite useful'' and said it helped clear the air between the U.N. nuclear watchdog agency and the isolated nation.
``As you know, we have had a rocky relationship,'' he said. ``We agreed to look forward, not back.''
North Korea expelled U.N. nuclear inspectors in 2002 after the Bush administration accused the regime of hiding a uranium enrichment program in violation of a previous agreement with Washington. The ensuing crisis led North Korea to conduct an underground test last October of a small nuclear device that relied on plutonium, not enriched uranium, for fuel.
ElBaradei said regime officials expressed concern to him about the financial pressure from the U.S. over the last 18 months. He said the officials assured him they were ``ready, willing and able'' to quit plutonium production once they regain access to the frozen funds.
Six countries negotiated the landmark disarmament deal, including the United States, China, South Korea, Japan and Russia and North Korea. Under the accord, North Korea has 60 days to shut and seal the nuclear reactor and a reprocessing facility at Yongbyon in exchange for shipments of heavy fuel oil.
U.S. Assistant Secretary of State Christopher Hill, the chief U.S. negotiator, told reporters in Beijing that he plans several days of bilateral meetings with his counterparts as well as sessions of the working groups looking at improving cooperation on energy, denuclearization and security.